Downtown Lawyer

State Farm Auto. Ins. Co. v. Stamps, No. CA08-750.

This case involves a dispute between an insured and her insurance carrier over the insured’s entitlement to underinsured motorist benefits.  The insured was in an automobile collision with a drunk driver and received the drunk driver’s policy limits of $50,000 for her damages.  Her damages exceeded $50,000, though, so she sought recovery of the $250,000 available in underinsured motorist benefits under her own policy with State Farm.  When State Farm denied the insured’s claim, she filed suit.

In her complaint, the insured never specified a dollar amount of damages.  Approximately a month before trial, the insured filed an “amended demand pursuant to Ark. Code Ann. 23-79-208″ in which she requested $150,000.  That statute allows the an insured to recover a 12% penalty and reasonable attorney’s fees if the insured recovers at least 80% of the amount demanded in the suit.  State Farm refused to accept the demand, and a jury awarded the insured $135,000.

The insured file a post-judgment motion seeking a 12% penalty and reasonable attorney’s fees because the $135,000 award was at least 80% of her demand of $150,000.  State Farm opposed the motion, arguing that the insured had sought policy limits at trial.  The trial court awarded the 12% penalty and reasonable attorney’s fees, finding that the insured never demanded $250,000 at trial. 

On appeal, the Arkansas Court of Appeals affirmed the trial court’s ruling.  The court noted that, because the parties had stipulated to the policy limits of $250,000, the jury had discretion to award anything between $0 and $250,000.  However, such a stipulation was not a demand.