Goddard v. Farmers insurance and bad faith and oregon and court of appeals and lipscomb

Finally, the fourth case, the bad faith case against Farmers, was filed. Though it was filed early in the 1990s in Multnomah County, the case was put on hold until after the declaratory judgment action was completed in 1998. Then the action shifted to Multnomah County, where the plaintiffs argued that Farmers was guilty of bad faith for violating ORS 746.230(1)(f):

"(1) No insurer or other person shall commit or perform any of the following unfair claim settlement practices:..(f) Not attempting, in good faith, to promptly and equitably settle claims in which liability has become reasonably clear. "

Goddard's Bad Faith Case against Farmers

What were the particulars of Goddard's case? First, we need to realize that summary judgment was granted to Farmers at the first bad faith trial in 2000. This verdict was appealed to the Ct of Appeals, and Judge Lipscomb (who actually is the presiding Judge for the Marion County Circuit Court, but was sitting with the Ct of Appeals for the day) held for the panel that sufficient allegations of Farmers bad faith were made by the plaintiffs, and so the case was remanded for trial. (The case you read for class). The trial on the merits of the bad faith claim, then, was held in 2002.

Three clusters of facts were significant at the jury trial in 2002. First, Goddard argued that Farmers made little attempt to respond to numerous letters of Carl Amala in the winter and spring of 1988 and that there continued efforts to stonewall constituted bad faith. Testimony emerged at trial that Farmers decided to "let the matter ripen" for a bit when it became clear late in 1987 that coverage under one or both of the policies could be debated. Originally, Goddard claimed, Farmers had recognized liabilty for the accident, but was unsure whether $100,000 or $200,000 was in play, though one of Farmers executives commented in Dec. 1987 that the latter amound was "in play." Because of developing uncertainty however, Goddard argued that Farmers decided on a strategy where it would actually have to pay nothing--first of all by convincing the 73 year-old Helen Foley that she actually had not given Munson permission or, better said, that she had a "policy" where permission was withdrawn if Munson was drunk (thus there was no permission given) and second, that Munson had driven Mrs. Foley's pickup enough times in the past to make it a regular use (hence no coverage under his policy). Thus, Goddard argued, by stalling and by redefining the issue, Farmers was practicing bad faith according to ORS 746.230(1)(f).

The second cluster of issues presented at the bad faith trial in 2000 was the conduct of Farmers at the wrongful death trial in January 1990. Before trial Farmers attorney had written a memo indicating that liability for Farmers in the trial would probably be between $75,000-$150,000. This number was very bad for Farmers because, if only one policy would be held to apply to the case, it meant that Farmers would be on the hook potentially for more than the $100,000 policy limits. (Law in most jurisdictions is that if an insurer rejects a policy limits demand and then the jury comes back with a verdict above policy limits, that the insurer is liable for the entire amount). In addition, liability for more than the policy limits when the insurer had turned down a policy limits demand would run Farmers into danger of having practiced bad faith on behalf of the insured. Interestingly enough, Goddard's attorneys discovered that this $75,000-$150,000 estimation was "toned down" in the "official memo" sent to Farmers --to a figure of between $30,000-$60,000. Of course, when Goddard presented this information they did so with a sort of glee--that it appeared that Farmers was coaching its lawyers to practice bad faith.

Goddard's attorneys also managed to elicit testimony to the effect that Farmers attorney became privy to the jury deliberations during trial and reported back to his client that the jury was "talking big numbers." This was not the same as "tampering with the jury," but was an allegation of such significant proportion that a jury which was to decide if this was evidence of bad faith almost certainly would conclude that it was.

The third cluster of issues related to Farmers conduct after the wrongful death verdict against Munson was handed down. Goddard argued that the insurer had a duty to negotiate in good faith after the verdict, too. However, the declaratory judgment action was just heating up and Farmers decided that this was not the time to be engaging in any settlement discussions with Goddard.

Conclusion

Well, I am sure you are interested to know the results of the bad faith trial in 2002. The next essay discusses the result and concludes our consideration of this case.