A federal court jury awarded a Smiths Station, Ala., man $2.763 million last week because an insurance company acted in bad faith after he suffered injuries in a 2012 crash.
Terry Guthrie was struck by a vehicle while riding his bicycle on Feb. 26, 2012, at Third Avenue and 29th Street in Columbus.
Geico, which insured the motorist who hit Guthrie, refused to settle the claim for the policy limits shortly after the crash and acted in bad faith throughout the legal process, according to court documents.
"They could have settled this for $30,000 back in 2012," said Guthrie's attorney, Charles Gower of Columbus. "He suffered back and neck injuries. Instead, they offered less than $12,500, which was not much more than his $10,000 in medical bills."
Guthrie was hit by a SUV driven by Bonnie Winslett, and the fact that Winslett was responsible for the crash, which knocked Guthrie off his bike and into a utility pole was not disputed, according to court records. After the crash, Geico informed Winslett that it would handle the matter with Guthrie's attorney, Gower.
Guthrie did not have medical insurance and was unable to obtain additional medical care needed after the crash. Three months later, Gower sent Geico a letter offering to settle the case for the policy limits. Geico refused and offered to settle it for $12,409, according to court records. Attorneys for Guthrie claimed that by not settling the case for the policy limits, it exposed Winslett to financial risk.
Guthrie sued Winslett in Muscogee County Superior Court. The complaint was not answered by the defendant or Geico, and Judge Gill McBride issued a default judgment of $2.916 million, the amount that Guthrie's attorneys requested.
"Recognizing it's obvious bad faith in exposing its insured to a more than $2.9 million judgment when it had the opportunity to settle Terry Guthrie's claim for $30,000, Geico moved quickly to appoint outside fee counsel to represent Bonnie in an effort to have the default judgment set aside," the complaint alleged. "However, rather than mitigating the bad faith that Geico had already committed by failing to settle the case for the policy limits, Geico's subsequent actions only served to compound its bad faith."
When Geico failed to get the default judgment set aside, Columbus attorney Fife Whiteside, a trustee for the U.S. Bankruptcy Court, Middle District of Georgia, filed an involuntary bankruptcy claim against Winslett, attempting to collect the nearly $3 million.
Geico hired legal counsel to fight the involuntary bankruptcy petition.
"Clearly, Geico's decision to fight the involuntary bankruptcy was not motivated by any interest to protect Bonnie, who only stood to benefit from the bankruptcy, but was driven entirely by Geico's desire to protect itself from the bad faith lawsuit it knew would be forthcoming from the bankruptcy trustee if the involuntary bankruptcy proceeded," Guthrie said.
The judgment, when paid or settled, will be awarded to the bankruptcy trustee, and Guthrie is the only creditor in the bankruptcy case. Gower expects Geico to appeal the decision.
The case was tried in U.S. District Court, Middle District of Georgia in front of Judge Clay Land. The jury came back with the verdict on Thursday after about three hours of deliberation in the four-day trial, Gower said.
Gower was assisted by Miranda Brash and Shaun O'Hara from his firm.