Court of Appeals reverses order requiring $25,000.00 bond for business to contest insurer's denial of coverage
Leeboldt, Inc. sued its insurer, State Farm, after incurring a theft loss. Leeboldt claimed a $58,000 loss, but the case evaluation recommended only a $1,000.00 settlement. When Leeboldt rejected that evaluation, the court required it to file a $2,500.00 bond to cover State Farm's potential costs if Leeboldt lost the case. Leeboldt filed the bond, but State Farm persuaded the Court to increase the bond to $25,000.00. Leeboldt appealed.
The Court of Appeals reversed, pointing out that State Farm and the trial judge had made an error of law in requiring such a large pre-trial bond, which was unduly harsh and resulted in the dismissal of a potentially meritorious claim. Judge Gadola, attempting to position himself as the insurer's next best friend, dissented and would have upheld the bond even though it essentially precluded the insured's day in court.