JANUARY 2018 BAD FAITH CASES: NO BAD FAITH WHERE SETTLEMENT OFFER WAS MADE AND JURY AWARD IN EXCESS OF POLICY LIMITS WAS NOT REASONABLY ANTICIPATED (New Jersey Appellate Division)
This opinion is the culmination of over a decade of litigation, originating in an April 2000 automobile accident. Nancy Palmer, as assignee of the insured-tortfeasor, brought suit against the tortfeasor’s insurer after a three-day trial in August 2004, which resulted in a $460,000 award in Palmer’s favor. The insured-tortfeasor had a $300,000 policy limit.
Prior to filing the underlying lawsuit, Palmer’s attorney made a demand to the insurer for $40,000. The insurer responded that it was not going to engage in any settlement talks, because it did not believe Palmer could meet her burden under New Jersey’s Automobile Insurance Cost Reduction Act, which required a heightened burden of proof for Palmer to recover non-economic damages. After filing the underlying lawsuit, Palmer reduced her demand amount, and an arbitrator entered a non-binding award of $22,500. The insurer rejected this arbitration award, and demanded a trial de novo, which led to the $460,000 verdict.
The insurer unsuccessfully appealed the $460,000 result, and ultimately paid Palmer. Thereafter, the insured-tortfeasor assigned Palmer the right to bring a bad faith claim against the insurer.
After an August 2015 non-jury trial, the trial court ruled that Palmer failed to meet her burden to show that the insurer acted in bad faith, either before the jury verdict or thereafter. Palmer appealed the trial court’s decision, and argued (1) the insurer’s claims handling activities violated its duty to exercise due care in protecting its insured; (2) the insurer failed to employ proper expertise in both investigating and negotiating settlement of the claim; (3) the insurer violated the law in appealing the August 2004 verdict without a reasonable probability of reversal; (4) the insurer failed to put the insured’s interests first; (5) the insurer failed to pursue all available settlement avenues; and (6) the trial judge misinterpreted the law and the evidence.
The Appellate Division disagreed, and affirmed the trial court’s decision. The Court ruled that the trial judge was owed considerable deference in “her critical finding that [the insurer] did convey an offer to settle the case for the policy limits while the appeal of the jury verdict was still pending.” Furthermore, the jury verdict in excess of the policy limits was neither reasonably anticipated nor reflective of Palmer’s own settlement demands. Lastly, the Appellate Division wrote, “we accept the judge’s finding that the insurer’s delay in making the post-verdict offer was neither reflective of bad faith nor that it produced appreciable prejudice to . . . the insured, beyond the happenstance of the excess verdict itself.”
Date of Decision: December 14, 2017
Palmer v. New Jersey Manufacturers Ins. Co., DOCKET NO. A-0854-15T3, 2017 N.J. Super. Unpub. LEXIS 3060 (New Jersey Appellate Division Dec. 14, 2017) (Sabatino, Ostrer, and Whipple, JJ.)
