Morrison Law Journal
Morrison Law Group logo

The Morrison Law Journal
October 2021
Volume XVI, Edition 10

When a Deal Is a Deal: Court of Appeal Affirms Judgment in Favor of Automobile
Driver Defendant Which Informally Settled Through Her Insurer for Policy Limits

By: Edward F. Morrison, Jr., Esq.
Larry A. Schwartz, Esq.

A significant liability facing insurers in California, and which has been discussed in The Morrison Law Journal (see the August 2021 Article discussing Hedayati v Interinsurance Exchange for the Automobile Club (2021) 67 Cal.App.5th 833) is the effect of a policy limits demand involving a severe injury accident where the defendant insured (typically an automobile driver) is substantially under-insured. The practice of many plaintiff's counsel is to serve a "time limited demand" to the insurer for the underinsured defendant's insurance policy limits, together with a demand for a "certified copy" of the insurance policy, including declarations, a "prompt exchange of the settlement draft" for a release of all claims, and a settlement check naming the plaintiff law firm and its clients. And this is what occurred in the matter of Carachure v. Scott (2021) Westlaw WL 4619909 ("Carachure case").

In the Carachure case, the plaintiff sustained severe injuries on August 21, 2011 when the defendant's car struck her while she was standing on the side of a road in Riverside. Allegedly, three of the plaintiff's family members witnessed the accident. The defendant driver was insured by Safeco Insurance Company of America ("Safeco") and had policy limits of $15,000 for each person, and a maximum of $30,000 per occurrence.

Plaintiff retained counsel, the Avrek Law Firm, who immediately served a "timed" demand for policy limits. That demand was served on October 14, 2011. On October 21, 2011, a Senior Claims Specialist at Safeco, Ken Wong, emailed the Avrek firm to confirm a telephone conversation that he had with Avrek, and to confirm that a settlement had occurred for the policy limits. Mr. Wong also attached a copy of the complete insurance policy, as requested. Mr. Wong also requested a 30 day extension of time to respond to a corresponding policy limits demand which had been issued by the plaintiff's family members, as the police incident report did not list them as witnesses.

Three days later, October 24, 2011, Mr. Wong emailed the Avrek firm, attaching a confirming letter, the release, his insured's signed declaration (as to insurance), and a Medicare mandate letter. Mr. Wong also sent a confirming note that the matter had been settled for the $15,000 policy limits. Over the next several months, Mr. Wong followed up with the Avrek firm (and apparently no one denied a settlement had been reached). The following summer, the Avrek firm represented that plaintiff had agreed to sign the release-but she never did.


In September 2012, the Avrek firm sent a new demand letter to Mr. Wong demanding the full $30,000 policy limits (for the plaintiff and her family). In response, Mr. Wong informed the Avrek firm that a $15,000 policy limits settlement as to plaintiff had already been reached and that Safeco was waiting on the signed release in order to issue the settlement check. Regarding the family members, Mr. Wong requested evidence to support the claim that the plaintiff's grandchildren had actually witnessed the accident.

In November 2012, now more than one year after the accident, the Avrek firm asserted that its policy limit demand expired in September 2012, and that Safeco's failure to "unconditionally timely tender the policy" was evidence of bad faith. Mr. Wong wrote a lengthy response, providing a chronology of the events.

In August 2013, suit was then filed by plaintiff against the defendant. In March 2015, the defendant moved for summary judgment on the grounds that plaintiff, through counsel, had entered into a valid release. The Trial Court granted the Motion, but on appeal, the Court of Appeal reversed, concluding there was a triable issue of fact as to whether the plaintiff had actually assented to the settlement. The trial then occurred in May 2018. The jury returned a verdict in favor of the defendant on the basis there had been a settlement. Plaintiff appealed. The Court of Appeal affirmed. Key in the Court of Appeal's ruling is that the Avrek attorneys admitted that they had authority to issue the policy limits demand in October 2011 and Safeco's acceptance of the demand.

Policy limits demands can be a very significant issue where a defendant is severely under-insured. What the Carachure case expresses is that if an insurer representative is meticulous in documenting acceptance of a timed demand (and provides the documents which are demanded as part of the demand), a settlement can be enforced – or at least determined to have been reached - even if the settlement agreement was never signed by the Plaintiff.

About the Authors: Edward F. Morrison, Jr. is the founding partner and Larry A. Schwartz is Of Counsel to The Morrison Law Group, a professional corporation. Their biographies can be viewed at

Publication Note: The Morrison Law Group wishes to disseminate this publication to all clients and colleagues of the Firm who wish to receive it. Should any recipient desire to be removed from the distribution list, or wishes to have a colleague added, please contact Jim Van Dusen at The Morrison Law Group at 213 356-5504.

Disclaimer Note: The legal article presented above is intended to provide general information which may be of interest or use to clients and colleagues of The Morrison Law Group and should not be construed as legal advice on any matter.