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$191,000 award against insurer affirmed on appeal

The Missouri Court of Appeals Eastern District on April 7 affirmed a $191,000 award against an insurer found to have refused to settle a claim from an injured man.

Plaintiff Farzad Qureshi was injured in a rear-end collision in 2011 on an interstate highway in the St. Louis area. The at-fault driver was never identified. He reported the accident and his neck and back pain to his insurer, American Family Mutual Insurance Company, which closed the file without informing him that he could recover under his uninsured-motorist policy.

Nearly two years later, Qureshi obtained counsel, eventually leading to a lawsuit against the insurer for breach of contract and vexatious refusal to pay the claim.

A St. Louis jury sided with Qureshi in 2018, awarding $250,000 in damages, plus $18,000 in vexatious-refusal penalties and about $98,000 in attorneys’ fees and costs. The damage award was reduced to the $75,000 policy limit on the uninsured-motorist policy.

On appeal, the insurer argued that anything it did after Qureshi’s suit was filed was irrelevant, and that deposition testimony from two American Family employees who worked on Qureshi’s claim was protected by attorney-client and work-product privileges and should not have been admitted.

But Judge James M. Dowd, writing for the Eastern District panel, said the employees could have explained the insurer’s actions and decisions. Instead, he wrote, American Family “strategically chose to pursue the legally unsupported path” of claiming privilege. The insurer also argued that the insurer’s $20,000 settlement offer and the amount of the policy limit should have been excluded. But Dowd said vexatious refusal cases provide an exception to the general rule that settlement offers can’t be admitted.

“Frankly, we find it difficult to imagine any evidence more relevant to the reasonableness element in a vexatious refusal to pay case than whether defendant insurance company made a settlement offer and, if so, for how much,” he wrote. Judges Gary M. Gaertner Jr. and Robin Ransom concurred.

Qureshi was represented by Michael T. Harrison of Harrison & Associates and Shannon M. Dawson of the Dawson Law Firm, both in St. Louis. Harrison said the ruling is a relief to his client, who has gone nearly nine years without payment.

“I think the appeals court was crystal clear that American Family’s strategy throughout every step of the case was folly, and they had no legal basis for the arguments they were making,” he said.

American Family’s legal department did not respond to a message seeking comment.

The case is Qureshi v. American Family Mutual Insurance Company, ED107661.