On July 29, 2008, the Missouri Court of Appeals affirmed a judgment in favor of an insured and upheld a $16.3 million award against Allstate Insurance. The court concluded that Allstate was liable for bad faith refusal to settle a claim. The Johnsons were struck head-on by a drunk driver in a pick up truck and suffered life-threatening injuries. The truck driver was insured by Allstate for $50,000 but Allstate refused to negotiate a settlement of the claim against its insured, the pick up driver. The Johnsons had to sue the pick up driver and, when Allstate continued to refuse to settle the case, they proceeded to settle with the pick up driver for $5 million. As part of the settlement, the Johnsons agreed not to collect from the pick up driver in exchange for his assigning to them 90% of his claim against Allstate for bad faith refusal to settle.
The Johnson sued Allstate for bad faith refusal to settle the claim against the pick up driver. The trial court entered a judgment awarding $5.8 million in compensatory damages and $10.5 million in punitive damages against Allstate. On appeal, the court held that Allstate’s actions demonstrated a reckless disregard for the interests of the pick up driver, its own insured.
Johnson v. Allstate Ins. Co., 2008 WL 2885673 (rehearing and transfer to Supreme Court denied 9/2/08)