Court Opinion

ID: 9491907
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:27:25.469987+00
Date Added: 2024-06-11T17:55:00.638221
License: Public Domain

MORRIS SHEPPARD ARNOLD, Circuit Judge.
H & H Brokerage (H & H) arranged for a shipment of goods owned by Singer Sewing Company (Singer) to be carried by R & R Trucking (R & R). The shipment was stolen from R & R’s possession before it was delivered. Singer submitted a claim to R & R’s insurance company, which denied the claim on the ground that R & R’s policy did not cover Singer’s damages. Singer then demanded that H & H compensate it for its damages, and suspended its business with H & H until H & H should do so.
H & H contacted its own insurance carrier, Vanliner Insurance Company (Vanliner), which informed H & H that its policy did not cover the cost of lost goods if R & R’s insurance did not do so (such coverage is “contingent cargo liability coverage”). H & H then paid Singer and sued Vanliner under Arkansas law for breach of contract and the tort of bad faith. A jury awarded approximately $84,150 to H & H (the amount that H & H had paid to Singer) for the lost goods, approximately $11,750 for H & H’s lost profits (from the temporary loss of Singer’s business), and $50,000 in punitive damages. The trial court denied Vanliner’s motion for judgment notwithstanding the verdict (JNOV) and entered judgment for H & H.
Vanliner appeals. We can reverse only if “after viewing the evidence in the light most favorable to the verdict, we conclude that no reasonable juror could have returned a verdict for [H & H].” Ryther v. KARE 11, 108 F.3d 832, 836 (8th Cir.1997) (en banc), cert. denied, — U.S. -, 117 S.Ct. 2510, 138 L.Ed.2d 1013 (1997). After a careful examination of the record, we affirm the judgment with respect to the cost of the lost goods, and reverse with respect to the lost profits and the punitive damages.
I.
Vanliner contends that the contract that it entered into with H & H did not include contingent cargo liability coverage, and that Vanliner is therefore not responsible for the cost of the lost goods or for any other damages suffered by H & H. Although there was no clause in the contract specifically providing such coverage, at trial H & H relied on the language of the “general conditions” clause of the “motor cargo liability policy,” which states that “[tjhis policy covers the liability of the insured for loss or damage to lawful goods and merchandise while in the custody or control of the insured.” The policy thus requires only that the goods be in either the custody or the control of the insured.
H & H concedes that it did not have custody of the goods but contends that they were in its control. In support of this proposition, H & H presented evidence that it selected the trucking company, directed how, where, and when the goods were to be delivered, negotiated the price that the owner of the goods was to be charged, handled all of the paper work, instructed the truck driver to stay in contact, and had the power to make route changes during shipping. We believe that this evidence provided a sufficient basis for the jury to find that H & H *1126was in control of the goods when they were stolen, and that Vanliner was therefore obligated to compensate H & H for the loss of those goods. We thus affirm the judgment for H & H with respect to the cost of the lost goods.
n.
Vanliner contends further that the jury’s award of damages for the temporary loss of Singer’s business should be overturned because consequential damages of this kind are not available in cases for breach of contract under Arkansas law unless the party charged has agreed to pay them. H & H responds that because its lawsuit includes a claim for the tort of bad faith, no agreement was necessary for an award of consequential damages.
In support of the contention that H & H’s consequential damages were tied exclusively to the claim for breach of contract, however, and not to the claim for the tort of bad faith, Vanliner points to the interrogatories submitted to the jury. The third interrogatory asked if H & H suffered “loss of profits as a result of Vanliner’s breach of the insurance contract,” and the next interrogatory asked for the amount, if any, of those damages. It was not until the fifth interrogatory that the tort of bad faith was mentioned, and the next interrogatory inquired about punitive damages in connection only with that tort.
Perhaps the trial court erred by failing to instruct the jury that it could assess consequential damages on the tort claim. H & H, however, did not object to the instructions or the interrogatories at trial and does not maintain on appeal that they were erroneous in any respect. In any event, to the extent that the instructions or the interrogatories were error, they were harmless error, because H & H is not entitled to consequential damages with respect to either the tort claim or the contract claim.
Consequential damages are inappropriate with respect to the contract claim because no reasonable jury could have found that there was an agreement on Vanliner’s part to pay such damages. See, e.g., Bankston v. Pulaski County School District, 281 Ark. 476, 665 S.W.2d 859, 862 (1984), and Hawkins v. Delta Spindle of Blytheville, Inc., 245 Ark. 830, 434 S.W.2d 825, 828 (1968). Consequential damages are inappropriate with respect to the tort claim because, as we demonstrate below, that claim fails as a matter of law. The judgment for consequential damages therefore cannot stand, and we reverse it.
III.
Vanliner contends that the trial court should have granted a JNOV with respect to H & H’s claim for bad faith. The parties'agree that Aetna Casualty and Surety Co. v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984), outlines the Arkansas law governing that tort. A bad faith claim “must include affirmative misconduct by the insurance company, without a good faith defense, and ... the misconduct must be dishonest, malicious, or oppressive.” Id. at 465. Actual malice, “that state of mind under which a person’s conduct is characterized by hatred, ill will or a spirit or revenge,” is required. Id.
H & H contends that the verdict on the bad faith claim was supported by the facts that the policy clearly covered the loss of the goods, that the underwriter was inexperienced, that the underwriter stated that he had intended to include contingent cargo liability coverage in the policy, that H & H had paid premiums specifically designated for such coverage, that H & H had always maintained such coverage with previous insurers, that Vanliner was aware that Singer was H & H’s biggest client, that Vanliner’s review committee had no real insurance experience, and that Vanliner was experiencing possible financial difficulties. Much of this evidence is simply irrelevant to the issue of bad faith, and what little probative value the rest of it has, it seems to us, makes for only a very weak inference that Vanliner’s actions were “dishonest, malicious, or oppressive,” or that Vanliner’s refusal to pay the claim on the grounds that the policy did not cover the loss was anything other than a “good faith defense,” id.1
*1127In any case, under Arkansas law, extrinsic evidence of the meaning of a contract is admissible, and the meaning of a contract is a question of fact for the jury, only when the contract is ambiguous. See, e.g., Precision Steel Warehouse, Inc. v. Anderson-Martin Machine Co., 313 Ark. 258, 266, 854 S.W.2d 321, 325 (1993); First National Bank of Crossett v. Griffin, 310 Ark. 164, 166-68, 832 S.W.2d 816, 818-19 (1992). The trial court in this case admitted extrinsic evidence and submitted the contract’s meaning to the jury, evidently in the belief that the contract was ambiguous, a belief that we share.2 We think, moreover, that where a contract is ambiguous, a defendant’s reliance on one of its permissible constructions provides a “good faith defense,” Broadway Arms, 664 S.W.2d at 465, as a matter of law. We hold that Vanliner’s interpretation of the contract was more than reasonable, and that the verdict on the bad faith claim therefore cannot stand.
IV.
For the reasons stated, we affirm the judgment of the trial court with respect to the cost of the lost goods, and reverse with respect to the lost profits and the punitive damages.

. Judge Gibson, in his dissent, misapprehends the import of these observations. We do not feel *1127that it is necessary to reach the question of whether the evidence outlined was sufficient to go to the jury because of what follows.

. Judge Gibson, in his dissent, indicates his belief that the language of the contract is not ambiguous. If that were so, then the case was not properly submitted to the jury, for its meaning, and its application to the undisputed facts, would have been a matter for the trial court.