Farm Bureau Mutual Insurance Co. of Arkansas v. Guyer
2011 Ark. App. 710
Ark. Ct. App.2011Background
- Farm Bureau issued a homeowner policy to the Guyers, with Bank of America named as mortgagee/loss payee.
- Fire destroyed the Guyers’ home and personal property on March 24, 2010; insurer delayed payment pending lien/title review.
- Farm Bureau filed an interpleader complaint May 19, 2010 to determine who should receive the proceeds.
- Only Bank of America was a true claimant among the interpleader defendants; Regions, MBNA, and Capital One had no recognized interest under the policy terms.
- The circuit court granted summary judgment for the Guyers on the interpleader issue, awarded penalties and fees, but granted Farm Bureau summary judgment on bad-faith claims; this court affirmed on direct appeal and cross-appeal.
- The policy’s mortgagee-lost-payee provisions generally precluded claims by non-loss-payee lienholders, and Arkansas Code § 23-79-125 supports paying proceeds to the named payees when no other party provides written notice of an interest.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Interpleader propriety and penalties | Farm Bureau sought interpleader to protect against competing claims. | Guyer opposes interpleader as unnecessary and delaying payment. | Interpleader improper for non-claimants; penalties/fees affirmed. |
| Interest of non-loss-payee lienholders | Regions, MBNA, and Capital One had potential interests in the proceeds. | Policy did not name them as loss payees; liens do not attach to proceeds. | Interpleader properly limited to Bank of America; other liens not entitled to proceeds. |
| Bad-faith claim against Farm Bureau | Farm Bureau engaged in coercive conduct and delayed payments; bad faith proven. | No affirmative misconduct; conduct amounted to bad judgment at most. | Summary judgment for Farm Bureau on bad-faith claim affirmed. |
Key Cases Cited
- Clark Center, Inc. v. National Life Insurance Co., 245 Ark. 563, 433 S.W.2d 151 (1968) (beneficiary identity issues; interpleader proper when beneficiary contested)
- Dennis v. Equitable Life Assurance Society, 191 Ark. 825, 88 S.W.2d 76 (1935) (beneficiary determination requires extrinsic proof; interpleader appropriate)
- Primerica Life Insurance Co. v. Watson, 362 Ark. 54, 207 S.W.3d 443 (2004) (interpleader not improper where competing claims exist; timely payment considerations)
- Fow v. USAble Life, 307 Ark. 379, 820 S.W.2d 453 (1991) (interpleader penalties/fees when insurer delays without clear basis)
- Echo, Inc. v. Stafford, 21 Ark.App. 201, 730 S.W.2d 913 (1987) (judgment liens do not attach to insurance proceeds; proceeds are insured’s personal property)
- Swaim v. State Auto Prop. & Cas. Ins. Co., 338 Ark. 49, 991 S.W.2d 555 (1999) (bad-faith standard requires affirmative misconduct)
- Edwards v. Unum Life Ins. Co. of Am., 362 Ark. 624, 210 S.W.3d 84 (2005) (rigorous standard for bad-faith claims)
- National case cited: Nationwide Mut. Ins. Co. v. Cumbie, 92 Ark.App. 448, 215 S.W.3d 694 (2005) (timing and penalties under 23-79-208; reasonable time to pay)