False Claim of Slow Payments Results in Judgment for Insurer
ULIE A. MACKINNEY v. ALLSTATE FIRE AND CASUALTY INSURANCE COMPANY, No. 18-1437, UNITED STATES COURT OF APPEALS FOR THE TENTH CIRCUIT (May 6, 2019)
At trial, the insured’s sole claim was a state-law claim for bad faith based on the insurer’s unreasonable delay in paying underinsured-motorist benefits. On this claim, the jury found no liability and the district court entered judgment for the insurer.
The appeal involves the denial of the insured’s motion for a mistrial. The motion stemmed from questioning of the insured on cross-examination. This questioning involved the insurer’s earlier payments on the claims for underinsured-motorist coverage. The insured’s responses showed that when she sued, she hadn’t known about payments to her attorney.
After the insured testified, the bailiff notified the district court that one of the jurors had admitted possible bias in the case. The district judge inquired and learned that the juror believed, based on the insured’s testimony, that the insured’s attorney had been driving the entire lawsuit. The district court ultimately dismissed this juror, but the insured also moved for a mistrial. The district court declined to order a mistrial, concluding that the prejudice had been remedied through dismissal of the juror.
On appeal, the insured argued that the district court erred in refusing to declare a mistrial. The insured contended that the allegedly irrelevant and prejudicial cross-examination prevented her from receiving a fair trial.
The Tenth Circuit concluded that the court did not abuse its discretion in denying the motion for a mistrial. The insured’s statutory claim was that the insurer had taken too long to make these payments, and the questions asked on cross-examination apparently involved the timing of the insurer’s past payments to the insured’s attorney. The timing of the past payments appears relevant to a claim based on delays in making those payments, and the Tenth Circuit did not see why the questions would be unfairly prejudicial. Since the insured has not told the Tenth Circuit why the questions were prejudicial and, therefore, the Tenth Circuit concluded that the district court acted within its discretion in declining to order a mistrial based on the cross-examination of the insured.
Many lawyers believe that filing a suit alleging bad faith and a claim for punitive damages will result in a quick offer of settlement from an insurer to avoid the cost of defending the suit. In this case, a suit for bad faith because of delay of payments by an insurer that actually made payments to the insured’s lawyer, who did not disclose that fact to the insured, is a contumacious act by the lawyer that put the client insured in a untenable position. The cross-examination complained of established that the bad faith case that was fraudulent on its face. The plaintiff argued, you caught me cheating, that’s not fair, it should be excluded. The judgment reached by the jury was appropriate and the plaintiff and the lawyer should be pleased they were not sanctioned or prosecuted for bringing a frivolous and false allegation.
© 2019 – Barry Zalma
This article, and all of the blog posts on this site, digest and summarize cases published by courts of the various states and the United States. The court decisions have been modified from the actual language of the court decisions, were condensed for ease of reading, and convey the opinions of the author regarding each case.
Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 50 years in the insurance business. He is available at http://www.zalma.com and firstname.lastname@example.org.
Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.
Over the last 51 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.
“Arson-For-Profit Fire at the Cowboy Bar & Grill”
A true crime novel based on the experience of the author, Barry Zalma, who for more than 51 years has acted for insurers who were faced with arson-for-profit, one of the most dangerous insurance fraud schemes. The book explains how an insurance claims adjuster, working with a fire cause and origin expert, a forensic accountant and insurance coverage lawyer, were able to defeat an arson-for-profit scheme and obtain a judgment requiring the perpetrator to take nothing and repay the insurer all of its expenses in defeating the claim.