Opinion ID: 2651525
Heading Depth: 3
Heading Rank: 1

Heading: Claim against insurer for bad faith

Text: James asserts that State Farm committed the tort of bad faith when it delayed payment on her UM claim. “[A] bad faith refusal claim is an ‘independent tort’ separable in both law and fact from the contract claim asserted by an insured under the terms of the policy.” Spansel v. State Farm Fire & Cas. Co., 683 F. Supp. 2d 444, 447 (S.D. Miss. 2010) (alteration in original) (quoting Hartford Underwriters Ins. Co. v. Williams, 936 So. 2d 888, 895 (Miss. 2006)). The Mississippi Supreme Court has recognized that claimants can bring bad faith claims against and recover punitive damages from insurers who refuse to pay out on a valid claim. See Caldwell v. Alfa Ins. Co., 686 So. 2d 1092, 1098 (Miss. 1996) (holding that denial of a valid insurance claim is critical for the submission of punitive damages to a jury). Additionally, although Mississippi courts are skeptical of such claims, they have permitted claimants to recover damages on bad faith claims when resolution of an insurance claim is merely delayed rather than ultimately denied.4 See, e.g., Travelers Indem. Co. v. Wetherbee, 368 So. 2d 829, 834S35 (Miss. 1979) (affirming jury award for punitive damages where insurer withheld payment for eight months); AmFed 4 Thus, here, we treat caselaw that refers to a “denial of a claim” as interchangeable with a “delay of payment on a claim” unless the context indicates that the law pertains specifically to a denial. 5 Case: 11-60458 Document: 00512514313 Page: 6 Date Filed: 01/28/2014 No. 11-60458 Cos., LLC v. Jordan, 34 So. 3d 1177, 1191 (Miss. Ct. App. 2009) (affirming trial judge’s decision to submit punitive damages issue to the jury in a delay-of- payment case); Pilate v. Am. Federated Ins. Co., 865 So. 2d 387, 400 (Miss. Ct. App. 2004) (“[T]here may be cases where a delay [of payment for one month] could possibly be sufficient grounds for a bad faith claim.”); see also Essinger v. Liberty Mut. Fire Ins. Co., 529 F.3d 264, 271 n.1 (5th Cir. 2008) (citation omitted) (“Inordinate delays in processing claims and a failure to make a meaningful investigation have combined to create a jury question on bad faith.”); but see Tutor v. Ranger Ins. Co., 804 F.2d 1395, 1399 (5th Cir. 1986) (per curiam) (reversing jury’s punitive damage award where payment was delayed during an ongoing dispute between insured and insurer); Caldwell, 686 So. 2d at 1098 (affirming grant of summary judgment where insurance company delayed payment for three months in complex wrongful death claim, including a six-week delay after it completed its investigation). Our review of the case law illustrates that whether to submit a delay-ofpayment claim to a jury is a highly fact-sensitive analysis. To establish a claim for punitive damages in the context of a bad faith claim, James must establish three factors: 1) State Farm had a contractual obligation to her; 2) State Farm lacked an arguable or legitimate basis for its delay in paying her claim; and 3) State Farm’s failure resulted “from an intentional wrong, insult, or abuse as well as from such gross negligence as constitutes an intentional tort.”5 Jeffrey 5 We acknowledge that James must demonstrate her entitlement to compensatory damages before she may receive punitive damages. See Broussard v. State Farm Fire & Cas. Co., 523, F.3d 618, 628 (5th Cir. 2008) (“Mississippi law does not permit parties to recover punitive damages unless they first prove that they are entitled to compensatory damages.” (citations omitted)). See also Miss. Code Ann. § 11-1-65(1)(b), (c) (West 2012); Jordan, 34 So. 3d at 1189 (describing process whereby after the jury awarded the claimant compensatory damages, the claimant moved to submit the issue of punitive damages to the jury). However, because the only question before us is whether summary judgment in favor of State Farm was proper on James’s bad faith claim, we refrain from determining James’s entitlement to compensatory damages. 6 Case: 11-60458 Document: 00512514313 Page: 7 Date Filed: 01/28/2014 No. 11-60458 Jackson, Miss. Ins. Law and Prac. § 13:2 (2012) (internal quotation marks and citations omitted); see U.S. Fidelity & Guar. Co. v. Wigginton, 964 F.2d 487, 492 (5th Cir. 1992); see also Sobley v. S. Natural Gas Co., 210 F.3d 561, 564 (5th Cir. 2000). As a preliminary matter, the trial judge must decide, as a matter of law, that the insurer lacked “a reasonably arguable basis” for denying the claim. See Broussard v. State Farm Fire and Cas. Co., 523 F.3d 618, 628 (5th Cir. 2008) (internal quotation marks and citation omitted) (quoting Andrew Jackson Life Ins. Co. v. Williams, 566 So. 2d 1172, 1186 n.13 (Miss. 1990)); Wigginton, 964 F.2d at 492 (citation omitted); Fulton v. Miss. Farm Bureau Cas. Ins. Co., 105 So. 3d 284, 288 (Miss. 2012).