You were wonderful!
Christian A.
Deland, FL
An automobile insurer could not be sued for maliciously litigating an injury claim brought against its insured, the Hawaii Supreme Court has ruled in affirming a dismissal. The plaintiff suffered neck and spinal injuries when her car was rear-ended by a vehicle operated by a driver insured by Allstate.
Despite significant medical bills, Allstate never offered the plaintiff more than $5,300 to settle her claims. The parties engaged in protracted litigation, including arbitration, before a jury awarded the plaintiff $190,000.
The plaintiff subsequently sued Allstate for "malicious litigation," contending that she was the victim of a company-wide settlement program that was designed to dissuade claimants from seeking the advice of counsel while encouraging Allstate attorneys to engage in "scorched earth" litigation tactics.
But the court refused to recognize a cause of action making an insurer liable for defending a claim because it lacked "probable cause" that such a stance was supported by the facts or existing law.
"[W]e cannot take the drastic step of creating a new tort, inasmuch as the tort of malicious defense will have a chilling effect on legitimate defenses, particularly because it softens the malice standard of the tort of malicious prosecution," the court said.
It noted that only New Hampshire has recognized the tort.
However, the court determined that the plaintiff could sue Allstate for intentional infliction of emotional distress based upon its conduct during the course of litigation.
"We are holding that 'reasonable people could differ as to whether the defendants acted without just cause or excuse and beyond all bounds of decency in [this case].' As part of Allstate's litigation tactics, Allstate offered [the plaintiff] merely $5,000 to settle her claims, then raised its offer to $5,300, even though it was aware that its insured was liable for the accident and that her medical expenses from the accident exceeded this offer. Additionally, we 'believe that the complaint plainly alleged [necessary elements of an emotional distress claim] by averring that the defendants' intentional conduct caused [the plaintiff] to experience severe anxiety, worry, fear, and mental and emotional distress,'" the court said.
Hawaii Supreme Court. Young v. Allstate Insurance Co., No. 26887. Dec. 26, 2008. Lawyers USA No. 993-325.
Originally published by Lawyers USA Staff.
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