CA Appeals Court Rules Against Allstate Insurance on Personal Injury Claim

When someone causes an injury accident in California and subsequently passes away, the injured victims are able to file lawsuits against the estate of the decedents to recover damages for their losses. The California Probate Code limits the amount of recoverable damages for plaintiffs to the policy limits of the decedents’ insurance that covered their liability at the time of their accidents.

As Meleski vs. Estate of Hotlen, Cal. Ct. App. Case No. C080023 shows, plaintiffs who prevail at trial may also recover their costs in addition to the policy limits in cases in which the insurance companies refuse reasonable settlement offers. Parties are encouraged to resolve their legal disputes through settlements. When they fail to do so, the parties that refused to settle for reasonable amounts may be ordered to pay the costs of the parties that prevail.

Factual and procedural background

Amanda Meleski suffered physical injuries in a car accident that was caused by Albert Hotlen. Meleski’s attorney attempted to have her civil complaint served on Hotlen but was informed that he had died. At the time of the accident, Hotlen had been insured by Allstate Insurance with a policy that had a policy limit of $100,000. Meleski’s attorney requested that Allstate pay Meleski the policy limits, but the company refused. Meleski then amended her civil complaint to name the estate of Albert Hotlen as the defendant pursuant to California Probate Code §§ 550 to 555.

Before trial, Meleski tendered a § 998 offer to Allstate for the amount of $99,999. Allstate refused the offer and made a counteroffer of $40,000. Meleski refused the counteroffer, and the case went to a jury trial. At the trial, the jury found in favor of Meleski and awarded her a verdict of $180,613.86. Because of the Probate Code’s provisions, Meleski’s damages award was reduced to $100,000. She then asked the court to order Allstate to pay for her trial costs, but Allstate argued that she could not recover the costs because her judgment was limited to the policy limits of Hotlen’s insurance policy.

Issue: Whether prevailing parties can recover costs in addition to the policy limits when the insurance company has refused a reasonable settlement offer?

Meleski presented evidence in a memorandum that she filed with the court that the costs associated with preparing her case for trial totaled $66,017.08. Allstate filed a motion in response to her memorandum asking the court to strike the costs. It argued that it couldn’t be held to be responsible for paying Meleski’s costs because its liability was limited under the California Probate Code to the policy limits of $100,000.

The court ruled in Allstate’s favor, ruling that Allstate wasn’t a defendant to the action and could not be ordered to pay Meleski’s costs because its liability was limited to the $100,000 policy limits. Allstate also filed a motion for a new trial, arguing that Meleski’s damages award was excessive. The judge denied that motion, finding that the facts of the case showed that the jury’s award of damages was not excessive. Meleski filed an appeal, arguing that Allstate was a party that fell within the meaning of the law and should have been ordered to pay her post-offer costs.

Rule – A party that refuses a reasonable offer prior to trial and who then receives a less favorable judgment may be ordered to pay the prevailing party’s post-offer litigation costs.

Under Cal. Civ. Proc. § 998, parties are encouraged to reach settlements prior to trial. Either party to an action is able to serve the other party with a § 998 offer of settlement before trial. The other party may refuse the offer, accept it, or make a counteroffer. If a defendant refuses a plaintiff’s § 998 offer, and the plaintiff then is awarded a greater amount at trial than his or her final offer, the court may order the defendant to pay all of the costs that the plaintiff incurred after making the offer to prepare for trial and to pay expert witness fees. However, Cal. Prob. Code § 554 states that an action against the estate of a defendant who was covered by insurance can only recover damages up to the policy limits of the insurance policy.

Analysis

Allstate is one of the nation’s largest insurance companies. It was previously investigated by the National Association of Insurance Carriers for improperly handling the claims of people who suffered bodily injuries. Allstate settled the investigation for $10 million in 2010. The company was found to use a computer algorithm to reduce the amounts of the claims that it should pay.

In Meleski’s case, Allstate refused to settle her claim for $99,999 when she made a settlement offer prior to trial under CCP § 998. That statute is intended to encourage settlements by providing a disincentive to refusing reasonable pretrial settlement offers. If a plaintiff refuses a reasonable § 998 offer that a defendant makes before trial, the plaintiff may be ordered to pay the defendant’s post-offer costs if he or she loses at trial or receives an award of less than what was offered to him or her. Similarly, a defendant that refuses a pretrial § 998 offer made by a plaintiff may be ordered to pay the plaintiff’s post-offer costs if the plaintiff’s recovery at trial is greater than the demand that he or she made.

However, in cases in which the defendant dies before trial, plaintiffs are allowed to name the defendant’s estate as the defendant to the lawsuit. The plaintiffs will then be able to try to recover damages from the defendant’s insurance company. The amount of damages that may be awarded will be limited to the policy limits of the insurance policy.

Insurance companies may employ a number of different tactics to try to avoid paying damages or to reduce the amounts that they might ultimately be forced to pay. In Meleski’s case, Allstate made a counteroffer of $40,000 and refused Meleski’s § 998 demand. At trial, the jury found that her damages were more than $180,000, which was far more than the $99,999 she had demanded to settle the case.

Allstate argued that it was not a party to the lawsuit and could not be ordered to pay costs under § 998. It also argued that even if it was found to be a party to the lawsuit, it couldn’t be ordered to pay Meleski more than the $100,000 of Hotlen’s insurance policy limit.

The appeals court first looked at § 998. The statute provides that a party to the action may make a demand or offer to the other party before trial. Offers made under the statute are considered to be withdrawn if they are not accepted within 30 days. Since the purpose of § 998 is to encourage settlements by providing a disincentive to parties that refuse reasonable offers of settlement, the court found that Allstate Insurance should be considered to be a party for purposes of the statute. Allstate controlled the litigation and defended the estate at trial. It also was the only entity that was responsible for paying damages.

The court next looked at whether Cal. Prob. Code §§ 550 to 555 precluded Meleski from recovering her post-offer costs. Since Meleski did not name the personal representative of Hotlen’s estate as a defendant to the lawsuit, her recovery of damages was limited to the insurance policy’s limits. The court then reviewed Cal. Prob. Code § 554, which limits the recovery of damages to the policy limits of the insurance policy when the defendants die before trial. It found that Meleski could recover her post-offer costs despite the limitation because costs are not damages.

Conclusion

The court reversed the trial court’s ruling and modified its order. Allstate was ordered to pay Meleski’s post-offer costs of $66,017.08 in addition to the $100,000 in damages. Allstate was also ordered to pay Meleski’s appeal costs.

Contact the Law Offices of Steven M. Sweat

Dealing with insurance companies after you have been injured in a car accident can be overwhelming. When the at-fault party dies, you may still recover from his or her insurance company and his or her estate. The rules that govern cases against estates are complex, making it important for you to seek the help of an experienced lawyer. Contact the Law Offices of Steven M. Sweat today to learn about your potential claim.

Sources

https://law.justia.com/cases/california/court-of-appeal/2018/c080023.html?utm_source=summary-newsletters&utm_medium=email&utm_campaign=2018-11-30-personal-injury-ae2ff02df3&utm_content=text-case-read-more-6

https://codes.findlaw.com/ca/code-of-civil-procedure/ccp-sect-998.html

https://codes.findlaw.com/ca/probate-code/prob-sect-554.html

https://www.victimslawyer.com/auto-claims-with-allstate-insurance-in-california.html https://www.victimslawyer.com/california-car-insurance-accident-disputes.html