The Missouri Court of Appeals recently affirmed an $8 million punitive damages award against an insurer in a breach of contract, malicious prosecution, and punitive damages action arising from a denied automobile insurance claim valued at $10,300. Hampton v. State Farm Mutual Automobile Ins. Co., No. WD66791 (Mo. App. Ct., Jan. 8, 2008).
The plaintiff insured reported her automobile stolen and filed a claim with her insurance company. The charred remains of the automobile were later recovered from a field. The insurer investigated the loss, denied the insured’s claim and recommended to the National Insurance Crime Bureau that the insured be investigated. The insured was subsequently charged with insurance fraud and, along with her boyfriend’s brother, with conspiracy to commit insurance fraud. Each was later found not guilty.
The insured and her boyfriend’s brother then brought suit against the insurer for breach of contract and malicious prosecution. At trial, the plaintiff presented evidence that the insurer did not provide the prosecutor with its complete files and omitted evidence favorable to the plaintiffs when requesting prosecution, made false statements through its attorney to the insured’s attorney regarding incriminating evidence that did not really exist and relayed warnings through its attorney that the insured should be careful about pursuing her insurance claim because criminal charges could still be brought. The jury found in favor of the plaintiffs, awarding the insured $10,300 on her breach of contract claim and awarding the insured and her boyfriend’s brother each $400,000 plus legal fees on their malicious prosecution claims. Finally, the jury determined that punitive damages should be awarded. The trial court judge awarded $4 million in punitive damages to each plaintiff.
The appeals court affirmed the judgment of the trial court and upheld the more than $8 million damages award. With regard to the punitive damages award, the court of appeals concluded that the plaintiffs presented substantial evidence that the insurer had acted maliciously and that the award was not excessive in light of the nature of the insurer’s conduct. The appeals court further held that the insurer could be held liable for the acts of its attorney because there was ample evidence from which it could be inferred that the insurer authorized or ratified the statements made by its attorneys.