Title: Parker v. Southern Farm Bureau Cas. Ins. Co.

State: arkansas

Issuer: Arkansas Supreme Court

Document:

Rickey PARKER v. SOUTHERN FARM BUREAU
CASUALTY INSURANCE COMPANY

95-1134                                            ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered December 23, 1996


1.   Discovery -- trial court has wide discretion -- when abuse of
     discretion will be found. -- The trial court has wide
     discretion in matters pertaining to discovery and a trial
     court's decision will not be reversed absent an abuse of
     discretion; abuse of discretion has been found where there has
     been an undue limitation of substantial rights of the
     appellant under the prevailing circumstances; a motion for
     production of documents must be considered in the light of the
     particular circumstances which give rise to it, and the need
     of the movant for the information requested.

2.   Discovery -- goal of discovery to allow litigant to prepare
     adequately. -- In cases where the appellant is relegated to
     having to prove his claim by documents, papers, and letters
     kept by the appellee, the scope of discovery should be
     broader; this factor is considered in deciding whether there
     has been an abuse of discretion in denying a discovery
     request; the goal of discovery is to permit a litigant to
     obtain whatever information he may need to prepare adequately
     for issues that may develop without imposing an onerous burden
     on his adversary.  
3.   Discovery -- protective order properly granted -- no abuse of
     discretion found. -- Where, during the course of discovery,
     appellee provided appellant with substantial information and
     material regarding the billing and notice procedures, and
     appellant did not request cancellation notices issued by
     appellee to other policyholders prior filing his cause of
     action, and appellant did not show how notices sent after his
     lawsuit was filed would be relevant to his bad-faith claim,
     the supreme court could not say that the trial court abused
     its discretion in granting the protective order limiting
     discovery; a cause of action for bad faith must exist and be
     complete at the time such a lawsuit is filed; a motion for
     production of documents must be considered in the light of the
     particular circumstances which give rise to it and the need of
     the movant for the information requested.  

 4.  Discovery -- work product not equal to attorney-client
     privilege. -- Work product is not the same as a privilege that
     protects the sanctity of confidential communications; the
     attorney-client privilege and the work-product rule the
     principles upon which they are based, while susceptible to
     confusion, are separate and distinct.

5.   Discovery -- trial court has broad discretion in matters
     relating to discovery -- no abuse of discretion found. --  The
     trial court's ruling excluding certain portions of appellant's
     claim file under the work-product doctrine was upheld where
     appellant did not explain how these documents were pertinent
     to his claim of bad faith, nor did he argue that he was
     prejudiced by their exclusion; no abuse of discretion was
     shown; a trial court has broad discretion in matters
     pertaining to discovery, and that discretion will not be
     second-guessed by the appellate court absent an abuse of
     discretion that is prejudicial to the appealing party. 

6.   Torts -- insurance companies -- when liability for bad faith
     may be incurred. -- An insurance company may incur liability
     for the first-party tort of bad faith when it affirmatively
     engages in dishonest, malicious, or oppressive conduct in
     order to avoid a just obligation to its insured; the tort of
     bad faith requires affirmative misconduct, without a good-
     faith defense; the affirmative conduct must be dishonest,
     malicious, or oppressive in an attempt to avoid the insurer's
     liability under an insurance policy. 

7.   Torts -- bad faith -- affirmative misconduct must be present
     for liability to be incurred. -- The tort of bad faith cannot
     arise merely from the denial of a claim, without some
     affirmative misconduct; a cause of action must exist and be
     complete at the time the action is commenced; the subsequent
     occurrence of a material fact cannot aid in maintaining it.

8.   Torts -- none of appellee's conduct after filing of complaint
     could be used by appellant to support his claim of bad faith -
     - appellee's action did not rise to level of bad faith. --
     Where none of the conduct by appellee after the filing of the
     complaint, including legal positions asserted, could provide
     a basis for appellant's bad-faith claim, and it was not
     apparent from the abstract that the lack of notice was even
     raised by appellant prior to the filing of the lawsuit, the
     court could not say that appellee's action, albeit mistaken,
     in denying the claim for nonpayment of premium constituted
     dishonest, malicious, or oppressive conduct rising to the
     level of bad faith.

9.   Attorney & client -- amount of fee awarded -- trial court has
     superior perspective in determining. -- Due to the trial
     court's superior acquaintance with the record and the quality
     of the service rendered, the supreme court will usually defer
     to the trial court's superior perspective in awarding
     attorney's fees and will reverse only when there has been an
     abuse of discretion.  

10.  Attorney & client -- amount of fee awarded -- factors to be
     considered. -- The amount of the fee should not be such that
     attorneys would avoid the type of litigation, or fail to
     sufficiently prepare, that the fee should be commensurate with
     the time and amount of work involved, and the ability present
     and necessary to meet the issues that arise in the case; the
     amount recovered in the action is a relevant consideration.

11.  Attorney & client -- award of fee -- factors for determination
     of amount. -- The following factors are relevant in the
     determination of an award of attorney's fees: (1) the
     experience and ability of the attorney; (2) the time and labor
     required to perform the service properly; (3) the amount
     involved and the result obtained in the case; (4) the novelty
     and difficulty of the issues involved; (5) the fee customarily
     charged for similar services in the locality; (6) whether the
     fee is fixed or contingent; (7) the time limitations imposed
     upon the client in the circumstances; and (8) the likelihood,
     if apparent to the client, that the acceptance of the
     particular employment will preclude other employment by the
     lawyer.

12.  Attorney & client -- factors properly considered -- no abuse
     of discretion found in fee awarded. -- Where appellant 
     submitted a detailed bill for 117.60 total hours, it was
     virtually impossible to separate those services related to the
     coverage claim and those related to the bad-faith claim, the
     fee was very large in relation to appellant's recovery, and
     the trial court, in its order, considered these and all of the
     relevant factors presented in the case, the supreme court
     could not say that there was an abuse of discretion in the
     award of the fee.


     Appeal from Ashley Circuit Court; Sam Pope, Judge; affirmed on
appeal; affirmed on cross appeal.
     Arnold, Hamilton, & Streetman, for appellant.
     John Richard Byrd, Sr., for appellee.

     Andree Layton Roaf, Justice.
     This is an insurance case.  Rickey Parker sued Southern Farm
Bureau Casualty Insurance Company ("Farm Bureau"), contending that
an insurance policy Farm Bureau issued to him covered losses he
sustained in an automobile accident.  Farm Bureau denied coverage,
claiming that the policy issued to Parker had expired due to
nonpayment of the premium.  The trial court granted summary
judgment to Parker on the issue of coverage, and granted summary
judgment to Farm Bureau on Parker's bad-faith claim.  Parker
asserts on appeal that the trial court 1) impermissibly limited the
scope of discovery, 2) erroneously dismissed his bad-faith claim,
and 3) arbitrarily reduced his request for attorney's fees.  On
cross-appeal, Farm Bureau argues that the attorney's fees should
have been further reduced.  We affirm on appeal and on cross-
appeal.
     The facts which led to this litigation may be summarized as
follows.  Farm Bureau issued an automobile insurance policy to
Parker on June 6, 1993.  The policy was for a six-month term, from
September 9, 1993, through December 9, 1993, with a total premium
of $745.35.  Parker elected to pay the premium in quarterly
installments, and made the initial payment of $377.77 at issuance
of the policy.
     Farm Bureau mailed Parker a "Billing Notice" on August 11,
1993, advising him that his quarterly payment was due, that his
coverage would expire on September 9, 1993, if the payment was not
made, and that he would receive no further renewal notice.  Farm
Bureau did not receive Parker's payment by September 9, 1993. 
Although Parker's check register indicated that he wrote a check to
Farm Bureau for the premium on September 2, 1993, this check never
cleared his bank. 
     Parker's daughter was involved in a two-vehicle accident while
driving one of Parker's insured vehicles.  She was at fault in the
accident.  Parker's vehicle was damaged in the amount of $1,456.21,
and the other vehicle sustained damages in the amount of $439.70. 
Parker reported the accident to his Farm Bureau agent on September
17, 1993, and also filed a claim for his losses. 
     On September 22, 1993, Farm Bureau mailed Parker a
"Cancellation Reminder Notice" informing him that his policy was
canceled September 9, 1993, because the quarterly premium had not
been paid. The notice invited Parker to reinstate his coverage. 
Parker took the notice to his Farm Bureau agent on September 27,
1993, and also showed the agent his check register with the
notation of a check for the September 2nd premium payment.  Parker
paid the premium on September 27, and his Farm Bureau agent
attempted to reinstate Parker's coverage effective September 9,
1993.  However, Farm Bureau's underwriting department refused to
allow the retroactive reinstatement and instead reinstated the
policy effective October 4, 1993.  
     Parker's efforts to settle the claim with Farm Bureau were
unsuccessful, and he filed suit against the company on July 13,
1994.  Parker sued Farm Bureau for failure to comply with the terms
of his policy and with Ark. Code Ann.  23-89-304 (Michie. Repl.
1992), which requires ten days' notice of cancellation for
nonpayment of insurance premiums.  Parker also asserted a claim for
the first party tort of bad faith for the failure to pay his claim. 
He sought recovery for the damages to his vehicle, statutory
penalty, attorney's fees, punitive damages, and a declaratory
judgment that Farm Bureau was required to pay the damages sustained
by the other driver.  
     The trial court granted Parker summary judgment on the issue
of insurance coverage, finding that Farm Bureau failed to comply
with the ten-day notice requirement.  The trial court granted Farm
Bureau summary judgment on the bad-faith claim.  Parker was awarded
$1,403.73, which included the twelve percent statutory penalty, and
attorney's fees in the amount of $10,676.  Farm Bureau was also
adjudged liable for the other driver's damages of $439.59. 
     Parker appeals from the dismissal of his bad faith claim and
from the trial court's award of less than the requested attorney's
fees.  Parker also asserts that the trial court erroneously limited
the scope of discovery, which he needed to establish his claim of
bad faith.  Farm Bureau cross-appeals the trial court's award of
attorney's fees.  
     Although Farm Bureau does not appeal the award of summary
judgment on the issue of coverage, it is necessary to review the
basis of the trial court's ruling on this question in order to
address Parker's arguments regarding his bad-faith claim.  Parker's
policy was for a six-month period, and the declaration sheet issued
stated that the policy period was June 9, 1993, through December 9,
1993.  The trial court based its award of summary judgment upon
Farm Bureau's failure to comply with the notice provision of
Parker's policy and with the ten-day notice required by Arkansas
statute.  This statutory notice requirement is found in the
subchapter dealing with cancellation and nonrenewal of automobile
liability, physical damage and collision policies, and provides as
follows:
     No notice of cancellation to any named insured shall be
     effective unless mailed or delivered at least twenty (20)
     days prior to the effective date of cancellation,
     provided that, where cancellation is for nonpayment of
     premium, at least ten (10) days' notice of cancellation
     accompanied by the reason therefor shall be given.
Ark. Code Ann.  23-89-304(a)(2) (emphasis added).     
     Parker's policy contained a provision entitled "Cancellation,"
which essentially tracked the statutory notice provision, and
provided as follows:
     If we cancel your policy, for non payment of premium, we
     will notify you in writing at least ten (10) days before
     the date of cancellation.  If we cancel your policy for
     any other reason we will notify you in writing at least
     twenty (20) days before the date of cancellation. . . .
     The policy period will end of the date and time stated in
     the notice.
     (Emphasis added.)  The policy contained a further provision
concerning renewal premium and policy periods: 
     Your Declaration or renewal certificate will show the
     policy period.  Unless cancelled, this policy may be
     renewed at our option if the required premium is paid by
     you and accepted by us.  Failure to pay on time will end
     coverage.  If your policy does expire and you send a
     later payment of the required premium, we may reinstate
     at our option, as of the date and time the payment is
     received.  A new policy period is then established.
     The only notice Farm Bureau sent to Parker prior to
cancellation of his policy was the following "Billing Notice," sent 
twenty-seven days before his quarterly installment payment was due:
     It is time to make your quarterly premium payment on your
     auto policy.  Please accept this notice that your
     coverage is due to expire 12:01 am, 09-09-93.  To keep
     your coverage in force please mail us your payment before
     that date.  In order to reduce expenses this will be the
     only renewal notice you will receive. . . .
     Farm Bureau insisted to the trial court and continued to
assert on appeal that Parker only purchased insurance for three
months, and that the statutory notice of cancellation thus did not
apply to a policy which expired by its own terms.  Farm Bureau also
maintained, alternatively, that the billing notice sent to Parker
satisfied the statutory notice requirement.  The trial court found
that Farm Bureau's reliance on the case of Farmers Ins. Co. v.
Hall, 263 Ark. 734,