Donna Driver gets into a car accident with Vic Victim in Cleveland, Ohio. Vic sustains severe injuries. Donna admits liability as she knows that she ran a red light by mistake, thus causing the accident. Donna has auto insurance with an insurance company called Gekko. Her policy has a liability coverage limit of $100,000. Unfortunately, Vic’s medical bills alone run close to $100,000 and between that and his missed work and pain and suffering, he appears to have a strong case to recover significantly more than that.
However, Vic is in no mood for litigation. He therefore offers to settle the whole case for $100,000. Donna pleads with Gekko to settle the case for the $100,000, as she knows that at trial, she will probably get hit with a verdict for more than that. However, Gekko refuses, saying that it will not settle for more than $50,000. If that amount won’t be accepted, it will take its chances at trial.
The case goes to trial and Vic eventually wins a verdict of $200,000. $100,000 is paid by Gekko and Donna is forced into bankruptcy because she cannot pay off the remaining $100,000. Donna sues Gekko in Ohio civil court, claiming that under Ohio law, the insurance company had a duty to negotiate in good faith. Donna claims that it was obvious that Vic’s case was worth more than $100,000 and that Gekko’s intransigence caused her now to face bankruptcy. She therefore asks that Gekko be forced to pay the full $200,000 to Vic so that she does not have to.
Please read the following cases:
Shaeffer, Whiting v. Grange Mutual Casualty Company, 1981 Ohio App. LEXIS 14351 (Ohio Ct. App. 1981)
Schneider v. Eady, 2008-Ohio-6747 (Ohio Ct. App. 2008)
Please discuss, in about one page for each case, how each of those two cases is likely to affect our case.
This is NOT an IRAC-based essay assignment.