The Kentucky Court of Appeals last week upheld a $3.425-million jury verdict awarded to a Boone County man against the Indiana Insurance Company in an insurance bad-faith action that was tried in Campbell County Circuit in 2012.
In October 2012, a jury in Campbell Circuit Court awarded compensatory and punitive damages against the company for violating the Kentucky Unfair Claims Settlement Practices Act, the Kentucky Consumer Protection Act, and breaching the insurance contract with its policyholder, James Demetre.
Indiana Insurance appealed jury verdict to the Court of Appeals, which unanimously upheld the jury’s decision in a decision released on January 30. In its decision, the Court of Appeals held that the jury had ample evidence to support its decision that Indiana Insurance’s conduct toward Demetre violated Kentucky statutory and common law, making “the peace of mind Demetre bargained for in procuring insurance … merely illusory.”
“We appreciate the thorough legal analysis conducted by the Court of Appeals in examining this case and upholding the jury verdict against Indiana Insurance,” said Jeffrey Sanders, who represented Demetre in the legal action. “We think the jury decision, coupled with this appellate decision, sends a clear message to the insurance industry in Kentucky that you must treat your policyholders fairly and in good faith or you will be held accountable under Kentucky law.”
The case arose from property that Demetre and his wife acquired in Newport, which they insured with Indiana Insurance. The property, which has been vacant for 50 years, formerly housed a gasoline station. However, the station closed in 1962 and its underground storage tanks were removed in 1998.
In 2009, a family living near this property sued Demetre, alleging that petroleum fumes were flowing into their house from his property. The family claimed personal injuries and property damages and demanded that Demetre pay $10 million in damages.
After Demetre turned the claim over to Indiana Insurance, instead of investigating the Demetre’s claim, the insurance company sued him, claiming it had no responsibility to cover the claim. Demetre then hired Sanders, who fought with the insurance company for more than three years in an effort to compel it to cover the claim.
The jury awarded Demetre $925,000 in compensatory damages for emotional pain and suffering, stress, worry, anxiety, and mental anguish. At trial, Demetre testified that his experience was a “four-year nightmare” and told the jury about the stress and anxiety he suffered at the hands of his own insurance company.
The jury also awarded Demetre $2.5 million in punitive damages. Punitive damages are awarded to punish defendants who act with reckless or wanton disregard for the safety, security, rights, and well-being of others.
Sanders tried the case with his brother, Robert E. Sanders. Other members of the trial team were Justin Sanders, Matt Nakajima, Irene Hartley, and Mary O’Neill. The expert witness who testified for Demetre at trial was Erlanger attorney Carl Grayson.
- Staff report