Reshamwalla v. State Farm Fire & Casualty
Published: Mar. 23, 2002 | Result Date: Feb. 8, 2002 | Filing Date: Jan. 1, 1900 |Case number: S992129FCDJFM Bench Decision – $8,800,000
Judge
Court
Federal Circuit Court
Attorneys
Plaintiff
Defendant
Facts
In late 1992, some teenagers entered into a construction site on I 405 and threw construction debris onto the
freeway. The plaintiff, who was driving in the fast lane, was struck directly in the face with a piece of concrete.
He suffered permanent and severe injuries.
The plaintiff and this wife sued the teenagers, their parents and others. One of the teenagerÆs parents carried a
homeowners policy issued by State Farm Fire & Casualty.
The teenager, Darel Abruzzo, and his mother, Tia Nucci tendered the lawsuit to State Farm. State Farm
defended Nucci but refused to defend 16-year-old Darrel Abruzzo. State FarmÆs sole basis for refusing to
defend Darrel was its conclusion that he was not a resident of his motherÆs home at the time of the incident.
In December 1994, the defendant rejected the plaintiffÆs $300,000 (policy limits) settlement offer. The
defendantÆs sole basis for rejecting the offer was its contention that Darrel Abruzzo was not an insured. The
plaintiffs took Darrel AbruzzoÆs default. Thereafter, the plaintiffs and Abruzzo entered into a settlement
agreement in which Abruzzo waived any defenses to a default judgment. The agreement expressly provided
that the trier of fact would determine damages.
The plaintiffs obtained default judgments against Darrel Abruzzo for approximately $6.4 million. Darrel
Abruzzo assigned his rights against State Farm to the plaintiffs. The plaintiffs sued State Farm, as judgment
creditors and as assignees of Darrel AbruzzoÆs claims, for the full amount of the default judgments plus
interest.
On Sep. 5, 2000, the District Court granted the plaintiffsÆ partial summary judgment, finding that Daniel
Abruzzo was a resident of his motherÆs home at the time of the incident and that State Farm had breached its
duty to defend him.
On Feb. 8, 2002, the court granted the plaintiffsÆ motion for summary judgment finding
that the defendant had acted in bad faith when it rejected the plaintiffsÆ settlement offer solely on
the basis of coverage considerations. The court rejected the defendantÆs argument that the
plaintiffs had committed fraud in obtaining the default judgments. The court ordered the
defendant to pay the entirety of the default judgments, which, with interest, amounts to
approximately $8.8 million.
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