Allstate’s Appeal of $16 Million Verdict Denied
January 26, 2008
A Missouri appeals court has upheld a $16 million bad faith insurance verdict against Allstate Insurance. Just as a jury did in 2006, a Jackson County appeals panel denied Allstate’s assertion that their failure to settle the claim of two car accident victims was unintentional.
Case Background
In March of 2000, Edward Johnson and his wife Virginia were driving their small sub-compact car when they were slammed into by a pick up truck driven by an intoxicated Wayne Davis Jr. The Johnsons survived the collision but faced a medical bill of $320,000.
Initially the Johnsons agreed to settle for Davis’ minimal insurance policy limit of $50,000. Despite this, Davis’ insurance company, Allstate, failed to respond within the statutory 60-day limit.
Allstate’s Failure to Settle Leads to Bad Faith Lawsuit
Due to Allstate’s failure to respond to the settlement, The Johnsons had no other choice but to sue Davis. The Johnsons and Davis agreed on a judgment that laid down the following conditions:
- Davis agreed to a $5 million judgment in favor of the Johnson’s
- The Johnson’s agreed not to collect on the $5 million, but instead filed a joint lawsuit with Davis to sue Allstate for failing to respond in a timely fashion to the Johnsons’ initial settlement offer.
- Instead of collecting on the original $5 million judgment, the Johnsons would be promised the bulk of whatever settlement would be received in the bad faith lawsuit against Allstate.
Allstate’s Defense
In response to the joint bad faith lawsuit filed by the Johnsons and Davis, Allstate defended itself by claiming:
- Allstate lost the letter the contained the original settlement proposal and then responded late because they had not received the Johnsons’ necessary medical information.
- Allstate argued that it was not convinced that the crash had caused the Johnsons’ injuries. This was despite the fact the Jaws of Life had to be used to remove the Johnsons from their vehicle and then flown to the hospital via helicopter due to the seriousness of their injuries.
Allstate Found to Have Acted in Bad Faith
The jury was unconvinced by Allstate’s defense and found them guilty of acting in bad faith. The jury awarded the plaintiffs:
- $5.8 million in damages plus 9 percent interest since the date of the Johnson’s original verdict
- $10.5 million in punitive damages.
Allstate’s Appeal Denied
Allstate recently attempted to appeal the jury’s original decision but the three judge panel of the Jackson County Court of Appeals upheld the $16 million verdict.
(Source: News Inferno)
Bad faith insurance law is the area of law relating to insurance companies who deny policy holders benefits sought through legitimate claims. If you would like more information on bad faith legislation, please contact us to confer with a bad faith lawyer.
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