681 N.E.2d 1357 | Ohio Ct. App. | 1996
[EDITORS' NOTE: THIS PAGE CONTAINS HEADNOTES. HEADNOTES ARE NOT AN OFFICIAL PRODUCT OF THE COURT, THEREFORE THEY ARE NOT DISPLAYED.] *671
This is an appeal from the judgment of the Court of Common Pleas for Lake County awarding prejudgment interest under R.C.
On February 16, 1993, plaintiff-appellee Sara-Beth Loder, then approximately two and one-half years old, was bitten by a Labrador retriever belonging to defendants-appellants Charles E. and Donna Jean Burger ("appellants"). The appellants were covered by an insurance policy with Allstate Insurance Company ("Allstate"). Sara-Beth's parents, plaintiffs-appellees George W. and Mary A. Loder ("appellees"), brought this action on her behalf to recover for her injuries, medical expenses, and pain and suffering.
Appellants, who were defended by Allstate in the underlying action, initially disputed liability by relying on a number of arguments. They asserted that the child was teasing or tormenting the dog and that they did not actually own the dog, which they claimed belonged to their son. However, on the morning of trial, appellants stipulated liability under R.C.
On November 3, 1995, appellees filed a motion for prejudgment interest pursuant to R.C.
The hearing on this matter uncovered the following facts. After the attack, Allstate paid $9,555 of Sara-Beth's medical expenses. Appellees then hired an attorney to resolve the claim with Allstate. Counsel for appellees sent a letter to Allstate on July 1, 1994, notifying it that appellees had retained a lawyer. Allstate sent an acknowledgment letter to counsel for appellees on July 21, 1994, and informed him that the claims adjuster would be Regina Walker. *672
On July 27, 1994, counsel for appellees sent a second letter to Walker requesting information regarding the limits of the appellants' insurance policy.
On August 1, 1994, counsel for appellees sent a third letter to Walker, containing photographs of Sara-Beth's face so that she could review the condition of the child in order to discuss settlement.
On August 9, 1994, counsel for appellees sent a fourth letter to Walker, containing the report of Dr. Bahman Guyuron, who had examined Sara-Beth and reported on the extent of the scarring on her face. The letter informed Walker that the statute of limitations was fast approaching, and repeated the earlier request for information on the appellants' insurance policy.
On October 25, 1994, counsel for appellees sent a fifth letter to Walker, containing a summary of Sara-Beth's medical expenses, more photographs of her face, a copy of a supplemental report from Dr. Guyuron, and a third request for information regarding the coverage limits of the appellants' insurance policy. It also contained a demand for $500,000.
On October 28, 1994, counsel for appellees sent a sixth letter to Walker, which supplemented the summary of medical expenses, and requested a response to the previous correspondence.
On December 27, 1994, counsel for appellees sent a seventh letter to Walker. The letter explained once again that the two-year statute of limitations was approaching, and requested a response to the previous correspondence.
On January 9, 1995, Walker sent a letter to counsel for appellees with an offer to settle the case for $65,000.1 Walker testified at the hearing that she had seen the photographs of Sara-Beth's face, read the reports from Dr. Guyuron, and reviewed the list of medical expenses. She did not seek an independent medical opinion. She testified that of the $65,000, she intended about one-third to cover Sara-Beth's legal fees, and the remaining $40,000 to compensate the girl for her injuries, pain and suffering, and future medical expenses.
Counsel for appellee testified that he had never received the letter, but steadfastly maintained that it was inadequate. He filed suit on February 14, 1995, just two days before the statute of limitations would run on Sara-Beth's claim.
On June 29, 1995, counsel for appellees filed a written demand for $500,000. On September 16, 1995, counsel for appellees attempted to obtain a copy of the insurance policy by serving a request for production of documents on Allstate. Counsel for Allstate indicated that the policy would be sent under a separate *673 cover, but the policy was never mailed. On or about October 4, 1995, counsel for appellees called counsel for Allstate to discuss settlement. Counsel for Allstate indicated that he thought that Walker had made an offer of $60,000 or $65,000, but he would check with Allstate.
At a pretrial conference held October 6, 1995, counsel for Allstate confirmed that the offer to settle was $65,000. Counsel for appellees reduced the demand from $500,000 to $160,000. In response, counsel for Allstate increased the offer to $76,000, less credit for the $9,000 in medical expenses already paid, for a net settlement offer of $67,000. Largely because the new offer did not significantly exceed the first, counsel for appellees declined to accept. At some point, the court admonished counsel for Allstate that the offer was too low.
A few days after the pretrial, counsel for appellees again contacted counsel for Allstate in an attempt to settle the claim. Counsel for appellees reduced the demand to $120,000. Counsel for Allstate refused to settle, and did not make a counteroffer.
On the day of trial, the counsel for Allstate conceded liability under the dog bite statute. Counsel for appellees took the opportunity to again attempt to settle the case. He reduced the demand to $109,000, less a $9,000 credit for medical expenses already paid, for a net settlement of $100,000. Counsel for Allstate refused to settle. The case went to trial, and the jury awarded $130,273.
In a decision filed December 5, 1995, the trial court found that Allstate had indeed failed to make a good faith effort to settle the claim, and granted appellees' motion for prejudgment interest. Originally, the court assessed the interest from February 4, 1995.2 The court later entered a nunc pro tunc entry assessing the interest from February 16, 1993, the date of the attack. Appellants filed this appeal on December 21, 1995.
Appellants assign only the following as error:
"The trial court abused its discretion by awarding prejudgment interest to plaintiffs."
R.C.
"Interest on a judgment, decree, or order for the payment of money rendered in a civil action based on tortious conduct and not settled by agreement of the parties, shall be computed from the date the cause of action accrued to the date on which the money is paid, if, upon motion of any party to the action, the court determines at a hearing held subsequent to the verdict or decision in the action that the party required to pay the money failed to make a good faith effort to *674 settle the case and that the party to whom the money is to be paid did not fail to make a good faith effort to settle the case."
The party seeking prejudgment interest bears the burden of demonstrating that the other party failed to make a good faith effort to settle the case. Moskovitz v. Mt. Sinai Med. Ctr.
(1994),
Where, as here, the defendant in a lawsuit is represented by an insurance company, the court's inquiry as to whether the defendant made a good faith effort to settle must focus on the settlement efforts of the insurance carrier. See Moskovitz,supra,
Appellants initially argue that, because they honestly believed that liability was disputed, they were under no obligation to make any settlement offers whatsoever. See Id. at 159, 25 OBR at 203,
Appellants alternatively argue that the trial court found that Allstate had failed to make a good faith attempt to settle this claim solely because Allstate's final net settlement offer was only about one-half of the eventual verdict. They citeBlack v. Bell (1984),
"The statute [R.C.
"Fortuitous foresight does not demonstrate good faith settlement efforts. Nor does poor predictive ability necessarily establish a failure to make such efforts." Id.,
In essence we have agreed with these principles. Jones v.Gray Drug Fair, Inc. (Nov. 16, 1990), Ashtabula App. No. 89-A-1465, unreported, 1990 WL 178941, at *7 (holding that a prevailing party could not meet her burden of *676 showing a lack of good faith effort to settle by relying only on the difference between the settlement offers and the eventual verdict). We also agree that the mere fact that the final net settlement offer amounted to barely fifty-two percent of the eventual verdict at best supplies weak circumstantial evidence of a lack of good faith effort to settle.4
However, there is much more evidence in the record to support the trial court's conclusion that Allstate failed to make a good faith effort to resolve this case. Despite repeated attempts to negotiate, Walker failed to make an offer until twenty-three months had elapsed after the dog attack. In Kline v. Ross (Mar. 15, 1991), Lake App. No. 90-L-14-066, unreported, 1991 WL 35637, we held that a party's pretrial activities may be considered when determining a party's good faith. In that case, we suggested that an insurance company's eighteen-month failure to respond to attempts to negotiate could be sufficient to establish the lack of a good faith effort to settle. A settlement offer made this close to the statute of limitations deadline allows neither careful consideration nor further negotiations. The policy of R.C.
Additionally, Allstate did not respond with a significantly increased offer after counsel for appellees repeatedly reduced the demand. In Hughey v. Lenkauskas (Sept. 30, 1987), Lake App. No. 12-014, unreported, 1987 WL 18001, we upheld the decision of the trial court to award prejudgment interest where the prevailing party repeatedly reduced the demand from $375,000 to $60,000, and where the opposing party did not bother even to make a nominal effort to counter. The second net settlement offer of $67,000, which surpassed the initial offer of $65,000 by a mere three percent, does not constitute an aggressive effort toward settlement as is required by R.C.
Furthermore, counsel for Allstate did not increase the second net settlement offer during the settlement negotiations at the commencement of trial after stipulating liability. Robert DiCello, an expert on personal injury litigation called *677 by Allstate in the prejudgment interest hearing, admitted on cross-examination that the failure to raise the offer at that point was unreasonable.
Last, Walker testified that her valuation of the case as being worth approximately $65,000, less one-third for attorney fees, rested solely on her experience. She did not seek an independent medical opinion. In Detelich v. Gecik (1993),
There is ample evidence beyond the mere disparity between the final net settlement offer and the eventual verdict upon which the trial court could have determined that Allstate failed to make a good faith effort to settle the underlying claim. Because the judgment is supported by competent, credible evidence, we cannot say that it is unreasonable or arbitrary. Thus, the court below did not abuse its discretion in awarding prejudgment interest.
Appellants' assignment of error is meritless, and the judgment of the trial court is affirmed.
Judgment affirmed.
FORD, P.J., and EDWARD J. MAHONEY, J., concur.
EDWARD J. MAHONEY, J., retired, of the Ninth Appellate District, sitting by assignment.