Arizona appellate court rejects $55 million award in first-party insurance bad faith case; upholds only $155,000
Nardelli v. Metropolitan Group Property and Casualty Ins. Co. (Ariz. App. May 1, 2012).
Decision: official; Leagle; Findlaw. Background: Amanda M. Lorenz & Alacia G. Curran; Robert D. Helfand.
Opinion by Judge Patricia K. Norris. Concurrence in part / dissent in part by Judge Peter B. Swann (concluding defendant should not be held liable for any exemplary damages).
Plaintiffs’ new Ford Explorer was stolen in Mexico, and ultimately found trashed, with a ruined engine. Rather than simply replacing the vehicle, their insurer tried to resolve the claim with false reports that the vehicle could be repaired for as little as $815. At trial, the plaintiffs presented evidence that the bad-faith handling of their claim file was part of the insurer’s official policy of boosting profits by pressuring adjusters to arbitrarily cap claim payouts.
The jury awarded $155,000 in compensatory damages and $55 million in exemplary damages, reduced by the trial judge to $620,000 (4-to-1 ratio). The plaintiffs asked the appellate court to increase it to at least $10 million. Instead, the appellate court further reduced it, to $155,000 (1-to-1 ratio).
Steve C. Dawson, Anita Rosenthal and Richard A. Dillenburg for plaintiffs.
Floyd P. Bienstock, Bennett Evan Cooper, Douglas Janicik and Tim Strong for defendant.