Nickerson v. Stonebridge Life Ins. Co., No. B234271 (D2d3 Nov. 3, 2016)
This is our third go-round on this case, having covered the original D2 opinion and the Supreme Court’s partial reversal. The Supremes held that Brandt fees—fees incurred by an insured in its effort to obtain wrongfully denied coverage—should count in the denominator for the 9:1 or 10:1 ratio that more or less limits the ratio between actual and punitive damages under the constitutional Gore/State Farm due process framework.
On remand, the court runs through a full analysis on the puni award, finding that although the jury award of $19 million on a compensatory award of $35,000 and 12,500 in Brandt fees was out of whack, a punitive award of ten times that sum—$475,000—would hold up under Gore/State Farm. So the court vacates the new trial award that pertained to the remittitur and orders the trial court to amend the judgment to reflect punitives of $475,000.
Affirmed, as modified.
Showing posts with label nickerson. Show all posts
Showing posts with label nickerson. Show all posts
Saturday, December 3, 2016
Thursday, July 14, 2016
Brandt Fees Are Part of the 1 in State Farm's Punis Ratio
Nickerson v. Stonebridge Life Ins. Co., No. S213879 (Jun. 9, 2016).
I wrote about this case back in 2013 when it was decided by the Court of Appeal. The focus of my post was on an instructional issue. But the Supreme Court granted review on a different issue in the case—one that merited three sentences paragraph in the Court of Appeal’s opinion: When deciding whether punitive damages in a bad faith insurance case exceed the constitutionally proscribed ration of nine or ten time the actual damages, should the baseline include so called Brandt fees. These are fees that, notwithstanding the American rule, can be recovered by an insurance coverage plaintiff to compensate for legal costs of obtaining coverage over the carrier’s objection. The Court of Appeal said they could not, citing a 2010 case on the point. But the Supreme Court—with Justice Kruger writing for a unanimous court—disagrees. Brandt fees are an element of compensatory damages in a bad faith case. It is thus appropriate to consider them as part of the starting point in the State Farm/Gore analysis, which puts a nine- or ten-to-one ratio of punitives to compensatories at the outer limits of the state’s power to punish. That’s the case even when the parties follow the common practice—as happened here—of stipulating to have the court calculate Brandt fees post-trial in the event of a bad faith verdict in the plaintiff’s favor.
Reversed.
I wrote about this case back in 2013 when it was decided by the Court of Appeal. The focus of my post was on an instructional issue. But the Supreme Court granted review on a different issue in the case—one that merited three sentences paragraph in the Court of Appeal’s opinion: When deciding whether punitive damages in a bad faith insurance case exceed the constitutionally proscribed ration of nine or ten time the actual damages, should the baseline include so called Brandt fees. These are fees that, notwithstanding the American rule, can be recovered by an insurance coverage plaintiff to compensate for legal costs of obtaining coverage over the carrier’s objection. The Court of Appeal said they could not, citing a 2010 case on the point. But the Supreme Court—with Justice Kruger writing for a unanimous court—disagrees. Brandt fees are an element of compensatory damages in a bad faith case. It is thus appropriate to consider them as part of the starting point in the State Farm/Gore analysis, which puts a nine- or ten-to-one ratio of punitives to compensatories at the outer limits of the state’s power to punish. That’s the case even when the parties follow the common practice—as happened here—of stipulating to have the court calculate Brandt fees post-trial in the event of a bad faith verdict in the plaintiff’s favor.
Reversed.
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