Allen v. State Farm Mutual Automobile Insurance Company, 3:15-cv-00019

On Oct. 17, 2012 Allen was rear-ended while driving an employer-owned, State Farm–insured vehicle; he recovered $100,000 from the tortfeasor and $143,817.21 in workers’ compensation benefits.
Allen made a UIM demand to State Farm for the $100,000 policy limit on Apr. 21, 2014; State Farm assigned adjuster Michael Yount and investigated causation and pre‑existing medical history.
State Farm retained experts (accident reconstruction/biomechanics) and conducted an Examination Under Oath after discovering conflicting vehicle damage, medical-history gaps, and questions about the accident’s force and causation.
State Farm ultimately informed Allen (through counsel) it believed he had been fairly compensated by the underlying liability payment and denied the UIM claim; Allen sued alleging breach of the covenant of good faith and bad faith tort claims among other claims.
A jury later awarded Allen $354,480.23 on the UIM claim at trial; defendants moved for summary judgment on Allen’s bad faith claims and, in the alternative, partial summary judgment limiting bad faith damages.
The court denied summary judgment on the bad faith claims (finding disputed issues of reasonableness in State Farm’s investigation) but granted partial summary judgment barring punitive damages, litigation‑induced stress damages, emotional‑distress tied to the accident, and attorney’s fees as components of bad faith damages.

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether denial of UIM claim supports bad faith	Allen: denial and investigatory conduct were objectively unreasonable and evidence of bad faith	State Farm: claim was fairly debatable; investigation and expert reliance were reasonable	Denial of summary judgment; factual disputes (expert testimony) precluded judgment for defendants
Whether reliance on experts and EUO shows reasonableness	Allen: insurer’s investigation was biased, delayed, and pre‑disposed to deny	State Farm: use of experts and EUO shows a reasonable, good‑faith investigation of causation	Court: expert reliance can support reasonableness but plaintiff’s expert created triable issues over bias/timeliness
Availability of punitive damages for bad faith	Allen: reckless disregard and conduct justify punitive damages	State Farm: no outrageous conduct or malice; ordinary investigation not punitive	Granted for defendants — punitive damages not recoverable as a matter of law here
Recoverability of litigation‑related emotional distress and attorney’s fees as bad faith damages	Allen: litigation stress and fees caused by insurer denial should be recoverable	State Farm: such damages are not recoverable; fees governed by Rule 82; litigation stress not compensable	Granted for defendants — litigation‑induced stress, accident‑related emotional distress (already compensated), and attorney’s fees cannot be claimed as bad faith damages

Lockwood v. GEICO Gen. Ins. Co., 323 P.3d 691 (Alaska 2014) (bad‑faith element requires showing insurer’s actions were objectively unreasonable)
State Farm Mut. Auto. Ins. Co. v. Weiford, 831 P.2d 1264 (Alaska 1992) (discussion of punitive‑damages standard and bad‑faith boundaries)
Hillman v. Nationwide Mut. Fire Ins. Co., 855 P.2d 1321 (Alaska 1993) (an insurer may challenge claims that are fairly debatable)
Ennen v. Integon Indem. Corp., 268 P.3d 277 (Alaska 2012) (emotional‑distress damages for delay in payment may be recoverable if bad faith proven)
Gov’t Emps. Ins. Co. v. Gonzalez, 403 P.3d 1153 (Alaska 2017) (example of prolonged refusal to investigate leading to punitive award—distinguished by court)
Celotex Corp. v. Catrett, 477 U.S. 317 (summary judgment burden allocation)
Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (summary judgment standard and reasonable inference drawing)
T.W. Elec. Serv., Inc. v. Pac. Elec. Contractors Ass’n, 809 F.2d 626 (9th Cir. 1987) (summary judgment—specific facts must permit a reasonable jury verdict)