Client Told to Pay Insurer $4.5 Million

In a highly unusual Los Angeles federal court jury verdict, an insurance company has won a $4.5-million punitive judgment against a client after claiming that the client had acted in bad faith.

Hartford Accident & Indemnity Co. was awarded the damages against Mercedes-Benz of North America Inc., which had filed a suit against the insurer for having delayed payments on a claim involving the pilfering of auto parts at the company’s La Mirada distribution center.

Hartford, in its counterclaim, charged Mercedes with bad faith and fraud for concealing information about the auto company’s losses.

Hartford’s attorney, Elia Weinbach, called the award possibly the first in the nation in which an insurance company won a “reverse” bad faith judgment and received a substantial award of punitive damages.

In its verdict Thursday, the jury also awarded $100,000 to Mercedes on its breach-of-contract claim.