United Servs. Auto. Ass'n v. Lisanby
| Docket Number: | 2009-CA-00529-SCT | |
| Supreme Court: | Opinion Link Opinion Date: 11-18-2010 Opinion Author: Kitchens, J. Holding: DA - Affirmed in part, reversed and rendered in part; CA - Affirmed. |
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| Additional Case Information: |
Topic: Insurance - Wind damage - Bad faith damages and fees - Replacement costs - Change of venue - Mistrial - Send a message argument - Punitive damages Judge(s) Concurring: Waller, C.J., Carlson and Graves, P.JJ., Dickinson, Lamar and Chandler, JJ. Non Participating Judge(s): Pierce, J. Concurs in Result Only: Randolph, J. Procedural History: Jury Trial Nature of the Case: CIVIL - INSURANCE |
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| Trial Court: |
Date of Trial Judgment: 01-06-2009 Appealed from: Jackson County Circuit Court Judge: Billy G. Bridges Disposition: The jury awarded the plaintiffs more than $900,000 in compensatory damages, but the trial judge directed a verdict in favor of the defendant on the issue of punitive damages. Case Number: 2007-00,147(3) |
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| Party Name: | Attorney Name: | Brief(s) Available: | ||
| Appellant: | UNITED SERVICES AUTOMOBILE
ASSOCIATION (“USAA”) |
JANET G. ARNOLD, CHARLES G. COPELAND, W. SHAN THOMPSON, JAMES DENNIS BOONE |
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| Appellee: | ADMIRAL JAMES LISANBY AND WIFE, GLADYS LISANBY | DON BARRETT, DAVID M. McMULLAN, JR. | ||
Synopsis provided by:  If you are interested in subscribing to the weekly synopses of all Mississippi Supreme Court and Court of Appeals hand downs please contact Tammy Upton in the MLI Press office. |
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| Topic: | Insurance - Wind damage - Bad faith damages and fees - Replacement costs - Change of venue - Mistrial - Send a message argument - Punitive damages |
| Summary of the Facts: | James Lisanby and his wife, Gladys Lisanby, owned a two-story home and a cottage in Pascagoula. Their property was located roughly one hundred feet from the Mississippi Sound. As Hurricane Katrina approached, the Lisanbys fled their home. When they returned a few days later, they found what remained. The bottom floor of their residence was almost completely gone, and the cottage and garage were no longer present. The second floor of their home sustained substantially less damage than the first floor; unlike the furniture that had been on the first floor, the Lisanbys were able to salvage all of the furniture from the second floor. United Services Automobile Association provided homeowners’ insurance for the Lisanbys, with coverage limits of $505,000 for the dwelling, appurtenant structure limits of $50,500, additional coverage for the cottage of $22,000, personal property limits of $378,750, and additional living expense limits of $101,000. The Lisanbys also had $350,000 in flood insurance coverage and were paid the flood policy limits. However, the insurance carrier maintained that the majority of the damage was caused by storm surge, and thus was excluded; therefore, USAA paid only $46,354.21 pursuant to the homeowners’ policy. The Lisanbys filed a complaint against USAA, alleging breach of contract and bad-faith denial of their claims. They sued for damages for emotional distress, punitive damages, attorneys’ fees, and expenses. The jury returned a unanimous verdict awarding the Lisanbys a total of $909,641 in compensatory damages. The special verdict apportioned the damages as follows: $478,141 in additional wind damage to the house; $50,500 for wind damage to the garage; $197,000 in additional wind damage to the contents of all three buildings; $12,000 in additional living expenses; nothing in lost rent for the cottage; and $86,000 per plaintiff for emotional distress. The trial judge declined to submit the issue of punitive damages to the jury, but awarded the plaintiffs an additional $302,920.44 in attorneys’ fees and $211,069.47 in litigation expenses. USAA appeals. |
| Summary of Opinion Analysis: | Issue 1: Wind damage USAA argues that the evidence established, as a matter of law, that storm surge, an excluded cause, caused the majority of the damage to the Lisanby home, and thus USAA was entitled to a judgment notwithstanding the verdict. In the alternative, USAA argues that it is entitled to a new trial because the overwhelming weight of the evidence points to water damage. The Lisanbys’ key expert witness was a structural engineer, who testified that there was “overwhelming” evidence that wind damage had structurally destroyed the Lisanby home long before water reached the first floor. It was undisputed that hurricane-force winds reached the Lisanby house far in advance of the storm surge of seawater. Their expert testified that, once these winds breached the first floor, they caused a tunneling effect throughout the house, creating suction and pressure from the inside. According to the expert, it was this internal pressure, and not the storm surge, that first caused significant damage to the house, especially to the ground floor. USAA offered its own engineering expert, who opined that storm surge destroyed the garage and cottage and caused the damage to the first floor. It was his opinion that the force of the wind, alone, never exceeded the design load of the first floor walls; therefore, it was his conclusion that water and not wind had caused the devastating damage. Both sides offered reasoned explanations for the damage to the home. The evidence presented at trial was very much in dispute and differing conclusions could be reached, based on this evidence. Therefore, viewing the evidence in the light most favorable to the plaintiffs, the trial judge did not abuse his discretion in denying USAA’s alternative motion for a new trial. Issue 2: Bad faith The Lisanbys were awarded damages for emotional distress, attorneys’ fees, and litigation expenses based on their claim that USAA acted in bad faith when it denied their claim. USAA argues that the Lisanbys are not entitled to recover these extracontractual damages because USAA had an arguable basis for denying the claim. The plaintiff’s burden in proving a claim for bad faith refusal goes beyond proving mere negligence in performing the investigation. The level of negligence in conducting the investigation must be such that a proper investigation by the insurer would easily adduce evidence showing its defenses to be without merit. The plaintiffs cite numerous instances of conduct that they contend support a finding that USAA acted in bad faith. However, most of these allegations are not supported by the record, and USAA persuasively disputes all of them without response from the plaintiffs. For example, the plaintiffs claim that USAA concluded on August 29, 2005, that the damage was caused by flood. The record simply does not support this assertion. Based on a phone call from Admiral Lisanby to USAA shortly after the storm, the USAA representative opened both a homeowners’ insurance claim and a flood insurance claim for the Lisanby property. There is no indication that USAA attributed most of the loss to storm surge until after it had completed an investigation. Although the jury ultimately decided that it was wind, and not water, that initially caused the destruction, the evidence does not establish that USAA acted in bad faith in denying the majority of the homeowners’ claim. Because USAA had an arguable basis for its denial, the defendants are entitled to judgment as a matter of law on the issues of emotional distress damages, attorneys’ fees, and litigation expenses. Issue 3: Replacement costs The parties stipulated to the amount of replacement costs as follows: $1,577,324 for the dwelling, $45,643 for the garage, and $88,746 for the cottage. Although USAA stipulated to these amounts, it argued that this evidence was erroneously admitted because, under the homeowners’ policy, the Lisanbys were not entitled to recover replacement costs. The policy provides that in the absence of replacement, the insured was entitled to the actual cash value of the damaged or destroyed property. The plaintiffs argue that evidence of replacement costs was necessary to a determination of actual cash value. USAA admits that replacement costs are relevant to determining actual cash value, but argues that it was prejudiced because plaintiffs were not required by the trial court to restrict their evidence to actual cash value of the loss. USAA fails to point to any evidence in the record that the verdict was based on replacement costs alone, and the evidence adduced at trial included an actual cash value of $1.6 million. Therefore, the trial judge did not abuse his discretion in admitting evidence of replacement costs. Issue 4: Change of venue USAA argues that the trial court erred by denying its motion for a change of venue because it contended that it could not receive a fair trial in Jackson County due to community bias. Months before trial, USAA filed a motion for a change of venue, arguing that it could not receive a fair trial in any of the Mississippi Gulf Coast counties because: the majority of potential jurors were adversely affected by Hurricane Katrina; there had been widespread negative publicity about insurance companies in general; prominent coastal residents had filed suit against their homeowners’ insurance companies; and there was potential for witness and juror intimidation. The plaintiffs responded that the majority of the media attention was directed at State Farm, not USAA, and that no article mentioned the Lisanbys’ case specifically. The trial judge denied the request for a change of venue, reasoning that voir dire examination would be an adequate means to ensure that an impartial jury was impaneled. With the exception of one article published just before trial, USAA did not present to the trial court any pretrial news coverage specific to the Lisanbys’ case. Out of the twenty articles attached to its motion for a change of venue, only two mentioned USAA, and most of the articles focused on State Farm. As for the number of similar claims in Jackson County, USAA provided no such statistics, and none of the veniremen had filed a lawsuit against his or her homeowners’ insurance carrier. USAA knew well in advance of trial that its motion for a change of venue had been denied; yet the record does not indicate that the defendant took any significant steps to ferret out its perceived juror bias beyond its extensive voir dire examination of the venire. Neither did USAA ask for additional peremptory challenges or for an increase in the size of the venire. Thus, the trial judge did not abuse his discretion in declining to transfer venue out of Jackson County. Furthermore, the trial judge struck all fourteen jurors who indicated that they might be biased against USAA. Issue 5: Mistrial USAA argues that the trial judge should have granted a mistrial based on plaintiffs’ counsel’s “send a message” argument and based on the same attorney’s interview with local media. The trial judge is in the best position for determining the prejudicial effect of an objectionable remark. Here, the judge did not abuse his discretion by refusing to grant a mistrial. The trial judge promptly and unequivocally instructed the jurors not to consider the remarks in question, and they are presumed to have done so. USAA also argues that a mistrial was warranted because one of the plaintiffs’ attorneys conducted an interview with a local television station in front of the courthouse and in view of the jurors as they were recessing between deliberations. When it was brought to the judge’s attention the following day, the judge individually polled the jurors about the interview. Every juror but one admitted having seen the interview in progress, but none of the jurors heard what was being said. The only statement to which USAA points is the plaintiffs’ attorney’s assertion to the reporter that the Lisanbys “should win.” Such a statement, even if overheard by the jurors, would not have had a substantial likelihood of materially prejudicing the verdict. Issue 6: Punitive damages On cross-appeal, the plaintiffs argue that the trial judge erred by refusing to hold an evidentiary hearing before denying their request to move to a punitive damages phase of the trial. Because bad-faith denial of their claim was the only basis the plaintiffs asserted to support punitive damages, this issue is moot. |
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