$9 Million Bad Faith Verdict
LOS ANGELES JURY SLAPS AVIATION INSURER WITH BAD-FAITH VERDICT OF $1.8 MILLION COMPENSATORY AND $7.2 MILLION IN PUNITIVE DAMAGES
Last Friday a Los Angeles jury returned a verdict against an aviation insurer for over $9 million in compensatory and punitive damages. The jury in the case entitled National Test Pilot School, et al., vs. Ranger Insurance Company, Los Angeles County Superior Court Case No. LC042481, found that Ranger Insurance Company had acted maliciously and in conscious disregard of its insureds’ rights in its bad-faith handling of an aircraft property loss claim.
In October of 1995, the aircraft was damaged. The school sought to have the aircraft repaired and submitted a claim to its insurance company, Ranger Insurance Company, of Houston, Texas. At trial, the insurer was represented by Arthur Wasserman of Wasserman & Miller, 16380 Roscoe Boulevard, Suite 120, Van Nuys, California 91406-1221; (818) 895-8234. Notwithstanding the directions of the aircraft manufacturer and the FAA, the insurer’s adjusters insisted that the aircraft could and should be repaired without utilizing the manufacturer’s drawings by a repair station located in Northern California that had never even heard of a Firecracker before this claim, let alone worked on one. The bid submitted by the insurer’s selected repair station (incidentally, also a Ranger insured) was woefully lacking in detail and grossly underestimated in terms of the man hours required to do the job.
The insureds were very concerned about the qualifications of Ranger’s selected repair station, and were vehement that the repairs could only be undertaken if the repair station had in its possession the manufacturer’s drawings. The insureds persisted in the refusal to accept the insurer’s suggested repair plan that, in the insureds’ opinions, would have been inadequate, illegal and dangerous. The insurer failed to seek out information from the manufacturer or the FAA to assist in its evaluation. In fact, the insurer even refused to obtain bids/evaluations from any other repair station. Ranger flatly ignored and refused to acknowledge the insureds’ concerns, stating that aircraft are routinely repaired without manufacturers’ drawings. Although that may be the case with mass-produced aircraft, the insurer’s position was completely unfounded with respect to revenue-generating aircraft, used for hire, to train jet test pilots. The Firecracker was routinely operated in maneuvers, pulling up to 6 "G’s." The operating limitations issued by the FAA governing the use of a Firecracker mandated that the required repairs could only be undertaken by a qualified repair station that had the manufacturer’s drawings.
When attempts were made to obtain the manufacturer’s drawings for the repair station (since the foreign manufacturer was no longer in business, the drawings had to be obtained from a private person), the insurer intentionally interfered with the negotiations and ultimately terminated the effort to obtain the drawings. In the end, the insurer did nothing to effectuate the safe repair of the aircraft. Its adjusters refused to communicate further with the insureds and ultimately invited the insureds to sue the insurer.
On February 9, 2001, after a month-long trial, presided over by Judge Ernest G. Williams, the jury returned its unanimous verdict, finding that Ranger Insurance Company had not only acted in bad faith, but had done so maliciously and in conscious disregard for the rights and safety of its insureds, National Test Pilot School and Flight Research, Inc. The action could have been settled one year ago for $600,000.00. The settlement was frustrated by the insistence of the insurer’s adjuster that he maintain control over how the aircraft was to be repaired, as well as the distribution of money for that repair. The jury awarded compensatory damages in the amount of $1,803,014, and punitive damages in the amount of $7,222,500.
When asked about the verdict, Mr. Robbins replied that the individual jurors were outraged at the insurer’s stonewall claims handling tactics and wanted to be sure this conduct never happened again. "The claims handling decisions were made for no reason other than to try to force the test pilot school to accept a repair that would have been unsafe and illegal. Fortunately, the school had the tenacity and integrity to hang on the five years it took for this claim to be resolved." Mr. Robbins also remarked that the jury felt the adjuster had not been credible during trial.
When he questioned jurors concerning the amount of the punitive damage award ($7,225,500.00), they replied, "The sum of $225,500.00 was symbolic, and intended to send a message to Ranger and its adjuster that their bad-faith conduct and misrepresentations would not be countenanced." The sum of $225,500.00 represented what Ranger’s adjusters insisted was the cost to repair the aircraft. Evidence during trial established that a proper repair would have cost almost double that amount. "What this case was all about was how blind arrogance, if left unsupervised, can completely disrupt the insurer/insured relationship and, in the end, bring a verdict that cost the insurance company and its adjuster more than ten times what it would have cost had the insurance company treated its insureds in a reasonable, responsible fashion."
National Test Pilot School and Flight Research, Inc., look forward to having the Firecracker back in their fleet and operational within five months.
Any inquiries and requests for further information should be directed to Clay Robbins III of the law firm of Maga a, Cathcart & McCarthy, 1801 Avenue of the Stars, Suite 600, Los Angeles, California 90067-5899 (310) 553-6630; firstname.lastname@example.org.