State Farm Told to Pay $1.5 Million

An Orange County jury awarded more than $1.5 million in damages against State Farm Mutual Insurance Co. Monday in a verdict designed to punish California’s largest seller of auto insurance for refusing to settle a claim for injuries inflicted by an uninsured drunk driver.

The verdict was in favor of Julie Gourley, 45, of Santa Ana, who suffered broken bones and chronic tendinitis after a drunk driver crossed a median on Jamboree Road on Dec. 19, 1981, and struck head-on the car her husband was driving.

“I think basically we are glad it’s over,” Gourley said after the verdict was reached in Superior Court in Santa Ana. “It seemed so preposterous from the beginning that our insurance company would blame us for an accident instead of a drunk driver.

“I’m happy the jury agreed with us,” said Gourley, a former high school English teacher with two children. “I hope the verdict will help save others from the frustration and irritation of having to fight their own insurance company when they need support.”

Figure a Compromise

Jurors said it was State Farm’s attempt to avoid or limit damages because Gourley was not wearing a seat belt that justified the large verdict.

Gourley had at one time agreed to accept $60,000--more than double State Farm’s $25,000 offer, but well under the $95,000 award granted by an arbitrator in 1984.

Jurors voted 9 to 3 to award Gourley $1,576,500 in punitive damages and $15,765 as compensation.

The figure, which jurors called a compromise, is in addition to compensation Gourley received after arbitration--a procedure required by the policy--and was intended to punish State Farm for the “malice, oppression and fraud” the firm showed in failing to deal fairly and in good faith with the Gourleys.

‘Foolish, Absurd, Silly’

State Farm attorneys asserted that they were justified in raising a valid legal defense--a claim attacked as “foolish, absurd, silly, preposterous and senseless” by Santa Ana lawyer Wylie A. Aitken, past president of the California Trial Lawyers Assn. and a consistent courtroom foe of the insurance industry.

California motorists now are required to use seat belts under a law not in effect at the time of the accident. The fact that more drivers are buckling up today means that the standard of care is higher and that failure to wear a seat belt is more likely to be considered careless by a jury, State Farm attorney James L. Crandall said.

But Aitken pointed to surveys showing that fewer than 20% of all Californians used seat belts five years ago.

The jury award was not a record but it was a bitter pill for State Farm, which writes more auto and fire insurance than any other firm in the country and just last year was rated among the best in California in terms of customer complaints, according to a study compiled by the state Department of Insurance.

Sought Greater Damages

Jury foreman John Andrew, 45, of Mission Viejo said he had pressed to award greater damages. But other jurors were concerned that the firm would raise rates to cover any award, Andrew said.

“I really do think State Farm won this case,” Andrew said after the verdict was issued. “I don’t think there is a number we could have come up with that State Farm wouldn’t make money with. They will use that to raise premiums.”

Crandall said State Farm will consider an appeal.