Clock v. Larson

Betty Naber became a paraplegic when she fell from an unprotected catwalk located on property she rented from Merlin Clock. Clock had $100,000 of liability-insurance coverage with IMT Insurance Company (IMT). L. Larson was Clock’s insurance agent. Naber brought a tort action against Clock, seeking damages. IMT provided Clock with counsel. Subsequently, Clock (plaintiff) filed a declaratory-judgment action in trial court against IMT and Larson (defendants), alleging negligence for the failure to procure a $1 million umbrella liability policy that Clock had allegedly requested. Clock and Naber then entered into a settlement agreement. Under the agreement: (1) Naber agreed to accept $110,000 from Clock, with $100,000 paid by IMT and $10,000 paid by Clock, in exchange for releasing the tort claim against Clock; (2) Clock assigned his interest in the declaratory-judgment action to Naber; and (3) Naber dismissed the tort suit against Clock with prejudice and agreed not to pursue any claim against Clock arising from the accident. Afterward, Naber, as assignee in the declaratory-judgment suit and in Clock’s name, filed an application to determine whether the suit could be maintained after the settlement agreement and dismissal of the underlying tort suit. The trial court found that the settlement agreement fixed the maximum amount of Naber’s right to recovery in the declaratory-judgment suit, as Clock’s assignee, to $10,000. The trial court dismissed the declaratory-judgment suit. Clock appealed.