$17M Jury Award Against American Family Mutual Reinstated

May 6, 2009

A Missouri appeals court has reinstated a $17 million jury award in a class action lawsuit against American Family Mutual Insurance Co. over aftermarket vehicle parts.

The Missouri Court of Appeals for the Western District made the decision to reinstate the award in Nicholas H. Smith, Et Al., v. American Family Mutual Insurance Company, brought to appeal by plaintiffs Nicholas Smith and Amy and Bryce Johnson after a lower court judge set aside the jury award in the case.

The original $17 million verdict, handed down March 9, 2007, covered an estimated 319,000 Missouri residents who made vehicle repair claims between May 1990 and December 2004. Jurors determined American Family allowed repair shops to use inferior, third-party equipment to repair policyholders' damaged vehicles, the Associated Press reported.

Later, Jackson County Circuit Judge Edith Messina ruled the plaintiffs didn't provide enough proof that they had suffered damages from the insurance company's policy allowing aftermarket parts in accident repairs and overturned the award.

The case was filed in 2000 and certified as a national class action in 2001. The Missouri Supreme Court subsequently ruled that it could apply only to Missouri customers because other states differed in how they regulate insurance company's use of aftermarket parts.

American Family had cross-appealed, "asserting evidentiary and instructional error as the basis for a new trial, and asking, in the alternative, that the class be decertified," the appeals court said in its written opinion." The cross-appeal was denied.

As to the question of whether the plaintiffs had presented sufficient evidence they were harmed by the insurer's actions, the appeals court found that the trial court had erred in its decision. "The Plaintiffs presented sufficient evidence for a reasonable juror to conclude that aftermarket parts are not of like kind and quality to OEM parts and that American Family breached its contacts with its policyholders when it paid to return the damaged vehicle to pre-loss condition based on the nature and cost of aftermarket parts," the appeals court opinion stated.

Associated Press reports contributed to this story.