State Farm Fire & Casualty Co. is on the hook for $14.5 million in damages after a contractor prevailed on his defamation claim against the insurer. The award is one of the largest defamation damages in the country, according to the court.
State Farm was in the midst of receiving bad press for its denial of homeowners’ claims for hail damage to their roofs following a 2006 spring storm in central Indiana. Joseph Radcliff created Coastal Property Management to help State Farm homeowners identify and repair damage, and file claims. State Farm began looking into CPM’s work, and the insurer hired engineers to inspect roofs of homeowners whose claims were denied. Some reports showed damage caused by hail or wind, but some claimed that mechanical damage was caused intentionally by CPM. State Farm only forwarded information unfavorable toward CPM to the National Insurance Crime Bureau, which forwarded its findings to the Indianapolis Metropolitan Police Department.
Radcliff was arrested for multiple counts including insurance fraud, attempted theft and corrupt business influence. After his arrest, State Farm issued a statement to an Indianapolis television station that had covered State Farm’s denial of claims, saying the company is committed to fighting fraud. Radcliff’s arrest led his company to lose significant business.
The charges were dropped after Radcliff admitted there was probable cause for his arrest for misdemeanor criminal mischief. Later, State Farm filed a lawsuit in Hamilton County against Radcliff and his company, alleging racketeering and insurance fraud. Radcliff countersued for defamation and won the large damages award after a six-week trial in 2011.
In State Farm Fire & Casualty Company v. Joseph Martin Radcliff and Coastal Property Management LLC, a/k/a CPM Construction of Indiana, 29A04-1111-CT-571, State Farm appealed, arguing that its communications with NICB and IMPD were protected by statutory immunity and a common-law privilege for reporting crime, and that Radcliff failed to prove actual malice by clear and convincing evidence.
Judge Nancy Vaidik authored the 61-page unanimous decision, writing that evidence shows State Farm lacked grounds for belief in the truth of their statements sent to NICB because they only sent portions of the reports that were favorable to their claims. Evidence also pointed to CPM being targeted because Radcliff talked to the local news about State Farm’s denial of claims and the insurer had faced recent bad press.
“Here, the jury heard testimony of a man whose whole world – professionally and personally – was destroyed by State Farm’s accusations and the accusations’ role in his arrest, and it heard from Dr. (Bruce) Jaffee, who testified that Radcliff had $7.5 million in lost earnings, and Dr. (Kim) Saxton, who explained that Radcliff’s reputation was in a ‘virtually unrecoverable’ place. The jury’s damage award does not punish State Farm; rather, it attempts to compensate Radcliff for the longstanding consequences it caused on the only profession that Radcliff ever knew. Accordingly, the $14.5 million damage award is not excessive,” Vaidik wrote.