# What is a Morris Agreement?

*Published:* 2017-04-03
*Author:* Glenn Jimerson

A “Morris Agreement” is a “settlement agreement entered into when the insurer is defending under a reservation of rights under which the insured stipulates to a judgment, assigns his rights against the insurer to the claimant, and receives in return a covenant from the claimant not to execute against the insured.” *See Parking Concepts, Inc. v. Tenney*, 207 Ariz. 19 n.1, 83 P.3d 19 n.1 (2004).

What is the Rationale of a “Morris Agreement”?
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According to the Arizona Supreme Court, if an [insurer defends](/services/insurance-litigation) under a reservation of rights, then the insurer has “not abandon\[ed\] its insured’s by breaching any policy obligations,” but the insurer also has not “accept\[ed\] full responsibility for the \[insured’s’\] liability exposure.” *United Services Automobile Association v. Morris*, 154 Ariz. 113, 118, 741 P.2d 246, 251 (1987). Thus, the Arizona Supreme Court distinguishes between an insurer’s [duty to defend](/news-publications/arizona-court-of-appeals-upholds-damron-agreement-declares-facts-in-stipulated-judgments-bind-insurers-for-purposes-of-coverage) and duty to indemnify. *Id.* at 119, 741 P.2d at 252. *Morris* concluded that an insurer “who performs the duty to defend but reserves the right to deny the duty to pay should not be allowed to control the conditions of payment.” *Id.* As a result, the Arizona Supreme Court held that, “an insured being defended under a reservation of rights may enter into a \[Morris Agreement\] without breaching the cooperation clause.” *Id.*

What are an Insurer’s Defense to a “Morris Agreement’?
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An insurer’s defenses to a Morris Agreement include:

1. Notice
2. Coverage
3. Reasonableness of the stipulated judgment
4. Fraud and collusion

If an Insured Enters a “Morris Agreement” What Should an Insurer Do?
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If an insured and plaintiff enter a Morris Agreement, then an insurer’s best and safest course of action is to:

1. Move to intervene in the litigation after the Morris Agreement is signed and/or the insured and plaintiff request a reasonableness hearing.
2. File a motion to stay a reasonableness determination until dispositive legal issues subject to a motion for summary judgment, such as notice or coverage, are determined.
3. If the insurer loses on the dispositive issues, then contest the reasonableness of the stipulated judgment in a reasonableness hearing. If, however, plaintiff and insured do not seek a reasonableness determination, then an insurer is entitled to contest reasonableness in a declaratory judgment action.