State Farm Mutual Automobile Insurance Company v. Horkheimer

Jill Horkheimer (defendant) had an uninsured/underinsured motorist policy through State Farm Mutual Automobile Insurance Company (State Farm) (plaintiff) with a $50,000 policy limit. Horkheimer was involved in an automobile accident with an underinsured motorist, but State Farm refused to pay. Horkheimer sued State Farm for damages, alleging State Farm was obligated to pay-out the $50,000 policy limit on her claim. Horkheimer did not seek damages in excess of the policy limit and did not claim State Farm acted in bad faith. State Farm was validly and timely served with Horkheimer’s pleadings but never responded. Nine months later, the court clerk entered a default-judgment against State Farm. After entry of the default-judgment, Horkheimer’s claim proceeded to a full jury trial on damages, at which the jury awarded Horkheimer $1 million. State Farm did not appear at trial. State Farm moved to vacate the default-judgment and to conform the jury award to the $50,000 policy limit, arguing that (1) it could not be required to pay damages in excess of the policy limit absent a bad-faith claim; and (2) Horkheimer’s relief must be limited to the pleadings, in which Horkheimer admitted to the $50,000 policy limit. The trial court refused to reduce the jury award or vacate the default-judgment, holding State Farm had sufficient notice about both the default and the trial. State Farm appealed.