Opinion ID: 1793497
Heading Depth: 1
Heading Rank: 3

Heading: did the trial court err in drafting peavy's jury instructions, and in granting instructions c-5 and c-6 and in amending instruction d-1 and in refusing instructions d-13 and d-14?

Text: First, Independent Life claims that the trial court erred in drafting Peavy's instructions. Peavy had drafted twenty-one (21) proposed instructions, a number of them concerning punitive damages. At the charge conference, the court expressed concern that the giving of such a large number of instructions on punitive damages would unduly emphasize the issue. After much discussion, the court proposed that it draft the instructions on punitive damages, and did so. Newell v. State, 308 So.2d 71 (Miss. 1975) is dispositive of the issue. There we held that in addition to the written instructions presented for approval by the attorneys for the litigants, ... the trial judge may initiate and give appropriate instructions in addition to the approved instructions submitted by the litigants if, in his discretion, he deems the ends of justice so require. Newell, 308 So.2d at 78. The trial court did not err in drafting the instructions. Next, Independent Life argues that the instructions themselves were erroneous in certain respects. The following is Instruction C-5, the giving of which Independent Life assigns as error: The Court instructs the jury that if you find from a preponderance of the evidence in this case that the Defendant insurance company was guilty of abuse, gross negligence, malice, fraudulent or outrageous conduct in this cause with regard to the handling or the unjustifiable refusal, if any, to pay the legitimate claim of George R. Peavy, you may award George R. Peavy additional damages in this case by way of punitive damages. Punitive damages are added damages awarded for public service in bringing a wrongdoer to account, as an example to warn and deter others from repeating the same act. Such damages are never awarded to benefit the injured party or as a matter of right, but rather to punish and compel the wrongdoer to have due and proper regard for the rights of the public. In assessing the amount of punitive damages, if any, to be awarded to the Plaintiff, you may take into account the financial status of the Defendant. Independent Life argues that, while unjustifiable refusal to pay the claim would be a basis for the imposition of punitive damages, the handling of a claim is not. Independent Life's argument is based on the erroneous assumption that unjustifiable refusal to pay a legitimate claim is the only basis for imposing punitive damages against an insurance company. Under Mississippi law, acts other than unjustifiable refusal to pay a claim may warrant an award of punitive damages against an insurance company. Henderson v. United States Fidelity & Guaranty Co., 620 F.2d 530 (5th Cir.1980) (failing to disclose internal company policy may void arguable reason defense); National Life v. Miller, 484 So.2d 329 (Miss. 1985) (using agent's false statement on application as reason to deny claim vitiated company's arguable reason defense). Independent Life also asserts that the trial court erred in giving Instruction C-6, which is as follows: The Court instructs the jury that in considering whether or not the Defendant insurance company has been guilty of any abusive, grossly negligent, malicious, fraudulent or outrageous conduct with regard to the handling or refusal, if any, to pay the claim of the Plaintiff for benefits under the contract of insurance which is the subject of this cause, you may consider any efforts of the Defendant insurance company to rely upon provisions of the insurance contract to the detriment of the insured, or for the purpose of misleading the insured, which policy provisions the Defendant either knew or by the exercise of reasonable diligence should have known would have been void or invalid as policy provisions as being contrary to the public policy and laws of the State of Mississippi as expressed in the statutes of this State or the decisions of the Mississippi Supreme Court. It is the law of this State (and any policy provisions to the contrary are invalid) that: (A) the separate coverages concerning total disability and accidental death benefits are separate contracts for which separate premiums were charged and paid. The Court further instructs you that any language attempting to limit an insurer's liability must fail when it deprives the insured of benefits for which a premium was paid; and, (B) a man is not required to be absolutely flat on his back in order to be classified as totally disabled. You are instructed that in order to be totally disabled, an insured must be unable to engage in his usual business or occupation, and must also be unable to engage in any comparable occupation or employment for which he is fitted by education, training, or experience. The trial court's definition of total disability is consistent with Mississippi law, Ezell v. Metropolitan Insurance Co., 228 So.2d 890 (Miss. 1969); Prudence Life Insurance Co. v. Wooley, 254 Miss. 500, 182 So.2d 393 (1966), as is its statement that the separate coverages in the policy were separate contracts, Travelers Indemnity Co. v. Wetherbee, 368 So.2d 829 (Miss. 1979). Neither instruction constituted reversible error. Next, Independent Life claims that the trial court erred in modifying Instruction D-1. That instruction reads as follows, the language in brackets being that which the trial court omitted: As used in the life insurance policy Mr. Peavy has with The Independent Life and Accident Insurance Company total disability is defined: 1. Incapacity to engage in any occupation for remuneration or profit, which incapacity is the result of bodily injury or disease suffered or contracted after the date of this disability provision; or 2. The loss by severance of both hands at or above the wrist, of both feet at or above the ankle, or of one hand and one foot at or above the wrist and ankle respectively; or 3. The permanent loss of sight of both eyes. Also under the Agreement Providing Waiver of Premiums in Event of Total Disability the provision concerning Notice of Claim provides in pertinent part as follows: No claim for benefits hereunder shall be valid unless total disability is established as provided elsewhere herein and written notice thereof is given to and received by the company during the lifetime of the insured and during the continuance of total disability. Failure to give such notice within such time shall not invalidate any claim if it shall be shown that it was not reasonably possible to give it within such time and that such notice was given as soon as was reasonably possible... . Therefore, if you believe from a preponderance of the credible evidence that Mr. Peavy did not submit his claim for waiver of premium under his life insurance policy during the continuance of total disability, that is, he submitted it at a time when he was not totally disabled [as defined in the policy] and if you find from a preponderance of the evidence that Mr. Peavy did not show the company that it was not reasonably possible to give such notice during the continuance of total disability, then the Court instructs you to find for the defendant, The Independent Life and Accident Insurance Company. Independent Life claims that by omitting the words as defined in the policy, the trial court abrogated the company's right to contract and, in effect, instructed the jury to award punitive damages, since the trial court, in another instruction, informed the jury that, in Mississippi, a man does not have to be flat on his back to be considered totally disabled. The trial court did not err in modifying the instruction. Without the alteration, the instruction would have allowed Independent Life to escape liability by including an invalid provision in its policy and then relying on that invalid provision to deny the claim. An insurance company cannot simply ignore changes in the law, and an attempt to do so has been held, in the Fifth Circuit, to be a basis for assessing punitive damages. Richards v. Allstate Insurance Co., 693 F.2d 502 (5th Cir.1982). We do not suggest that punitive damages are always appropriate whenever an insurance policy contains a provision which is invalid under state law. An insurer is not, however, entitled to a peremptory instruction on liability to the effect that the insurer can never be liable (even for actual damages) when it acts in accordance with the provisions of its policy, regardless of their invalidity. Independent Life next claims that the trial court erred in refusing Instruction D-13, which would have instructed the jury that the parties were free to contract as they pleased, that they were therefore bound by the contract, and that the policy was a valid contract of life insurance. Again, Independent Life is, in effect, arguing that provisions in its policy are valid by virtue of being in the policy, regardless of whether they comport with state law. Clearly, this Court has the power to declare a policy provision invalid. Lowery v. State Farm Mutual Automobile Insurance Co., 285 So.2d 767 (Miss. 1973). Indeed, the policy's definition of total disability is invalid in light of this Court's holding that a person does not lose his status as being totally disabled simply because he is able to sit on a street corner and sell peanuts and shoe strings. Ezell v. Metropolitan Insurance Co., 228 So.2d 890, 892 (Miss. 1969). Finally, Independent Life assigns as error the trial court's refusal of Instruction D-14, a peremptory instruction on punitive damages. This argument is another refrain of the inappropriate for punitive damages tune, which is discussed in connection with the first assignment of error. The trial court did not err in instructing the jury. Returning to Independent Life's complaints about the admission of evidence on 1) the invalidity of the policy's definition of total disability, 2) the policy provision that the insured forfeited his double indemnity when he filed for waiver of premium, and 3) the company's failure to use the automatic premium loan provision to pay Peavy's premium, we conclude that the first two were relevant to the issue of malice or reckless disregard for the insured's rights, and thus relevant as to the appropriateness of punitive damages. As to Independent Life's claim that evidence of its failure to activate Peavy's automatic premium loan was improperly admitted, we note that the failure was a separate incident from the denial of the claim for waiver of premium. Although its probative value is thus lessened somewhat, the admission of such evidence is largely within the discretion of the trial judge. Mississippi Power and Light v. Shepard, 285 So.2d 725, 740 (Miss. 1973). See also Rule 401, Mississippi Rules of Evidence (effective January 1, 1986) (evidence is relevant which has tendency to make fact of consequence more or less probable). This evidence was probative on the issue of punitive damages, and the trial court did not err in admitting it.