$4.1 Million Judgment for Insurance Bad Faith Appeal - Scaffold Platform Assembled Negligently by the Construction Company

The plaintiff was badly injured at his construction job in 1986 when he fell from a scaffold platform that had been assembled negligently by the construction company, the general contractor on the project.

At the trial of the personal injury case, the construction company argued that it was not responsible for the scaffold; that the plaintiff was himself contributorily negligent; and that his damages were not large.

Rejecting these arguments, the jury returned a verdict for the plaintiff in the amount of $1 million, and $100,000 for his wife's loss of consortium. With pretrial interest, that verdict was worth more than $2 million when judgment first entered on that case in 1994.

The defendant insurance company, who insured the construction company and controlled the conduct of the litigation, appealed that judgment.

Their only asserted grounds of error vis-a-vis the plaintiffs were two evidentiary/trial conduct rulings, both of which had been held by the trial judge to be harmless in post-trial motions.

The defendant insurance company's appeal also sought indemnity from two subcontractors. In 1997, the Appeals Court affirmed the judgment in all respects in a rescript opinion. The defendant insurance company then paid the plaintiffs the full amount of the verdict plus interest: $2.94 million.

The plaintiffs filed suit against the defendant insurance company and alleged that the defendant's appeal of the judgment in the personal injury case violated Chapter 93A and Chapter 176D. The court agreed for three reasons.

It determined that no reasonable insurance company would believe that the appeal had a likelihood of success on the merits, that is a reversal or new trial, since it involved only minor, harmless rulings, and that the appeal under these circumstances was in objective bad faith.

The court found that the defendant also failed to conduct a proper investigation into the merits of the appeal. It had relied on its trial attorneys to advise it on appeal, which was particularly inappropriate, the court found, because of the personal hostility between the defendant insurance company's trial attorneys and the plaintiff's trial attorney.

The court also found that the defendant's decision to appeal was motivated by subjective bad faith. It determined that "part of the purpose of the appeal was to put the plaintiffs in a position where they would be more likely to settle for much less than the verdict with interest," noting the defendant's "low ball" offers, the first of which was extended after more than two years into the appellate process.

Holding that "[the defendant] used the appellate process in an attempt to extort the plaintiffs into a settlement for far less than they were owed," the judge awarded municipal damages for bad faith in this 93A/176D case in the amount of $4.1 million, double the value of the underlying 1994 verdict plus interest and attorneys' fees.

The case settled following the judgment.