The Eighth Circuit affirmed the jury verdict which determined that the insurer acted in bad faith for failing to settle within policy limits. Bamford, Inc. v. Regent Ins. Co., 2016 U.S. App. LEXIS 8787 (8th Cir. May 13, 2016).
In May 2009, an employee of Bamford caused a vehicular accident resulting in the death of the employee and a serious injury to the other driver, Bobby Davis. A steel pipe stored on the roof of the Bamford truck became dislodged and penetrated Davis' left thigh, went through his abdomen and pelvis, and out his right buttock, pinning him inside his vehicle for thirty to sixty minutes before help arrived.
Bamford held a commercial auto liability policy with Regent with a policy limit of $6 million. Regent began investigating. Bamford hired coverage counsel, Daniel Placzek. The Davis family retained attorney Tom Fee. On August 5, 2010, Fee sent Regent a settlement packet offering to settle the claim for policy limit of $6 million. Placzek followed up, informing Regent that the Davises' claims presented an exposure risk above Bamford's $6 million policy limits and demanded a settlement within policy limits.
Regent retained attorney Brian Nolan as coverage counsel. Nolan thought the claims were worth less than $1 million. He informed Regent that he was investigating a possible loss-of-consciousness defense, based on the possibility that the Bamford driver had lost consciousness before the accident. Nolan believed that such a defense would be a complete bar to liability.
Mediation was attempted in December 2010. Regent came up to $774,000, and Fee came down to $4,995,000. Thereafter, the Davises filed suit against Bamford.
In September 2011, Regent retained attorney Steve Ahl to provide a second valuation opinion. Ahl valued the claims between $1.75 and $2.25 million, and felt the value of the claims would not approach policy limits.
Communications in Regent's files noted that Regent felt no case was worth more than $2 million in Nebraska. Nolan and Ahl both felt that Nebraska was a conservative jurisdiction in terms of jury verdicts.
By May 2012, Regent placed reserves on the case at $2.25 million. The Davises prevailed on partial summary judgment in June 2012. The court not only granted the Davises' request to strike the loss-of-consciousness defense, it also found Bamford liable as a matter of law. Therefore, the only issue at trial would be the amount of damages.
Settlement was attempted again shortly before trial. On the day before trial, the Davises offered to settle for $3.9 million. Regent countered for $2.05 million.
The trial lasted seven days and the jury returned a verdict of $10.6 million for the Davises. Bamford appealed, and the case then settled for $8 million. Bamford was responsible for the excess judgment.
Bamford then sued Regent for its bad faith in refusing to settle. Following a five-day trial, the jury returned a verdict for Bamford, awarding it damages of over $2 million for the amount it paid for the excess judgment. The trial court denied Regent's renewed motion for judgment as a matter of law and for a new trial.
On appeal, the Eighth Circuit noted the issue was whether, drawing all reasonable inferences in Bamford's favor, a reasonable jury would find that Regent acted in bad faith. The court held there was not sufficient evidence to support such a conclusion.
Regent's failure to adjust its valuation following the district court's grant of partial summary judgment strongly supported the conclusion that Regent acted in bad faith. Knowing that the jury would be instructed that Bamford was negligent as a matter of law and liable for Davises' injuries, Regent's valuations of the case were unreasonable.
Therefore, Bamford presented sufficient evidence from which a reasonable jury could conclude that Regent acted in bad faith in failing to settle the Davises' claims within the policy limits.