Opinion ID: 4185100
Heading Depth: 2
Heading Rank: 3

Heading: Statutory Damages and Attorney Fees

Text: For its part, Simmons claims it should have received statutory damages and attorney fees.11 Under Ark. Code Ann. § 23-79-208(a)(1), an insurer found to have improperly withheld payment on a claim “shall be liable to pay the holder of the policy . . . , in addition to the amount of the loss, twelve percent (12%) damages upon the amount of the loss, together with all reasonable attorney’s fees for the prosecution and collection of the loss.” This additional relief is available only “if the amount recovered for the loss is within twenty percent (20%) of the amount demanded or which [was] sought in the suit.” Id. § 23-79-208(d)(1). The Arkansas Supreme Court has made clear the statute is “strictly construed in favor of the party sought to be penalized” and “should not be held to apply except in cases that come clearly within the statute.” Primerica Life Ins. Co. v. Watson, 207 S.W.3d 443, 448 (Ark. 2004). Whether this case comes “clearly within the statute” depends on whether Simmons recovered at least 80% of the amount it “demanded” or “sought in the suit.” After thorough analysis, the district court found “Simmons fail[ed] to chin this statutory bar, as its net recovery of $2,817,380.11 is only 78.6% of its $3,584,041.90 demand.” We review the district court’s legal conclusion de novo, and the factual findings supporting it for clear error. See, e.g., Jackson v. Allstate Ins. Co., 785 F.3d 1193, 1206 (8th Cir. 2015). Simmons proposes two reasons why the district court was wrong. First, Simmons suggests the district court took too narrow a view in deciding what numbers to use. That is, the math should reflect the question posed to the jury: “What . . . was the least amount for which Simmons could have replaced the entire Ft. Gibson Building?” Simmons said this number was $6,098,080, the “amount demanded.” 11 The Arkansas Supreme Court has held § 23-79-208 is “a procedural matter,” and therefore may be applied regardless of what state’s substantive law governs. Shepherd v. State Auto Prop. & Cas. Ins. Co., 850 S.W.2d 324, 329 (Ark. 1993). -12- The jury found the number to be $5,525,995.56, the “amount recovered.” If these numbers are used, then Simmons recovered 90.6% of the amount it sought. But this approach fails to recognize the difference between an insurance claim and a legal claim, and the statutory threshold is concerned with the latter. See Ark. Code Ann. § 23-79-208(d)(1) (referring to the amount sought “in the suit” (emphasis added)); Nat’l Standard Ins. Co. v. Westbrooks, 962 S.W.2d 355, 357 (Ark. 1998) (“This court has previously interpreted the language ‘amount demanded or which is sought in the suit’ as ‘the amount sued for.’” (quoting Mut. Relief Ass’n v. Poindexter, 10 S.W.2d 17, 18 (Ark. 1928))). Simmons made an insurance claim, and the insurers denied part of that claim. Simmons then demanded and ultimately sued for the difference, not the entire $6,098,080, a point it repeatedly acknowledges throughout its briefs. This admitted truth is enough to defeat this version of Simmons’s argument. Alternatively, Simmons contends the district court failed to grasp the “substance” of its demand. Notwithstanding the above approach, Simmons says it was “undisputed” Simmons was suing to recover the difference between what it spent to replace the facility and what the insurers voluntarily paid. That difference was $3,488,761.13, and using this as the “amount demanded” would mean a recovery rate of 80.8%. The district court was right to reject this attempt at revisionist history. Given the parties’ stipulations, this is the correct difference and appears to be the most Simmons could have recovered. Yet, for some unknown reason, Simmons consistently demanded an amount almost $100,000 more than that. Consider: In its pre-suit demand letter, Simmons sought $3,584,041.90; the complaint stated the suit was for $3,584,041.90, and asked for an additional 12% of that amount as statutory damages; pretrial disclosures and reports reflect this higher number; and the jury was told this was the stipulated amount Simmons was seeking. When the district court mid-trial expressed concern about the origin of this number, Simmons doubled down and reaffirmed that “at the end of the day . . . this lawsuit is for 3.584 million.” The closest Simmons came to reducing its demand was in closing arguments when counsel acknowledged some expenses did relate to so-called betterments that were -13- not technically covered by the policies, but even then Simmons sought to justify the costs. It seems clear to us that all parties operated under the assumption Simmons was seeking $3,584,041.90, and Simmons never made a full and timely attempt to make a “new and lesser demand.” Id. at 358. Because Simmons failed to recover at least 80% of that amount, it was not entitled to statutory damages or attorney fees.