January

Frank Patterson and Lindsay Dunn won a defense verdict in an important bad faith “set-up” case in El Paso County with exposure of almost $10 million. The jury found for defendant State Farm on all claims after a 7-day jury trial. 

Plaintiff Melanie Rountree was insured through State Farm for auto insurance liability policies totaling $1,250,000. She was 100% at fault in causing an auto accident on January 19, 2013. Rountree, while extremely intoxicated, drove her vehicle through a red light and collided with Patrick Kirchhofer’s vehicle, causing serious and permanent injuries to Mr. Kirchhofer, including partial paralysis. Ms. Rountree claimed that State Farm unreasonably failed to timely make an offer to settle, causing a judgment to be entered against Ms. Rountree in the amount of $4,102,526.05. State Farm paid its policy limits plus interest and costs after judgment was entered, leaving an unpaid judgment balance of $3,469,598.25 as of the second trial. Rountree entered into a Bashor Agreement with Kirchhofer and was represented at the bad faith trial by the same lawyers who had represented Kirchhofer. She sought the unpaid amount of the judgment, plus two times the insurance limits (a total of $2.5 million) for unreasonable delay under C.R.S. § 10-3-1115 and 1116, punitive damages of $3,469,598.25, and attorney fees. In closing, the total requested by her attorneys was $9,439,196.50, plus attorney fees in excess of $500,000.00.

State Farm provided Rountree a defense to the Kirchhofer suit and Rountree later hired personal counsel. During the underlying litigation, Kirchhofer’s attorneys sent a letter demanding a settlement offer from State Farm. The letter purposely did not say State Farm’s limits would be accepted as a full and final settlement. Rountree and her attorneys advised State Farm not to offer its policy limits because that would immediately expose Rountree’s personal assets for further negotiations. They still hoped to convince Kirchhofer’s attorneys to accept policy limits for a full release. State Farm agreed to Rountree’s request. When State Farm’s policy limits were not offered by the deadline Kirchhofer’s attorneys revoked their “demand”, claimed it was bad faith and argued State Farm was now exposed to the full damages suffered by Kirchhofer. They demanded $12 million at mediation and $27 million at the injury trial. After the injury trial Rountree entered into the Bashor Agreement, assigning her bad faith claim proceeds to Kirchhofer.

During the bad faith trial, Frank Patterson and Lindsay Dunn convinced the jury that State Farm never had a reasonable opportunity to settle the case for several reasons. First, it was following the request of its insured in not making the policy limits offer. Second, Kirchhofer and his lawyers had no intent to settle for the State Farm policy limits. The lawyers were trying to create a “set-up”, a way to claim bad faith and open the policy limits.

This case is important for insurers because there is a surge of “set-up” cases in Colorado as a result of the punitive provisions of C.R.S. § 10-3-1115 and 1116. This case shows that juries will consider the question whether the insurer had a reasonable chance to settle, and that set-up cases raise real doubts about the plaintiff’s intent to settle.

June

State Farm Mutual Automobile Insurance Company v. Susan Cary, 2015CV30260 was tried by Franklin D. Patterson and Lindsay M. Dunn in Boulder District Court and arose from a Declaratory Relief Action filed by State Farm seeking judicial determination that Ms. Cary breached her contract and voided UM/UIM coverage. Cary filed a lawsuit against another driver following a MVA in December of 2010. The other driver and the owner of the vehicle never answered the lawsuit so Cary obtained a default against them and set a date for a court hearing to establish her damages.  State Farm intervened in that lawsuit to defend its interests per Brekke. Concurrently with the intervention, State Farm was attempting to investigate her claimed injuries and damages.  In February 2015, State Farm denied Cary any coverage or benefits, claiming she had refused to cooperate as required by the policy, as she did not participate in any EUOs, nor did she ever provide medical releases. In November 2015, following an undefended damages trial, a judge in the first case entered judgment in excess of $826,000 (over $1.2 Million with interest and costs) against the other driver. After the judgment entered, Cary demanded State Farm pay her the $500,000 UM/UIM policy limits from the two policies.  State Farm refused to pay because of its prior denial. Against State Farm Ms. Cary claimed damages of over $1,000,000.

VERDICT: For State Farm on all claims. State Farm is seeking costs in excess of $85,000.

Heather Salg tried and won the case of Roland Jaramillo v. State Farm Mutual Automobile Insurance (14cv34554)  in a 4-day trial in El Paso County District Court. This case involved a low-speed, rear-end motor vehicle accident. Plaintiff was transported to the hospital via ambulance and was claiming $60,000 in medical expenses at trial. He recovered policy limits of $25,000 from the tortfeasor and then sought underinsured motorist benefits from State Farm, as well as claimed wage losses. Due to lack of documentation substantiating the wage loss claim, State Farm offered $15,000 based on the received information. Plaintiff filed suit and then advised that there would not be additional information submitted to support the claim of lost wages. State Farm advanced the amount of its initial offer. However, at trial, Plaintiff claimed unreasonable delay. During litigation, defendant discovered that Plaintiff had numerous DUIs prior to the subject MVA. Defendant argued that these DUIs were relevant but was precluded to tell the jury the specific amount of DUIs, rather Defendant could use the word “numerous.” Defendant’s position at trial was that plaintiff had been adequately compensated and that he had failed to cooperate with State Farm by providing timely, complete and accurate wage loss information.

The final demand before trial was $85,000, with the final offer before trial being $5,000.

The jury returned a verdict for the defendant on all claims.


After 43 years of practice, Thomas J. Seaman, Of Counsel for Patterson & Salg has announced his retirement. Tom will be greatly missed and we wish him all the best in his retirement. 

May

State Farm Mutual Automobile Insurance Company v. Susan Cary, 2015CV30260 was tried by Franklin D. Patterson and Lindsay M. Dunn in Boulder District Court and arose from a Declaratory Relief Action filed by State Farm seeking judicial determination that Ms. Cary breached her contract and voided UM/UIM coverage. Cary filed a lawsuit against another driver following a MVA in December of 2010. The other driver and the owner of the vehicle never answered the lawsuit so Cary obtained a default against them and set a date for a court hearing to establish her damages.  State Farm intervened in that lawsuit to defend its interests per Brekke. Concurrently with the intervention, State Farm was attempting to investigate her claimed injuries and damages.  In February 2015, State Farm denied Cary any coverage or benefits, claiming she had refused to cooperate as required by the policy, as she did not participate in any EUOs, nor did she ever provide medical releases. In November 2015, following an undefended damages trial, a judge in the first case entered judgment in excess of $826,000 (over $1.2 Million with interest and costs) against the other driver. After the judgment entered, Cary demanded State Farm pay her the $500,000 UM/UIM policy limits from the two policies.  State Farm refused to pay because of its prior denial. Against State Farm Ms. Cary claimed damages of over $1,000,000.

VERDICT: For State Farm on all claims. State Farm is seeking costs in excess of $85,000.

 

April

Katie Vogt vs American Family Mutual Ins. Co., 2015CV031731 tried by Franklin D. Patterson and Lindsay M. Dunn in Denver District Court was a case that arose from a condominium fire in November of 2014. Plaintiff claimed her insurance company, American Family, failed to pay all the benefits to which she was entitled.  She claimed American Family wrongfully concluded the HOA’s insurance company, Scottsdale, was primary for all Coverage A damages, including to the interior of her condo unit.  Am Fam then forced her to pursue Scottsdale even though she was not an insured under that policy.  Plaintiff made claims for breach of contract, unreasonable delay, and bad faith breach of contract. American Family denies it acted unreasonably or in bad faith.  American Family agreed the fire damaged both her property and that of the Homeowners Association, but that the Declarations and Covenants of the HOA required the association’s policy to be primary and to cover all damages, both interior and exterior.  American Family claimed that any delays were caused by the Homeowners Association, its property manager and its insurance company, Scottsdale Insurance, all of whom obstructed efforts to coordinate benefits and repairs because they were upset Ms. Vogt had negligently started the fire in violation of HOA regulations.  Finally, American Family claims that Plaintiff has failed to take steps herself to resolve the issues of coordination or to get repairs done after checks were issued.

VERDICT: For Defendant on all claims

Kevin Ripplinger tried and won the case of Campanini v. State Farm in a 3 day UIM trial in Arapahoe County District Court.  Plaintiff was involved in a minor rear-end accident while yielding to get on 225 at Parker.  Plaintiff was employed as a pharmaceutical representative with Eli Lilly at the time of the accident.  Plaintiff sued the tortfeasor, Liberty Mutual (UIM carrier for Eli Lilly) and State Farm (Plaintiff personal liability carrier).  Tortfeasor and Liberty Mutual settled out before trial for limits of $50,000 each.  Plaintiff had an additional $100,000 on UIM with State Farm.  Plaintiff claimed a permanent low back injury.  Plaintiff had preexisting back problem but claimed they resolved several months prior to the accident and that she was pain free.  Causation and damages were in dispute.  Jury determined Plaintiff had injuries and damages but that they were not caused by the accident.  The jury returned a verdict for the defense.  Plaintiff’s Motion for New Trial Denied.

March

Angela A. Stevens v. State Farm Fire and Casualty Company, dba State Farm Insurance, and aka Frontier Division of the State Farm Fire & Casualty Company of Bloomington, Illinois, 2014CV030309 was tried in Larimer County District Court by Franklin D. Patterson and Lindsay M. Dunn. This case arose from a MVA when the at-fault driver failed to yield while turning, resulting in a T-Bone collision, which resulted in Plaintiff settling liability claims at $50,000 limits. She demanded UIM limits, and State Farm concluded she had been adequately compensated by the BI limits.

Plaintiff brought 3 claims for relief: willful and wanton breach of contract, unreasonable delay/denial, and bad faith. State Farm denied it acted improperly, and asserted an affirmative defense of failure to cooperate.  The failures to cooperate included failure to timely respond to State Farm’s requests for information, concealment of relevant and important records, and failure to produce authorizations to allow State Farm to obtain records.  State Farm further contended Plaintiff’s treatment had been excessive and unreasonable, and that the great bulk of her medical complaints are due to pre-existing conditions or caused by other injury-producing incidents both before and after this incident.  State Farm also contested the reasonableness and cost of the medical care Plaintiff received. In closing, Plaintiff’s attorney asked for $700,000 in non-economic and exacerbated disability damages.

VERDICT: For Defendant on all claims.

Defendant’s costs exceed $40,000The jury verdict indicated Plaintiff’s total damages were $53,000 above the amount of the BI coverage.  However, Plaintiff decided to pursue a willful and wanton breach of contract claim instead of a simple breach of contract claim.  The jury was only instructed on the elements of willful and wanton breach and the verdict was returned in favor of Defendant.