State Farm Loses Supreme Court Appeal over Lawsuit

October 6, 2004

The U.S. Supreme Court has declined to hear the appeal of one of Utah’s highest-profile court cases, perhaps ending a decades-long legal battle over a claim brought by a couple against their insurance agency.

The court’s decision means a lower court ruling that State Farm Mutual Automobile Insurance Co. must pay Inez Campbell, of Lewiston, $9 million will stand.

Campbell and her late husband, Curtis Campbell, sued State Farm after it refused to settle claims arising from a 1981 car accident that killed one driver and left another disabled.

“I am immensely relieved,” Campbell said in a statement released Monday. “Although Curtis did not live long enough to see the end, I did, and I know he would be thrilled with the outcome.”

A jury in 1983 found Curtis Campbell at fault in the accident and ordered him to pay the victims about $136,000 in excess of his $50,000 insurance policy limit.

After the verdict, Campbell testified, he asked his State Farm-hired attorney what to do and was told to put a “For Sale” sign on his home.

State Farm eventually paid all the damages, but Campbell and his wife still sued for punitive damages, alleging bad-faith failure to settle, fraud and emotional distress. A Utah jury awarded the Campbells $1 million in compensatory damages and $145 million in punitive damages, which was later reduced to $25 million on appeal.

In 2001, the Utah Supreme Court reinstated the initial $145 million in punitive damages, taking into account State Farm’s net worth and its business behavior in other states.

In 2003, the U.S. Supreme Court held that the $145 million award was unconstitutionally large, and remanded the case to the Utah Supreme Court to adjust the amount.

In April, the state high court lowered the award amount to just over $9 million

The 83-year-old Campbell died of Parkinson’s Disease soon after the 2001 ruling, but his wife remained a party to the lawsuit.

The case made national headlines as a two-month trial in Salt Lake City included evidence of agents forced to cut payments to policyholders if they expected promotions or raises.

State Farm spokeswoman Maria Taylor said the company was disappointed with the decision but would meet its obligations.

“We will abide by the decision of the courts and move to bring this case to a close,” she said.

The company says its practices have changed since the Campbell trial, and it now reassures customers that excess verdicts over their policy limits will be covered.

Copyright 2004 Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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