Bannister v. State Farm Mutual Automobile Insurance
2012 U.S. App. LEXIS 18668
10th Cir.2012Background
- Bannister suffered a single-vehicle crash on I-40 near Oklahoma City; police indicated DUI; no other witnesses identified.
- State Farm denied Bannister’s UM claim, deeming him majority at fault; claim ultimately removed to federal court in a diversity action.
- The case proceeded to trial on bad-faith denial; Bannister presented multiple State Farm claim logs and testimony showing ongoing investigation.
- The jury awarded Bannister $125,000, with a separate recklessness finding leading to potential punitive damages.
- The district court granted State Farm’s renewed JMOL on bad-faith grounds, and conditionally denied a new trial; Bannister’s attorney fees were denied.
- The court affirmed JMOL in favor of State Farm and dismissed State Farm’s cross-appeal as moot.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Was State Farm’s denial based on a legitimate dispute as to coverage? | Bannister argues denial lacked good-faith basis. | State Farm had reasonable grounds to dispute coverage based on facts known. | Yes; denial rested on a legitimate dispute about majority fault. |
| Was there a failing in State Farm’s investigation that would merit jury consideration? | Investigation was inadequate and would have revealed information undermining the dispute. | Investigation was reasonable under the circumstances and did not overlook material facts. | No; no adequate showing that further investigation would have altered the basis for denial. |
| Whether the JMOL was proper under standard for bad-faith cases when a legitimate dispute exists | JMOL should not have been granted because questions of bad faith could go to a jury. | Jury could reasonably conclude no bad faith given the legitimate dispute. | JMOL affirmed; reasonable jury could not find lack of good faith. |
| Did the trial court abuse its discretion in denying a new trial for damages and conduct | Challenged irregular damages calculation and counsel conduct. | No prejudicial error requiring new trial. | Yes; no basis shown to reverse denial of a new trial. |
Key Cases Cited
- Timberlake Constr. Co. v. U.S. Fidelity & Guar. Co., 71 F.3d 335 (10th Cir. 1995) (legitimate dispute defense; inadequate investigation can support jury submission of bad-faith claim)
- Oulds v. Principal Mut. Life Ins. Co., 6 F.3d 1431 (10th Cir. 1993) (legitimate dispute does not automatically bar bad-faith claim; may submit if weak evidence of bad faith exists)
- Buzzard v. Farmers Ins. Co., Inc., 824 P.2d 1105 (Okla. 1991) (insurer’s reasonable basis can defeat bad-faith claim; investigation standard guidance)
- Capstick v. Allstate Ins. Co., 998 F.2d 810 (10th Cir. 1993) (insurer not liable for bad faith where initial facts support reasonable denial)
- Vining v. Enter. Fin. Grp., Inc., 148 F.3d 1206 (10th Cir. 1998) (systematic bad-faith scheme requires more than a single dispute; inadequacy of investigation may defeat bad-faith claim)