Grange Mutual, an Automobile Liability Insurance Company in Ohio, offered a $30,000.00 settlement to an injured claimant named Darlene Stephens. Ms. Stephens rejected the offer, proceeded to Trial against the Policyholder, Leslie Daniel, and obtained a Judgment against him. The Jury awarded compensatory damages in the amount of $31,478.50 and assessed $20,000.00 in Punitive Damages against the Policyholder, Mr. Daniel.
Mr. Daniel assigned his rights against Grange to the injured claimant, Ms. Stephens. Both Ms. Stephens and Mr. Daniel together sued Grange for Bad Faith in failing to settle the underlying case. Stephens v. Grange Mut. Ins. Co., 2012 WL 5296019 *1, ¶¶ 2-3 , 2012-Ohio-4980 ¶¶ 2-3 (Ohio 2d DCA October 26, 2012).
The Appellate Court observed that any assessment of Punitive Damages in this case was not insurable. First, Punitive Damages are not insurable in Ohio as a matter of public policy. Second, Mr. Daniel's Policy "excludes coverage for punitive or exemplary damages, and [third,] in their responses to Grange's request for admissions [in the Bad Faith case], Stephens and Daniel admit that Grange 'had no contractual obligation to pay punitive damages under the terms of the insurance policy issued to' Daniel." Stephens v. Grange Mut. Ins. Co., 2012 WL 5296019 *6, ¶ 28 , 2012-Ohio-4980 ¶ 28 (Ohio 2d DCA October 26, 2012).
The official opinion of the unanimous Court did not say so, but it appears that the panel unanimously concluded that since the Auto Liability Insurance Carrier had no Coverage for Punitive Damages in this Ohio case, therefore the Carrier had no duty to attempt to settle the Punitive Damages claim against its Policyholder in the underlying case.
The Appellate Court construed the evidence most strongly in favor of Ms. Stephens and Mr. Daniel on their Bad Faith claim against Grange, and concluded "that there is no evidence that it acted in bad faith in negotiating Stephens' compensatory damages." Grange's offer of $30,000.00 before Trial compared favorably to the Jury Verdict for compensatory damages of $31,478.50 in the eyes of the Appellate panel, "an amount only $1,478.50 more than Grange's final offer." Stephens v. Grange Mut. Ins. Co., 2012 WL 5296019 *7, ¶ 29 , 2012-Ohio-4980 ¶ 29 (Ohio 2d DCA October 26, 2012). Under these facts in the record in this appeal, the Appellate Court affirmed the Trial Court's entry of Summary Judgment in favor of Grange. Under Ohio law, a Liability Insurance Company's Bad Faith in settlement takes place where there is a double negative, apparently; i.e., where the Insurance Company's refusal to pay the claim is not predicated on circumstances that provide a reasonable justification for not settling the claim. Stephens v. Grange Mut. Ins. Co., 2012 WL 5296019 *6, ¶ 25 , 2012-Ohio-4980 ¶ 25 (Ohio 2d DCA October 26, 2012).
The majority of the panel did not mention, however, that the Jury Verdict was well within Grange's Policy Limits even if compensatory damages were lumped together with the Punitive Damages assessment. The Court stated at the outset, and as a fact in the record, that Grange's Policy Limits in this case were $100,000.00/$300,000.00. Stephens v. Grange Mut. Ins. Co., 2012 WL 5296019 *1, ¶ 3 , 2012-Ohio-4980 ¶ 3 (Ohio 2d DCA October 26, 2012). The majority of the Appellate Court did not mention the Policy Limits again.
But a third Judge on the Appellate panel did mention the Policy Limits and the amounts of the Jury's Verdict. This Judge would have decided the issue on the law, not just on the facts in this record. "As a matter of law, if compensatory damage exposure, and eventual judgment, is well within policy limits, an insurer need not consider whether to make a greater settlement offer solely to shield the insured from a punitive damage judgment." Stephens v. Grange Mut. Ins. Co., 2012 WL 5296019 *7, ¶ 33 , 2012-Ohio-4980 ¶ 33 (Ohio 2d DCA October 26, 2012)(Vukovich, Ohio 7th DCA J., concurring; sitting on assignment by the Ohio Chief Justice to participate in this 2d DCA decision). [Emphasis added.]
Whether as a matter of settled law, or of clear record facts, the Auto Liability Insurance Company in this Ohio case absolutely was held not liable for Bad Faith in Settlement.
Dennis Wall is a featured speaker at this year's National Forum on Bad Faith Litigation in Orlando, Florida on November 28 and 29, 2012. I will be speaking both days. On November 28, 2012 I will be on a panel which will address Innovative Litigation Strategies in Bad Faith Cases. My presentation in particular will focus on Expert Witnesses in Insurance Cases. On November 29, 2012, I will also be leading a Florida Workshop on Bad Faith, all at Disney World in Orlando, Florida. I am told that if you mention my name should you choose to register for this Forum, discounts may be available from the ACI. Tell the ACI at the time of registration that I told you to ask about discounts. The ACI contact information is on the American Conference Institute's website at www.americanconference.com/badfaith.
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