Opinion ID: 879244
Heading Depth: 2
Heading Rank: 4

Heading: Should the District Court have Granted FIG's Motion for Directed Verdict?

Text: FIG contends that the District Court erred in not granting its motion for directed verdict so as to relieve it from extra-contractual damages and for liability on its implied duty of good faith and fair dealing. A motion for directed verdict is properly granted only in the complete absence of any evidence to warrant submission to the jury, and all inferences of fact must be considered in the light most favorable to the opposing party. Jacques v. Montana National Guard (1982), 199 Mont. 493, 649 P.2d 1319; if the evidence viewed in a light most favorable to plaintiff indicates reasonable men could differ as to the conclusions drawn from the evidence a directed verdict is not proper. Weber v. Blue Cross of Montana (1982), 196 Mont. 454, 643 P.2d 198. The question of Britton's arson was an affirmative defense by FIG, and of course, an issue of fact for the jury. Arson may be proved by circumstantial evidence, and a prima facie case is shown if there is (1) arson by someone; (2) motive by the insured; and (3) unexplained surrounding circumstantial evidence implicating the insured. Lawson v. State Farm Fire and Casualty Insurance Company (1978), 41 Colo.App. 362, 585 P.2d 318. Circumstantial evidence alone may be relied upon to prove the defense of incendiarism but the proofs should do more than throw a mere suspicion of guilt on the insured. The insurer may not rest upon speculation and conjecture alone. However, a preponderance of the evidence is sufficient to establish the arson. Great American Insurance Company v. K & W Log, Inc. (1979), 22 Wash.App. 468, 591 P.2d 457. Had FIG in this case relied on admissible circumstantial evidence and promptly denied the claim, we would then have been constrained to hold that Britton was not entitled to extra-contractual damages or to punitive damages in this case. There were other elements in its handling of the claim, however, that made a jury issue of whether FIG breached its duty of fair dealing in at least the following respects:

4. In making payment to the mortgagee Bank, it took a partial assignment of the Bank's mortgage, which had the effect of (a) not reducing the debt on the mortgage owed by Britton, (b) continuing interest charges on that portion of the debt assigned, and (c) precipitating the mortgage foreclosure action by the Bank. 5. It failed to deny coverage of the claim within a reasonable time after Britton's proof of loss statements had been completed. 6. It never raised the question of arson directly with Britton until it filed its answer and cross-claim in the foreclosure action. 7. It claimed a subrogation right under the policy without first denying the claim to its insured. (We know from the record, though it has no application here, that the Bank later contended with the insurance company that it had no right to a partial assignment under its subrogation clause. The effect of taking the partial assignment was to place the insurance company ahead of a judgment creditor in this case.) 8. It wrongfully delayed the claim from Britton upon its insistence that Russell Britton was an insured under the policy. There were therefore sufficient elements of breach of good faith in the handling of the Britton claim for the District Court to submit the issue of extra-contractual damages and punitive damages to the jury. The District Court in this case carefully covered the issue of good faith in its charge to the jury. The court instructed the jury that it was a breach of good faith to refuse unreasonably to pay a valid claim and such refusal would subject the insurer to liability for all damages proximately resulting from the conduct. The jury was instructed that FIG could be incorrect in denying a claim and not be subject to liability. Its refusal had to be unwarranted, unreasonable and without justification. The District Court in this case properly submitted the issues of extra-contractual damages and punitive damages to the jury. We find no error on this issue.