Allstate settles long-running bad faith suit in Missouri court

Both sides have agreed to settle a lengthy and contentious bad- faith insurance dispute that influenced similar cases across the country.

Allstate Insurance Co. and Paul Aldridge, a former policyholder, reached a confidential settlement after they met for the third time with a court-appointed mediator late last month. The settlement came just three weeks before the two were to begin what likely would have been a lopsided trial favoring Aldridge.

Larry Ward, a Shughart Thomson & Kilroy attorney appointed to the case as mediator, filed a notice of settlement in Jackson County Circuit Court last week. The notice appeared on the court's Web site Wednesday. A settlement hearing is now scheduled to take place before Judge Michael Manners on July 21, which was when the trial was set to begin.

Andy Gelbach, a Warrensburg attorney for Aldridge, did not return messages seeking comment on Wednesday.

Mike Siemienas, an Allstate spokesman, said only that terms were not disclosed and the company was "pleased the case has been resolved."

The expensive and drawn-out legal battle stems from a September 2000 car wreck caused by Aldridge.

While traveling on Interstate 70, Aldridge failed to stop as traffic slowed in a construction zone. He rear-ended a car driven by Dale Deer.

Deer, represented by Dirk Vandever, of the Popham Law Firm, went on to sue Aldridge and Allstate. He eventually reached a settlement with Allstate for $750,000, which could have ended the case, but the amount was never paid.

Deer followed with a second lawsuit -- an equitable garnishment claim -- against the two. It settled last October, when Allstate agreed to pay $1.2 million.

But while Deer's case played out, Aldridge filed the bad faith cross-claim that alleged Allstate mishandled the claim from his accident.

For much of the past two years, lawyers for the Aldridge and Deer have accused the insurer of withholding evidence and hiding company executives who would testify about Allstate's claims practice.

Despite Allstate's assertions that the plaintiffs' demands were unreasonable, time-consuming and costly, Manners struck the insurer's pleadings and levied a $25,000 daily fine last September. As of the end of June the fine totaled more than $7 million. It's unclear if Allstate ever paid the fines or if they were included in the settlement.

Throughout litigation, Manners' interactions with Allstate's attorneys seemed to indicate a judge that grew weary of defendant's noncompliance.

In his last order, a June 30 decision in which he denied Aldridge's motion for additional sanctions, Manners said there was no point in slapping Allstate with more penalties.

"It is difficult to conceive of what more this court can do to the defendant," he wrote. "It refuses to obey this court's orders. Additional sanctions will be superfluous."

Earlier this year, Manners severely damaged Allstate's defense when he ordered that the company would not be allowed to present evidence or cross-examine witnesses during the trial.

Manners' rulings even played into a controversy in Florida. There, an insurance commissioner cited the case in his decision to suspend Allstate's ability to sell new claims in that state.

However, over the past several months, Allstate eventually began to produce some evidence sought by Gelbach and his co-counsel, Steve Garner and Jeff Bauer, of the Springfield firm Strong Garner Bauer.

In May, the insurer turned over more than 120,000 pages of documents to Gelbach. Included among those records were the so- called McKinsey documents, which allegedly detail Allstate's claims handling process.

Plaintiffs' attorneys have claimed the McKinsey documents, which were created in the 1990s with the help of consulting firm McKinsey & Co., show how Allstate placed profits before its policyholders.

Allstate recently posted on its Web site more than 150,000 pages of documents in an attempt to "dispel inaccurate portrayal of claim practices."

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