Settlement Involving Morris Agreement Protects Homebuilder and Positions Insurance Company for Success in Declaratory Relief Action

In Premier Condominium v. Palos, HOA filed lawsuit against developer and general contractor seeking to recover $3,178,574 in construction defects for forty condominium units. RLG represented the general contractor and brought a third party complaint against the implicated subcontractors. RLG aggressively defended the general contractor in the case. To position the case for success at trial, RLG retained highly qualified experts who provided a defense cost to repair of $115,632. Although two separate insurance were paying the defense costs of the developer, they were doing so under reservation of rights and explicitly stated that there may not be coverage for the claims being asserted by the HOA. Both insurance carriers were represented by coverage counsel and were closely monitoring the case. RLG ultimately negotiated favorable settlement with the subcontractors in the amount $280,400. Based on the coverage analysis of coverage counsel, the two insurance carriers collectively offered $500,000 to Plaintiff to settle the case. Plaintiff rejected this offer and proposed that the general contractors enter into a Morris agreement. Since a Morris agreement fully protected RLG's client and coverage counsel were unwilling to recommend the withdrawal of the reservation of rights, RLG recommended that the general contractor enter into a Morris agreement with Plaintiff. With the input of coverage counsel for both insurance carriers, RLG negotiated a Morris agreement with Plaintiff that fully protected the developer. The Morris agreement resulted in the general contractor paying nothing in settlement and gave the insurance carriers a "war chest" of $280,400 from the subcontractor settlement proceeds to defend the declaratory relief action. RLG worked closely with coverage counsel to ensure that the general contractor was protected and that the insurance carriers were positioned for success on the declaratory relief action.