Court Opinion

ID: 9481250
Source: CourtListenerOpinion
Date Created: 2023-08-05 08:12:15.872184+00
Date Added: 2024-06-11T17:48:10.581180
License: Public Domain

GEE, Circuit Judge,
concurring in part and, in part, dissenting:
I concur in the Court’s affirmance as to compensatory damages. As to the punitive damage award, however, I am unable to agree.
Shelter asserts a number of reasons why the jury’s award of punitive damages must be overturned, among them that the evidence fails to support the award and that the unfettered discretion of the jury to impose punitive damages violates the due process clause.1 The constitutional claim is presently pending before the Supreme Court; and to the definitive treatment which it will receive there I can, of course, add nothing. I am also persuaded, however, that under Mississippi law the evidence was insufficient to support submission of the punitive damage issue to the jury.
The Mississippi Supreme Court spells out the allegations necessary to sustain a punitive damage claim in Andrew Jackson, 566 So.2d 1172, 1182-92. The district court could not benefit from the discussion in Andrew Jackson because it is a recently issued opinion, but I find guidance in it as to Mississippi’s law in today’s case.
The trial judge must decide — in accord with the guidelines established by the Mississippi Supreme Court — whether a punitive damages issue should be submitted to *1168the jury. Andrew Jackson, 566 So.2d at 1182. The determination largely turns on whether the insurer denied the underlying policy or claim on a reasonable or arguable basis. Reserve Life Ins. Co. v. McGee, 444 So.2d 803, 809 (Miss.1983); Mutual Life Ins. Co. of N. Y. v. Estate of Wesson, 517 So.2d 521, 528 (Miss.1987). If the trial judge is unable to find that the insurer acted in bad faith — that is, that the insurer failed to deal with the disputed claim fairly and in good faith — then according to the Mississippi Court the punitive damages issue “generally” should not be submitted to the jury. See Andrew Jackson, 566 So.2d at 1184; Pioneer Life Ins. Co. of Ill. v. Moss, 513 So.2d 927, 930 (Miss.1987).
In rare cases, however, a trial judge may submit the punitive damage issue to the jury if the evidence sharply conflicts as to whether the insurer had a legitimate and arguable defensive position. Andrew Jackson, 566 So.2d at 1185; State Farm Fire & Cas. Co. v. Simpson, 477 So.2d 242, 254 (Miss.1985). Here I conclude that the evidence does not show bad faith on the part of Shelter in denying the claim. Shelter timely investigated the disputed claims and paid the claims which arose after the period of contestability. Shelter chose to rely on the pre-existing condition clause to give the Nichols sufficient warning that their claim might not be honored. Shelter also chose to believe Mr. Holland — who never recanted his statement that he made no misrepresentations to the Nichols whatsoever. Given the swearing match between the Nichols and Mr. Holland, I would not regard Shelter’s denial of the Nichols' claim as so patently unreasonable as to warrant punishment — to establish a precedent of such a finding could result in punitive damage awards as a matter of course whenever an insurance company denies a contested claim.
Mississippi law has evolved — some might say eroded — to the point of allowing the submission of a punitive damages issue to the jury even when the insurer undeniably had an arguable basis for denying a claim. See Andrew Jackson, 566 So.2d at 1186. Instances where such a submission can occur, however, are limited to cases in which the insurer: (1) egregiously breaches its implied covenant of good faith and fair dealing; (2) attempts to use the insured’s dire financial straits and inferior bargaining position as settlement leverage; (3) countenances acts of fraud; and (4) treats the insured in a generally cavalier manner. Andrew Jackson, 566 So.2d at 1190. I discern no evidence in the record that Shelter engaged in even one of these practices, save to the extent it relied on its agent’s misrepresentations in denying the Nichols’ claim. I do not consider Shelter’s reliance to be a “contrived or specious defense,” however, given the plain language of their pre-existing disease exclusion. See Id. at 1186. The record before us does not merit discarding the general rule and submitting the case to the jury on a less than bad faith standard. I therefore conclude that the jury verdict awarding punitive damages should be reversed. I therefore respectfully dissent from the Court’s affirmance on this point.

. See Pacific Mutual Life Ins. Co. v. Haslip, 553 So.2d 537 (1990), cert. granted, — U.S. -, 110 S.Ct. 1780, 108 L.Ed.2d 782 (1990).