READING — After 16 years of court proceedings, a Berks County family is looking for a light at the end of the tunnel after a ruling awarded them $18 million for punitive damages from Nationwide Insurance.
The lawsuit involved a lengthy proceeding to get the insurer to pay for replacement of a Berks County woman’s car that was damaged in a wreck.
Sadly, the case took so many years winding through the court system that the plaintiff died of cancer unrelated to the case before the settlement.
The judge in the case was so struck by the insurer’s actions in the dispute that he included remarks in his ruling characterizing big companies as uncaring and arrogant toward the average consumer.
The saga started on Sept. 4, 1996 when Sherri Berg, of Mohnton, was involved in a non-injury crash while driving her 1996 Jeep Grand Cherokee.
Berg, and her husband Dan, were insured with Nationwide Mutual Insurance Co. at the time.
“The ensuing litigation marathon,” as described in the recent opinion written by Berks County Judge Jeffrey Sprecher, spawned from a dispute over the amount of damage done to Berg’s car and the quality of the resulting repairs.
“We are grateful to the legal system which prevailed, at each appellate level, so that our trial judge could render justice after 16 years of intense litigation,” said the family’s attorney Ben Mayerson, of Lower Pottsgrove.
The ruling in favor of the Bergs occurred in the civil division of the Berks County Court of Common Pleas.
Despite the possible end to the case, the length of time it has taken to reach this point has not been lost on Dan Berg.
“The years are clicking by,” he said. “It’s been crazy.”
Six days after the 1996 collision, a representative from Nationwide, “concluded that (the Berg’s) car should be totalled.”
At that time, the SUV was valued at $25,000.
However, on Sept. 20, 10 days after the original assessment was made, Nationwide entered a second estimate. That estimate, according to the courts, “saved (Nationwide) approximately half of the $25,000 expense to replace the Jeep.”
“(Nationwide’s) position to repair rather than total and replace the Jeep, never changed until the expiration of the lease in December 1998, 28 months after the collision,” Sprecher wrote.
During that time, the Bergs continued to make regular payments toward the lease of the damaged vehicle and “were forced to drive, what they claim, is a defectively repaired Jeep,” as Sprecher presented in the ruling.
Nationwide, according to court documents, partnered with Lindgren Chrysler Plymouth to appraise the damage on the Jeep.
Doug Joffred, the manager of the shop at the time, declared the Jeep should be totalled for the first estimate and also issued the revised estimate in 1996.
Several attempts to contact Lindgren Chrysler Plymouth and Joffred were unsuccessful. But in his testimony, Joffred told the court that it is not unusual to originally consider a car a total loss and then reassess once a more through examination has been done.
About a year after the car was repaired, David Wert, a former employee at the shop, reached out to the Bergs and told them he had concerns about the quality of the work done.
That call propelled Berg to get in touch with Mayerson.
Ben Mayerson, and his father Hy who were the attorneys on the case from the beginning, were contacted by the Bergs in 1997. Mayerson said a lawsuit was filed against the insurance company in May 1998.
“It put the fear of God in me,” Berg said about getting the call from Wert. He said since repairing cars isn’t his area of expertise, he took Wert’s word that the car was repaired poorly.
However, a footnote in the Findings of Fact questioned the reliability of Wert’s testimony.
“Wert ... offered vague testimony that Nationwide personnel visited Lindgren during the repair process. Wert could not identify the specific personnel, dates, or nature of the visits,” the paperwork said.
Attempts to contact Wert also proved unsuccessful.
Even after Wert’s testimony was questioned in court, Berg said he believed Wert was right about the condition of the car.
“(Wert) told us that if we were in an accident, there was a potential that the air bags wouldn’t open,” he said.
But the Bergs were left without a choice. They were a “young family without a lot of money.”
“We continued to drive the Jeep because the second car was unsafe,” Berg said. He owned a work van but it did not have any seats in the back.
So the Bergs felt their only option was to continue to pay for the Jeep. The value of the SUV depreciated to the point that Nationwide paid $18,000 for it in December, 1998.
“We were just stuck. I had to work and we had to do our things,” Berg said.
“It’s like telling a little white lie,” he said, of the defendants in the case. “You have to tell another one to cover the first one up then you’re in a rabbit hole you can’t get out of. I think that is what happened in this case.”
The legal work
Despite the complexity of the case and the dozens of years’ work to reach a proposed settlement, Sprecher quickly summed up the issue in his recent decision.
“The bottom line,” Sprecher wrote, “is that (Nationwide) would have paid several thousand dollars more if the Jeep had been totalled ... but by repairing the Jeep at $12,300 (Nationwide) saved nearly $13,000.”
The court concluded the car was not repaired “adequately.”
But the main proponent that kept the dispute over a $25,000 collision-repair case brewing for so long was, according to Mayerson, Nationwide’s failure to provide the proper documents.
“For 12 years, Nationwide would not produce any evidence no matter the number of court orders filed for evidence,” he said.
The case is complex with intricate details that fill a 16-year time line from the beginning to the potential end of the “bad faith claim,” against Nationwide.
“I think,” Berg said, “(Nationwide) doesn’t really want a bad faith verdict in the books for people to reference in the future. That is a really big deal in all of this.”
This case, which is an example of citizens taking on a multi-billion dollar, national company, also allowed a judge to raise questions about the way insurance cases are handled.
Toward the end of his decision, Sprecher takes a moment to chastise Nationwide and similar companies that used their nearly unlimited resources to take on citizens.
Sprecher mused about the messages sent by companies in these kinds of cases: “Its message is 1) that it is a defense minded carrier, 2) do not mess with us if you know what is good for you, 3) you cannot run with the big dogs, 4) there is no level playing field to be had in your case, 5) you cannot afford it and what client will pay thousands of dollars to fight the battle, 6) so we can get away with anything we want to and 7) you cannot stop us ... (Nationwide) applied extensive examples of bad faith in failing and refusing to disclose vital information ...”
Although Mayerson using previous court rulings was able to secure the multi-million dollar award from the multi-billion dollar company, Nationwide can still appeal the ruling, which means the dispute may continue.
“Nationwide certainly hasn’t contacted us as to how they will pay,” Mayerson said.
According to Mayerson, post-trial motions were due on Friday.
Nationwide may fight the ruling in order to keep from paying the large punitive award, Mayerson said, noting the figure falls well within a ratio precedent set in a 1996 case.
“The way the figure of $18 million arose goes back to BMW v. Gore,” Mayerson said.
The decision in that case set a precedent that presumed damage awards could not exceed a single digit ratio to harm or a 9-to-1 ratio.
When Mayerson investigated the amount that Nationwide was paying its attorneys, he discovered the fee reached more than $3 million.
In the end, the award, although it can be considered a victory, is bittersweet for the Berg family.
Sherri Berg died at her home on April 25 of this year.
Mayerson, who spent nearly 20 years working with the Bergs, described her as “a beautiful woman.”
Nationwide issued a statement about the ruling, saying the company has a strong record of fairness in cases like the Bergs’.
“Nationwide has a strong record of fairness in dealing with its policyholders’ claims without resorting to litigation. While Nationwide fully respects the judge’s ruling, we deny that the company engaged in bad faith on the Berg claim. We look forward to setting the record straight. The many delays that occurred in this litigation cannot be completely attributed to the company and were beyond our control,” said director of public relations Eric Hardgrove.