Case Study: Village Northridge V. State Farm

Law360, New York (October 7, 2010, 3:54 PM EDT) -- In a recent decision, the Supreme Court of California provided insurance companies doing business in the state, and their defense attorneys, with guidance on how to draft settlement agreements with policyholders in a manner that will offer the carriers greater protection from subsequent lawsuits.

In Village Northridge Homeowners Association v. State Farm Fire and Casualty Company, the high court overturned a court of appeal decision allowing an insured to “affirm” the settlement of its claim (thus keeping the settlement proceeds) and at the same time sue...
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