United Am. Ins. Co. v. Merrill
| Docket Number: | 2005-CA-00048-SCT Linked Case(s): 2005-CA-00048-SCT2005-CA-00048-SCT2005-CA-00048-SCT2005-CA-00048-SCT |
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| Oral Argument: | 06-05-2007 | |
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| Supreme Court: | Opinion Link Opinion Date: 09-06-2007 Opinion Author: Randolph, J. Holding: AFFIRMED |
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| Additional Case Information: |
Topic: Insurance - Accord and satisfaction - Medical records - Jury instructions - Evidentiary rulings - M.R.A.P 28(a)(6) - M.R.E. 701 - M.R.E. 704 - Punitive damages Judge(s) Concurring: SMITH, C.J., WALLER AND DIAZ, P.JJ., EASLEY, CARLSON, GRAVES, DICKINSON, AND LAMAR, JJ. Procedural History: Jury Trial Nature of the Case: CIVIL - INSURANCE |
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| Trial Court: |
Date of Trial Judgment: 01-05-2005 Appealed from: Jasper County Circuit Court Judge: Robert G. Evans Disposition: Jury verdict against United American Ins. Company. Case Number: 10-0075 |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | UNITED AMERICAN INSURANCE COMPANY |
SAM STARNES THOMAS,
EDDIE JACOB ABDEEN,
WILLIAM J. BAXLEY,
RANCE N. ULMER,
FLOYD D. GAINES |
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| Appellee: | NATALIE MERRILL | CHRISTOPHER COLLINS VAN CLEAVE, CLYDE H. GUNN, III, JOHN LEONARD WALKER, JR., PHILLIP J. BROOKINS, D. NEIL HARRIS, SR. | ||
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| Topic: | Insurance - Accord and satisfaction - Medical records - Jury instructions - Evidentiary rulings - M.R.A.P 28(a)(6) - M.R.E. 701 - M.R.E. 704 - Punitive damages |
| Summary of the Facts: | Natalie Merrill and her husband, Robert Merrill, residents of Gautier, purchased a United American Insurance Company life insurance policy through an agent, Fannie Triplett. The policy guaranteed the designated beneficiary, in this instance Natalie, $5,000 upon the insured’s death, in this instance Robert. When Natalie did not receive the promised benefits of this policy, she was forced to take out a loan to pay for Robert’s funeral. In order to satisfy the loan obligation, Natalie, at age 71, was required to take a job at the Boomtown Casino working the graveyard shift. Natalie filed suit in the residence county of United’s agent, Triplett. The Complaint named as defendants United, Triplett and unknown employees of United. United removed the case to federal court claiming fraudulent joinder. Natalie filed a Motion to Remand which the district court granted. United filed its Answer and Defenses alleging that it acted in good faith at all times regarding Natalie’s claim and that the life insurance policy was void ab initio because of material misrepresentations Robert had made about his health. Triplett filed an Answer and Cross-Complaint against United. The trial was bifurcated, and after the jury awarded compensatory damages, a separate hearing was conducted on punitive damages. The verdicts of the jury were as follows: For Natalie against United, $500,000 in compensatory damages; For Triplett against United, $250,000 in compensatory damages; For Natalie against United for United’s bad faith breach of contract, $900,000 in punitive damages; For Triplett against United, $900,000 in punitive damages. Natalie filed a Motion to Amend the Pleadings to Conform to the Evidence and for Award of Attorney’s Fees. The trial court ruled that Natalie was entitled to attorney’s fees and expenses and accepted that the stipulated amount was reasonable. The trial court entered judgment for Natalie on the jury verdict, plus attorney’s fees and expenses and post-judgment interest on the total at 8% per annum. Judgment was entered for Triplett on the jury verdict, plus post-judgment interest, also at 8% per annum on the total. United filed a Motion for Judgment Notwithstanding the Verdict, or in the Alternative, for New Trial or Remittiturs. The trial court denied United’s Motion for Judgment Notwithstanding the Verdict, as well as United’s Motion for New Trial. However, the trial court granted the Motion for Remittitur for compensatory and punitive damages as to Natalie and Triplett and for punitive damages as to Triplett. The trial court found Triplett proved her attorney’s fees were $75,000. The trial court found that she failed to prove any other damages and reduced her compensatory damages to $75,000. The trial court calculated that nine times Triplett’s compensatory damages was $675,000, and accordingly reduced Triplett’s punitive damages award to $675,000. The court reduced Natalie’s award of compensatory damages to $200,000. Natalie accepted the remittitur for the sole purpose of facilitating a final judgment, but did not waive her right to cross-appeal in the event United appealed the final judgment. Triplett filed an Affidavit on Judgment Satisfaction, authorizing the clerk of the circuit court to mark the judgment satisfied and canceled as it pertains to relief granted in favor of cross-claimant Fannie L. Triplett. The trial court entered a Judgment of Dismissal with Prejudice as it pertained to Triplett’s claims. The final judgment recited that Natalie should recover from United: $200,000 in compensatory damages; $900,000 in punitive damages; $527,474.69 in attorney’s fees and expenses; and post-judgment interest of 8% per annum on the total judgment. United appeals. |
| Summary of Opinion Analysis: | Issue 1: Accord and satisfaction United argues that it should have been granted a directed verdict, peremptory instruction, or JNOV, because Natalie cashed the refund check from United. It is United’s contention that cashing the refund check represents mutual rescission and/or accord and satisfaction of the claim. Natalie argues that because United did not plead this defense in its Answer, this defense was waived. The elements of accord and satisfaction include something of value offered in full satisfaction of a demand; accompanied by acts and declarations as amount to a condition that if the thing offered is accepted, it is accepted in satisfaction; the party offered the thing of value is bound to understand that if he takes it, he takes subject to such conditions; and the party actually does accept the item. Neither the letter from United, nor the refund check, establish that the check was in satisfaction of the claim. United did not converse with Natalie at any time before issuing the check. Natalie testified she cashed the check because she was behind on her bills and she still believed United owed her the money from the claim. Subsequent to cashing the check, Natalie wrote the letters to Triplett and the President of United asking why her claim had not been paid. Based on the record, it is clear Natalie did not intend, nor did she fully understand cashing the check would constitute a waiver of her claim against United. As clearly required by the first three elements of a valid accord and satisfaction, there must be a meeting of the minds of the parties. In United’s correspondence to Natalie, there was no statement, or for that matter, any notice that United intended the check to be full satisfaction of the demand, but actually encouraged a continuing dialogue between Natalie and United. Thus, the trial court did not err in denying United’s directed verdict motion, peremptory instruction, and motion for judgment notwithstanding the verdict. Issue 2: Medical records In a pretrial hearing, the judge stated United was only to gather medical records for “whatever the policy allowed them.” The policy application requested medical information for the previous three years. Subsequently, United issued eleven subpoenas to medical providers. These subpoenas, which sought additional records, were not issued until six years after United denied Natalie’s claim. Natalie filed a Motion to Quash these eleven subpoenas. The trial judge granted Natalie’s Motion to Quash, but allowed United to make a proffer of the records in its possession. United argues that the records that were not admitted into evidence would prove that Robert was treated for congestive heart failure. United’s medical director opined that Robert’s medical records indicated congestive heart failure. A thorough review of the record for any substantiation of this conclusion cannot be found. The medical director never contacted Robert’s treating physicians, nor did he offer any reason, basis or fact to support his opinion that Robert had been treated for or diagnosed with congestive heart failure during the three-year period preceding application. An insurance company must present an arguable, good-faith basis for denial of a claim. Every medical document for the three-year period preceding application contradicts the opinion of the medical director. Accordingly, there is no proof of a good-faith basis for denial. A medical opinion put forth by a medical director, without substantiation, is insufficient to deny a claim. The medical records at issue exceed the three-year time period which is stated on the application. With one exception, the medical records not admitted by the trial court range in date from May 1989 to September 1991, well before the 1996 application. The letter of denial to Natalie clearly stated the denial was based on evidence of congestive heart failure from the medical records United possessed from the preceding three years. The medical records excluded were not utilized to deny Natalie’s claim, nor do they provide evidence Robert suffered from or was treated for congestive heart failure from 1993 to 1996. As this is a lawsuit based on the denial of Natalie’s claim, and United chose to base its denial only on the preceding three years, then United must be satisfied to use records from these three years to defend its denial. Issue 3: Jury instructions United argues that the trial judge erred in granting numerous instructions, because they were contrary to law and to the proof presented. Although the instructions may have been contrary to United’s theory of the case, the instructions are correct statements of the law and were supported by Natalie’s proof. Because Natalie presented proper evidence for compensation of emotional distress, instructions regarding emotional distress damages were proper. The instructions given by the trial court, taken as a whole, were proper. Issue 4: Evidentiary rulings Natalie did not offer a single authority in her response to United’s argument on erroneous evidentiary rulings. Therefore, pursuant to M.R.A.P 28(a)(6), the Court is not required to consider her argument on this issue. United argues that the trial court should not have allowed the deposition testimony of two employees of United, wherein they testified to United’s obligations regarding the policy. The trial judge was correct that this testimony merely spoke to Robert’s agreement to the policy which United drafted. The testimony did not attempt to interpret the actual language of the policy. United also argues that the court erred in allowing Triplett to give a legal conclusion and that Triplett should not be able “testify that we owe the claim.” Triplett was correctly allowed to state her opinion on this matter pursuant to M.R.E. 701 and 704 and their Comments. United argues that Triplett should not have been allowed to testify that she was told by Parker and Associates that a claim would be paid in thirty days and that she relayed this information to the Merrills. As an agent for United, United is bound by the information Triplett gave regarding the policy. United argues that it was also error to allow Triplett to testify that Parker and Associates was involved in a dishonest scheme because she did not receive any training; that she was allowed to go out “foot free and loose,” but was accountable when “things happened;” and that she was exploited and pushed to bring in money. The training of agents who will solicit answers from prospective insureds which may result in material misrepresentations, is pertinent to the resolution of the issues of this case and meets the requirements of M.R.E. 701 and its comment. Issue 5: Punitive damages United argues the trial court erred in submitting the punitive damages issue to the jury, because Natalie was denied her motion for directed verdict. A judge may validly conclude that an insurer lacked an arguable reason to deny the claim and that it acted in bad faith notwithstanding the fact that he refused a directed verdict on the underlying contract claim. United also argues it had an arguable basis for denying the claim. The arguments by the parties with regard for an arguable basis to deny the claim clearly presented a factual dispute for which a jury determination was necessary and proper. Where punitive damages are awarded by the jury, attorney’s fees are justified. The attorney’s fees awarded to Natalie were reasonable, as stipulated by United. |
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