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Sept. 02--A 2006 storm that battered Central Indiana with golf-ball-size hail ravaged thousands of homes.
The damage tally topped $1 billion, with State Farm Fire & Casualty alone paying out more than $200 million on about 50,000 claims.
But the nation's largest property and casualty insurer also took an additional $14.5 million hit. That payout was not the result of damage to homes or cars -- but for what a jury determined was damage State Farm did to the reputation of a roofing contractor.
The jaw-dropping judgment a Hamilton County jury issued in 2011 in favor of Joseph Martin Radcliff is the largest defamation award in Indiana and one of the largest ever in the U.S. Now, State Farm is claiming Radcliff obtained that judgment through fraud on the court.
State Farm paid the judgment in November, cutting a check for more than $16.9 million to cover the $14.5 million verdict and interest. But the Illinois-based insurance giant wants its money back.
State Farm's appeal -- based on a little-used civil trial rule that allows a judge to order a do-over in an already-decided case -- cites an affidavit from a former Radcliff employee who says the contractor bribed a witness and destroyed documents revealing the company's misconduct.
It is the latest twist in a complicated and contentious legal saga that has dragged on for more than six years and is now back before the Indiana Court of Appeals.
The legal dispute started with an act of God: a Good Friday hail storm that pummeled Indianapolis and the surrounding area. But the case hinges on the subsequent actions of a handful of individuals and allegations of misconduct on the part of Radcliff, State Farm and representatives of their respective businesses.
Attorneys for State Farm and Radcliff, 39, declined to comment on the case.
"At this point, the arguments and briefings speak for themselves," said Phil Supple, a State Farm spokesman. "We await the court's decision."
The details and often-conflicting allegations in the convoluted case are laid out in thousands of pages of court documents.
The story, according to those records, goes like this:
Several months after the storm, Radcliff saw a business opportunity in the shortage of contractors and huge demand to repair damaged roofs. He established a company called Coastal Property Management to repair hail-damaged homes.
Around that same time, State Farm was struggling with a public relations headache. The company was facing complaints that it had denied hundreds of claims from policy-holders, sometimes when their next-door neighbors were getting new roofs paid for by other insurers.
Radcliff discovered some contractors were not willing to work with homeowners who had State Farm policies and decided to go after that niche in the market. He placed signs around Marion County stating his company would help them "fight State Farm."
In early 2007, a State Farm media specialist learned that Radcliff was meeting with an Indianapolis reporter as part of a local TV station's inquiry into State Farm's handling of hail claims. The employee made a note to herself that there would be an investigation into Radcliff and his company and that there were concerns about the "professional business methods of this particular group," a court document said.
In March 2007, an internal State Farm email revealed the company's efforts to defray the unfavorable media attention in Indianapolis had failed. "Unfortunately, the story will not go away," it said. "Our partners are requesting a change to a more aggressive strategy."
Part of that strategy involved going after what the company deemed "questionable contractors."
"A good, positive story to indirectly expose some of these practices and help protect consumers," another internal email explained, "could go a long way to helping change the public's attitudes and perceptions."
At the time that email was written, State Farm already had launched an investigation of Radcliff.
State Farm's probe proved devastating for the contractor. State Farm shared its findings with the National Insurance Crime Bureau, a nonprofit organization that serves as a liaison between insurance companies and law enforcement.
The NICB took the information to Indianapolis police, who got prosecutors to file felony fraud charges against Radcliff. The contractor and his staff were alleged to have intentionally bent shingles to imitate wind damage and marred roofs and gutters with coins and golf balls to simulate hail strikes.
Unknown at that time, however, was that State Farm had withheld documents unfavorable to its allegations against Radcliff.
There is no indication in court records that NICB was complicit in State Farm's attempts to discredit Radcliff. Records reveal NICB requested that State Farm provide all documents from its files related to allegations against Radcliff, but the insurance company did not comply.
Radcliff was arrested in September 2008 by a half-dozen police officers with guns drawn as he approached an arbitration hearing scheduled on behalf of a State Farm customer. A State Farm adjuster on hand for the arbitration laughed as Radcliff was arrested and led away in handcuffs, a court document said.
Three days after the arrest, one of State Farm's lead investigators visited the Myspace page of Radcliff's wife and found a picture someone had posted depicting a stick-figure Radcliff behind jail bars being raped. The investigator forwarded the link to the NICB investigator he worked with on the case with the message, "enjoy."
The insurance company took a more restrained public approach to the arrest. State Farm issued a statement saying it was cooperating with investigators. A company official later said in a deposition that the arrest gave State Farm the "opportunity to tell its story in a positive light."
Publicity surrounding Radcliff's arrest destroyed his business almost overnight. Customers canceled contracts. Suppliers cut off lines of credit. Sales staff quit. Rivals drew attention to the arrest .
The insurance company also filed a civil lawsuit against Radcliff in Hamilton County alleging fraud and racketeering. Radcliff responded with a counterclaim alleging abuse of process, interference with business relationships and defamation. An economic expert hired by Radcliff placed his losses at $7.5 million.
The civil case went to trial in May 2011. By that time, the Marion County prosecutor had dismissed all of the criminal charges against Radcliff because of problems with witnesses and the evidence.
Following 40 days of testimony by more than three dozen witnesses, a Hamilton County jury returned its verdict -- a $14.5 million judgment for Radcliff.
State Farm appealed, and in April 2013 the Indiana Court of Appeals upheld the verdict.
After the Indiana Supreme Court declined a request to take up the case, the judgment was finally paid in November.
But State Farm continued to fight, turning back to Hamilton Superior Court with the allegation that there was new evidence from an eyewitness who claimed to have seen Radcliff destroy incriminating documents and bribe a witness.
Under a seldom-used procedure, State Farm again asked that the verdict be overturned because of the new evidence. Hamilton Superior Judge Steven Nation denied State Farm's request, which prompted the new appeal. A three-judge panel from the Court of Appeals heard arguments in the case last week.
Shelia Birnbaum, an attorney for State Farm, argued Nation abused his discretion by not conducting a hearing on the new evidence. She also said the judge applied the wrong legal standard in denying the motion to overturn the verdict.
Birnbaum said a new trial is essential to preserve the integrity of not only this case but the entire judicial system. The court, she said, cannot stand by and allow a verdict to stand in the face of new evidence that suggests the verdict was obtained through fraud and bribery.
Radcliff's attorney, Julia Blackwell Gelinas, argued that State Farm was aware of the new witness long before the 2011 trial and that Nation already had heard similar allegations about Radcliff's conduct.
She said Nation reviewed the new allegation in light of all the other evidence in the case and determined that it did not meet the high standard required to throw out the verdict and order a new trial.
"At some point," Gelinas said, "the litigation has to stop."
Call Star reporter Tim Evans at (317) 444-6204. Follow him on Twitter: @starwatchtim.
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