$2,500,000: Insurance Co. Flip-Flops As To Whether Their Client Was At Fault In An Accident
June 3, 2010
CASE DESCRIPTION: The plaintiff was involved in an auto accident with and uninsured motorist. The uninsured motorist sued plaintiff for their injuries. Plaintiff’s insurance carrier (defendant) defended the plaintiff in that action claiming no liability. However, when the plaintiff sought to collect on their under insured motorist policy, defendant began claiming the plaintiff was at fault in the accident. The defendant also conducted other questionable practices against the plaintiff. Plaintiff brought suit against the defendant on the basis of insurance bad faith.
RESULT: $2,500,000.00 (not including underlying action)
On September 2, 1989, Plaintiff Lance C., age 16, was driving his 89′ red Toyota pick-up truck on the Fort Mohave Indian Reservation in Arizona when a 88′ gray pick-up truck coming from the opposite direction (which was racing with a third “phantom” vehicle) collided with plaintiff’s vehicle head-on. Plaintiff suffered a broken femur, broken wrist, lacerations to the face and neck, minor head injury and low back pain. The Plaintiff pursued recovery from his own insurance company, State Farm, because the other vehicle and the “phantom” vehicle were uninsured and under insured respectively. Plaintiff claimed he had under insured motorist coverage of $100,000/300,000 as well as $1 million umbrella policy. Initially, however, State Farm took the position that the UIM coverage was $30,000/60,000 with no umbrella. Plaintiff contended his parents wanted “full” coverage. Finally coverage of $100,000/300,000 plus the $1 million umbrella was admitted after a declaratory relief action and depositions of insured and the insurance agent. Unfortunately this admission was after almost a two-year delay, despite the claims file acknowledging that the coverage issue should have resolved in favor of the insured two years earlier.
In the meantime, the driver of the other vehicle (uninsured) had sued Lance C. and State Farm provided defense expert witnesses, in reconstruction, etc… and took the position in that case that Lance C. was not at fault for the accident. However, after State Farm resolved the case against the other driver (for a very low value in light of the other driver’s injuries) State Farm then immediately flip-flopped and began to place blame for the accident on its insured (Lance C.) to avoid liability on the underinsured motorist policy. State Farm hired a new expert to contradict the expert they previously retained on behalf of Lance C., and then did not even provide the newly retained expert with all pertinent information and evidence (nor the opinions and materials produced by their prior expert) which alleged that Lance C. was not at fault.
In addition, although State Farm paid its initial $100,000 policy limits to Lance C. after resolving the above referenced coverage issue, State Farm then had authority to offer $500,000 additional money out of the umbrella policy – but never increased their offer even after plaintiff had demanded $500,000 several days prior to the arbitration of this matter. The case was then arbitrated and the plaintiff was awarded $855,047.80 on May 24, 1994.
It should also be noted that State Farm had taken steps during this matter to investigate issues of the marital status of plaintiff’s parents and the death of plaintiff’s brother – two issues which did not have even the remotest connection to the case.
BAD FAITH ACTION (SETTLEMENT NEGOTIATIONS)
After the above referenced arbitration award was paid, plaintiff then filed suit for Bad Faith against State Farm and served a C.C.P. §998 demand for $1,000,000 to each of the two State Farm entities. Plaintiff alleged that the above actions by State Farm constituted Bad Faith, breach of the implied covenant of good faith and fair dealing and breach of contract. As a result, plaintiff suffered anxiety, emotional distress and financial hardship. This demand was allowed to expire.
The Defendants alleged that they were reasonable and fair in the handling of Lance C’s claim. However, State Farm requested an informal settlement conference, offering $500,000, then $1,000,000 and then $1.5 million. Ultimately the case was settled for $2.5 million.
TYPE OF CASE: Insurance Bad Faith
INJURIES: Emotional distress, loss of use of funds, and costs in the amount of $300,000.00, all sue to State Farm’s delay in admitting coverage and then unreasonable failure to settle for some four years.
DATE & LOCATION OF INCIDENT: On 9/2/89 in Fort Mohave Indian Reservation, Arizona.
PLAINTIFF’S AGE: 16 at time of incident. (21 at time the case reached settlement).
OCCUPATION: College Student
Wylie A. Aitken
AITKEN * AITKEN * COHN
For Plaintiff – Lance C.
Also for Plaintiff:
JACKSON & WILSON
James R. Robie & Maria Cousineau
ROBIE & MATTHAI
For Defendants – State Farm Mutual Automobile Insurance Company & State Farm Fire And Casualty Company
DEFENDANT’S INSURANCE CO.: State Farm Mutual Automobile Insurance Company & State Farm Fire And Casualty Company