Consent judgment
The court held that, because the insurer wrongfully refused to defend, it could not rely on that provision of the policy.
![consent judgment consent judgment](https://images.template.net/wp-content/uploads/2017/06/Short-Consent-Order.jpg)
The insurer defended the judgment on the ground that entering into the settlement violated the “no action” clause of the policy, prohibiting the insured from entering into settlements without the insurer’s consent. Steil involved a medical malpractice case in which the insured physician entered into a consent judgment following a denial of defense by the insurer. One of the best examples of how consent judgments are treated emanates from a Florida intermediate court.
![consent judgment consent judgment](https://data.templateroller.com/pdf_docs_html/2028/20282/2028270/page_2_thumb.png)
In addition, every jurisdiction recognizes the inherent potential for fraud and/or collusion in such judgments and, accordingly requires that they be reasonable in amount and entered into in good faith.2 The question which seems to be left open in virtually every jurisdiction, however, is what happens if the judgment is found either to be unreasonable in amount or entered into in bad faith. The critical aspects of these judgments are: 1) entry into a judgment purporting to represent a reasonable settlement of the claim 2) an agreement not to execute on the judgment against the insured 3) an assignment of any and all claims the insured may have against the insurer under the insurance policy and 4) an agreement to satisfy the judgment upon conclusion of the contemplated litigation against the insurer. While the names may change, the agreements are unwaveringly uniform. Some form of this type of judgment is recognized in almost every jurisdiction in the United States,1 and generally referred to by any number of monikers, generally based upon the “seminal” case in that jurisdiction.
![consent judgment consent judgment](https://www.zambiawatchdog.com/wp-content/uploads/2020/07/9BA99551-8A5E-4EE1-8D4A-CCA3605BBCE1-250x541.jpeg)
The scene is all too familiar: an insured, disenchanted with its insurer’s refusal to defend an action the insured believes is within coverage, decides to enter into a “consent judgment” with the plaintiff, in return for which, the plaintiff agrees only to pursue satisfaction of the “judgment” against the insurer.
#Consent judgment series
This is one of a series of articles originally published in Mealey’s Litigation Report: Insurance Bad Faith, Vol.