U.S. Court of Appeals Affirms $2.25 Million Jury Verdict for Underinsured Motorist Coverage Claim and Breach of Contract

Donald Etherton was injured in a rear-end car crash. The other driver’s insurer settled with Etherton for $250,000, which was the insurance policy limits. Etherton entered a claim to Owners Insurance Co., his underinsured motorist coverage insurer, which had limits of $1 million. He requested that the company pay up to $750,000, which was the remainder of his insurance policy limit. Etherton’s vehicle had only minor damage, but Etherton underwent three back surgeries to repair disk damage to his spine.

Between July and December of 2009, he communicated frequently with Owners. Owners repeatedly indicated it needed additional information to assess his claim. On Dec. 30, 2009, Owners offered to settle the underinsured motorist claim for $150,000. Etherton asked Owners to explain the basis for the low offer. Owners responded that “our $150k offer is based on the documentation you have provided to date . . . We note serious questions of causation of Mr. Etherton’s injuries . . .”  Many other additional communications between Etherton and Owners failed to resolve the matter. Etherton filed this lawsuit in March 2010.

He first filed his lawsuit in the state of Colorado, which was removed to the Federal District Court. As the jury trial approached, Owners filed a motion in limine under Federal Rule of Evidence 702, seeking to exclude Dr. Joseph Ramos, Etherton’s causation expert. Owners argued that Dr. Ramos’s methodology was not reliable under Rule 702 and Daubert v. Merrill Dow Pharmaceuticals Inc., 509 U.S. 579 (1993). After a Federal Rule of Evidence 104(a) Daubert hearing, the presiding federal judge ruled from the bench and excluded Dr. Ramos’s testimony, concluding his methodology was not reliable. Shortly thereafter, Etherton moved for reconsideration wherein the presiding judge recused herself from the case, and the case was reassigned to another judge who granted Etherton’s motion to reconsider. Based upon his review of the Daubert hearing transcript, the new judge concluded Dr. Ramos’s methodology was reliable and he therefore could testify.

After a 6-day jury trial and at the close of evidence, Owners moved for judgment as a matter of law on Etherton’s claim for the unreasonable delay or denial of an insurance claim under Colorado law. The court denied the motion. The jury returned a verdict in Etherton’s favor on his claims for breach of contract and unreasonable delay or denial. The jury found Etherton’s noneconomic losses were $375,000, his economic losses were $857,000 and his physical impairment and disfigurement damages were $150,000. The District Court initially entered judgment for a total of $1,500,000. It concluded that Etherton was entitled to $750,000 in breach of contract damages for the remainder of his policy limit and an additional $750,000 for the unreasonable delay or denial claim under Colorado law.

Owners filed a motion seeking a new trial under Federal Rule of Civil Procedure 59 and renewed its motion for judgment as a matter of law under Federal Rule of Civil Procedure 50. The court rejected these arguments and denied the motions.

Etherton moved to amend the judgment under Rule 59(e) arguing that Colorado law permits not just an award of his breach of contract damages multiplied by two, but doubled his covered benefits in addition to any award for breach of contract damages.  The District Court granted the motion and amended the judgment to award Etherton $2,250,000. This amount included: (1) $750,000 for breach of contract; the amount remaining on Etherton’s policy limit; and (2) $1,500,000 for the unreasonable delay or denial claim. The court arrived at the latter figure by doubling the amount of covered benefits, which was the $750,000 left on his $1 million policy after receiving $250,000 from the other driver’s insurer.

The U.S Court of Appeals agreed with the District Court that Etherton had presented sufficient evidence that Owner’s unreasonably delayed his claim, thereby precluding judgment as a matter of law on his unreasonable delay or denial claims. In conclusion, the court of appeals affirmed on all grounds first that the District Court properly applied Rule 702/Daubert and did not abuse its discretion by finding Etherton’s expert’s methodology reliable in admitting his expert testimony. Second, the court correctly denied Owner’s motion for judgment as a matter of law because when viewed in the light most favorable to the nonmoving party, Etherton presented evidence that will allow a reasonable jury to find in his favor even if we assume that his claim for benefits was fairly debatable. Third, the District Court correctly interpreted state law and properly exercised its discretion to amend the judgment to increase Etherton’s damages or award. U.S, Supreme Court nominee to fill the ninth seat on the court, Judge Neil Gorsuch was one of the justices of the 10th Circuit who wrote a part of this opinion.

Etherton v. Owners Insurance Co., 829 F.3d 1209 (U.S. Court of Appeals for the 10th Circuit)

Kreisman Law Offices has been handling uninsured motorist claims, underinsured motorist claims, auto accidents, truck accidents, bicycle accidents and motorcycle accidents for individuals and families who have been injured or killed by the negligence of another for more than 40 years, in and around Chicago, Cook County and surrounding areas, including Orland Park, Northlake, Des Plaines, Wheeling, Arlington Heights, Countryside, Country Club Hills, Geneva, Lockport, Lemont, Round Lake Beach, Skokie, St. Charles, Deerfield, Cicero, Chicago (Wrigleyville, West Loop, UIC, Hyde Park, Humboldt Park, Horner Park, Greek Town, Gold Coast, Englewood, Edgebrook, East Garfield Park, Chinatown, Canaryville, Mayfair, Lower West Side, Lincoln Square), Northbrook and Morton Grove, Ill.

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