Opinion ID: 1657610
Heading Depth: 1
Heading Rank: 2

Heading: Claim for Bad Faith

Text: At the close of Appellee's case as plaintiff, Appellant moved for a directed verdict on Appellee's tort claim for bad faith on the basis that Appellee had not presented any evidence of affirmative wrongful acts by Appellant. Appellant admitted breaching its contract with Appellee, but contended the breach was from oversight rather than from hatred, ill will, or dishonesty. The trial court ruled that Herron's testimony presented a jury question as to bad faith and denied Appellant's motion. Appellant then presented its case, which consisted of a single witness, Appellant's employee Steve Murray, and three exhibits: (1) no-fault endorsements for medical benefits, accidental-death benefits, and income-disability benefits; (2) Appellee's application for insurance dated January 4, 1980, where he rejected uninsured-motorist coverage and no-fault coverage; and (3) Appellee's 1980 declaration sheet. Murray testified that he and Scott St. John, a claims representative for Appellant, determined that Anthony Allen was a resident of Appellee's household and therefore coverage existed. Murray stated that based on that determination, Appellant paid $27,500.00 to Hill and Hill's passenger. Appellant then rested and renew[ed] its motion for a directed verdict for the reasons stated before. Again, the court denied the motion, ruling there were issues to be decided by the jury. As its first point for reversal of this ruling, Appellant contends there was no evidence from which a reasonable person could conclude Appellant committed the tort of bad faith, therefore the trial court erred in submitting this issue to the jury. Specifically, Appellant contends there is no substantial evidence of affirmative acts to support a claim of bad faith. Rather, in Appellant's view, there is only evidence that Appellant failed to recognize that Appellee had medical-payments coverage. In essence, Appellant contends its actions were negligent but not malicious and relies heavily on our prior decisions that negligence, gross ignorance, or a complete failure to investigate a claim are not sufficient to establish a claim for the tort of bad faith. First Marine Ins. Co. v. Booth, 317 Ark. 91, 876 S.W.2d 255 (1994); Reynolds v. Shelter Mut. Ins. Co., 313 Ark. 145, 852 S.W.2d 799 (1993). We recently summarized our law on the tort of bad faith: The components of the tort of bad faith are affirmative misconduct by an insurer, without a good-faith defense, which is dishonest, malicious, or oppressive in an attempt to avoid liability under a policy. Aetna Casualty and Surety Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984). R.J. Jones Excavating Contractor, Inc.. v. Firemen's Ins. Co., 324 Ark. 282, 289, 920 S.W.2d 483, 487 (1996). This court has also said that a claim for bad faith cannot be based upon good faith denial, offers to compromise a claim or for other honest errors of judgment by the insurer. Neither can this type claim be based upon negligence or bad judgment so long as the insurer is acting in good faith.... [I]n an action of this type for tort, actual malice is that state of mind under which a person's conduct is characterized by hatred, ill will or a spirit of revenge. Actual malice may be inferred from conduct and surrounding circumstances. American Health Care Providers, Inc. v. O'Brien, 318 Ark. 438, 441-42, 886 S.W.2d 588, 590 (1994) (quoting Aetna Casualty & Surety Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984)). Our standard of review of the denial of a motion for directed verdict is whether the jury's verdict is supported by substantial evidence, which is evidence that goes beyond suspicion or conjecture and is sufficient to compel a conclusion one way or the other. Barnes, Quinn, Flake & Anderson, Inc. v. Rankins, 312 Ark. 240, 848 S.W.2d 924 (1993). It is not our province to try issues of fact, we simply review the record for substantial evidence to support the jury's verdict. John Cheeseman Trucking, Inc. v. Dougan, 313 Ark. 229, 853 S.W.2d 278 (1993). In determining whether there is substantial evidence, we view the evidence in the light most favorable to the party against whom the verdict is sought and give the evidence its strongest probative force. Integon Indem. Corp. v. Bull, 311 Ark. 61, 842 S.W.2d 1 (1992). After reviewing the evidence in this case, we find two instances of alleged wrongdoing on Appellant's part sufficient to create a jury question as to Appellant's bad faith. Those instances are the two conversations that occurred between Eddie Allen and Herron in Herron's office shortly after the fatal accident and then about one year later. The central issue of the first conversation was Anthony Allen's residence. It is undisputed that, as a resident of Appellee's household, Anthony Allen would be an omnibus insured under Appellee's policy. Eddie Allen testified that he and Herron discussed that Anthony Allen's insurance policy had lapsed. He stated the two of them then began discussing coverage under Appellee's policy. Eddie Allen testified that Herron asked him where Anthony Allen lived at the time of the accident and that he told Herron Anthony Allen had been living with their father. Eddie Allen testified further that Herron informed him there was no coverage for Anthony Allen under Appellee's policy. Appellant relies on Herron's testimony as to this conversation. Herron stated that he never asked Eddie Allen any questions about coverage for Anthony. According to Herron's testimony, he recalled that Eddie Allen inquired about coverage for Anthony Allen and that he only checked for coverage under Anthony Allen's policy. Herron admitted knowing that people commonly insure their children on their policies, but expressly denied checking to see if Anthony Allen was covered under Appellee's policy. The central issue of the second conversation between Herron and Eddie Allen, which occurred about one year after the first conversation, was the dispute between the parties to this lawsuit. Eddie Allen testified that Herron asked him if St. John had been out to talk to his father or had offered his father a settlement and if St. John and his father had been able to reach any kind of agreement. Eddie Allen stated that he told Herron he did not think they had reached an agreement and that Herron responded that the matter would probably end up in court. At trial, Herron denied ever asking Eddie Allen whether St. John and his father had talked or reached an agreement. Viewing this conflicting testimony in the light most favorable to Appellee as we are required to do, it is evidence from which a jury could have concluded that Herron lied about coverage available under Appellee's policy and that Appellant actively concealed this coverage from Appellee. Any conflicts in the testimony were for the jury to resolve. Medlock v. Burden, 321 Ark. 269, 900 S.W.2d 552 (1995). Likewise, it was for the jury to determine the credibility of these two witnesses and the remainder of the evidence. Id. On appeal, we simply determine if there is substantial evidence to support the jury's verdict. We conclude that Eddie Allen's testimony that Herron asked about Anthony Allen's residence, said he would check Appellee's policy for coverage, and then told him there was no coverage provides substantial evidence of an affirmative act made in a dishonest attempt to avoid liability under a policy. We also conclude that Appellant's dishonesty and active concealment of available coverage are substantiated further by Eddie Allen's testimony as to the second conversation between Herron and him. Accordingly, we cannot say the trial court erred in submitting this issue to the jury and denying Appellant's motion for a directed verdict.