United States Court of Appeals

For the Eighth Circuit

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No. 11-1522

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Ronald Tim Bacon

lllllllllllllllllllll Plaintiff - Appellant

v.

Liberty Mutual Insurance Company

lllllllllllllllllllll Defendant - Appellee

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 Appeal from United States District Court 

for the Southern District of Iowa - Council Bluffs

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 Submitted: March 13, 2012

 Filed: August 6, 2012

[Published]

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Before MELLOY, SMITH, and SHEPHERD, Circuit Judges.

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PER CURIAM.

Ronald "Tim" Bacon appeals the district court's grant of summary judgment

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to Liberty Mutual Insurance Company ("Liberty Mutual") on Bacon's fraudulentmisrepresentation and breach-of-contract claims. We affirm. 

The Honorable John A. Jarvey, United States District Judge for the Southern 1

District of Iowa. 
I. Background

"Bacon's suit against Liberty Mutual arises out of the settlement of a personal

injury lawsuit against Ridgetop Holdings, Inc. ('Ridgetop'), the parent company of

Bacon's employer, DavisErection Company, Inc. ('Davis Erection')." Bacon v.Liberty

Mut. Ins. Co., 575 F.3d 781, 782 (8th Cir. 2009).

On July 28, 2003, Bacon, a Nebraska resident, worked for Davis Erection on

a construction project in Omaha, Nebraska. Bacon suffered severe injuriesin a workrelated accident at the construction site. 

Liberty Mutual, a nationwide insurance company doing business in Iowa and

Nebraska, provided Davis Erection with commercial liability and workers'

compensation insurance under an Owner Controlled Insurance Program (OCIP)—or

"wrap around" insurance policy—for all participating contractors at the construction

site. This insurance covered Bacon's workers' compensation benefits, which were

administered under Nebraska law. In 2006, Bacon filed a personal-injury complaint

in Nebraska state court against several entities, including Ridgetop; Kiewit

Construction Company, the general contractor at the construction site; and DBI-Sala,

a/k/a DB Industries, Inc., the manufacturer of the safety harness that Bacon was

wearing at the time of the accident. The complaint additionally named Davis Erection

and Liberty Mutual as defendants for the sole purpose of subrogation of Bacon's

workers' compensation benefits. 

In June 2006, Bacon moved to Iowa. Liberty Mutual contributed $100,000 to

the purchase of his home. Since May 2006, Liberty Mutual has made weekly

disability payments to Bacon. 

In August 2007, Liberty Mutual and Bacon's attorney, Jim Harris, began

negotiating a settlement of LibertyMutual's workers' compensation rights. On August

1, 2007, Harris wrote to Liberty Mutual's attorneys in the Nebraska action, stating,

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"There is no subrogation claimagainst Kiewit orRidgetop. The waiver ofsubrogation

clause in the contract along with the fact that Liberty cannot subrogate against a party

to who[m] they owe a duty are dispositive of this matter." On August 27, 2007, Linda

Ward, Liberty Mutual Senior Technical Claims Specialist, responded:

We are in agreement that we have no "recovery" rights as to any

settlement monies from Kiewit or Ridgetop. However, although we can

not recover from those entities, we would still have a claim to Statutory

Credit/offset against any net to Mr. Bacon from those entities. It goes to

the "no double recovery rule[,"] and to the State's Statutes as to our

future obligations to Mr. Bacon post his recovery from3rd party monies.

Bacon and Liberty Mutual never reached agreement on settlement of lienrecovery amounts and litigation in preparation for trial continued.

Immediately prior to trial, on January 13, 2008, Ridgetop agreed to settle its

portion of Bacon's suit. Harris sent Ridgetop's counsel an email clarifying, inter alia,

that "inasmuch asRidgetop and Davis Erection are interrelated corporations, theywill

each waive any and all claims, cross-claims, subrogation, reimbursement or otherwise

against each other and their insurers." On January 29, 2008, Ridgetop's counsel

replied that "[t]his language will not work."

In a series of emails from January 29, 2008 to February 22, 2008, Liberty

Mutual's counsel sought Bacon's and Ridgetop's settlement amount, so that Liberty

Mutual could decide whether to assert a lien, set-off, or credit. Bacon's and Ridgetop's

counsel refused to disclose the settlement amount, citing to a confidentiality

agreement. Additionally, they asserted that the settlement amount was irrelevant to

whether Liberty Mutual had a lien. Bacon's counsel relied upon Ward's prior letter

and took the position that LibertyMutual had already confirmed that it had no interest

in the settlement proceeds. Liberty Mutual argued that refusal to divulge the

settlement amount made it impossible for Liberty Mutual to calculate its rights to a

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statutory credit/offset on future obligations. During this exchange of emails, Bacon's

counsel shared Ward's August 27, 2007 letter with Ridgetop's counsel. Ridgetop's

counsel then asked Liberty Mutual to confirm the representation made in Ward's

August 27, 2007 letter that "Liberty Mutual . . . asserts no subrogation lien or any

other form of claim over the settlement proceeds to be paid by Zurich and AIG on

behalf of Ridgetop Holdings." Liberty Mutual maintained that knowledge of the

settlement amount was relevant to its "claim of a credit." 

On February 28, 2008, Bacon filed a declaratory-judgment action in Douglas

County, Nebraska, asking the court to declare that Liberty Mutual waived its right to

subrogation against the settlement proceeds from Ridgetop. Bacon requested that the

court declare that no subrogation right exists against the parent company of an

insured, either past orfuture. On March 14, 2008, LibertyMutual answered that it had

a "bona fide workers' compensation lien entitling [it] to statutory credit for the funds

netted by [Bacon] through the settlement agreement by and between [Bacon] and

Ridgetop Holdings, Inc." Bacon did not seek damages. The lawsuit was dismissed

without being settled or adjudicated.

While the declaratory-judgment action was still pending, but after Liberty

Mutual had answered the complaint in that action, Bacon filed the instant case against

Liberty Mutual in federal district court in Iowa, "asserting a claim of fraudulent

misrepresentation, for which he sought punitive damages, and a claim of breach of

contract." Bacon, 575 F.3d at 782. Bacon argued that 

Liberty Mutual's answer to his complaint in the Nebraska declaratory

judgment action constituted a knowing misrepresentation made with the

intent to deceive. His breach-of-contract claim rested on his allegation

that LibertyMutual's claimrepresentative created a binding contract not

to pursue any claim to the settlement proceeds when she made the

alleged representation that Liberty Mutual waived any such claim.

Id. at 782–83. 

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Liberty Mutual moved to dismiss the complaint "on the grounds of forum non

conveniens and that Nebraska law, which does not permit punitive damages for

fraudulentmisrepresentation, should applyunder the applicable choice-of-law rules."

Id. at 783. The district court concluded that Nebraska had a greater interest in

deciding the suit than Iowa and granted the motion to dismiss on the ground of forum

non conveniens. Id. The court did not address the choice-of-law issue. Id. 

Bacon appealed, and we reversed the district court, holding that the doctrine

of forum non conveniens did not apply to permit the district court to dismiss the

action, rather than transfer venue, and, even if transfer to another federal forum were

unavailable, the district court abused its discretion in dismissing Bacon's claims. Id.

at 783–85. 

Bacon had also asked this court to determine whether Iowa or Nebraska law

governed the suit in Iowa because "[o]nly under Iowa law will he be able to recover

punitive damagesfor his fraudulent misrepresentation claim." Id. at 785. Because the

district court dismissed the suit and never reached the choice-of-law question, "we

decline[d] to decide which state'slaw applies to this suit." Id. We directed the district

court that, upon remand, it "should use Iowa's choice-of-law rules to determine

whether Iowa or Nebraska law will govern this suit." Id. 

On remand, the district court concluded that Nebraska law applied. The court

characterized Bacon's fraudulent-misrepresentation claim as based "on Liberty

Mutual's refusal to reconfirm its agreement that it had no recovery rights as to any

settlement monies from Ridgetop and on its Answer in the Declaratory Judgment

action, in which Liberty Mutual asserted that it had 'a bona fide workers'

compensation lien.'" The court concluded that mere silence cannot constitute a

misrepresentation in the absence of a duty to disclose information and found that

Bacon failed to cite any "authority demonstrating the existence of such a duty." The

court failed "to see how a party's failure to reconfirm a contract, the import and

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meaning of which it disputes, can serve as a basis for a fraud claim." The court

explained that Bacon's fraud claim was based on "Liberty Mutual's refusal to agree

with his interpretation of an agreement purportedly entered into by the parties" and

that "[s]uch refusal does not, as a matter of law, amount to fraud." The court further

found no evidence "demonstrating [that] a material fact dispute [exists] with respect

to the falsity of the 'representation,' or that it was known to be false when 'made.'" 

Observing that even if it resolved the choice-of-law issue in Bacon's favor and

applied Iowa law, the court found that Bacon's punitive damage claim would fail

because its fraudulent-misrepresentation claim failed. In the alternative, the court

determined that Bacon "did not produce clear, convincing and satisfactory evidence

supporting a finding that Liberty Mutual willfully and wantonly disregarded his

rights."

As to Bacon's breach-of-contract claim, the court assumed that a contract

existed and concluded that Liberty Mutual did not breach it because, "[u]pon Bacon's

settling of his lawsuit against Ridgetop, Liberty Mutual performed exactly as it said

it would, i.e., it did not assert a lien against the settlement monies, from Ridgetop, but

rather claimed an offset against those monies to its future workers' compensation

obligations."

II. Discussion

On appeal, Bacon argues that the district court erred in granting summary

judgment to Liberty Mutual on his fraudulent-misrepresentation and breach-ofcontract claims. According to Bacon, Liberty Mutual illegally delayed the

disbursement of settlement proceeds by fraudulently asserting a subrogation interest

in those settlement proceeds and breaching its earlier agreement that it had no such

right to subrogation from those settlement proceeds. Bacon also asserts that the

district court erred in applying Nebraska law to conclude that punitive damages are

not available. 

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"We review de novo the district court's grant ofsummary judgment to [Liberty

Mutual] on the breach[-]of[-]contract [and fraudulent-misrepresentation] claim[s]."

Myers v. Richland Cnty, 429 F.3d 740, 750 (8th Cir. 2005). 

As the district court pointed out—and as Bacon confirms on appeal —the 2

parties agree that no true conflict exists between Iowa and Nebraska law regarding

Bacon's contract and fraud claims. As a result, no choice-of-law analysis is required.

See Modern Equip. Co. v. Cont'l W. Ins. Co., 355 F.3d 1125, 1128 n.7 (8th Cir. 2004)

("If there is not a true conflict between the laws . . . on the pertinent issue, then no

choice-of-law is required."). "Therefore, regardless of which state's law applies, our

interpretation and application of the [fraudulent-misrepresentation and breach-ofcontract claims] will be the same." Weitz Co, LLC v. Lloyd's of London, 574 F.3d 885,

890 (8th Cir. 2009). Only if we conclude that the district court erred in granting

summary judgment to Bacon on his claims need we engage in a choice-of-law

analysis to determine whether punitive damages are available. See Bacon, 575 F.3d

at 785. 

A. Fraudulent Misrepresentation

According to Bacon, his fraudulent-misrepresentation claim is based upon

Liberty Mutual's affirmative assertion in its written answer to the Nebraska

declaratory-judgment action. Bacon alleges that Liberty Mutual represented that it

had a viable subrogation interest in the Ridgetop settlement proceeds when it knew

that it lacked such a right. Bacon maintains that Liberty Mutual knew that it lacked

such a right because Liberty Mutual knew in advance of the Ridgetop settlement that

Ridgetop was the parent company of Bacon's employer—Davis Erection—and that

no subrogation could exist by virtue of that relationship. He further asserts that

In his opening brief, Bacon states that "there is no conflict with regard to the

2

laws of Iowa and Nebraska with regard to Plaintiff's breach[-]of[-]contract and

fraudulent[-]misrepresentation claims. As such, thisCourt does not need to determine

which state's laws will apply to those claims under the Restatement."

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Liberty Mutual knew that it lacked a subrogation right because its own workers'

compensation policy contained a waiver-of-subrogation endorsement, which

precluded subrogation against all who performed work or provided services on the

construction project. Finally, he contends that Liberty Mutual knew that it lacked a

subrogation right because the policy language in the OCIP insurance policy precluded

subrogation. As a result, Bacon argues that he reasonably relied on Liberty Mutual's

earlier assertion that it had no viable subrogation interest in the Ridgetop settlement.

According to Bacon, Liberty's after-the-fact assertion that it did have a subrogation

interest amounted to a fraudulent misrepresentation. 

In response, Liberty Mutual argues that the district court correctly concluded

that a party's failure to reconfirm a contract—the import and meaning of which it

disputes—cannotserve as a basis for a fraud claim, especially considering that Bacon

did not rely upon the representation that he asserts forms the basis of the fraud claim.

To establish a claim of fraudulent misrepresentation, a plaintiff must

prove (1) defendant made a representation to the plaintiff, (2) the

representation was false, (3) the representation was material, (4) the

defendant knew the representation wasfalse, (5) the defendant intended

to deceive the plaintiff, (6) the plaintiff acted in reliance on the truth of

the representation and was justified in relying on the representation, (7)

the representation was a proximate cause of plaintiff's damages, and (8)

the amount of damages. 

Gibson v. ITT Hartford Ins. Co., 621 N.W.2d 388, 400 (Iowa 2001). 

According to Bacon, Liberty Mutual's answer in the Nebraska declaratoryjudgment action constitutes the "false misrepresentation." In its answer, Liberty

Mutual stated that it had a "bona fide workers' compensation lien entitling [it] to

statutory credit for the funds netted by [Bacon] through the settlement agreement by

and between [Bacon] and Ridgetop Holdings, Inc." According to Bacon, this false

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misrepresentation was contrary to Liberty Mutual's prior position in Ward's August

27, 2007 letter to Bacon's counsel. 

We affirmthe district court's conclusion that Bacon failed to prove that Liberty

Mutual made a false representation in its declaratory-judgment answer by stating that

it had a lien entitling it to a statutory credit. Neither party disputesthat Ward's August

27, 2007 letter to Bacon's counsel provided, in relevant part:

We are in agreement that we have no "recovery" rights as to any

settlement monies from Kiewit or Ridgetop. However, although we can

not recover from those entities, we would still have a claim to Statutory

Credit/offset against any net to Mr. Bacon from those entities. It goes to

the "no double recovery rule," and to the State's Statutes as to our future

obligations to Mr. Bacon post his recovery from 3rd party monies. 

(Emphasis added.) 

Thus, Liberty Mutual's position in Ward's August 27, 2007 letter may be read

consistently with its position in the declaratory-judgment action. Liberty Mutual

contended that it was entitled to a statutory credit for any funds that Bacon receives

from, inter alia, Ridgetop. As LibertyMutual points out, in neither Ward's August 27,

2007 letter nor Liberty Mutual's declaratory-judgment answer did Liberty Mutual

assert that it had a right of "subrogation."As the district court concluded, Liberty

Mutual's refusal to agree with Bacon's contrary interpretation of Ward's August 27,

2007 letter "does not, as a matter of law, amount to fraud."

Moreover, even assuming that Liberty Mutual's declaratory-judgment answer

was "false," Bacon must still identify evidence in the record showing that Liberty

Mutual "knew" that the representation wasfalse. As the district court concluded, there

is no evidence in the record demonstrating that Liberty Mutual knew the

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representation to be false, especially considering that "the import and meaning" of

Ward's August 27, 2007 letter is disputed. 

Finally, Bacon did not "rely upon" the representation made in the declaratoryjudgment answer. When Liberty Mutual answered the complaint, Bacon had already

settled his case with Ridgetop. The statement that Bacon "relied upon," if any, was

Ward's August 27, 2007 letter to Bacon's counsel. And, Bacon only "relies upon" the

first sentence of Ward's letter, which states, "We are in agreement that we have no

'recovery' rights as to any settlement monies from Kiewit or Ridgetop."

As a result, we hold that the district court did not err in granting summary

judgment to Liberty Mutual on Bacon's fraudulent-misrepresentation claim. 

B. Breach of Contract

Bacon argues that Liberty Mutual breached its earlier agreement that it had no

subrogation interest. According toBacon, the consideration for that earlier agreement

was a promise for a promise—Liberty Mutual agreed not to assert a subrogation claim

from any settlement proceeds resulting from either Ridgetop or Kiewit in the thirdparty action. Bacon, in turn, agreed to continue pursuing those third-party actions

against Ridgetop and others even though both factual and legal hurdles remained in

his path. Bacon maintains that Liberty Mutual's breach of its earlier agreement that

it had no subrogation right against Ridgetop's settlement proceeds unreasonably and

illegally delayed disbursements of needed settlement proceeds to Bacon. 

In response, Liberty Mutual contends that Bacon's breach-of-contract claim

fails because (1) Liberty Mutual performed as promised and (2) if a meeting of the

minds existed, it was simply that Liberty Mutual would give up its lien rights in

exchange for future credit rights. Liberty Mutual maintains that Bacon's counsel

repudiated this agreement three times following the parties' exchange of

correspondence by refusing to provide Liberty Mutual the information necessary to

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calculate its future credit amount and by attempting to extinguish Liberty Mutual's

right to a future credit. 

In a breach-of-contract claim, the complaining party must prove: (1) the

existence of a contract; (2) the terms and conditions of the contract; (3)

that it has performed all the terms and conditions required under the

contract; (4) the defendant's breach of the contract in some particular

way; and (5) that plaintiff has suffered damages as a result of the breach.

Iowa-Illinois Gas & Elec. Co. v. Black & Veatch, 497 N.W.2d 821, 825

(Iowa 1993). A party breaches a contract when, without legal excuse, it

fails to perform any promise which forms a whole or a part of the

contract. Magnusson Agency v. Public Entity Nat'l Co., 560 N.W.2d 20,

27 (Iowa 1997).

Molo Oil Co. v. River City Ford Truck Sales, Inc., 578 N.W.2d 222, 224 (Iowa 1998). 

In his complaint, Bacon alleged that Liberty Mutual breached its contract with

him by failing to perform its written promise that it was "'in agreement that [it] ha[s]

no 'recovery' rights as to settlement monies from Ridgetop or Kiewit.'" Before the

district court, Bacon "identifie[d] the contract as Liberty Mutual's promise not to

enforce any subrogation interest in any recovery from Ridgetop in exchange for Jim

Harris'[s] promise to pursue third-party claims against other defendants from whom

LibertyMutual could subrogate." The district court found "no clear promise by Harris

to pursue third-party claims against other defendants from whom Liberty Mutual

could subrogate, which isthe purported consideration for the contractBacon alleges."

But the district court cited Liberty Mutual's concession that a contract exists and

therefore considered Liberty Mutual's potential breach of that contract. 

For purposes of this appeal, we will, as the district court did, assume that a

contract exists. We conclude that Bacon has failed to prove that Liberty Mutual 3

On appeal, Liberty Mutual argues that in its motion for summary judgment it 3

argued that there was no consideration supporting the existence of a contract.

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"breached" that contract. Looking at Ward's August 27, 2007 letter, Liberty Mutual

agreed that it had "no 'recovery' rights as to any settlement monies from Kiewit or

Ridgetop," but it argued that it had "a claim to Statutory Credit/offset against any net

to Mr. Bacon from those entities." As explained supra, Liberty Mutual's declaratoryjudgment answer reads consistently with Ward's August 27, 2007 letter. In its answer,

Liberty Mutualstated that it had a "bona fide workers' compensation lien entitling [it]

to statutory credit for the funds netted by [Bacon] through the settlement agreement

by and between [Bacon] and Ridgetop Holdings, Inc." As the district court observed,

"[u]pon Bacon's settling of his lawsuit against Ridgetop, Liberty Mutual performed

exactly as it said it would, i.e., it did not assert a lien against the settlement monies,

fromRidgetop, but rather claimed an offset against those monies to its future workers'

compensation obligations." 

Therefore, the district court did not err in granting summary judgment to

Liberty Mutual on Bacon's breach-of-contract claim. 

III. Conclusion

Accordingly, we affirm the judgment of the district court.4

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However, Liberty Mutual has failed to explain why the district court stated that

"Liberty Mutual concedes the existence of a contract." 

Because we hold that the district court did not err in granting summary 4

judgment to Liberty Mutual on Bacon’s claims, we need not address whether Iowa

or Nebraska law would have applied to Bacon’s claim for punitive damages.

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