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92 Denver L. Rev. F. 13 (2014-2015)

handle is hein.journals/dnvrlwfv92 and id is 1 raw text is: BASHOR/NUNN AGREEMENTS: CAN AN INSURER INTERVENE IN A LAWSUIT BETWEEN A PLAINTIFF AND INSURED DEFENDANT UNDER COLORADO LAW? NATHAN A. SCHACHTt Snaking through the courts of many jurisdictions are important un- der-the-radar lawsuits, the outcomes of which are critically important to insurers. Imagine this: you are an insurer and one of your insured is in- volved in an accident in which a third-party is injured. The third-party sues the insured for injuries resulting from the accident. However, you, the insurer, are not a party to the lawsuit. During pre-trial settlement ne- gotiations, the third-party and the insured enter into a private agreement that you are excluded from. The agreement assigns all of the insured's rights and interest in any claim for insurance the insured may have against the insurer to the third-party. In exchange for this, the third-party agrees to not execute or attempt to enforce any judgment against the in- sured. Moreover, the third-party and insured agree to a quick liability and damage determination, if it is not stipulated to in the agreement, be- fore a court or arbitrator. The third-party and insured carry out this de- termination without your involvement. The third-party then pursues its claim against you in a separate bad faith lawsuit. You had no participa- tion in the underlying lawsuit, but are nevertheless thus stuck fighting against the stigma of the liability and/or damages determination from the previous suit in the subsequent bad faith action. Needless to say, this is not a position in which insurers like to find themselves, but this is happening across multiple jurisdictions, including the State of Colorado. This article explores the legal background of these agreements and argues that, though this is an issue of first impression in Colorado, insurers likely meet all Rule 24 intervention requirements and should be allowed to intervene in underlying tort actions in order to pro- mote public policy goals such as fairness and judicial economy. BASHOR/NUNN AGREEMENTS The Colorado Supreme Court first expressly permitted agreements between insureds and third-parties in the decision Northland Insurance Co. v. Bashor.' In Bashor, a third-party sued an insured and obtained a judgment in excess of the insured's liability policy limits.2 Subsequently, t Nathan A. Schacht is an attorney in Baker & Hostetler LLP's Denver office whose prac- tice focuses on litigation and employment law. 1. 494 P.2d 1292 (Colo. 1972). 2. Id. at 1293. 13

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