Nardelli v. Metropolitan Group Property & Casualty Insurance
230 Ariz. 592
Ariz. Ct. App.2012Background
- Nardellis insured Explorer theft claim with MetLife; MetLife chose to repair rather than total the vehicle based on appraisals and policy interpretation.
- MetLife paid a partial check for repairs, not full cost, and did not salvage-bid, possibly pressuring settlement.
- Nardellis argued MetLife acted in bad faith by insufficient investigation, misapplying policy, and failing to inform about key coverages.
- Trial court reduced punitive damages to $620,000; compensatory damages were $155,000.
- Jury found bad-faith liability and punitive damages; court affirmed liability but reduced punitive amount; appellate court ultimately lowered punitive to $155,000.
- Constitutional review of punitive damages concluded 1:1 ratio with compensatory damages is appropriate.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Bad-faith liability supported? | Nardellis: MetLife acted unreasonably and with reckless disregard. | MetLife: decisions were reasonable reliance on appraisals and policy interpretation. | No—sufficient evidence supports bad-faith liability. |
| Punitive damages entitlement proven? | Nardellis: clear and convincing evidence shows evil mind. | MetLife argues no evil mind shown. | Yes—evidence supports entitlement to punitive damages. |
| Appropriateness of punitive-damages amount? | Damages should reflect higher punitive amount. | Capped by constitutional limits; lower amount appropriate. | Punitive damages reduced to equal the compensatory damages: $155,000. |
| Constitutional ratio of punitive to compensatory damages? | Large ratio warranted given reprehensibility. | Due process requires closer to 1:1 ratio. | 1:1 ratio appropriate; remand to enter $155,000 punitive award. |
Key Cases Cited
- Rawlings v. Apodaca, 151 Ariz. 149 (Ariz. 1986) (establishes 'evil mind' standard for punitive damages in bad-faith actions)
- Linthicum v. Nationwide Life Ins. Co., 150 Ariz. 326 (Ariz. 1986) (limits punitive damages to aggravated, outrageous conduct with 'evil mind')
- Pope v. State of Ariz., 219 Ariz. 480 (Ariz. App. 2008) (guides de novo constitutional review of punitive damages; ratio considerations)
- Campbell v. State Farm Mut. Auto. Ins. Co., 538 U.S. 408 (U.S. 2003) (provides guideposts for reviewing punitive-damages awards (reprehensibility, ratio, penalties))
- Hawkins v. Allstate Ins. Co., 152 Ariz. 490 (Ariz. 1987) (illustrates heightened reprehensibility standards for punitive damages)
- Home Indem. Co. v. Bush, 20 Ariz. App. 355 (Ariz. App. 1973) (arose in bad-faith context; appraisal/amount disputes)
- Sarchett v. Blue Shield of Cal., 43 Cal.3d 1 (Cal. 1987) (insurer’s duty to inform insured of policy provisions (appraisal))
- Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234 (Ariz. 2000) (defines objective/subjective tests for bad-faith liability)
- Miel v. State Farm Mut. Auto. Ins. Co., 185 Ariz. 104 (Ariz. App. 1995) (bad-faith claim standards; evidence evaluation)
- Trus Joist Corp. v. Safeco Ins. Co. of Am., 153 Ariz. 95 (Ariz. 1986) (methodology for evaluating bad-faith claims)
- Shuman/Rawlings lineage cited, Rawlings v. Apodaca, 151 Ariz. 149, 726 P.2d 565 (1986) (Ariz.) (foundational standard for punitive damages in bad-faith cases)