Court Opinion

ID: 9642893
Source: CourtListenerOpinion
Date Created: 2023-08-22 18:11:46.56803+00
Date Added: 2024-06-11T18:10:53.945767
License: Public Domain

Darrell Hickman, Justice, dissenting. Unembellished, this is a breach of contract action by an insured against his insurance company. However, since the majority has recognized a new cause of action, the so-called tort of bad faith, the nature of the suit is changed significantly because a different remedy is available: the company is liable for punitive damages in the amount of $75,000 and for compensatory damages in the amount of $25,000. This is in addition to a recovery allowed by statute for the amount of the claim, $2,050, 12% penalty on that amount and an attorney’s fee of $2,500. Ark. Stat. Ann. § 66-3238 (Repl. 1980). So, we now have in Arkansas double recovery for breach of contract; one pursuant to statute, with appropriate penalties for failure to pay claims, for whatever reason; and another in the majority’s new remedy for bad faith. I must maintain the view I took in Aetna Casualty and Surety Company v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984). The conduct of the insurance company must be outrageous as we defined that term in Givens v. Hixson, 275 Ark. 370, 631 S.W.2d 263 (1982): Liability has been found only where the conduct has been so outrageous in character, and so extreme in degree, as to go beyond all possible bounds of decency, and to be regarded as atrocious, and utterly intolerable in a civilized community. The posture taken by the majority in Aetna and in this case is a surprise and, in my judgment, not sound. In Robinson v. M.F.A. Mut. Ins. Co., 269 F.2d 492 (8th Cir. 1980), the court addressed the question: Unlike nearly all states now recognizing the bad faith tort cause of action, Arkansas by statute imposes penalties on insurance companies wrongfully refusing to pay valid claims. Ark. Stat. Ann. § 66-3238 (Repl. 1980). Our research indicates that no state which has a statutorily prescribed penalty (approximately 14 states total) as Arkansas, has also permitted the bad faith tort by judicial fiat. . . . Apparently, the view is slowly spreading that states will have either the bad faith tort or the statutory penalty, but not both. The reason or motive of the company in breaching the contract is irrelevant. McClellan v. Brown, 276 Ark. 28, 632 S.W.2d 406 (1982). The majority is trying to regulate the insurance industry through the use of punitive damages. Regulation is best left to the legislature and there is ample legislation in that field. Ark. Stat. Ann. §§ 66-3002—66-3014 (Repl. 1980). In fact, this company was punished for its bad practices under that law, none of which related to the claim of the appellee. Yet all of this inflammatory evidence was before the jury. It is no surprise that the jury awarded punitive damages. Instead of regulating the industry, the majority is simply intimidating an industry and increasing attorneys’ fees. I would reverse the judgment in excess of the statutory claim.