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Thursday, April 11, 2013

Ind. Decisions - "Appeals Court affirms $14.5 million damage award against State Farm Insurance: Hail-damage claims led to suit, countersuit and jury verdict in Hamilton Superior Court"

In State Farm Fire & Casualty Company v. Joseph Martin Radcliff and Coastal Property Management LLC, a/k/a CPM Construction of Indiana, a 61-page opinion, Judge Vaidik writes:

In April 2006, central Indiana suffered a large hailstorm. Joseph Radcliff formed a company to repair the storm-damaged homes. State Farm Fire & Casualty Company began denying many of its policyholders’ claims even though other insurance companies were paying similar claims. Radcliff and his company offered to help the State Farm policyholders. Amid a flurry of bad publicity about State Farm’s claims response which in part was generated by Radcliff, State Farm launched an insurance-fraud investigation into Radcliff and his company. Radcliff was arrested on fourteen felony counts, but the charges were eventually dismissed pursuant to a diversion agreement with the State. State Farm then sued Radcliff and CPM for fraud and racketeering; Radcliff and his company counterclaimed for, among other things, defamation.

Following a nearly six-week-long jury trial before the Honorable Steven Nation in which over forty witnesses testified, a jury returned a $14.5 million verdict in favor of Radcliff and his company on their defamation counterclaim. This is one of the largest defamation verdicts in United States history. State Farm now appeals arguing that (1) it is entitled to judgment on Radcliff’s defamation counterclaim pursuant to two defenses: the public interest privilege for crime reporting and statutory immunity; (2) Radcliff failed to prove actual malice by clear and convincing evidence; and (3) it is entitled to a new trial on damages. Utilizing our standard of review for judgments on the evidence, we conclude looking to the evidence most favorable to Radcliff that State Farm is not entitled to judgment on either of the defenses. Also, utilizing a heightened standard of review for defamation cases, after an independent review of the record, we uphold the jury’s verdict that Radcliff proved actual malice by clear and convincing evidence and conclude that State Farm is not entitled to a new trial on damages. We therefore affirm the trial court.

From a news release just issued by the Indiana Court of Appeals:

INDIANAPOLIS – A unanimous Court of Appeals today affirmed a $14.5 million defamation verdict against State Farm Fire & Casualty Company in a case arising from a 2006 hailstorm that generated almost 50,000 State Farm claims in central Indiana.

The 61-page opinion upholds the jury’s verdict that Joseph Radcliff, who was sued by State Farm and then countersued, proved actual malice by clear and convincing evidence. The Court of Appeals also concludes that State Farm is not entitled to a new trial on damages, as the company had argued.

The opinion notes that State Farm’s appellant’s brief says the damage award is one of the largest defamation awards in U.S. history.

Background: After a hailstorm pounded central Indiana on April 14, 2006, a company called Coastal Property Management LLC (CPM) offered to help homeowners identify storm damage, make repairs and file insurance claims. Amid well-publicized complaints about State Farm’s claims response, the insurer launched an insurance-fraud investigation of CPM and owner Joseph Radcliff and sent its files to the National Insurance Crime Bureau, which forwarded its findings to the Indianapolis Metropolitan Police Department. The Marion County prosecutor filed 14 felony counts against Radcliff in 2008, including insurance fraud, corrupt business influence, criminal mischief and attempted theft.

In 2009, the Marion County prosecutor dropped all charges against Radcliff pursuant to a diversion agreement in which Radcliff admitted there was probable cause for his arrest for misdemeanor criminal mischief.

Independently, State Farm sued Radcliff and CPM in Hamilton Superior Court for racketeering and insurance fraud. Radcliff countersued, claiming defamation, and a jury awarded him $14.5 million after a nearly six-week trial that ended in June 2011.

State Farm raised three issues on appeal: (1) that its communications with NICB and IMPD were protected by statutory immunity and a common-law privilege for crime reporting; (2) that Radcliff failed to prove actual malice by clear and convincing evidence; and (3) that the damage award was excessive.

The Court of Appeals determined that the company failed on all three issues.

Documents filed in the appeal included 20 volumes of trial transcripts, more than 15 volumes of exhibits, 12 volumes of appendices, 10 claims notebooks and other materials.

Posted by Marcia Oddi on April 11, 2013 10:08 AM
Posted to Ind. App.Ct. Decisions