Safe Auto Insurance Co. and its policyholder Jaime Valdez have filed a lawsuit against Lewis Brisbois Bisgaard and Smith LLP, alleging the law firm’s failure to act on a $25,000 settlement offer resulted in a $5 million judgment tied to a 2021 auto accident.
The underlying incident occurred in April 2021, when Valdez struck a minor, Owen LaRue, leaving him with serious injuries. According to the complaint, Safe Auto later determined Valdez bore 70% of the responsibility for the accident.
In July 2021, Safe Auto received an offer from LaRue to settle the bodily injury claim for the policy limit of $25,000. At the time, LaRue had accumulated nearly $2 million in medical expenses related to the incident. Safe Auto assessed the claim and concluded that settling for the offered amount aligned with the policyholder’s interests and the carrier’s obligations.
The insurer then retained Lewis Brisbois in August 2021 to represent Valdez and instructed the firm to accept the settlement and pursue approval from the court. The lawsuit alleges that the firm neither accepted the offer nor filed for approval of the agreement. Instead, it recommended that Safe Auto pursue an interpleader action involving the policy limits.
An interpleader would have allowed the insurer to deposit the $25,000 with the court and require all potential claimants to litigate ownership of the funds. However, according to the lawsuit, this approach would not have protected Valdez from personal liability, and Safe Auto claims it was not in line with the policyholder’s best interests.
LaRue withdrew the settlement offer on Sept. 9, 2021, and subsequently sued Valdez for negligence. Safe Auto and Valdez then spent several years in litigation, ultimately resulting in a $5 million judgment in January 2025. The judgment was divided evenly between the insurer and its policyholder.
According to the lawsuit, had the law firm executed the instructions to accept the initial settlement offer, Safe Auto would have resolved the claim for $25,000, and the protracted litigation and multi-million-dollar judgment could have been avoided.
Safe Auto and Valdez are requesting a jury trial. The complaint states the damages sought exceed $75,000 but does not specify an exact amount.
The case echoes other high-profile legal disputes involving insurers’ claims practices. In one such example, State Farm agreed to a $12 million settlement in 2021 related to allegations of underpaying property claims after Hurricane Katrina.
Questions about the accuracy of policy documentation have also surfaced in recent litigation involving major carriers. In one case, State Farm was sued after an agent issued an insurance certificate with incorrect information, resulting in coverage disputes and legal action.
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