Bashor/Nunn Agreements: Can An Insurer Intervene In A Lawsuit Between A Plaintiff And Insured Defendant Under Colorado Law?
Nathan A. Schacht†
Snaking through the courts of many jurisdictions are important under-the-radar lawsuits, the outcomes of which are critically important to insurers. Imagine this: you are an insurer and one of your insured is involved in an accident in which a third-party is injured. The third-party sues the insured for injuries resulting from the accident. However, you, the insurer, are not a party to the lawsuit. During pre-trial settlement negotiations, the third-party and the insured enter into a private agreement that you are excluded from. The agreement assigns all of the insured’s rights and interest in any claim for insurance the insured may have against the insurer to the third-party. In exchange for this, the third-party agrees to not execute or attempt to enforce any judgment against the insured. Moreover, the third-party and insured agree to a quick liability and damage determination, if it is not stipulated to in the agreement, before a court or arbitrator. The third-party and insured carry out this determination without your involvement. The third-party then pursues its claim against you in a separate bad faith lawsuit. You had no participation in the underlying lawsuit, but are nevertheless thus stuck fighting against the stigma of the liability and/or damages determination from the previous suit in the subsequent bad faith action.