Kentucky Supreme Court upholds $3.425-million jury verdict against Indiana Insurance Company in an insurance bad-faith case in Campbell County, Kentucky
The case was originally tried in Judge Fred A. Stine's court room and he mentioned the case as one of his most memorable.
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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. Demetre’s wife, Kathy, is a Fort Thomas native whose family used to operate Konen’s Auto Repair and Service.
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“We appreciate the time and attention both the Kentucky Court of Appeals and Kentucky Supreme Court used to thoroughly examine the facts in this very important case, applying the relevant law, and ultimately upholding the jury verdict against Indiana Insurance,” said Jeffrey Sanders, the Fort Thomas lawyer who represented Demetre in the legal action.
In its appeal, the insurance company argued that the Unfair Claims Settlement Practices Act (UCSPA), which the Kentucky General Assembly passed in 1984, should not apply to the facts in the case. The Kentucky Supreme Court rejected this argument and said, “We strongly disagree with this construction, which would render the UCSPA inapplicable to an insured seeking benefits purchased pursuant to a liability insurance policy.”
Sanders said he believes this case may prove to be a landmark decision for all insurance policyholders -- not just in Kentucky but also throughout the United States.
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Sanders said Indiana Insurance Company went to extraordinary lengths, including suing Demetre, its own policyholder, to try to deny coverage rather than defend him against allegations that the insurer knew or should have known were meritless. To make matters worse, the insurer forced Mr. Demetre to incur hundreds of thousands of dollars in legal fees to defend himself against the insurance company’s lawsuit that never had any factual basis, he said.
“The actions and tactics of Indiana Insurance over the last nine years were outrageous and emotionally cruel to Jim Demetre,” said Sanders, who has practiced law for 30 years. “Despite having no facts to support its legal positions, the insurance company, through its adjusters and attorneys, took great measures to try to grind Mr. Demetre into submission, an ordeal that has been both emotionally and financially draining to him. Thankfully, justice ultimately prevailed over the monetary interests and bad-faith actions of the insurance company.”
In October 2012, the Campbell County 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.
The case arose from real estate 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 this 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 his claim, the insurance company sued Demetre, claiming it had no responsibility to cover the claim. Demetre then hired Sanders to countersue Indiana Insurance for insurance bad faith.
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. Louisville attorney Kevin Burke assisted during the appeals of the case.