November 29, 2023

Nationwide Insurance hit with $8M Bad Faith judgment

Jay Sadd. Photo by John Disney/Daily Report.

Jay Sadd. Photo by John Disney/Daily Report.

By Greg Land, From Daily Report

After a jury determined late last year that Nationwide Mutual Insurance Co. acted negligently and in bad faith in denying a claim for the death of an auto accident victim, a federal judge has ordered the insurer to pay more than $8.1 million in damages.

More than $5.7 million of the judgment represents a state court jury award in a 2009 trial pitting the family of the deceased woman, Stacey Camacho, against the drunken driver who killed her.

The court will also be awarding as-yet undetermined attorney fees because Nationwide turned down a 2011 offer to settle the case for $4.5 million. Under Georgia’s offer of judgment statute, a party that declines a settlement offer and then loses at trial by at least 25 percent more than the rejected offer can be ordered to pay the other party’s attorney fees accrued from the date of the offer.

Slappey & Sadd partners Jay Sadd and Rich Dolder, who represent the plaintiffs along with Darrell Hinson of Swope Rodante, said Nationwide could have avoided the judgment if it had simply agreed to pay its insured’s $100,000 policy limit without insisting upon additional conditions.

Nationwide’s attorneys, Goodman McGuffey Lindsey & Johnson partners Robert Darroch and Stephanie Glickauf and associate R. Tyler Bryant, filed a motion asking U.S. District Judge Amy Totenberg not to require Nationwide to post an appeal bond while it seeks relief at the Eleventh Circuit Court of Appeals.

In the underlying case, a commercial van driven by Seung Park ran a red light and slammed into Camacho’s Toyota Tercel in 2005. Camacho’s 2-year-old son Jacob, strapped into a car seat, survived, but his 25-year-old mother died the next day.

Park pleaded guilty to vehicular homicide and was sentenced to serve seven years in prison and five on parole.

After the accident, Camacho’s husband, Jesus Camacho, and mother and executor, LaJean Nichols, retained Charles McAleer of Decatur’s McAleer Law, who sent Nationwide a time-limited, 10-day demand for Park’s $100,000 policy limit. In exchange, he offered a limited liability release shielding Park from any personal liability for any other claims related to the accident “except to the extent that other insurance coverage was available from which the Camacho family could seek additional funds,” according to Totenberg’s order.

Nationwide rejected the offer, “albeit in an untimely response,” and said it would only pay if the family supplied a general release under which they would have to repay the insurer if any other claims were made related to medical liens.

No agreement was reached, and in 2006 McAleer and Tyrone Law Firm principal Nelson Tyrone III sued filed a wrongful death suit against Park in Fulton County State Court.

The jury awarded Camacho and Nichols $5.85 million, and Park assigned his right to sue Nationwide for negligence and bad faith for failing to settle the claims against him.

Since their lawyers in the state case were potential witnesses, the family retained new counsel to pursue the bad faith claim that was filed in 2011.

A pretrial defense filing showed that Nationwide challenged the suit on several grounds, including arguing that Park’s negligence was the proximate cause of the damages against him and that McAleer was “intent on setting Nationwide up for a bad faith claim” by wrangling over the type of release he demanded to push the insurer beyond the 10-day demand letter deadline in order to create a “gotcha moment.”

The defense also challenged the plaintiffs’ position that the bad faith claim was a tort and that the jury award accurately represented its damages, arguing that the case was really a breach of contract dispute.

“Nationwide’s alleged failure to settle was not the proximate cause of the $5.8 million verdict, and if its conduct did not cause the verdict, then the excess verdict amounts to nothing more than a bad faith penalty, and Georgia law is clear that there must be clear evidence of bad faith before penalties can be assessed,” it said.

Sadd and Dolder said there was little discussion of settling the case other than a $500,000 offer from Nationwide shortly before trial, which was declined.

A ‘lawsuit about a lawsuit’

During a trial that ran from Aug. 31 to Sept. 8, the only issue before the jury was whether Nationwide had acted negligently or in bad faith, with damages to be determined later. The plaintiffs’ lawyers said one of the challenges was educating the jury about insurance law in a lawsuit about a lawsuit.

“We focused on making sure the jurors understood the differences between a limited liability release and a general release and why it was important for their lawyer, McAleer, to stick to his guns and ensure that other avenues for recovery existed for his client,” Sadd said.

On Sept. 8, the jury found for the plaintiffs.

In her order awarding damages, Totenberg noted that Nationwide’s claims adjuster had admitted that her handling of the demand letter “was not in line with industry custom and practice,” and that “there was certain evidence from which the jury could infer that plaintiffs were being jacked around in their settlement negotiations giving Nationwide’s conduct the flavor of bad faith.”

Totenberg’s order awarded $5,730,000, the amount of the state court judgment, plus what was at the time of entry $2,405,873 in interest.

“We respectfully disagree with the trial court’s findings in this case and are reviewing our appellate options,” said Christopher Stollar, a Nationwide spokesman.

IMAGE: Jay Sadd John Disney/Daily Report

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