Los Angeles Jury Awards Quadriplegic Man $10 Million in Bad Faith Case

November 20, 2008

A Los Angeles jury has awarded a quadriplegic man $10 million in a bad faith case against Atlantic Mutual Insurance Co. The jury found that Atlantic Mutual acted despicably and with malice and oppression in wrongfully refusing to settle a personal injury case in 2002, according to Steven C. Smith & William D. Chapman, partners at Smith, Chapman & Campbell, which represented plaintiff Leon Bostick.

According to the law firm, on Jan. 4, 2001, Leon Bostick was working out on a “Smith” weightlifting machine at Gold’s Gym in Venice Beach, Calif., when he lost control of the weights, which broke his neck, rendering him a quadriplegic. The accident could have been prevented if the manufacturer had included safety devices that would have cost $75, he claimed.

Bostick filed suit against Flex Equipment and Gold’s Gym. By December 2001, Atlantic knew Bostick’s medical bills were more than $600,000. Atlantic knew that if Flex was found liable, a jury would come back with an award of $5 million to $10 million, the law firm indicated. However, Atlantic heard “rumors” that the accident did not happen on the Flex machine and decided to defend on that basis.

After learning that Flex only had a $1 million insurance policy, on Dec. 14, 2001, Bostick’s lawyers offered to settle his claims against Flex for the $1 million insurance policy. Atlantic was given 30 days to respond, then was granted an extension of another 17 days.

Before the expiration of the policy limits demand, a lawyer retained by Atlantic to defend Flex and independent counsel of Flex both advised Atlantic to settle. On Jan. 17, 2002, Atlantic concluded that “plaintiff was definitely using the insured’s machine.” However, the next day, Atlantic decided that it wanted to “reject” the policy limits demand, the law firm said.

On July 25, 2003, a Los Angeles jury rendered a verdict in the amount of $16.2 million in favor of Bostick. Flex assigned to Bostick its rights to sue Atlantic for bad faith refusal to settle within the policy. On Jan. 29, 2007, the California Court of Appeal affirmed the judgment against Flex. On Nov. 18, 2008, the jury in the bad faith case awarded $10 million to Bostick.

Source: Smith, Chapman & Campbell

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