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Allstate’s Bad Faith Justifies $16 Million Verdict

By July 30, 2008July 11th, 2022bad faith

The failure to respond to a settlement offer arising out of an auto accident demonstrated bad faith on the part of Allstate Insurance Co. and justified a $16 million verdict against it, a Missouri Court of Appeals has ruled.
Allstate was the insurance carrier for Wayne Davis Jr. On March 24, 2000, Davis crossed the center line on U.S. 54 in Camden County and crashed head-on into a compact car. Davis’ blood alcohol content was twice the legal limit.
Edward Johnson was driving the compact car, his wife, Virginia, was a passenger. They both suffered life-threatening injuries but survived.
Edward spent 35 days in the hospital, 21 of them were in the neuro-intensive care unit. He was in a coma for part of that time. He also suffered a broken arm, crushed pelvis, his left hip was torn from its socket, a crushed sternum and his thumb had to be amputated. His hospital bills totaled $185,000.
Virginia also spent time in the NICA and was hospitalized for a total of 40 days. Her injuries included a crushed right ankle and kneecap, a fractured femur, a dislocated ankle and a cut eyelid. Virginia’s hospital bills totaled $135,000.
After the accident, the Johnsons offered to settle their claim against Davis for $50,000, the limit of his auto insurance policy. However, Allstate did not respond within the 60-day time limit.
The Johnsons then sued Davis. He consented to a judgment in excess of $5 million. In return, the Johnsons agreed not to execute on the judgment. Instead, it sued Allstate for bad faith in refusing to settle in a timely manner.
A Jackson County jury sided with the Johnsons and awarded the couple $5.8 in compensatory damages plus 9 percent interest and $10.5 million in punitive damages.
On July 29, the Missouri Court of Appeals for the Western District upheld the verdict in Johnson, et al. v. Allstate Insurance Company. Appellate Court Judge Paul Spinden wrote:

“Allstate’s failure to recognize the severity of the Johnsons’ injuries and the probability that the claim would far exceed Davis’s policy limits; its failure to investigate the claim and respond to the demand in accordance with insurance industry standards and its own good faith claim handling manual; and its failure to retain counsel, are all circumstances supporting a reasonable inference that Allstate’s refusal to settle was in bad faith.”

The time limits are an important safety net for injured victims. During their hospitalization, the Johnsons were unable to work and support their family. Though not much, $50,000 would have helped them.
This case also underscores the importance of hiring an experienced auto accident attorney. The lawyers of Carey, Danis & Lowe are experienced in helping people who have been hurt as a result of the negligence of another. We will seek compensation for past and future medical expenses, past and future wages, pain and suffering, disability and other damages. We also represent family members in wrongful death cases.
Contact the lawyers at Carey, Danis & Lowe today by calling 877-678-3400.