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Insurer Sanctioned for Lack of Settlement Authority in Dog-Bite Case

Last week, a Washoe District Court judge ordered an insurance company to pay $50,000 after the insurer sent a representative to a court-ordered settlement conference in a dog-bite case with insufficient settlement authority, the Reno Gazette-Journal reports.

In the underlying case, the plaintiff, James Moberly, alleges he was attacked by the defendants’ German Pointer in 2011, suffering several bites to his arms and legs. The attack also caused the plaintiff to fall backwards, aggravating a pre-existing spinal injury. The plaintiff’s claimed damages include more than $75,000 in medical expenses, plus a claim for $850,000 in punitive damages. The plaintiff was the fourth of five persons that the dog attacked before being euthanized.

With a trial date scheduled for June 2, the court had ordered the parties to participate in a settlement conference on April 30, during which the defendants’ insurer, American Family Insurance, was to have a representative present who had authority to negotiate a settlement up to the insurance policy limits of $1 million. However, after ten hours at the conference, it became clear that the American Family Insurance representative did not have authority to settle up to policy limits. Instead, he was granted authority to settle only up to $600,000 – an amount that the insurer claimed to believe to be fair and sufficient to resolve the case. When the negotiations began suggesting figures above that sum, the representative requested an additional two days to work out the settlement, stalling the potential resolution of the matter.

According to the ABA Journal, the judge ruled that American Family Insurance’s actions constituted bad faith, justifying the $50,000 contempt sanction imposed upon it.