Court Permits Plaintiff’s Bad-Faith Claim to Proceed Against Insurance Company

Recently, a state appellate court issued a written opinion in a case involving a defendant-turned-plaintiff who claimed that his own insurance company failed to settle a case against him in bad faith. The case raises the broader issue, prevalent in many New Mexico car accident cases, of an insurance company’s duty to settle a case, and what should happen when an insurance company acts in bad faith.

The Facts of the Case

The plaintiff in this case was the estate of a man who was killed when he caused a car accident that resulted not only in his own death but also in the injuries of several others. This case only tangentially involves the case against the plaintiff for causing the accident.

Several of the injured parties filed a personal injury lawsuit against the estate of the man who caused the accident, seeking compensation for their injuries. The attorney for these victims reached out to the plaintiff’s insurance company, inquiring about settling the case.

The plaintiff’s insurance company, however, failed to respond to the attorney’s request. After 30 days, the victims rescinded their offer of settlement. Then, the insurance company’s attorney contacted the victim’s attorney, explaining that he had misplaced the letter outlining the settlement offer. The insurance company then tendered an offer of $50,000 to settle the case. The victims rejected the offer, and the case proceeded to trial.

At trial, the jury returned a verdict in favor of the accident victims in excess of $5 million. The plaintiff in this case (who, again, was the motorist who caused the accident and was not responsible for the sizable verdict against him) filed a claim against his own insurance company, claiming that the insurance company failed to settle the case in bad faith, resulting in what was a significant and avoidable jury verdict.

The trial court dismissed the plaintiff’s claims, and the plaintiff appealed. On appeal, the case was reversed in the plaintiff’s favor. The court explained that insurance companies have a duty to act in good faith when settling claims within the policy limits of an insurance policy. Here, the court noted, the attorney for the insurance company may have been negligent in failing to respond to the victims’ offer. However, since this presents an issue of fact, the court held that a jury should determine whether the insurance company acted in bad faith. Thus, the plaintiff’s case against the insurance company was permitted to proceed toward trial.

Have You Been Injured in a New Mexico Car Accident?

If you or a loved one has recently been injured in a New Mexico car accident, you may be entitled to monetary compensation. It is likely, however, that you will need to deal with at least one insurance company in the process. The dedicated personal injury attorneys at the Fine Law Firm have extensive experience assisting victims and their families with pursuing the compensation they need and deserve. To learn more, and to schedule a free consultation with an attorney today, call 505-889-FINE.

More Blog Posts:

State Recreational Use Statute Shields Stadium from Liability Because Child’s Admission Was Free, New Mexico Personal Injury Lawyer Blog, February 20, 2017.

New Mexico Circuit Court Finds Mountain Resort Waiver of Liability Valid in Negligence Lawsuit, New Mexico Personal Injury Lawyer Blog, February 5, 2018.