After reaching a settlement in which her insurer was also a third-party insurer, Connie Humes sued for bad faith and violation of the Unfair Trade Practices Act (UTPA). Humes appealed the trial court’s rulings, excluding evidence of certain amounts paid by Farmers Insurance Group, in the personal injury case.
In Connie Humes v. Farmers Insurance Exchange is a Mid-Century Insurance Company2022 MT 148, No. DA 21-0422, Montana Supreme Court (July 26, 2022) The Montana Supreme Court settled the dispute.
THE CASE IS BEGINNING IN THE MONTANA SUPREME COURT
Did the District Court abuse its discretion by excluding evidence of the amount paid in the settlement of several international claims by Farmers Insurance Group in the subsequent UTPA case?
Barney Benkelman rear-ended Humes’ car at a stop in Helena, injuring Humes. Benkelman was covered by Farmers Insurance Exchange (FIE) for bodily injury. Humes had insurance with Mid-Century Insurance Company (Mid-Century), including underinsured motorist coverage (UIM) with a limit of $250,000, and medical assistance (med-pay) with a limit of $50,000.
Farmers noted that the accident is “dual-insurance”, which occurs when the people involved in the accident are insured by the same company.
Humes retained counsel, and provided first-party UIMs and tort claims under his Mid-Century policy. Mid-Century asked Humes for another medical evaluation and later refused to continue paying for the meds. Humes then filed suit against Benkelman for negligence (the Benkelman claim), and against Mid-Century for breach of contract to deny UIM coverage (the UIM claim), breach of contract to deny med-pay coverage (med payments), and breach of contract. of good faith and fair dealing considering that he did not care about the claims of the first party (breach of contract).
FIE offered Humes $40,000 to settle Benkelman’s claims. Humes declined the offer. After that, all parties participated in the “international mediation” process. In arbitration, FIE and Humes settled Benkelman’s claim for the $100,000 limit. About 48 hours later, Humes and Farmers settled Humes’ claims against Mid-Century to pay $220,000-$200,000 under the UIM principle and $20,000 under the tort policy. Accordingly, all four of Humes’ claims in the action were dismissed for damages totaling $320,000.
Humes then sued Mid-Century and FIE, respectively, for violations of the UTPA, §§ 33-18-201 and -242, MCA.
In his legal documents filed less than a month before the start of the trial, Farmers said for the first time that he paid a certain amount to Humes with money from “SAE Group”, the department of bad faith. . Farmers said “they should be allowed to testify that [its] the bad faith department paid an additional $50,000 on top of the UIM and medical expenses” in the settlement.
Farmers argued that Humes was trying to use the final amount as evidence that Farmers “valued his injury at $320,000, and there is no basis for that…. [T]Hey, he wants the jury to think that because we paid 320 to settle a few complaints, that’s a crappy deal we’ve been giving him in the past. [injury] the damage was very minimal. “
Therefore, Humes was prevented from disclosing the amount of money he paid during the middle years and all the farmers paid to settle all four complaints.
After a five-day trial, the jury determined that FIE and Mid-Century did not violate the UTPA and that the insurance companies had a valid legal or factual basis for their actions in negotiating Humes’ claims.
Humes contended that the District Court’s failure to state the facts established for settlement prevented him from “showing how Farmers willfully ignored Humes’ claims against Benkelman” and thus prove his case under § 33-18-201(13), MCA.
The problem with Humes’ argument is that the Farmers did not pay $320,000 to settle “the same judgment” that they had paid $40,000 for in the first place, nor, as he said in his brief, was it a settlement for the Farmers “eight times the value of what they paid. go to the punch.”
Humes arguments are internally inconsistent. The farmers eventually paid $100,000 to settle the “same judgment,” and the District Court allowed Humes to award this exact amount to the jury. The value of the final costs that the District Court did not specify was debatable.
The use of the total cost of $320,000 as stated by Humes was to “prove” the value of one claim, while, on the contrary, this money eliminated four claims. A trial court may exclude relevant evidence “if its probative value is outweighed by the danger of undue prejudice, confusion of the facts, or misleading of the jury.” Unfair prejudice may result from evidence that confuses or misleads the jury, or unduly interferes with the jury on important issues.
Contrary to his argument, Humes was given ample opportunity to provide concrete evidence to support his claims of innocence by Farmers.
Humes presented a brief testimony among the Farmers who settled Benkelman’s claim and settled the Mid-Century claim several times, and argued that this showed undue support for the Farmers. Humes submitted letters indicating that Hunt had the authority to terminate the settlement within a week of Fox’s request, but instead authorized Farmers’ attorney to pay only $40,000.
Humes’ expert, lawyer John Morrison, when asked about Hunt’s offer of $40,000, said that “it was only a month or a month and a half when the farmers came and paid, not the whole limit, but a lot more than that.” Fox and Morrison’s testimony clearly supports Humes’s view that Alimi supported and ignored Benkelman’s claims. Humes was able to provide factual and technical evidence to support his argument that Alimi “failed to promptly resolve” Benkelman’s claims “so as to affect the bottom line” of his claims. of UIM, in violation of § 33-18-201 (13), MCA.
Farmers testified in his defense that the adjusters had reasonable grounds to dispute Humes’ injuries and the severity of Humes’ injuries, and that the duty to exceed the limits of Benkelman’s policy was not clear, justifying the three-and-a-half-hour delay. first party stability. An insurer may not be held liable under this section if the insured has a legitimate reason for or against the claim or the amount of the claim, regardless of what is being offered. Jurors received this evidence, including nearly three days of testimony in Humes’ capital trial, and ultimately found Farmers’ reformers successful.
In addition, Humes initiated medical tests and reviewed the reformers’ reasons for denying his injury, told Fox that he wanted early termination and challenged the reformers’ reasons for rejecting those demands, and used grievance files and employee letters to check with the reformers how they were evaluated.
The Supreme Court ruled that it would not overrule the District Court’s decision that Humes “was not precluded from presenting evidence in support of his theories as to how the insurers valued his claim.” Rather, the proposed rule only prevented Humes from using one piece of evidence—the verdict count—and his failure to do so did not prejudice his case.”
The Supreme Court held that the High Court did not abuse its discretion in granting its evidence; for the same reasons, it similarly did not abuse its discretion in denying Humes’ motion for a new trial. In light of the evidence Humes was able to present, the District Court’s denial was not so material as to affect the economy. [her] great freedom.
Some people will not be satisfied with settling a case, even if they get what they asked for and get replaced with the help of a mediator. Filed a second lawsuit under the UTPA and then attempted to bring evidence of the first settlement as if it were paid for his injuries when the insurance policy showed that it included bad faith damages paid out of a special fund maintained by the insurer. Mrs. Humes was not satisfied with the case and the settlement she reached only to try more. Even the farmers folded and paid what they asked. Judges and the Montana Supreme Court refused to allow him to profit from his accident.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now narrows his practice to an insurance consultant specializing in insurance coverage, insurance litigation, insurance bad faith and insurance fraud for both insurers and policyholders alike. . He has practiced law in California for over 44 years as an insurance and claims attorney and over 54 years in the insurance business. He can be reached at firstname.lastname@example.org.
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