Hollywood Pair Win $7.4 Million Over ‘Bad-Faith’ Auto Insurance Settlement

A Hollywood couple who failed to get a prompt settlement of their insurance claim after their car was rear-ended seven years ago won $7.4 million Friday from Liberty Mutual Insurance Co.

The award was part of a continuing trend in multimillion-dollar verdicts against insurance companies for so-called “bad faith,” and the case was one of the first tried under new California case law requiring insurers to negotiate claims fairly and promptly.

Alex Rhonis, 71, was granted $225,000 in compensatory damages and his wife, Mary, 66, $150,000 for their humiliation and mental anguish caused by Liberty’s actions. Each was awarded $3.5 million in punitive damages from the Boston-based insurance company by jurors in the court of Los Angeles Superior Court Judge Carlos E. Velarde.

The attorney for the Rhonises, Stanley K. Jacobs, said the couple suffered “run-of-the-mill” neck and back sprains when they were rear-ended by Ronald Ramos at surface-street speeds near their Hollywood home in 1978.

He said Rhonis would have accepted $7,500 for his own injuries and $9,500 for his wife’s, but that Liberty originally offered “a very unrealistic amount of money” and after several months increased the offer only to $3,000 and $4,500, respectively.

Four years later, as the couple’s personal injury lawsuit against Ramos and Liberty neared trial, Jacobs said, the insurance company paid $10,000 to settle Rhonis’ claim and $12,500 for his wife’s injuries.

Because of the delay, however, the couple proceeded with the bad-faith civil suit that ended with the jury’s verdict Friday after a four-week trial.

“Most people give up,” Jacobs said. “But these people refused to take an unfair amount. That punitive damage award wasn’t just for this couple’s humiliation and anguish but for the thousands and thousands of cases where people don’t get a prompt and fair payment.”

Jurors voted 11 to 1 on the amount of the compensatory damages and 9 to 3, the bare majority required in civil cases, on the punitive damage amount. Jacobs said the three dissenters told him they wanted to assess even more than the $7 million.

Liberty is expected to appeal.