Heil Co. v. Evanston Ins. Co., No. 11-6252 (6th Cir. 2012)
Annotate this CaseRonske’s widow sued Heil after a dump truck body it manufactured caused Ronske’s death. Heil held a commercial general liability policy. Evanston insured the first $1 million loss in excess of $500,000 self-insured retention. Heil was required to defend, investigate, and accept any reasonable settlement offer within the SIR; Evanston could choose to assume charge of defense and settlement. Heil retained attorney Pelini. After more than two years, Evanston wanted to assume defense and appointed Sutter, with Pelini to remain involved. Pelini’s fees would count toward exhaustion of the SIR, and Evanston would pay Pelini’s fees in excess of the SIR. The parties settled for $5,711,000. Evanston paid $1 million, leaving Heil responsible for $4,711,000 and $63,533.79 in fees and costs in excess of its SIR. Evanston declined to pay fees and costs. A jury found that Evanston breached the contract and refused in bad faith to pay amounts owed under the policy, but did not fail to settle the wrongful death action in bad faith, awarded Heil compensatory damages plus prejudgment interest for breach of contract, $15,883.44 in statutory damages for bad faith refusal to pay, and $2 million punitive damages. The Sixth Circuit vacated the $2 million punitive damages award, but affirmed the finding of liability under state law.
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