Allstate Insurance Co v. Fields, 885 N.E.2d 728, 2008 Ind. App. LEXIS 963, (Ind. Ct. App. 2008), held that the insurer’s conduct after the filing of bad faith litigation was irrelevant to the bad faith claim in an uninsured motorist case.

Fields was insured by Allstate and was injured in an accident with Woodley, who was insured by Coronet. Fields sued Woodley, but Coronet became insolvent. On January 9, 1997, Fields’ counsel notified Allstate Fields was making an uninsured motorist claim. On January 16, Allstate acknowledged the claim and requested completion of medical/wage authorization forms and Proof of Loss forms. On January 30, Fields sent an admittedly incomplete list of medical bills, accompanied by a letter arguing that this was clearly a policy limits case and demanding that limits be tendered. On February 4, Allstate reiterated its request for medical/wage authorization forms and Proof of Loss forms. Allstate then intervened in Fields’ suit against Woodley, making both coverage arguments and asserting that Fields’ fault caused or contributed to the accident.

On February 20, Fields’ counsel told Allstate he had now provided complete medical records and wage information, with special damages exceeding the $25,000 policy limits; he again demanded the limits. He relied in part on the serious damage to the Fields car. Allstate responded that it was still waiting for the proof of loss form and requested more information about the car.

On March 14, Fields amended his complaint in the pending suit to assert a bad faith claim against Allstate. After two years of contentious litigation, the trial court denied Allstate’s motion for partial summary judgment on bad faith. Later it granted a default judgment against Allstate. After an appeal was dismissed for want of a final order, a jury awarded $2 million in compensatory damages and $16 million in punitive damages for bad faith. The trial court reduced the punitive damages to $6 million, and the court of appeals reversed the judgment, directing summary judgment for Allstate on bad faith.

In Indiana, “’[p]oor judgment or negligence do not amount to bad faith; the additional element of conscious wrongdoing must also be present. A finding of bad faith requires evidence of a state of mind reflecting dishonest purpose, moral obliquity, furtive design, or ill will.’” Id. at 732. The court found no evidence of any of these things before the March 14 filing of the bad faith claim. At that time, Allstate had not denied payment. In the court’s view, “’if the incident giving rise to the bad faith claim is not a claim denial, then evidence that arises after the filing of the bad faith claim is not relevant.’” Id. quoting Gooch v. State Farm Mut. Auto Ins. Co., 712 N.E.2d 38, 42 1999 Ind. App. LEXIS 1059, (Ind. Ct. App. 1999). Consequently, it disregarded evidence of conduct after March 14.

Two colleagues and I have addressed the subject of bad faith in litigating with an insured in William T. Barker, Bennett Evan Cooper, Floyd P. Bienstock, Abuse Of Process And Malicious Defense: Fighting On A New Front In the War On Insurers and Defendants, 42 TORT, TRIAL & INS. L.J. 827 (2007). Our conclusion on that subject was that an insurer’s conduct in any litigation ought not itself be a basis for finding bad faith. The Fields holding supports that conclusion and goes even further.

William T. Barker
Sonnenschein Nath & Rosenthal, LLP