In the largest settlement to date in a Pennsylvania insurance bad faith case, The Princeton Insurance Co. has agreed to pay $20 million to settle a claim brought on behalf of a tavern that was hit with a $75 million verdict in a Dram Shop Act lawsuit.

This came after the insurer refused to settle the case for the tavern’s policy limit of $1 million. The tavern had assigned its rights to pursue the bad faith claim to Joseph Tuski, a former highway construction worker, who was left quadriplegic after he was struck by a drunken driver and thrown more than 100 feet. Mr. Tuski had filed a Dram Shop Act suit against Ivyland Café Ltd., the employer of the driver.

In the dram shop case, a Philadelphia, Pennsylvania jury awarded more than $75 million to Mr. Tuski – including $25 million in punitive damages – but the award was later cut in half by the trial judge. The reduced verdict of $37.5 million was later affirmed by the Pennsylvania Superior Court. A unanimous three-judge panel ruled that both the drunken driver and the tavern where he worked as a manager – and had served himself drinks on the morning of the accident – were properly held liable. After pre-judgment and post-judgment interest amounts were added, the judgment was more than $48 million.

A bad faith suit was subsequently filed alleging that Mr. Tuski’s suit against the Ivyland Cafe could have settled for $1 million, which was the tavern’s policy limit, and that the insurer was guilty of bad faith refusal to settle. The plaintiff’s lawyers argued that the insurer had “actual knowledge” of Mr. Tuski’s “devastating injuries” and also knew within the first few months of litigation that Ivyland Cafe “had no possible defense” against his claim. Mr. Tusk’s lawyer argued that Princeton repeatedly ignored the facts, the law, and the advice of its own lawyers, steadfastly refusing to make any offer whatsoever to settle the claim.

In the original verdict, punitive damage awards were awarded against both defendants. The jury said the owners of the Ivyland Cafe should pay $5 million in punitive damages and that the drunk driver should pay $20 million in punitive damages. The jury also awarded Mr. Tuski more than $1.6 million for his past medical expenses, $18 million for future medical expenses, and $2 million for lost earnings. The verdict also included four awards of $7.25 million each – or $29 million – for pain and suffering, loss of life’s pleasures, embarrassment and disfigurement. In a post-trial ruling, the trial judge granted a defense motion for remittitur and cut the jury’s award in half, leaving Mr. Tuski with an award of $25.34 million in compensatory damages and $12.5 million in punitive damages.

Princeton tendered the $1 million policy limit during the initial appeals. Mr. Tuski had already collected more than $1.4 million from the bond that Ivyland Cafe posted at the time of the appeal of the dram shop case. The insurer agreed to take the case to mediation. A settlement, in which Princeton agreed to pay an additional $20 million, was reached during mediation, making for a total recovery of more than $21.4 million for Mr. Tuski. Robert Mongeluzzi, Michael J. Hopkins, and Donna Lee Jones, who are with the Philadelphia firm of Saltz Mongeluzzi Barrett & Bendesky, and Louis A. Bove of Bodell Bove Grace & Van Horn, another Philadelphia firm, represented Mr. Tuski. They did an outstanding job for their client.


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