Facts

Mercury insured Saul Ayala Jr. with an automobile policy with bodily injury limits of $50,000 per person and $100,000 per accident. In October 2007, Ayala was driving intoxicated and struck Graciano, who was a pedestrian. Ayala reported the accident to Mercury. Three days later, Graciano's attorney also reported the accident to Mercury, referencing an expired Mercury policy number that police had obtained from the Ayala vehicle. Mercury failed to coordinate the two claims.

Two weeks after the crash, given Graciano's massive injuries, Ayala's intoxication, and with knowledge of the nominal policies that Mercury writes, Graciano's attorney made a written that Mercury "deliver payment of whatever policy limits" Ayala had, "within ten days." The police report that documented Graciano had been knocked 30 feet down the road, Graciano's life flight bill, a letter detailing her two shattered leg, and her continued hospitalization, were sent with the demand.

In a written response, Mercury first denied Graciano's demand on the basis there was no coverage because the policy had expired. A few days later, on the afternoon when the demand would have expired, Mercury determined that it had two claims opened for the same accident and that in fact, a valid policy providing coverage for Graciano's demand existed. Mercury then faxed a letter that said it would pay Graciano Ayala's $50,000 policy limits, but subject to a "hospital lien" that did not exist. Mercury never drafted nor delivered a check.

Graciano thereafter contended that Mercury had rejected her settlement demand initially, and at all times failed to accept its specific terms.

In August 2009 Graciano obtained a judgment against Ayala in her underlying personal injury case for $2,195,000. Graciano, as assignee of Ayala's bad faith rights, then sued Mercury for failing to accept a reasonable settlement demand within the policy limits.

Result

The jury held that Mercury had failed to accept a reasonable policy limit demand, and awarded Graciano $2,195,000. Mercury has appealed.