822 F.3d 403
8th Cir.2016Background
- Bamford's employee caused a 2009 crash that severely injured Bobby Davis; Bamford had a $6 million commercial auto policy with Regent Insurance.
- Claimants demanded the $6 million policy limit (initially and repeatedly); Regent reserved far less, engaged counsel (Nolan) and valuators (Ahl), and authorized offers well under policy limits.
- Over time, valuations increased (Nolan/Ahl/mediator estimates rose into the $1.5–$3M range), and Regent raised internal reserves to $2.25M but did not authorize settlement at or near policy limits.
- The district court struck Bamford’s loss-of-consciousness defense and held Bamford liable as a matter of law shortly before trial; counsel and Regent’s adjuster requested authority to offer $3M but were refused.
- Trial produced a roughly $10.6M verdict; the case later settled for about $8M with Bamford paying the excess. Bamford sued Regent for bad faith; a jury awarded Bamford about $2.04M.
- On appeal, the Eighth Circuit affirmed denial of Regent’s post-verdict JMOL/new-trial motion, finding sufficient evidence that Regent may have acted in bad faith by failing to reassess and protect Bamford’s exposure.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Did Regent act in bad faith by refusing to settle within policy limits? | Regent ignored growing evidence and counsel requests, failed to reassess after a liability ruling, and thus breached its fiduciary duty to Bamford. | Regent relied on counsel/valuations, increased reserves/offers over time, and honestly misjudged the case value—any mistake was not bad faith. | Jury could reasonably find bad faith; appellate court affirmed denial of JMOL/new trial. |
| Whether Regent completely failed to consider insured’s exposure to excess judgment | Bamford: Regent’s actions (or inaction) show failure to account for Bamford’s excess exposure, e.g., denying $3M authority after liability finding. | Regent: internal reserves and negotiations show it considered exposure and acted on valuations. | Evidence permitted inference of "complete and total failure" to consider excess exposure; jury creditable. |
| Whether Regent’s reliance on pretrial valuations/mediators/counsel insulated it from bad-faith liability | Bamford: many valuations were outdated or given before key discovery and the dispositive pretrial liability ruling; Regent ignored later reassessments. | Regent: followed competent legal advice and mediator opinions, so refusal to settle was an honest judgment. | Court distinguished Olson and found sufficient evidence that Regent unreasonably clung to earlier low valuations. |
| Whether jury instructions or verdict were legally erroneous or against weight of evidence warranting new trial | Bamford: (implicit) instructions were appropriate and jury verdict supported. | Regent: challenged sufficiency of evidence and instructions. | Court held instructions proper (aligned with Nebraska law) and declined to order new trial. |
Key Cases Cited
- Olson v. Union Fire Ins. Co., 118 N.W.2d 318 (Neb. 1962) (insurer not liable for excess judgment if it honestly relied on competent legal advice and fairly considered settlement)
- Hadenfeldt v. State Farm Mut. Auto. Ins. Co., 239 N.W.2d 499 (Neb. 1976) (grounds for insurer bad-faith failure-to-settle claim)
- Lienemann v. State Farm Mut. Auto Fire & Cas. Co., 540 F.2d 333 (8th Cir. 1976) (insurer may be liable where it refuses to consider adverse developments and changing settlement probabilities)
- Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133 (2000) (standard for reviewing sufficiency of evidence and drawing inferences in favor of prevailing party)