Opinion ID: 895782
Heading Depth: 1
Heading Rank: 8

Heading: evidence of oppression, fraud or malice

Text: [¶ 44] At the time of Revere's actions in this case, part of NDCC 32-03.2-11(1) authorized: In any action for the breach of an obligation not arising from contract, when the defendant has been guilty by clear and convincing evidence of oppression, fraud, or malice, actual or presumed, the court or jury, in addition to the actual damages, may give damages for the sake of example and by way of punishing the defendant. As we explained in Corwin Chrysler-Plymouth, Inc. v. Westchester Fire Ins. Co., 279 N.W.2d 638, 646 (N.D.1979), quoting Silberg v. California Life Ins. Co., 11 Cal.3d 452, 113 Cal.Rptr. 711, 718, 521 P.2d 1103, 1110 (1974), an insurer who violates its duty of good faith and fair dealing with its insured may face exemplary damages if it acted `with the intent to vex, injure or annoy, or with a conscious disregard of the plaintiff's rights.' [¶ 45] The trial court instructed the jury: If you find that [Ingalls] is entitled to an award of actual or compensatory damages, and you further find that in doing the act complained of, [Revere] acted fraudulently, maliciously or oppressively, you may in your discretion award [Ingalls] exemplary damages in such a sum as would in your opinion, punish [Revere] for the unlawful act and deter the defendant and others from committing like acts in the future. However, exemplary damages cannot be allowed against [Revere] unless you find that [Revere] committed fraud, oppression or malice as defined in these instructions by clear and convincing evidence. The court instructed the jury on fraud and on malice and oppression: The term  malice  and  maliciously  import a wish to vex, annoy, or injure another person, or an intent to do a wrongful act, established either by proof or presumption of law.... For the purposes of exemplary damages, the term  oppression  is defined as an act of cruelty, severity, unlawful exaction, or excessive use of authority. It is an act of subjecting to cruel and unjust hardship, or an act of domination. [¶ 46] Paull testified about a number of unreasonable and unfair actions in bad faith by Revere for the jury to have inferred fraud, malice or oppression from: Revere did not do a proper investigation before rescinding; Revere improperly sought a compromise settlement when Ingalls was disabled and had no reason to compromise; Revere alleged Ingalls had an actual intent to deceive about his income when there was nothing in their file on Ingalls to suggest he had such an intent; Revere relied on Ingalls's isolated statement he was only partially disabled without properly determining his condition with an independent evaluation; O'Brien talked to Ingalls about a settlement when Ingalls was in the hospital and under medication; O'Brien threatened three times to sue if Ingalls sought help from an attorney; O'Brien gave Ingalls one day to accept their proposed compromise settlement; Revere suspended Ingalls's benefits while it investigated whether to rescind for income misrepresentation when it knew he was totally disabled from his railroad job; and Revere engaged in postclaim underwriting as Paull, one testifying expert, described it, when instead of looking to pay the claim and provide a basis for paying the claim, you look for all the things in the application that you might be able to dig up that would allow you to rescind the policy. Paull testified that Revere acted in bad faith. She testified that of the 600-650 previous bad faith claims she has consulted on, [t]his is definitely in the top ten percent. I would say probably one of the worst cases I have seen of bad faith. Paull testified that Revere's bad faith conduct was intentional and malicious. [¶ 47] We conclude there was evidence for the jury to find Revere guilty by clear and convincing evidence of oppression, fraud, or malice, which is what NDCC 32-03.2-11(1) requires for an award of exemplary damages.