Background - Plaintiffs Alizabeth and Elvin Hana were assigned the Chamses’ bad-faith claim after a 2009 medical-malpractice verdict against the Chamses left a $1.35 million excess over ISMIE’s policy limits. - ISMIE defended the Chamses, paid policy limits post-verdict, and plaintiffs obtained a covenant not to execute against the Chamses in exchange for the assignment of any insurer bad-faith claim. - Plaintiffs sued ISMIE for $1.35 million compensatory damages (bad faith) and $10 million punitive damages plus fees/penalties under 215 ILCS 5/155; they demanded a jury trial. - The trial court (post-2015 statutory amendment reducing civil juries to six) empaneled a six-person jury over ISMIE’s objection; the jury awarded $1.35 million compensatory and $13 million punitive, plus >$1.5 million in fees/costs/penalties. - On appeal ISMIE argued, inter alia, denial of its constitutional right to a 12-person jury; the appellate court found that issue dispositive and reversed and remanded for a new trial. ### Issues | Issue | Plaintiff's Argument | Defendant's Argument | Held | |---|---:|---:|---| | Whether trying the case before a six-person jury violated defendant’s constitutional right to a 12-person jury | Plaintiffs argued ISMIE failed to preserve the issue, couldn’t show prejudice, and waived Rule 19 notice to the AG | ISMIE argued the 6-person jury under the 2015 statute violated the Illinois Constitution and Kakos requires 12-person juries | Court held ISMIE’s constitutional right to a 12-person jury was violated; Kakos renders the statute void ab initio, so remand for a new trial is required | | Admissibility of a 2013 settlement letter (offer to settle the bad-faith suit) | Plaintiffs asserted the 2013 offer showed continuing bad faith and was admissible under Rule 408’s exception for proving bad faith | ISMIE argued Rule 408 bars settlement evidence and, even if admissible, the 2013 offer was irrelevant to bad faith that caused the 2009 excess judgment | Court held the 2013 offer should be excluded: Rule 408 bars it and it is irrelevant to causation of the 2009 excess verdict | | Proper jury instructions for insurer bad-faith to settle (IPI Nos. 710.02, 710.03) | Plaintiffs relied on pattern IPI instructions | ISMIE argued pattern IPI instructions are outdated and don’t reflect Haddick/Powell standards (reasonable probability of excess liability and a demand within limits) | Court held IPI 710.02/710.03 do not accurately state current law; nonpattern instructions reflecting Haddick and Powell must be used on remand | | Form of damages instruction (IPI No. 710.07) | Plaintiffs proposed an instruction specifying an arithmetic breakdown of how damages ($1.35M) were calculated | ISMIE objected to altered and additional language beyond the pattern instruction | Court held the jury instruction should state the undisputed $1.35M and, if the court includes the calculation, it must follow the pattern wording without an extra sentence and use the limited bracketed explanatory language described in the opinion | ### Key Cases Cited Kakos v. Butler, 2016 IL 120377 (Illinois Supreme Court) (holding jury size is a constitutional right preserved as 12 people; statute reducing civil juries to six unconstitutional) Maple v. Gustafson, 151 Ill. 2d 445 (Illinois Supreme Court) (standard for granting new trial when verdict contrary to manifest weight or unfair trial) Haddick ex rel. Griffith v. Valor Ins., 198 Ill. 2d 409 (Illinois Supreme Court) (insurer duty to settle arises when third party demands within limits and there is a reasonable probability of excess liability) Powell v. American Service Ins. Co., 2014 IL App (1st) 123643 (appellate court) (explaining “reasonable probability” means more likely than not) Heastie v. Roberts, 226 Ill. 2d 515 (Illinois Supreme Court) (supreme court decisions apply retroactively to cases pending on direct review) Pedrick v. Peoria & E.R.R. Co., 37 Ill. 2d 494 (Illinois Supreme Court) (standard for judgment n.o.v.: evidence must overwhelmingly favor movant) Village of Lake Villa v. Stokovich, 211 Ill. 2d 106 (Illinois Supreme Court) (Rule 19 notice; court may allow late compliance when purpose of rule served) Pielet v. Pielet, 2012 IL 112064 (Illinois Supreme Court) (reviewing courts may address issues likely to recur on remand to guide lower court)