Manchester Insurance & Indemnity Co. v. Grundy

531 S.W.2d 493 (Ky. 1976)

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Nature of the Case

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Facts

D issued Carl Weaver with an auto policy bodily injury coverage limited to $10,000 for one person. Weaver struck the rear of a car being driven by a Richard Humphrey. Humphrey's car then struck P, a pedestrian, who was standing on a sidewalk. P sued Weaver who filed a third-party complaint against Humphrey. P had multiple-compound fractures of the left leg and seven months later, resumed his full-work activities with no permanent disability or impairment other than some pain and swelling in the leg. The total medical expense was $1,286.45 with lost earnings of $1,907.20. The jury returned a verdict of $20,000 against Weaver. P then brought suit against D to recover the excess. D was guilty of 'bad faith' in failing to settle P's claim. Weaver did not make a demand that D settle the claim within policy limits. Some months after the suit was filed and P and D were negotiating a settlement, P's attorney forwarded a letter to D's representative demanding that D settle for the policy limits and reciting that 'refusal upon the part of your company to settle within policy limits would be tantamount to an act of bad faith against my client as well as Weaver, the insured' and that if a judgment was obtained in excess of the policy limits, 'will make every effort to collect the full judgment against D based upon their bad faith in not accepting this settlement proposal.' D offered $5,000 and then before closing argument $7,500. This offer was refused, and so was a counter offer by P of $9,500. P presented two witnesses against D. Both stated that the case was worth between $18,000 and $25,000. D got its witness who said it was worth $8,000 to $12,000. P got the verdict and D appealed.