By Ian P. Goodman, Cantrell Strenski & Mehringer LLP
On January 16, 2016, the Indiana Court of Appeals issued its opinion in the matter of Earl v. State Farm. In Earl, a State Farm insured was hurt in a collision with a hit-and-run driver. The insured had both a State Farm personal auto policy with uninsured motorists coverage and a personal liability umbrella policy. Although asked about it during discovery, State Farm did not disclose the umbrella policy. The case went to trial where the trial court allowed into evidence the amount of the insureds’ policy limits for uninsured motorists coverage. The jury returned a verdict for plaintiffs in the amount of the policy limits of their uninsured motorists coverage.
A day after the verdict, State Farm told the insureds about the umbrella policy. The insureds eventually filed a new lawsuit (this one) against State Farm for fraud and bad faith based on its failure to disclose the umbrella policy. This Court of Appeals opinion concerns whether the Plaintiffs can maintain this second case against State Farm, or if the second case would necessarily, and therefore improperly, collateral attack the judgment in the first lawsuit. The full opinion is available here.
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