01/29/93 Underwriters At Lloyd's London V. Narrows

The Narrows, a bar, restaurant and residence owned by Jeanne L. Lindley and Carson E. Lindley, was destroyed by fire in May 1989. After their proof of loss claim was rejected, the Lindleys (hereinafter "the insured") sued Underwriters *fn1 alleging breach of contract and a "bad faith" refusal to pay on their claim. *fn2 In August 1990 Superior Court Judge Victor Carlson compelled Underwriters to produce, inter alia, its "bad faith" claims files and the financial statements of its members. He also ordered Underwriters to produce witnesses for depositions. In November the insured moved for sanctions, arguing that Underwriters failed to comply with the court's August order. Judge Carlson granted the insured's motion for sanctions and struck Underwriters' answer, resolving all liability in the insured's favor. A jury trial commenced to determine the amount of the insured's damages. In January 1991 the jury returned a verdict against Underwriters, awarding the insured $150,000 for loss of economic benefit, $1,000,000 for emotional distress, and $60,000,000 as punitive damages. Judge Carlson then awarded attorneys fees of $24,541,426. Underwriters appeals.