Benchmark Ins. Co. v. Sparks

Policyholder Robert Sparks was sued by victims and families of an automobile accident in which Sparks was involved. Sparks's insurance company, Benchmark, filed an interpleader action, seeking permission to deposit the $30,000 policy limits with the district court for dispersal to the plaintiffs. Benchmark then filed a motion for summary judgment, seeking a determination that once the court accepted the deposited funds, Benchmark would have no further obligation to defend Sparks in the underlying tort lawsuit. The district court granted Benchmark permission to deposit the policy liability limits but denied it's motion for summary judgment, determining that Benchmark's duty to defend Sparks extended beyond its tender of the policy limits. On appeal, the Supreme Court affirmed, holding (1) the policy did not unambiguously alert Sparks that Bench could terminate its duty to defend him by depositing the policy's limits with the district court; and (2) that a policyholder in Sparks' position would reasonably expect his insurer to procure a settlement on his behalf or defend him until the policy limits have been used to satisfy a judgment entered against him.