The Fifth District Appellate Court ruled early last week in favor of a man who sued Allstate Insurance over an incident that resulted in the loss of his leg.
A panel of Fifth District Appellate Court justices reversed the decision of partial summary judgment from Madison County Associate Judge Clarence Harrison II, and ruled that Allstate Insurance did act in bad faith against a former policyholder.
Justice Richard Goldenhersh delivered the opinion of the court and Justices Thomas Welch and Stephen Spomer concurred.
The case sparked from a 2006 car accident where plaintiff Steven Kirk, had his leg amputated as a result of Enver Hamiti running a stop sign and colliding with his motorcycle.
Hamiti was driving an automobile owned by Lindsey Skenderi, whose car was insured by Allstate with a liability limit in the amount of $100,000 per person and $300,000 per accident.
Mercury Insurance Company insured Hamiti.
In 2007, Kirk originally sued Hamiti, and won more than $1 million at a trial presided over by Circuit Judge Dave Hylla in 2009.
Following his victory in the Hamiti case, Kirk sued Mercury Insurance Co. for allegedly bribing and coaching a witness’s testimony. In January 2010, Mercury settled with Kirk and Kirk obtained assignment of rights from Hamiti to sue Allstate for bad faith.
On the same day Kirk obtained Hamiti’s right to sue Allstate, he filed suit against Allstate, the insurer that settled his first lawsuit, for bad faith.
At issue was whether Kirk induced a release from Hamiti.
The appellate court found that “Kirk is entitled to all of Hamiti’s right, title, or interest in the bad faith claim against Allstate.”
“If Kirk somehow had coerced or tricked Allstate in removing Hamiti’s name from the release, that might be a reason for entering partial summary judgment in favor of Allstate,” Goldenhersh wrote. “However, the record before us is completely devoid of any type of coercion or trickery involved in the underlying action.”
In 2006, multiple emails were sent back and forth between an Allstate employee and his supervisor about changing the release to exclude Hamiti’s name.
The Allstate employee took Hamiti’s name off the release and admitted doing so.
During the original case, Kirk argued that Allstate committed numerous acts of bad faith, including failing to notify Hamiti that he was being sued, not providing him with an attorney until a year later, and most important failing to protect him by taking his name off the release.
The Appellate Court agreed with Kirk that Allstate acted in bad faith.
“It appears that Allstate tried to clear itself from exposure in an excess case at the expense of Hamiti,” Goldenhersh wrote.
“If Allstate truly believed the release should only provide a release for Hamiti to the extent that he had other coverage with Mercury or perhaps some other insurance company, Allstate should have specifically stated that in the release language and should not have omitted Hamiti entirely from the release,” Goldenhersh wrote.
However, Allstate argued that it did protect Hamiti because he received the full $100,000 in full liability limits set out by his policy.
Allstate claims it did not act in bad faith because the company paid its policy limits, and bad faith cases can only come from insurance companies that fail to pay its policy limits.
“Illinois cases have long held that an insurer cannot discharge its duty to defend simply by paying policy limits,” Goldenhersh wrote, referring to Conway v. Country Casualty Insurance Co., 92 Ill. 2d 388, 442 N.E. 2d 245 (1982).
Goldenhersh also looked to the decision in Douglas v. Allied American Insurance, 312 Ill. App. 3d 535, 727 N.E. 2d 376 (2000), saying that insurers are required to do more than simply pay policy limits because if not, they would just fork up the policy money and leave the rest up to the client.
“This would be a breach of the insurer’s contract to defend,” Goldenhersh wrote.