Opinion ID: 2570635
Heading Depth: 1
Heading Rank: 4

Heading: the settlement letter

Text: ¶ 9 The bad faith claims against State Farm resulted in a bifurcated trial with jury verdicts of $2,600,000 in compensatory damages and $145,000,000 in punitive damages against State Farm. The trial court reduced the compensatory damages to $1,000,000 and the punitive damages to $25,000,000. State Farm appealed and the Campbells cross-appealed. On October 19, 2001, the Utah Supreme Court reversed and reinstated the original jury verdict (October Opinion). ¶ 10 Sometime in October of 2001, prior to the Utah Supreme Court's issuance of its opinion, State Farm made a settlement offer of $10,000,000, which was unanimously rejected by the Clients. After the October Opinion, but prior to the receipt of the Settlement Letter, Humpherys had several conversations with State Farm attorney, Michael Zimmerman, regarding the possibility of the Campbells requesting a vacatur of the October Opinion from the Utah Supreme Court in exchange for a substantial payment from State Farm. Humpherys informed Zimmerman that such a request was unlikely. On November 16, 2001, Humpherys received the Settlement Letter dated November 14, 2001 from State Farm. In the letter, State Farm proposed to escrow the sum of $150,000,000 to be paid immediately to the Campbells upon the Utah Supreme Court's vacatur of its October Opinion. The relevant part of the letter reads: State Farm proposes to settle on the following terms: (i) State Farm will immediately escrow the sum of $150,000,000, to be paid to you and your clients upon the Utah Supreme Court's vacating the opinion and decision issued on October 19, 2001; and (ii) you and your clients will join State Farm in filing with the Utah Supreme Court a notice, pursuant to Utah Rules of Appellate Procedure 37, that the matter has been settled in its entirety and is now moot, as well as a request that the court vacate its opinion and decision in the matter; The terms of this proposed settlement are confidential and shall not be admissible in this or any other court proceeding. State Farm requests that you present this offer to your clients and respond to me in writing by noon on Friday, November 16, 2001. In addition, the Settlement Letter stated that State Farm intended to file a Petition for Certiorari in the United States Supreme Court. ¶ 11 Upon receiving the Settlement Letter on November 16, 2001, Humpherys first contacted the Campbells and then the Ospitals regarding its contents. They declined to accept the offer if it required a vacatur of the October Opinion, as it clearly did. Thereafter, Humpherys contacted Slusher and informed him about the settlement offer and also informed him of the others' refusal to accept the offer based on the vacatur condition. It is unclear from the record if Slusher accepted or rejected the settlement offer, but it is clear that he did not approve an outright rejection of the offer. However, the record shows that the Clients and attorneys understood that pursuant to the provisions of the 1984 and the 1995 Agreements, all settlement offers had to be accepted unanimously. After speaking with the Clients, but without corresponding with Barrett, Humpherys delivered a letter to Zimmerman rejecting the $150,000,000 and explaining that his clients would not stipulate to the vacation of the opinion. After the rejection of the offer, but before the execution of the December 2001 Agreement, Humpherys mailed the Settlement Letter and the rejection letter to the Clients and to Barrett. Upon receipt of the letters, Slusher contacted Humpherys and expressed his dissatisfaction with Humpherys' handling of the settlement offer, especially his failure to initiate a meeting to discuss the issue. Slusher also expressed dissatisfaction for not having been properly notified of the amount and the material terms of the offer, claiming that had he known all the material terms and the amount, he would have agreed to the settlement offer. ¶ 12 State Farm filed its Petition for Rehearing with this court on November 19, 2001, and upon its rejection by the court, filed a Petition for Certiorari with the United States Supreme Court. The United States Supreme Court granted State Farm's petition, reversed the $145,000,000 punitive damage award, and directed a recalculation of the punitive damage award. See State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 429, 123 S.Ct. 1513, 155 L.Ed.2d 585 (2003). This court recalculated the damages according to the United States Supreme Court's ruling, reducing the award to $9,018,780.75. See Campbell v. State Farm Mut. Auto. Ins. Co., 2004 UT 34, ¶ 51, 98 P.3d 409.