State Farm v. Amanali Babwari

United Policyholders’ amicus brief addresses the consequence of an insurance company’s breach of the duty to defend. UP’s brief argues that State Farm should not be allowed to attempt to avoid paying for a consent judgment issued against its insured. State Farm initially defended its insured under a reservation of rights letter but then later decided to withdraw from the defense without obtaining a declaration that it had no duty to defend. When an insurance company engages in such behavior, it is bound by any reasonable underlying judgment or settlement both in terms of liability and damages.