Kentucky Farm Bureau Mutual Insurance Company v. Rodgers

Summary

The Supreme Court of Kentucky reversed a judgment awarding compensatory and punitive damages against Kentucky Farm Bureau in an underinsured-motorist bad-faith action and remanded for a new trial. The court held that evidence concerning the insurer's handling of an unrelated claim was improperly admitted under KRE 404(b) and the principles of State Farm Mutual Automobile Insurance Co. v. Campbell, although portions of the evidence could be used for the limited purpose of impeaching an expert witness. The court did not reach the constitutional challenge to the punitive-damages award.

Holdings

1. Evidence of Farm Bureau's handling of the Raines claim was inadmissible to prove that Farm Bureau acted in bad faith in handling Rodgers's claim or to support punitive damages because the evidence did not establish sufficiently similar conduct and was barred by KRE 404(b) and the principles stated in State Farm Mutual Automobile Insurance Co. v. Campbell.
2. Some testimony concerning the Raines claim was admissible for the limited purpose of impeaching testimony that a properly documented demand letter would have produced a more prompt and favorable settlement, but it was not admissible substantively to prove Farm Bureau's bad faith or entitlement to punitive damages.
3. Admission of the improper Raines evidence required reversal of the Court of Appeals' judgment and remand to the Lincoln Circuit Court for a new trial.

Questions Presented

1. Whether evidence concerning Farm Bureau's handling of Mabel Raines's separate insurance claim was admissible to prove Farm Bureau acted in bad faith or to support punitive damages in Rodgers's action.
2. Whether portions of testimony concerning the Raines claim were admissible for the limited purpose of impeaching an expert's testimony about the adequacy of demand letters.
3. Whether the admission of the improper bad-acts evidence required reversal and a new trial.

Disposition

reversed_and_remanded