WHAT TYPES OF EVIDENCE CAN BE USED AT THE TRIAL OF A BAD-FAITH CLAIM?
Sometimes the black letter law passed by the legislature is unclear. The legislature can’t anticipate every possible fact scenario when they pass a law, so it lay to the courts to interpret the law and give guidance to what it means. This interpretation is called case law. When the court decides a certain meeting to the law it essentially answers a legal question. Lawyers and other courts then can rely on that ruling when they have a similar issue in their case. The following case answers the question above.
Rinehart v. Shelter General Insurance Co., 261 S.W.3d 583 (Mo. Ct. App. 2008).
This case addresses the following issue:
What types of evidence can be used at the trial of a bad-faith claim?
In this case, an insurance company was found liable for bad-faith failure to settle, and a jury imposed both compensatory and punitive damages. Id. at 588. The insurer-defendant made challenges to several pieces of evidence, but the court found that all the evidence was properly admitted. Id. at 598. Specifically, the court found admitting the settlement agreement from the underlying suit, testimony relating to that settlement agreement, testimony of another victim of bad-faith conduct by the Defendant, and expert testimony from veteran claims adjuster, were all appropriate. Id. at 589.
The plaintiff-insured was involved in a vehicle collision that occurred while he was intoxicated. Id. at 588. The passengers in the other car filed suit against Plaintiff. Id. Defendant provided a defense for Plaintiff pursuant to an insurance agreement. Id. at 589. Counsel for the injured passengers offered to settle the claim for the policy limits, but that offer was declined. Id. At trial, the jury awarded hefty verdicts to each passenger, with each exceeding the policy limits several times over. Id. Plaintiff entered into a settlement agreement following the verdict, and filed suit against Defendant for bad-faith refusal to settle. Id.
At the trail of that matter, Plaintiff presented the settlement agreement for the underlying case, and provided testimony regarding the agreement. Id. at 590. Additionally, evidence of another victim of bad-faith by Defendant was presented, showing a very similar pattern of mishandling that claim, resulting in an excess settlement in that case. Id. at 590-91. Finally, an experienced insurance adjuster testified regarding the deficiencies of Defendant’s handling of the claim, based on industry standards. Id. at 591-92. Ultimately, the jury found for Plaintiff and awarded both compensatory and punitive damages. Id. at 589.
The court started with Plaintiff’s testimony regarding why and how he entered into the settlement agreement. Id. at 589. Defendant objected to this testimony because it “interjected issues of poverty and invoked sympathy for” Plaintiff. Id. The court held that the agreement had already been properly admitted, and the testimony largely explained the agreement, making it relevant and proper. Id. at 590. The court also found the testimony very helpful in proving emotional distress brought about by the bad faith of Defendant. Id.
The court then moved on to evidence regarding another, previous victim of bad-faith actions by Defendant. Id. at 590-91. This evidence was found to be extremely relevant in proving both bad faith and “legal malice,” which is required to award punitive damages. Id. at 591. Though this was action outside of the claims of the suit, it was “sufficiently connected to show the defendant’s disposition, intention, or motive in the acts central to the current claim of damage.” Id. Thus, this evidence was also properly admitted and considered by the jury. Id.
Finally, Plaintiff had offered testimony of an insurance adjuster with over thirty years of experience in handling claims. Id. at 592. The expert discussed how a claim should be handled, pursuant to industry standards, and Defendant’s own policies. Id. He noted the failures to adhere to these practice in the present case and noted that these deviations “supported a finding that the insurer intentionally disregarded [Plaintiff]’s financial interest in the hope of escaping full responsibility on his policy.” Id. at 593. Thus, this information was both relevant and proper for consideration by the jury. Id.