413 F.Supp.3d 921
E.D. Mo.2019Background
- January 3, 2014: Fire at Aaron and Aimee Thomas’s apartment; they filed a renter’s-insurance claim with American Modern.
- American Modern’s early investigation quickly concluded the fire was incendiary and the Thomases made misrepresentations, but the insurer never formally denied the claim; it delayed investigation and communications for ~25 months.
- American Modern filed a declaratory-judgment action in Feb. 2016 against the Thomases; litigation followed and the matter went to a seven-day jury trial on coverage, vexatious-refusal, and an IIED counterclaim.
- The jury found for the Thomases on coverage and vexatious refusal to pay, awarding $21,153.11; returned for American Modern on Aimee’s IIED claim.
- American Modern moved under Fed. R. Civ. P. 50(b) for judgment as a matter of law on vexatious refusal and, alternatively, for a new trial under Rule 59; the court denied both motions.
- The court concluded there was sufficient evidence of unreasonable delay, inadequate investigation, abusive investigative tactics, and post-filing conduct supporting the jury’s vexatious-refusal verdict and likewise sufficient evidence supporting coverage.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether insurer’s failure to pay constituted vexatious refusal to pay under Missouri law | American Modern: No reasonable basis existed to find vexatious conduct; evidence supported their investigation and decision-making, so JMOL should be entered | Thomases: Evidence of delay, inadequate investigation, coercive tactics, and post-filing conduct showed refusal without reasonable cause and a vexatious attitude | Denied — jury verdict supported; reasonable minds could differ and evidence supported vexatious refusal finding |
| Whether the jury’s verdicts (coverage and vexatious refusal) were against the weight of the evidence warranting a new trial | American Modern: Verdicts contradicted the weight of evidence, including investigative findings and alleged misrepresentations | Thomases: Credible testimony, inconsistent investigative record, and physical/testimony evidence supported coverage and countered incendiary theory | Denied — court not left with firm conviction that jury erred; conflicting evidence was for jury to resolve |
| Admissibility of certain evidence (Aaron’s criminal conviction; Detective Yount’s testimony; post-suit conduct) | American Modern: These items were material and prejudicial if excluded; hearsay exception or Rule 609 should allow admission | Thomases: Admission would be prejudicial, confusing, or unnecessary; post-suit conduct is relevant to vexatious claim | Denied relief — court properly excluded conviction and Yount proffer; post-filing conduct admissible for vexatious-refusal analysis |
| Jury instructions (definition of “material” and supplemental instruction including “delay”) | American Modern: Court erred by using Thomases’ definition of material and by adding “delay” to supplemental instruction, causing prejudice | Thomases: Instructions accurately stated Missouri law and clarified jury question on vexatious refusal | Denied — instructions were accurate under Missouri law, supplemental instruction neutrally and correctly included delay as a basis for vexatious refusal |
Key Cases Cited
- In re Prempro Prods. Liab. Litig., 586 F.3d 547 (8th Cir.) (standard for Rule 50 JMOL review)
- Reeves v. Sanderson Plumbing Prods., Inc., 530 U.S. 133 (2000) (JMOL and credibility / evidence-weighting limits)
- Western Am., Inc. v. Aetna Cas. & Sur. Co., 915 F.2d 1181 (8th Cir.) (construing evidence for Rule 50)
- Nooter Corp. v. Allianz Underwriters Ins. Co., 536 S.W.3d 251 (Mo. Ct. App.) (Missouri standard for vexatious-refusal and insurer conduct)
- Hensley v. Shelter Mut. Ins. Co., 210 S.W.3d 455 (Mo. Ct. App.) (delay, investigation adequacy, and insurer attitude as evidence of vexatious conduct)
- Daubert v. Merrill Dow Pharms., Inc., 509 U.S. 579 (1993) (standard for expert admissibility)
- Gray v. Bicknell, 86 F.3d 1472 (8th Cir.) (new trial standard: miscarriage of justice/weight of the evidence)