The Ninth Circuit Court of Appeals has affirmed the $14 million bad faith judgment returned against Allstate, finding there was sufficient evidence to conclude the insurer could and should have settled an underlying motorcycle collision case. A three-judge panel rejected Allstate’s appeal of a 2012 jury verdict that the insurer acted in bad faith when it rejected Carlos Madrigal’s offer to settle his claims against policyholders Anna and Richard Tang for policy limits.

In the underlying case, Madrigal had sued the Tangs after a July 2009 collision between his motorcycle and a car driven by Richard Tang left Madrigal a paraplegic. Madrigal made a settlement demand for the Tangs’ $100,000 policy limit. Allstate initially rejected the offer and made a counteroffer of approximately $34,000. Madrigal rejected this offer and a later $100,000 offer. The case went to trial in state court, and in October 2012, the jury awarded Madrigal $10 million.

Following the trial, the Tangs assigned their rights against Allstate to Madrigal, who sued the insurer in California federal court in April 2014 for bad faith failure to settle. In November 2015 the jury found bad faith and awarded Madrigal approximately $14 million. Allstate appealed, seeking a reversal of the trial court’s denial of a new trial or a judgment notwithstanding the verdict.

Madrigal and the Tangs are represented by Arash Homampour and Wendi O. Wagner of the Homampour Law Firm, Warren J. Binder of Binder & Associates, and Jeffrey I. Ehrlich of The Ehrlich Law Firm. The case is Madrigal et al. v. Allstate Indemnity Co., (case numbers 16-55839 and 16-55863) in the U.S. Court of Appeals for the Ninth Circuit.


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