Insurance company setlles bad-faith suit for $2.3 million

Jan. 12--An insurance company agreed to a $2.3 million settlement for a bad-faith claim filed by the estate of a Pittston man killed by a hit-and-run driver as he rode a bicycle in Scranton.

The settlement between CSAA General Insurance and the family of Michael Harmer resolves a legal dispute over whether the company acted properly when it denied coverage under a $15,000 policy held by Natalie Jordan of Scranton, the owner of the vehicle that struck Harmer.

Lackawanna County Judge Terrence Nealon approved the settlement this week, which calls for Harmer's two minor children to split $1,494,682. The money will be held in a trust account on their behalf. The Scranton law firm of Lenahan & Dempsey will receive $805,318 in legal fees and costs.

Harmer, 26, died Aug. 28, 2016, after he was struck on South Main Avenue by a 2003 Chevrolet Tahoe driven by Thomas Anthony Gill, who fled the scene. Gill, 59, of Scranton, admitted he was high on heroin and other drugs. He pleaded guilty in March to accidents involving death or injury and other charges, and was later sentenced to six to 12 years in state prison.

Scranton attorney Matthew Dempsey initially filed a wrongful death suit against Gill, who had no insurance, and Jordan. CSAA refused to defend Jordan in the case because it maintained her policy was canceled prior to the incident.

Neither Jordan nor Gill responded to the suit, which led Nealon to enter a $2.7 million judgment against them last year. There was little chance the estate could recover the money, however, since there was no insurance coverage, Dempsey said.

After the verdict, Dempsey filed a claim against CSAA, alleging it acted with bad faith when it refused to defend Jordan. By law, an insurance company is obligated to defend a client, even if there is a dispute over coverage, unless the company gets a pretrial ruling affirming it has no obligation. CSAA never did that in this case, court records show.

The settlement allows Harmer's estate to recover $2.3 million of the $2.7 million verdict. Had CSAA defended the case, the most the company would have been liable for is $15,000, Dempsey said.

"We continued with the lawsuit in the hope we could collect on the judgment down the road," Dempsey said. "It was a very good result for the minor children."

A spokeswoman for CSAA declined to comment on the settlement.

Contact the writer:

tbesecker@

timesshamrock.com;

570-348-9137;

@tmbeseckerTT on Twitter

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