Punitive Damage Verdict Upheld

State Farm v. Campbell was feared to be a dramatic change in the law of punitive damages, but some courts have not taken the bait. In Willow Inn, Inc. v. Public Service Mutual Ins. Co. the United States Court of Appeals for the Third Circuit affirmed a punitive damage award of 75 times the compensatory damage award.

The plaintiff’s property was damaged by a tornado. The trial judge found that the insurer had engaged in obstructive tactics in settling the plaintiff’s property damage claim, which resulted in a two-year delay in the payment of $125,000.

The plaintiff’s bad faith claim resulted in a compensatory damage award of $2,000, punitive award of $150,000 and attorneys’ fees and costs of another $135,000+. The appellate court affirmed, finding the conduct of the insurer “reprehensible” and a combination of “purposefully indifferent actionand intentionally dilatory action.”

To justify the ratio of damages, the court looked not to the $2000 compensatory award but rather to the award of fees and costs permitted under the state law of bad faith. Click here to read the opinion.

Punitive damages are hard to get and harder to keep. Before you ask for them it is a good idea to do some research about the current state of the law.

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