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$2 million. On March 14, 1991, upon authorization of petitioner,
a partial settlement agreement (the agreement) was entered into
by petitioner, petitioner's attorneys, and Harte-Hanks.
The agreement provided for a payment to petitioner of
$8,500,000 from Harte-Hanks and its insurers. Of that amount,
Continental agreed to pay $2,100,000, and Harte-Hanks agreed to
pay $1 million to settle the first $7 million in principal
liability of the judgment. Harte-Hanks agreed to pay $2,400,000
to settle the principal amount of the judgment between $7 million
and $12 million, and to the extent necessary, to settle all
postjudgment interest liability on the first $22 million of the
judgment. Columbia and Hudson agreed to pay $3 million to settle
the principal amount of the judgment between $12 million and $22
million.
In reaching agreement, none of the payors considered whether
the amounts they were paying were for actual or punitive damages.
Nor did the payors or petitioner discuss any allocation of the
settlement amount between actual or punitive damages. Instead,
the parties regarded the judgment as a claim that totaled in
excess of $31 million, considered the tiered structure of the
insurance coverage, and tried to work out a settlement that
preserved petitioner's claim against the upper tier insurer and
resolved his claim against the lower tier insurers.4
4 Federal did not participate in the settlement
negotiations, nor did it join in the appeal of the trial court's
judgment. After the agreement was entered into, Federal filed a
(continued...)
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