Wednesday, June 17, 2020
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Ninth Circuit:
Accident Victim With $5 Million Judgment Can’t Collect From Defendant’s Insurer
Panel Says Allstate Did Not Act in Bad Faith in Not Timely Accepting Offer To Settle for Policy Limit of $100,000; Potential Award Wasn’t Foreseeable
By a MetNews Staff Writer
A man who was seriously injured in a traffic accident and obtained a $5 million judgment in Los Angeles Superior Court against the driver of the other car cannot collect a cent from that party’s insurer, the Ninth U.S. Circuit Court of Appeals has held, finding that there was no bad faith in failing to settle for the policy limit of $100,000.
In a memorandum opinion filed Monday, a three-judge panel said that Allstate Indemnity Company did not commit a tortious breach of the implied covenant of good faith and fair dealing by delaying until one day after the offer had expired before accepting it. It had, the panel found, been seeking additional information from the attorney for the injured driver, Antonio Pureco.
Pureco, who suffered a traumatic brain injury and other serious injuries, will receive nothing. He traded his $5 million judgment against David Carrillo, who was covered under a policy with Allstate, for an assignment of Carrillo’s cause of action against the insurer.
Through his attorney, Andrew Zeytuntsyan, Pureco repeatedly turned down Allstate’s $100,000 offer.
The claims adjuster made that offer on a Tuesday, when she saw documentation from Zeytuntysan as to the extent of the injury. That documentation was provided late on a Friday afternoon; the adjuster was out of the office at that time, and on the following Monday, the day the offer expired.
Wilson’s Decision
The Ninth Circuit’s opinion affirms a summary judgment in favor of Allstate awarded by District Court Judge Stephen V. Wilson of the Central District of California, who found:
“To prevail on their bad faith claim, Plaintiffs must…establish that Defendant unreasonably failed to accept the otherwise reasonable offer within the time specified by Pureco for acceptance. Here, the Court agrees with Defendant that, on this record, no reasonable jury could conclude that Defendant acted unreasonably.”
There was an issue as to whether Allstate was obliged to settle in order to avoid a judgment against its insured in excess of the policy limit.
It was undisputed that Pureco had made a U-turn without signaling. Allstate initially determined that Pureco was 75 percent at fault—meaning that there would have to be damages in excess of $400,000 for Pureco to be awarded $100,000.
Wilson said:
“A preliminary indication that an injury is serious is not at all the same as a substantial likelihood that damages will total at least $400,000. On this record, no reasonable jury could conclude that there was a substantial likelihood of an excess judgment when the settlement demand expired. Thus, Defendant did not face a duty to settle the claim in the first instance, and so could not have acted unreasonably by refusing to settle.”
(As it turned out, a Los Angeles Superior Court jury, in the courtroom of Judge David S. Cunningham III, on Aug. 5, 2016, set damages at $10 million, found Pureco 50 percent at fault, and awarded $5 million. No appeal was filed.)
Ninth Circuit’s Opinion
The memorandum opinion sets forth:
“Even viewing the facts in the light most favorable to Pureco, there is nothing to suggest that Allstate’s delayed acceptance was anything more than ‘an honest mistake, bad judgment or negligence.’ ”
It goes on to say that there is evidence suggesting that Zeytuntsyan knew the Allstate agent was out of the office on the Friday the documentation arrived and would be absent on Monday.
“Even if Zeytuntsyan did not know that the agent would be out,” the opinion continues, “Allstate’s failure to evaluate the additional material until Tuesday morning was at most negligence, not ‘a conscious and deliberate act, which unfairly frustrates the agreed common purposes and disappoints the reasonable expectations of the other party.’ ”
The case is Pureco v. Allstate Insurance Company, 19-55061.
Marc Jeremy Feldman, Thomas R. Proctor and Peter Klee of the San Diego office of Sheppard Mullin Richter & Hampton LLP represented Allstate, holding onto the victory they secured in the District Court. Acting for Pureco were Kristin Hobbs, Ricardo Echeverria, Steven Patrick Messner, and Steven M. Schuetze of Shernoff Bidart Echeverria LLP; Hobbs, Echevaria and Messner also represented David Carrillo, by and through his guardian ad litem, Felipe Carrillo.
Felipe Carrillo is the brother of David Carrillo, who was incapacitated not as a result of the 2015 collision with Pureco, but in a 2016 motorcycle accident. Then-Los Angeles Superior Court Commissioner (now Judge) Brenda J. Penny made the conservatorship appointment.
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