Frank Patterson successfully defeated a bad faith set-up case in the trial of Lloyd Sidley vs Roshan Dulal and State Farm Mutual Automobile Ins Co. Trial was before Judge Frederick Martinez in Arapahoe County. Plaintiff was severely injured in a motorcycle accident, with medical expenses in excess of $1 Million. The defendant had only $25,000 in liability coverage. Plaintiff’s attorney sent a letter to State Farm saying plaintiff would accept the limits in settlement of the claim if State Farm satisfied 3 conditions – 1) supply proof of the liability limits; 2) perform due diligence in determining whether there was any other liability insurance; and 3) provide an affidavit, which he provided, signed by the insured which indicated the defendant’s assets. State Farm did all three and offered its limits. Plaintiff filed suit against State Farm’s insured, arguing that State Farm failed to satisfactorily complete the three conditions, thus exposing the insured to a large excess verdict and making State Farm liable for the excess. The trial court allowed State Farm to intervene and bifurcated the trial to determine first whether a settlement had been reached. The jury quickly returned a verdict that State Farm had properly completed the conditions and that there was indeed a settlement for $25,000.
This case is a good example of a situation with large damages and little insurance, where the plaintiff’s attorney was trying to set-up the insurance company to be on the hook for all the damages. It was clear that counsel never had any real intent to settle. He was going to argue that the insurer failed to satisfy the conditions no matter what it had done. We were fortunate in this case that our insurance client was allowed to intervene in the underlying injury suit rather than having to wait until a sizable judgment was entered against its insured and then fight it in separate litigation.