$1,300,000: Despite Clear Liability, A Driver’s Insurance Co. Acts In Bad Faith And Pays For It

CASE DESCRIPTION:  Couple injured by hit and run driver.  The Driver was found to be personally liable.  In addition the insurance company of the driver paid out the policy limits and more due to their bad faith in handling this case.

RESULT:  $1,300,000 total settlement

The subject accident occurred on Pacific Coast Highway near the Cano’s Restaurant in the City of Newport Beach, California.  Defendant in the underlying accident, Bonnie V., left the restaurant’s parking lot in her Mercedes Benz automobile while intoxicated.  Plaintiffs, Linda and Linden K. were pedestrians across the street on Pacific Coast Highway.  The Plaintiffs were struck by Mrs. Bonnie V’s vehicle when she drove across the highway and onto the sidewalk.  Mrs. Bonnie V. then fled the scene (hit & run).

During settlement negotiations (pre Moradi-Shalal), Defendant’s insurance company failed to accept settlement demands for the policy limits, despite clear liability and damages that exceeded policy limits, which would have resolved the case against the insureds (Bonnie V.).  As such, Plaintiffs demanded and received $200,000 from Bonnie V’s personal assets and an assignment of the Bonnie V’s cause of action for bad faith against the insurance company.  (Plaintiffs also received the $200,000 insurance policy limits).   Plaintiffs then entered into a stipulated judgment in the sum of $2.4 million against Bonnie V. and proceeded against the insurance company on both their own Royal Globe third party bad faith cause of action as well as the assigned first party cause of action.

The insurance company maintained premised their defense of the following:  First no demand within the policy limits was made such that there was no opportunity to extricate the insureds from the lawsuit (hence no bad faith); Second the stipulated judgment was not a “final judicial determination of liability” as required pursuant to Moradi-Shalal; And third the stipulated judgment was collusive and inflated and therefore not valid, nor binding on the insurance company.

TYPE OF CASE:  Insurance Bad Faith

INJURIES: For Plaintiff Linden K.:  Cerebral concussion, a fracture of the intercondylar eminence of the left knee, a medial collateral ligament tear, phlebitis of the left leg, multiple fractures on his left side, fractured ribs, facial abrasions and scalp contusions.  His permanent injuries are numerous facial scars, his left leg is shorter, and he has an arthritic condition from his left knee to the thigh.

For Plaintiff Linda K.:  Multiple contusions and abrasions, ligament damage in her left side and pelvic area, and an enlarged uterus.  She had deep vein throbosis of the left leg.  All of the toes on her left foot were fractured.  She had a dislocated left shoulder and a whiplash injury to her neck.  She suffered a pulmonary embolism. She injured the disks at C5-6, suffered a neural foraminal narrowing at C6-7 and at C7-C8 suffered extreme nerve irritation.  Permanent injuries are degenerative disk disease at C5-6, and due to a pulmonary embolism she suffered thromboebolic disease.

DATE & LOCATION OF INCIDENT:  On 6/2/83 at Margaritaville Restaurant Parking Lot in Newport Beach, CA.

PLAINTIFFS’ AGE:  Husband – 43 at time of incident.
Wife – 40 at time of incident.

OCCUPATION:  Husband – Wine Shop Proprietor
Wife – Store Manager

Wylie A. Aitken & Richard A. Cohn
For Plaintiffs – Linden & Linda K.

William D. Jennet & Michael Mercy

For Defendant – Interinsurance Exchange of the Automobile Club of Southern California