Insurer Settles Suit with Former Utah State University Frat Members

A Georgia insurance company that paid a wrongful death claim on behalf of a former Utah State University fraternity has settled the lawsuit it brought against four of the fraternity’s members.

The Herald Journal of Logan reports that attorneys for RSUI Inc. told a 1st District Court judge the company had resolved a dispute with the four men. Court records show attorneys met with the judge April 20 – one day before a planned hearing.

RSUI sought $50,000 each from Sigma Nu pledge Chad Burton and chapter officers Cody Littlewood, Colton Hansen and Mitchell Alm as compensation for a settlement payment to the parents of Michael Starks.

Starks died Nov. 21, 2008, from alcohol poisoning after a fraternity event.

At the time, RSUI was the insurer for the fraternity and its members, including pledges. RSUI attorneys have acknowledged that both the company and the four defendants would have been jointly liable to Starks’ parents, George and Jane Starks of Salt Lake City. The company claims it paid the full amount of a settlement with the Starks, although those terms have not been made public.

In court documents, attorneys for RSUI contend the defendants planned and participated in a “capture event,” in which new pledges would be kidnapped by members of a sister sorority and later rescued by fellow pledges. During the event, court documents say, Starks drank nearly two-thirds of a bottle of vodka. He died hours later.

“The defendants are required to pay their portion of the amount used to settle the claims against them,” RSUI’s attorneys state in court papers. “The defendants accepted this benefit and it would be inequitable for them to retain the benefit without payment to plaintiff of its value.”

Defense attorneys for the fraternity brothers say RSUI breached its good faith agreement by going after its own policyholder.

“You cannot subrogate against your own insured,” said Baird Morgan, who represented Hansen. “That is almost the definition of insurer bad faith.”

Terms of the agreement reached between RSUI and the four defendants were not disclosed in court records.

Both Morgan and attorney Richard Glauser, who represented Burton, said their clients paid no money to RSUI. Littlewood’s attorney said he couldn’t discuss financial details of the resolution and no attorney could be located for Alm.

RSUI attorneys declined the newspaper’s request for comment on the resolution.

Baird said he intends to file a counterclaim against RSUI on Hansen’s behalf and contends the company had breached its implied duty of good faith and fair dealing.