AMLO wins verdict against Hamilton Mutual Ins. Co.

Barnett v. Hamilton Mutual Ins. Co., et al

TAYLOR CIRCUIT COURT (2006)

AMLO client wins $755,000 bad faith verdict against Hamilton Mutual Insurance Company.

On June 2, 1995, 21-year-old Steven Barnett was killed instantly in an automobile accident when a drunk driver, speeding on the wrong side of the road, struck head-on the car in which he was a passenger. At the time of the accident, Steven's father, Harlon Barnett held a policy of insurance with Appellant, Hamilton Mutual Insurance Company of Cincinnati ("Hamilton Mutual") that included stackable coverage of $900,000 in underinsured motorist ("UIM") benefits.

By raising questionable, if not frivolous, defenses to this clear liability claim, Hamilton Mutual delayed payment for two-and-a-half years, settling at the eve of trial.

THE UNDERLYING CLAIM LITIGATION

Claims file documentation produced in this subsequent bad faith lawsuit, shows that Hamilton Mutual knew the defenses were invalid, yet raised them "to get the settlement value down." For instance, all records in those files indicate that Steven Barnett was a student at EKU, a fact which absolutely made him a resident of his parents' household according to Hamilton Mutual's own internal policies. However, despite this internal policy, Hamilton Mutual commenced a coverage defense that Steven was not a resident and not covered under Harlon Barnett's policy. Defendant noted very early in the claim file that, "this claim could be big money if we let it get out of hand." Reserves were set at $500,000 and defense counsel indicated $675,000 would be a "bargain" for Hamilton Mutual, yet Hamilton Mutual only offered $150,000.00.

Hamilton Mutual made other attempts to prevent Harlon Barnett from recovering the UIM benefits to which he was entitled. Contrary to the law, Hamilton Mutual insisted that Harlon Barnett's UIM coverages were not stackable, even though their own underwriters later admitted in depositions that they knew the coverages were indeed stackable, having actually increased the premiums to accommodate the higher exposure generated by stacking. When the trial judge granted summary judgment to Barnett on both issues, Hamilton Mutual moved its focus to a dram shop apportionment defense that had nothing to do with the claim made by Harlon Barnett, a tactic encouraged by Hamilton Mutual's internal personnel files. The trial judge threw out this defense in a September 15, 1997 ruling stating that there was "no issue of any involvement of the dram shops as to the claim of the plaintiff, Barnett, against the defendant Hamilton Mutual Insurance Company." Defendant then filed a cross-claim against a "phantom" driver even though there were absolutely no facts whatsoever to tie him to the accident.

This is second time that Hamilton Mutual has been found in violation of the Unfair Claims Settlement Practices Act in a case handled by Austin Mehr Law Offices, P.S.C.

The case ultimately settled in January 1999 for $587,500 - nearly three (3) years after suit was filed. Plaintiff then filed this action against Hamilton Mutual based on Hamilton Mutual's violation of provisions of the Unfair Claims Settlement Practices Act in connection with it handling of Barnett's initial claim.

The 12 member jury found that Hamilton Mutual had (1) violated 3 provisions of the Kentucky Unfair Claims Settlement Practices Act, (2) that they lacked a reasonable basis to deny and delay the claim, and (3) acted with reckless disregard for Barnett's rights. The jury awarded $155,000 in compensatory damages and $600,000 in punitive damages. They also found that Hamilton Mutual "lacked a reasonable foundation" to pay the claim, which will allow Plaintiff to recover over $195,000 in attorney's fees paid to the lawyer in the underlying case.

Verdict Upheld

Later in 2006, a Kentucky Judge upheld the verdict, finding that AMLO proved at trial "unreasonable delay tactics, lack of a reasonable investigation and an effort to settle this case for less than a fair and equitable amount" against EMC Insurance Company.