Rodney Perez, the son of Stella Perez, brought a gun to school and shot another student, Christopher Brown. Brown and his family began a suit against Rodney Perez for battery and Stella Perez for negligent supervision. Stella Perez made claim against her homeowners policy issued by American Reliance Insurance.

American Reliance proceeded with defense but did so under a reservation of rights; while initiating a declaratory judgment action based upon the intentional acts exclusion.

The Perezes' admitted negligence, settled with the Browns and assigned their rights against American Reliance to the Brown's--all without obtaining the consent of American Reliance.

American Reliance denied recovery based upon breach of policy conditions which state that the insured cannot assume obligation or voluntarily make payment without the insurer's consent. Suit was filed against American Reliance.

The initial decision of the trial court was in favor of the Browns. American Reliance appealed.

In the decision of the appeals court, it was determined that an insured has the right to make or enter into a reasonable settlement without the insurer's consent if the insurer had wrongfully refused defense, which was not applicable in this case as the insurer had not refused defense, rather reserved its rights. The Perezes further stated that the policy did not specifically state that the insured could not settle a claim. The court disagreed and indicated that the wording was such that a reasonable person would understand.

The decision of the trial court was overturned upon appeal in favor of the insurer.

(American Reliance Insurance Company, Appellant v. Perez et al., Appellees. FlaDistCtAppl No. 96-1096, Filed June 24, 1998. CCH 1998 Fire and Casualty Cases, Paragraph 6537.)