Rosina Crisci owned an apartment building and purchased $10,000 worth of general liability insurance from Security Insurance Company. One of Mrs. Crisci’s tenants, June DiMare, was descending an exterior wooden staircase when it gave way, causing her to fall through the opening to her waist and to hang some fifteen feet above the ground for a period of time. Mrs. DiMare suffered physical injuries from the incident, and afterwards experienced a very severe psychosis requiring hospitalization. She sued Crisci seeking $400,000 in damages. Security Insurance Company provided Crisci with a defense and retained an experienced attorney who handled the case with the aid of investigators and a claims manager. The attorney reported that the case was one in which liability was clear, and that the verdict might be very large if the psychosis could be attributed to the incident at the apartment building.
As the case developed, both sides found expert medical testimony to support their positions. The claims manager noted that if the jury believed plaintiffs expert, the damages could reach $150,000. The attorney essentially agreed, though he set the exposure at $100,000. DiMare eventually offered to settle for the $10,000 policy limits. By this time, however, Security was convinced that it could establish through its expert that the psychosis was not caused by the incident. As a result, Security would offer no more than $3000 to settle the case. DiMare lowered her offer to $9000, and Crisci was willing to contribute $2500 of her own money to a settlement, but Security rejected that offer. The jury returned a verdict of $100,000 for DiMare and $1000 for her husband. The jury returned a verdict of $100,000 for DiMare and $1000 for her husband. Security then paid its $10,000 policy limits.
Mrs. Crisci became essentially destitute as a result of the judgment and her physical and emotional health declined to the point where she attempted suicide. In the action brought by Crisci, the trial court awarded $91,000 plus interests and costs for the excess of the DiMare judgment over the policy limits, and an additional $25,000 for Crisci’s emotional distress damages.