Source: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca10-89-02271/USCOURTS-ca10-89-02271-0/pdf.json

Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

---

FI LED 

UNITED STATES COURT OF APPEALS 

TENTH CIRCUIT 

Uaitcd Sttm Court of Appeals 

Tenth Circuit 

JUL 2 6 1991 

DONNIE OWENS, STUART ANDERSON, ) 

doing business as ANDERSON FARMS, ) 

) 

Plaintiffs-Appellees, ) 

) 

vs~ ) 

) 

INTERNATIONAL BUSINESS AND ) 

MERCANTILE REASSURANCE COMPANY, ) 

) 

Defendant-Appellant. ) 

&OBERT L. HOECKER 

Clerk 

Nos. 89-2242 & 89-2271 

(D.C. No. 87-0234-JB) 

(D.N.M.) 

ORDER AND JUDGMENT* 

Before MOORE and BALDOCK, Circuit Judges and ANDERSON, District 

Judge.** 

Defendant-appellant International Business and Mercantile 

Reassurance Company (International) appeals from a jury verdict 

awarding compensatory and punitive damages to plaintiffs-appellees 

Donnie Owens (Owens) and Stuart Anderson (Anderson). Our 

jurisdiction in this diversity case arises under 28 u.s.c. S 1291. 

We affirm. 

* This order and judgment has no precedential value and shall 

not be cited, or used by any court within the Tenth Circuit, 

except for purposes of establishing the doctrines of the law of 

the case, res judicata or collateral estoppel. 10th Cir. R. 36.3 

** The Honorable Aldon J. Anderson, Senior United States 

District Judge for the District of Utah, sitting by designation. 

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 1 
Background 

Plaintiff Owens cultivated ten farms in the Estancia Valley 

in central New Mexico. Nine of these farms (Ashcroft, Bass, 

Carrejo, Kale, Knox, Montoya, Stephens, Vaughan and H. Vaughan) 

were operated by Owens. The tenth farm (Schwebach) was operated 

by Owens and Anderson as a joint venture. Most of Owens's farming 

effort was devoted to the cultivation of silage to fulfill a 

supply contract with the Valley Gold dairy. In spring 1986, Owens 

and Anderson attended a sales presentation by International's 

representative, Lee Looney. International offered two types of 

crop insurance, hail and multiperil. Hail insurance is 

wholly-private insurance which compensates farmers for hail damage 

to crops, in excess of five-percent of the crop. Multiperil 

insurance is federally-subsidized insurance in which the federal 

government reimburses private insurers for claims paid. 

Multiperil coverage insures against a host of problems which can 

affect farm production in a given year by guaranteeing up to 

seventy-five percent of the insured's production. 

A key factor in the adjustment of multiperil losses is the 

method of calculating production losses. At the sales 

presentation, plaintiffs expressed concern that, in determining 

production under the multiperil policy, International would use 

county per-acre averages, rather than the much-higher yields from 

their own farms. According to plaintiffs, Looney assured them 

that production guarantees would be calculated on the basis of 

past production on individual farms, or, if past figures were not 

-2-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 2 
available, by production on adjacent farms. Plaintiffs claim 

that, in reliance on these assurances, they purchased both crop 

hail and multiperil policies from International. 

In June 1986, a hail storm caused extensive damage to the 

Schwebach and Vaughan farms and less extensive damage to the other 

farms. The hail resulted both in direct physical damage to the 

plant tissue as well as severe soil compaction. International's 

adjuster originally concluded that no compensable damage had 

occurred on the Schwebach farm. The adjuster convinced Owens to 

sign a claim withdrawal form, although Owens never intended to 

withdraw his claims. The parties disputed the extent of the 

damage and the calculation of production guarantees under the 

multiperil policy, including 1986 production yields. Owens sought 

to cease cultivation of the heavily-damaged Schwebach farm and 

declare the farm a total loss, but International never provided 

the necessary assurances. With the exception of a partial payment 

for casualty losses, International never paid plaintiffs for the 

1986 crop damage. 

Plaintiffs sued International alleging breach of contract, 

promissory estoppel, negligent misrepresentation, fraudulent 

misrepresentation, bad faith and violation of the New Mexico 

Unfair Trade Practices Act, N.M. Stat. Ann. §§ 57-12-1 to 57-12-15 

(1987 Repl. Pamp. & 1990 Cum. Supp.), and the Unfair Insurance 

Practices Act, N.M. Stat. Ann.§§ 59A-16-1 to 59A-16-30 (1988 

Repl. Pamp. & 1990 Cum. Supp.) In addition to payment under the 

policy, Owens sought consequential damages for lost business 

-3-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 3 
• 

opportunities, loss of credit, loss of equipment due to 

repossession, loss of the Valley Gold dairy contract, loss of his 

feed store and loss of his farming operation. He also sought 

punitive damages. Anderson sought consequential damages for lost 

business opportunities due to the loss of the Schwebach joint 

venture and Valley Gold contract, and punitive damages. By 

special interrogatories, the jury returned a verdict for the 

plaintiffs on all claims except fraudulent misrepresentation. The 

jury awarded damages to each plaintiff as follows: 

Owens 

Casualty losses under crop hail policy $ 107,454 

Casualty losses under multiperil policy 148,7401 

Losses from futile cultivation of Schwebach 

Damages resulting from repossessed equipment 

Damages from lost credit 

Damages from lost Valley Gold contract 

Subtotal $ 

17,500 

215,869 

120,000 

350,000 

959,563 

Punitive Damages 

Total 

Anderson 

Casualty losses under crop hail policy 

Casualty losses under multiperil policy 

Losses from futile cultivation of Schwebach 

Damages from lost Valley Gold contract 

Subtotal 

Punitive Damages 

Total 

1,500 .ooo 

$ 2,459,563 

$ 

$ 

$ 

64,410 

40,7072 

17,500 

150,000 

272,617 

500,000 

772,617 

1 The jury's determination of casualty losses was reduced by a 

previous partial payment by International to Owens. 

2 The jury's determination of casualty losses was reduced by a 

previous partial payment by International to Anderson. 

-4-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 4 
I. Coverage Under Crop Hail Policy 

The crop hail policy provided coverage for "direct loss" of 

insured crops caused by hail. International argued that a "direct 

loss" only occurs when hail physically damages the tissue of the 

crop. Plaintiffs countered that soil compaction caused by hail 

was a compensable "direct loss" under the policy. The district 

court rejected International's argument and instructed the jury in 

pertinent part as follows: 

The Court has determined as a matter of law that, 

for crop damage to be a covered loss under the Crop Hail 

Policy, the damages must be a direct consequence of 

hail. The Policy does not require that the crop damage 

have resulted from direct impact of hail upon the 

plants. 

IR. doc. 397, instr. 13a. International argues that this 

instruction is based upon misinterpretation of the contract. 

We review the district court's state law determinations de 

IlQYQ. Salve Regina College v. Russell, 111 S. Ct. 1217, 1225 

(1991). Under New Mexico law, the words in an insurance contract 

must be given their ordinary meaning. Safeco Ins. Co. v. McKenna, 

565 P.2d 1033, 1037 (N.M. 1977). The test is not what the insurer 

intended its words to mean, but what a reasonable person in the 

position of the insured would understand those words to mean. ,lYY 

Nelson Grain Co. v. Commercial Union Ins. Co., 453 P.2d 587, 588 

(N.M. 1969). Any ambiguity in the insurance contract is resolved 

against the insurer. Id. at 589. Construction of a contract, 

insurance or otherwise, poses a question of law for the court to 

decide; only when construction of a contract depends on extrinsic 

evidence is a factual issue created for the jury's resolution. 

-5-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 5 
See Valdez v. Cillessen & Son, Inc., 734 P.2d 1258, 1264 (N.M. 

1987). 

All losses directly traceable to hail are comprehended under 

a hail insurance policy. 5 J. Appleman, Insurance Law and 

Practice, § 3148 at 476 (1970); l0A G. Couch, Couch on Insurance, 

§ 42:364 at 480 (2d ed. 1982). A "direct loss" under a hail 

insurance policy "is one proximately caused by the hazard insured 

against." Southall v. Farm Bureau Mut. Ins. Co., 632 S.W.2d 420, 

421 (Ark. 1982). See,~, Harris v. Michigan Mutual Hail Ins. 

Co., 173 N.W. 533, 537 (Mich. 1919) (hail damage to fertilized 

blossoms compensable under hail policy protecting loss to fruit); 

Stephanie v. Consumers Mut. Ins. Co., 74 N.W.2d 116, 118 (Minn. 

1955) (water damage after roof had been damaged by hail storm 

constituted direct loss under hail policy); Strother v. North 

Carolina Farm Bureau Mut. Ins. Co., 370 S.E.2d 82, 83-84 (N.C. 

App. 1988) (collapse of greenhouses from weight of accumulated 

sleet constituted direct hail loss under multiperil policy), 

review denied, 373 S.E.2d 556 (N.C. 1988); Reeves v. National Fire 

Ins. Co., 170 N.W. 575, 577 (S.D. 1919) (rust damage to crop loss 

directly traceable to hail). Here, plaintiffs contended that the 

Schwebach farm soil was compacted by the hail, resulting in a 

restricted air supply to the corn plants which inhibited root 

development. Such damages, if proven, would be a direct and 

proximate result of the hail storm; no intervening causes are 

alleged to have caused the soil compaction. Construing the term 

"direct loss" according to its ordinary meaning, we therefore 

-6-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 6 
conclude that a reasonable person in the position of the insured 

would understand the term to encompass soil compaction directly 

traceable to hail. See Safeco, 565 P.2d at 1037; Ivy Nelson 

Grain, 453 P.2d at 588. Thus the district court correctly 

construed the crop hail policy to encompass soil compaction. See 

Appleman,§ 3148 at 476; Couch,§ 42:364 at 480. 

II. Sufficiency of Evidence 

International argues that insufficient evidence exists to 

support the jury's determination and calculation of damages, and 

that the district court should have granted its motion for 

judgment notwithstanding the verdict (j.n.o.v.). "When reviewing 

a district court's denial of j.n.o.v., we view the evidence, 

together with the inferences therefrom, in the light most 

favorable to the jury's verdict." Wheeler v. John Deere Co., Nos. 

90-3080 & 90-3120, slip. op. at 27 (10th Cir. May 16, 1991) [1991 

WL 78087]. A j.n.o.v. is appropriate "only if the proof is all 

one way or so overwhelmingly preponderant in favor of the movant 

as to permit no other rational conclusion." J.I. Case Credit 

Corp. v. Crites, 851 F.2d 309, 311 (10th Cir. 1988). 

A. 

Concerning the Ashcraft, Bass, Carrejo, Kalo, Knox, Montoya 

and Stephens farms, International first claims insufficient 

evidence exists to support a thirty-percent loss due to hail. We 

disagree. The jury heard testimony from Clement Ray Austin, 

-7-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 7 
Owens's employee, that all the farms suffered hail damage in 

varying degrees. III R. 50-53. Owens and his former wife also 

testified to the pervasive hail damage among all the farms. II R. 

198; IV R. 104. Finally, Owens's expert witness estimated the 

hail damage on the other farms by comparing 1986 production to 

that of previous years. The expert then subtracted 1986 

production from farm production in 1984 or 1985 to arrive at the 

lost production. 3 III R. 162-72. While this method of 

calculation is not beyond question, we cannot say that the 

evidence on Owens's damages is so overwhelmingly preponderant in 

favor of International's position that a reasonable jury could not 

accept the calculations advanced by Owens. 

B. 

International next questions the sufficiency of the evidence 

to support the jury's finding that the Schwebach farm suffered 

one-hundred-percent damage and the Vaughan farm, eighty-percent. 

Owens testified that between thirty and thirty-three acres of the 

Vaughan farm were damaged heavily by hail. R. IV 81. He also 

testified that Schwebach did not produce in 1986. R. IV 121. The 

jury also heard expert testimony estimating the loss at each farm. 

3 International argues that the expert's exhibit setting forth 

the percentage of hail damage on the other farms lacked any 

evidentiary foundation. However, at trial International 

stipulated that the information the expert relied upon was in 

evidence. III R. 168, 172. International is bound by its 

stipulation. See Wheeler v. John Deere Co., Nos. 90-3080 & 

90-3120, slip op. at 12-13 (10th Cir. May 16, 1991) [1991 WL 

78087]. 

-8-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 8 
International recognizes that the most probative testimony 

concerning damages on the Schwebach and Vaughan farms was by Owens 

and Anderson, and suggests that this testimony should carry less 

weight on appeal. Such credibility determinations lie within the 

province of the jury, and on appeal we may not second-guess the 

jury. Sufficient record evidence supports the finding of 

damages. 4 

c. 

International next challenges the sufficiency of the evidence 

to establish Owens's actual production from his farming 

operations, a determination critical to calculating his damages 

under the multiperil policy. No explanation is provided as to how 

plaintiffs' proof was inadequate. The jury heard evidence that 

Owens either shipped his 1986 harvest to the Valley Gold dairy or 

else stored the silage in bags on the farm. II. R. 248-49; IV R. 

118-27. Plaintiffs' expert calculated 1986 production by adding 

the weight slips from the Valley Gold shipments (10,496.7 tons) to 

the estimated weight of silage stored in bags (1,467.7 tons) to 

reach a total of 11,964 tons. III R. 169. Although this method 

may not be exact, it is an estimate which provided a reasonable 

basis for the jury's verdict. 

4 International devotes considerable portions of its brief 

arguing that Owens's alleged failure to comply with proper claims 

procedure should preclude his recovery. See Appellants' Brief at 

27-29. International was free to advance this argument below, and 

we decline to consider it for the first time on appeal. 

-9-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 9 
o. 

International urges that it was entitled to j.n.o.v. on 

Anderson's claim because insufficient evidence exists that 

Anderson relied on Looney's misrepresentations. This argument is 

meritless. Anderson testified explicitly that he relied on 

Looney's representations in deciding to pursue the joint venture 

with Owens. II R. 122. 

E. 

International also challenges the sufficiency of the evidence 

to support the jury's award of consequential damages resulting 

from: (1) Owens's loss of equipment due to repossession, (2) 

Owens's loss of credit, and (3) Owens's and Anderson's loss of 

business. Expert testimony and trial exhibits supported an 

estimate of Owens's damages due to the loss of equipment. III R. 

145-57. Owens testified that he was unable to secure credit after 

the disastrous 1986 season. IV R. 140-48. He further discussed 

the financial effect this had on his businesses. IV R. 169-75. 

Finally, Anderson testified about the Schwebach venture's losses, 

both in terms of direct economic losses and unnecessary equipment 

purchases. II R. 140-47. 

International responds that Owens was in dire financial 

straits before the 1986 growing season and that his businesses 

would have failed regardless. International again argues that the 

evidence supporting plaintiffs' consequential damages comes 

primarily from personal testimony which is inherently unreliable. 

-10-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 10 
But the task of choosing between competing versions of events and 

evaluating the credibility of witnesses rests with the jury. 

Sufficient evidence supports the jury's determination of 

consequential damages. 

III. Exclusion of Evidence 

International argues that the district court erred in 

excluding evidence of Owens's 1984 claim experience and the 

failure to report the proceeds of this claim to the Internal 

Revenue Service. We review a district court's exclusion of 

evidence for abuse of discretion. Comcoa, Inc. v. NEC Telephones, 

Inc., 931 F.2d 655, 663 (10th Cir. 1991). 

Evidence of prior insurance claims frequently is more 

prejudicial than probative. See E. Cleary, McCormick on Evidence 

§ 196 at 577-80 (3d ed. 1984). No evidence suggests that Owens's 

prior claim was fraudulent and the jury heard evidence that Owens 

had prior experience with crop insurance. See Warner v. 

Transamerica Ins. Co., 739 F.2d 1347, 1350 (8th Cir. 1984) (in 

case involving business fire, exclusion of evidence concerning 

previous fire at insured's home upheld; no evidence either fire 

was deliberate and evidence not probative of insured's familiarity 

with insurance claims); II R. 10-13. The district court did not 

abuse its discretion in excluding evidence of the prior claim. 

As to Owens's failure to report proceeds from his prior 

insurance claim to the IRS, the district court's decision that 

this evidence was too prejudicial in relation to relevance plainly 

-11-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 11 
was not an abuse of discretion. See Fed. R. Evid. 403, 404(b); 

Lesueur Creamery, Inc. v. Haskon, Inc., 660 F.2d 342, 350 (8th 

Cir. 1981), cert. denied, 455 U.S. 1019 (1982). 

IV. Expansion of Multiperil Coverage 

Without citing any authority, International argues that 

plaintiffs could not obtain coverage level guarantees in excess of 

that available under the federally subsidized program. This 

argument is flawed. "An insurance company is bound by the 

construction placed upon a provision of the policy by its agent 

provided the agent is acting within the scope of his actual or 

apparent authority •.•. " 4 Couch on Insurance§ 26A:45 at 

91-92. See Gilmore v. Constitution Life Ins. Co., 502 F.2d 1344, 

1348-49 (10th Cir. 1974); Pribble v. Aetna Life Ins. Co., 501 P.2d 

255, 259-60 (N.M. 1972). An agent's apparent authority is "such 

authority as a reasonably prudent person naturally would suppose 

the agent to possess in view of the insurer's conduct in clothing 

the agent with the trappings of actual authority." Ellingwood v. 

N.N. Investors Life Ins., 805 P.2d 70, 71 (N.M. 1991). Whether an 

insurance agent possesses authority to bind his principal is a 

question for the jury whenever facts are in dispute. Id. 

Three witnesses testified that International's agent, Lee 

Looney, told plaintiffs that multiperil guarantees would be based 

upon the insured's past production or production from adjacent 

farms. No dispute exists that Looney was acting within the scope 

of his authority when he made these representations. Looney's 

-12-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 12 
statements may have exceeded the terms of the insurance policy 

issued pursuant to a federally subsidized program, but 

International still is liable for the statements. Indeed, federal 

regulations in effect at the time plaintiffs entered into the 

insurance contract explicitly recognized that an insured who 

relies in good faith upon an insurance agent's misrepresentation 

is entitled to indemnification in accord with his reliance. See 7 

C.F.R. S 432.5 (1986). 

V. Accord and Satisfaction 

According to International, Owens's acceptance of a check for 

losses arising out of the Schwebach farm constituted an accord and 

satisfaction concerning multiperil policy claims. 5 Accord and 

satisfaction is an affirmative defense which must appear in a 

party's pleading. Fed. R. Civ. P. 8(c). Failure to affirmatively 

plead such a defense in the district court precludes this court 

from considering it for the first time on appeal. Horwitz v. 

Board of Medical Examiners, 822 F.2d 1508, 1512 (10th Cir.), cert. 

denied, 484 U.S. 964 (1987). International failed to plead 

affirmatively accord and satisfaction when in district court; 

consequently, we decline to address the issue any further. 

5 The jury's award was offset by this partial payment. 

-13-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 13 
VI. Punitive Damages 

A. 

Concerning multiperil crop insurance, International contends 

that it acted as an agent or instrumentality of the Federal Crop 

Insurance Corporation (FCIC) and consequently is immune from 

punitive damages. See Missouri Pac. R.R. Co. v. Ault, 256 U.S. 

554 (1921). In advancing this contention, International places 

principal reliance on Smith v. Russellville Prod. Credit Ass'n, 

777 F.2d 1544 (11th Cir. 1985). In Smith, the Eleventh Circuit 

held that privately-owned Production Credit Associations (PCAs) 

are federal instrumentalities immune from punitive damages. Id. 

at 1550. 

International's argument depends upon the strength of the 

analogy between International and a PCA. The Smith court reasoned 

that, "despite their 'private' characteristics, PCAs remain 

federal instrumentalities, operated pursuant to Congressional 

mandate." Id. at 1550. As support, the court noted that Congress 

stated explicitly that each PCA "'shall continue as a federally 

chartered instrumentality of the United States.'" Id. (quoting 12 

U.S.C. §2091). In contrast, the district court found that 

International as a re-insurer was not so linked to the federal 

government. "While it is clear that the FCIC reserves the right 

to impose certain requirements on the private re-insuring company, 

it does not follow therefrom that all activities and undertakings 

of the re-insurance company are being supervised by the Federal 

Government." II R. 24. International "is simply a private 

-14-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 14 
insurer that participates in the crop insurance for its own 

benefit and not for the benefit of the FCIC." II R. 25. Because 

the district court found no agency relationship between 

International and the FCIC, id. at 25, 6 and because such a 

relationship finds no support in the applicable statutes and 

regulations, International cannot be treated as an instrumentality 

of the United States immune from punitive damages. See generally 

Olney Sav. & Loan Ass'n v. Trinity Banc Sav. Ass'n, 885 F.2d 266, 

273-74 (5th Cir. 1989) (punitive damages against savings and loan 

association upheld even though association taken over by FSLIC 

after judgment; funds ceased to be assets of association at the 

time of judgment and, therefore, were not under FSLIC's control). 

B. 

International challenges on sufficiency grounds the award of 

punitive damages. Under New Mexico law, reckless or grossly 

negligent conduct by an insurer in settling a claim justifies an 

award of punitive damages; fraud is not required. See Jessen v. 

National Excess Ins. Co., 776 P.2d 1244, 1246-47 (N.M. 1989). 

Punitive damages are appropriate when a preponderance of the 

evidence supports such a finding. Id. at 1246. Given the 

fiduciary relationship and the unequal bargaining position between 

the parties, punitive damages in insurance cases may be awarded 

under the above standard, which is slightly more relaxed than the 

6 International does not contend that the district court's 

factual findings on the lack of an agency relationship are clearly 

erroneous. 

-15-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 15 
• 

• standard in ordinary cases. Romero v. Mervyn's, 784 P.2d 992, 998 

n.2 (N.M. 1989). See also Suggs v. State Farm Fire & Cas. Co., 

833 F.2d 883, 890-92 (10th Cir. 1987) (interpreting New Mexico 

law), cert. denied, 486 U.S. 1007 (1988). 

The evidence indicates that International's insurance 

adjusters in this case admittedly knew nothing about raising corn 

and adjusting this type of loss. III R. 20-21. The jury heard 

testimony that International's investigation of plaintiffs' claim 

was cursory, inadequate, untimely, and below industry standards, 

and that International acted improperly (and in decided preference 

to its own interests) in requesting withdrawal of a claim rather 

than considering a genuine dispute. III R. 77-85. Testimony also 

indicated that International was attempting to juggle the crop 

hail policy against the multiperil policy to assure reimbursement 

by the federal government. A reasonable jury could conclude by a 

preponderance of the evidence that International acted recklessly 

and with gross negligence in settling plaintiffs' claim. Thus, 

sufficient evidence supports the punitive damages and we may not 

undo the jury's award. 

c. 

Finally, International contends that the jury's award of 

punitive damages violated its fifth amendment right to due process 

of law. Although juries retain discretion to award punitive 

damages, the fifth amendment requires that such discretion be 

"exercised with reasonable constraints" and be the product of 

-16-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 16 
"rational decision making," involving an "individualized 

assessment" of appropriate factors. Pacific Mut. Life Ins. Co. v. 

Haslip, 111 S. Ct. 1032, 1044 (1991). Here, the district court 

instructed the jury that: 

In the event you find that plaintiff should recover 

either actual or nominal damages, and if you further 

find that the acts of defendant were willful, wanton, 

malicious, reckless, grossly negligent, fraudulent or in 

bad faith, then you may award exemplary or punitive 

damages. 

Such additional damages are awarded for the limited 

purpose of punishment and to deter others from the 

commission of like offenses. 

The amount of exemplary or punitive damages must be 

based on reason and justice taking into account all the 

circumstances, including the nature of the wrong and 

such aggravating and mitigating circumstances as may be 

shown. The amount awarded, if any, must be reasonably 

related to the actual damages and injury and not 

disproportionate to the circumstances. 

IR. doc. 396, instr. 42 (emphasis supplied). This instruction 

adequately constrained the jury's discretion and fostered a 

rational decision making process involving individualized factors. 

The jury was informed of the express purpose of punitive damages 

and that such damages must be based upon reason and related to 

actual damages. Further, the jury was directed to consider the 

nature of the insurer's wrong, adjusted for mitigating or 

aggravating circumstances. Hence, the jury's award of punitive 

damages did not violate due process. See Haslip, 111 s. Ct. at 

1044. 

-17-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 17 
VII. Attorney's Fees 

International finally argues that the district court's award 

of attorney's fees to plaintiffs pursuant to the New Mexico Unfair 

Trade Practices Act was erroneous because the statute in effect at 

the time the action was commenced required a finding of 

"willfulness." Compare 1977 N.M. Laws ch. 181, § 3 (prior version 

of N.M. Stat. Ann. § 57-12-10(C)(2)) with N.M. Stat. Ann. 

§ 57-12-lO(C) (1987 Repl. Pamp.) (current version). The New 

Mexico Constitution provides: "No act of the legislature shall 

affect the right or remedy of either party, or change the rule of 

evidence or procedure, in any pending case." N.M. Const. art. IV, 

§ 34. Standards governing the award of attorney's fees clearly 

affect the rights of private parties in civil suits, thus the 

prior statute applies. See Hillelson v. Republic Ins. Co., 627 

P.2d 878, 880 (N.M. 1981) (change in statutory interest rate 

affected rights of parties, rate in effect at time action 

commenced applied). However, under either statute, a finding of 

"willfulness" was implicit in the jury's verdict on this claim 

given the district court's instruction that, in order to impose 

liability under the Act, International had to knowingly make false 

statements to plaintiff in connection with crop insurance. See I 

R. doc. 396, instr. 9. The jury had to determine that 

International's violation of the Act was willful to impose 

liability in accordance with the instruction. The requisite 

-18-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 18 
finding of willfulness having been made, International's argument 

on this point must be rejected. 

AFFIRMED. 

Entered for the Court 

Bobby R. Baldock 

Circuit Judge 

-19-

Appellate Case: 89-2271 Document: 010110129486 Date Filed: 07/26/1991 Page: 19