*1 IN THE COURT LOVELL v. NATIONWIDE MUTUAL INS. CO. (1993)]
[108 LOVELL, Deceased, Lovell, GAIL Administratrix Estate Allison COMPANY, v. NATIONWIDE MUTUAL INSURANCE Plaintiff Defendant
No. 9126SC619 (Filed 1993) January — (NCI4th)— Damages § 1. automobile accident —insurance — bad faith refusal to settle claim evidence sufficient of bad evidence faith refusal to settle a med pay (medical payments) insurance claim arising from automobile accident was sufficient to withstand motion a directed where was dispute verdict there no that med pay valid; was although alleged actually it did not refuse to the claim and failed to make a demand simply formal and defendant common forgot, sense leads to the conclusion that plaintiff’s submission of the funeral to expenses defendant was a sufficient indication of a desire paid pay provisions, bearing mind adjuster that defendant’s had specifically stated the bills be paid upon receipt; would reasonably could draw presented the inference from the evidence that defendant’s intentional, faith, to pay failure was in bad not due to innocent mistake or honest disagreement, and intended to “wear down” claim; influence settlement of the and there was sufficient еvidence of aggravated conduct. Although plain- tiff relies on conduct not specifically connected to the med conduct, pay claim to support allegations aggravated defend- wrongful ant linked the death and claims wanted time, to resolve them at the same so that consideration of the whole record of defendant’s conduct is permissible. 2d,
Am Jur §§ Insurance 1404. Liability party’s right insurance: third of action for in- surer’s bad-faith designed delay payment tactics of claim. 62 ALR4th 1113. (NCI4th)— Appeal company’s Error insurance
faith refusal object to settle —instructions —failure to or request special in writing instruction
Review of defendant company’s insurance assignment of error to the instructions on bad faith refusal settle
IN THE COURT OF APPEALS LOVELL v. NATIONWIDE MUTUAL INS. CO.
precluded where orally requested the trial judge settle, to instruct on bad faith refusal to objected at trial instruction, requested re-instruction on portion of the and did not make objections further when the judge complied. timely Failure to object to jury instructions constitutes a waiver any objection and special instruction requests ar.e required 51(b). 1A-1, to be submitted in writing. N.C.G.S. Rule 2d, Am Jur Appeal §§ and Error 537. (NCI4th)— 3. Damages § 135 insurer’s bad faith refusal to settle claim —punitive damages —not excessive
The trial court correctly denied defendant’s motion for a new trial based on an excessive damages award claim, where plaintiff alleged bad faith refusal to settle a $2,000 claim at issue was a med pay and the jury award- $225,000 ed in punitive damages. The actively trial who judge, participated in the trial and had first-hand knowledge of the proceedings, was clearly a much better position than the appellate court to determine whether the award was ex- $15,000 cessive. The fact plaintiff only requested punitive damages is a factor but is not determinative. Had plaintiff pled correctly, the complaint would merely have re- $10,000 quested punitive in excess and the evi- dence presented at trial was sufficient to support jury’s verdict. 2d,
Am Jur Damages § 739. Insurer’s liability for consequential for wrongful delay or refusal to make payments due under contracts. 47 ALR3d 314.
Recoverability of punitive damages in by action insured against liability insurer for failure to against settle claim in- sured. 85 ALR3d 1211.
Judge WALKER dissenting. Appеal by defendant from judgment entered 12 February 1991 by Judge John R. Friday in Mecklenburg County Superior Court. Heard in the Court of Appeals April OF APPEALS IN THE COURT.
. MUTUAL INS. CO. v. NATIONWIDE LOVELL App. 416 DeVore, Acton, Acton, Jr. Fred William D. W. DeVore & III, plaintiff-appellee. Hickman, Huckel, P. by Wayne & Lobdell
Kennedy Covington Landers, C. and Michelle Tompkins, Charles V. for defendant- appellant.
LEWIS, Judge.. in a accident Rusty Lewis were killed car
Allison Lovell and Rusty driving high school prom. after their morning owner, Allison’s Michael Lovell. father permission car with the *3 liability by policy automobile issued vehicle was insured ah The liability bodily limit by injury The included a policy defendant. accident, $250,000.00 person per payments medical per of [hereinafter accident, $2,000.00 per and colli- per person pay] coverage of entitled to the med occupants Both of car were coverage. sion Rusty time of the accident driving pay coverage. Because Lovell, obligated to pro- Mr. defendant was permission with the of obligation placed him This coverage. vide with had plaintiff, significant who a position a adversarial Rusty’s claim estate. against death wrongful Gill, had dealt with agent previously William who with this insurance and Francis рolicy, Mr. Lovell in connection defendant, Walker, twenty-year employee of adjuster and they met Lovells before the funeral until contacted the repeatedly days At that meeting Mr. after the accident. eight with Walker claim, which the Lovells that the med Mr. Walker assured within two weeks re- expenses, paid covered funeral would any liability status claim. regardless of the bills ceipt the bills submitting Mr. Walker never stated addition or demand for specific request Lovells would have make At policy. was such a demand mentioned payment, nor a. filing wrongful had not mentioned the point possibility Lovells revulsion, Mr. Walker Lovells’ surprise death claim. To the low value of their and the began discussing coverage meeting. this initial wrongful death claim daughter’s by day telephone later Mr. Walker informed One including all the med prefer to settle claims defendant would claim, arising of the same accident at any liability out attorney, Harold then retained an the same time. The Lovells IN THE COURT OF APPEALS LOVELL v. NATIONWIDE MUTUAL INS. CO.
Bender, who notified defendant that he would handle all further inquiries and communications for the Lovells. Lovells submitted the funeral July bills on but
these bills had yet been paid at the time this lawsuit was May filed in 1989. In comparison, the bills Rusty submitted for Lewis on day that same were within paid two or three weeks. Defendants contend that this disparity in treatment is due to the fact that Mrs. Lewis specifically requested a letter bills, sent along with the Mr. whereas Bender merely stated that he wanted to discuss the case with Mr. Walker and did not men- tion the med pay claim in the letter he sent with the Lovells’ bills.
In September 1988 Mr. Bender informed Mr. Walker letter $250,000.00 that the Lovells were demanding the policy limits of on the wrongful death claim. On November Mr. Walker offered to settle the wrongful death claim for The Lovells rejected the offer and continued to demand the policy limits of $250,000.00. Mr. Bender filed the death wrongful action on No- vember 1988. Thereafter Mr. Walker maintains that his involvement with the case was some follow-up work and dis- action, cussion of the wrongful death and that he never heard anything else from Mr. Bender or the Lovells regarding the med *4 1990, pay claim. During the summer the wrongful death action went to trial and ended in a days mistrial four later after the jury could not reach a verdict. That claim was then settled for $200,000.00. Plaintiff, mother and administratrix of the estate of Lovell, 1, Allison filed this May lawsuit on 1989 to recover on $2,000.00 pay claim. Plaintiff also alleged
refusal to settle and negotiate plaintiff’s claim was willful in and faith, bad and therefore sought punitive 4, trial, At the February 1991 defendant’s excuses for nonpayment of the claim were that it “just plumb forgot,” and that plaintiff had failed to make a formal written payment. demand for $2,000.00 $225,000.00 awarded on the med pay claim and in punitive damages, and judgment was entered accordingly. Defend- ant appeals, alleging judge erred its denying motion verdict, for a directed the judge erred in failing correctly identify explain essential elements of a bad faith refusal to settle in its instructions jury, to the and the erred in judge refusing IN THE OF APPEALS
420 INS. CO. v. NATIONWIDE MUTUAL LOVELL App. 416 N.C. the verdict for a new trial on the basis that grant its motion (cid:127) excessive. bad faith refusal to company’s I. Elements of tort of insurance settle a claim
[1] a directed verdict
First,
the defendant
at the
conclusion
challenges
the denial
evidence,
of its motion for
alleging
evidence did not establish the elements of a bad
plaintiff’s
directed verdict
refusal to settle a claim. On a motion for
the evidence in the
most favorable to
light
court must consider
nonmovant,
every
the nonmovant
the benefit of
allowing
Honeycutt,
Atlantic Tobacco Co. v.
101
reasonable inference.
N.C.
160, 163,
641,
denied,
disc. rev.
398 S.E.2d
App.
(1991).
569,
There is no response complaint. ant to this its to the Defendant stipulated however, actually that it did not refuse to the claim. alleges, Rather, plumb forgot,” it failed to mаke a formal “just when she the bills to defendant. demand submitted *5 the fact that all Defendant stresses of the communications between Mr. Walker and Mr. Bender dealt with the claim and that Thus, neither mentioned the med claim. could pay nonpayment attention,” only due to “innocent mistake” or a “lack of not payment. intentional decision to refuse a conscious and IN THE COURT OF APPEALS 421 LOVELL v. NATIONWIDE MUTUAL INS. CO.
Plaintiff, hand, on other that alleges defendant procrastinated on the med claim in order pay to induce a lower settlement Moreover, claim. Mr. Walker himself told that pаy the med upon claim- would be paid receipt of the bills and formally never mentioned the need to payment. demand The fact that the bills unpaid remained until defendant’s response to the Also, complaint indicates a refusal pay, according to to plaintiff. had, fact, Mr. Lovell testified that he in repeatedly inquired through one of agents as to the status of the med claim.
Common sense this leads Court to the conclusion that submis- sion of the bills representing funeral to expenses defendant was obviously a sufficient indication Lovells’ desirе to be paid provisions med pay of their Mr. policy. insurance Walker had specifically stated that the paid upon bills would be receipt. evidence, when in light viewed plaintiff, most favorable to is more than to go sufficient on to this element. (2) Bad faith
According Dailey Integon Gen. Ins. Corp., 75 N.C. App. 148, disc. rev. S.E.2d means “not based on honest disagreement or innocent mistake.” Id. (citing S.E.2d Newton (1976)). v. Standard Fire Ins. reason, Dailey Defendant interprets require “wrongful a purpose or motive for not in paying” order show bad faith.
Defendant alleges that even if the jury determined it had this pay, refused was refusal not bad faith. Defendant denies plaintiff’s theory delay that
was intended to “wear down” in order to a effectuate low settlement of the wrongful death that the noting theory evidence of nonpayment July was to May from Plaintiff maintains that nonpayment defendant’s excuses for It were credible. is hard to “just believe that defendant plumb forgot” the bills when it paid the Lewis’ promptly bills which were very submittéd on the same day. points Plaintiff also out that Mr. Walker adjuster” years “master with 21 ex- perience, and the evidence reveals he and his con- supervisor excuse, stantly reviewed the Lovells’ file. Defendant’s other the plaintiff failed to make a payment, formal demand weak fact Mr. light Walker stated the bills would be *6 IN THE COURT MUTUAL INS. CO.
LOVELL v. NATIONWIDE ' App. (1993)] N.C. [108 policy a formal de- paid upon receipt nothing required and Thus, these surmises that since excuses payment. mand delay must have convincing, were not defendant’s been (cid:127) and in order to “wear down” the Lovells deliberate intentional liability Payne v. Farm Bureau the claim. See regarding Mut. (1984) 692, 694-95, (pattern Ins. App. faith). claim nonpayment of excuses for indicative of bad evidence, was sufficient with- overwhelming, while From the presented, stand the motion for directed verdict. evidence defendant’s failure reasonably could draw inference that faith, intentional, and to innocent in bad not due mistake pay even sufficient under disagreement. or honest Plaintiff’s evidence is Dailey interpretation wrongful requiring purpose defendant’s motive, since it establish that defendant tends to intended influence settlement claim. “wear down” Lovells to (3) Aggravated conduct malice, fraud, may by be shown
Aggrаvated gross conduct insult, rudeness, and oppression, or wanton reckless negligence, Dailey, plaintiff’s rights. disregard omitted). (citation S.E.2d at 154 any Defendant claims there was insufficient evidence of questionable conduct. Some of incidents of conduct aggravating by the were the bills covered med even occurred before submitted, and are irrelevant failure to therefore upon claim. Other conduct relied concerned case, either, and not be should considered to defendant. according were insulting,
Plaintiff claims defendаnt’s actions the whole outrageous. example, agent For contacted indignant funeral of plaintiff and her five times before the their husband with the soon as urge adjuster pos- them to meet daughter sible, they if policy even that the could be insinuated voided immediately although At the first comply. meeting, did not only the car med pay coverage, to discuss and the expected Lovells Mr. informed them of a low settlement another wrongful Walker very told their worth much. daughter death case and them wasn’t here,” and noted that he “didn’t see a lot valuе He stated “only job school student” with no and no high Allison was told Mr. adjuster Defendant admits Lovell dependents. IN THE OF APPEALS LOVELL v. MUTUAL NATIONWIDE INS. CO.
that his daughter was not at the time of the accident and asleep *7 that she had up.” “burned
Plaintiff also claims aggravated by that conduct is shown the admittedly fact that defendant linked the pay med claim and the claim, liability and stated that it wanted all claims at to settle allegations delayed once. Plaintiff’s that defendant payment med claim in order a settlement to force low of the wrongful certainly death claim indicate conduct. See Smith v. aggravated Nationwide Fire Ins. App. Mut. rev. disc. 326 N.C.
(1990) (delay on of claim for months a factor showing conduct). 58-63-15(ll)(m)(1991)(states See also aggravated N.C.G.S. § that “[fjailure promptly liability to settle claims where has become clear, reasonably portion coverage one of the insurance in order to influence settlement under other of the insurance portions however, is an policy coverage” practice; unfair claim settlement such a violation can challenged Commissioner of Carolina, Insurance of North and must be often рerformed enough to constitute a general practice). business
Plaintiff notes defendant’s late start
investigation
on the
of
coverage, and a series of
letters
unanswered
from
Mr. Bender to Mr.
July
Walker sent from
1988 to
October
regarding
progress
oh the
claim. Defendant even denied
car,
Rusty
Lewis was the driver of the
Allison
although
Lovell’s
body was found seat-belted on the
side. The
passenger
Lovells
go
expense
had to
to the
of
a
hiring
expert
reconstruction
on
this,
liability.
issue
Dailey,
before
admitted
See
at
App.
to
to the
(requiring plаintiff
“go
inconvenience and
of
expense
obtaining qualified, expert estimates”
conduct).
indicative
aggravated
Plaintiff also notes defendant’s
Smith,
low settlement offer of
See
(a
218,
LOVELL v. contends, true, on con- relies It as defendant support the med claim to specifically duct not connected to However, since defendant allegations conduct. aggravated and.wanted admittedly wrongful death and claims linked time, it permissible resolve at the same this Court finds them record defendant’s conduct for to consider whole go evidence this case to in the matter. There sufficient conduct part the issue of on aggravated motion directed verdict the defendant. The denial evidence plaintiff presented since sufficient proper was therefore tort of faith refusal settle a claim. on each element of the settle Jury II. on elements of bad refusal to instructions *8 In its of defendant contends the trial assignment second error [2] court failed to
correctly identify
the essential elements
explain
and
faith
to settle
company’s
of the tort of an insurance
bad
refusal
in
to
the
con
jury. During
pre-charge
a claim its instructions
orally
trial
instruct on
requested
judge
ference
defendant
However,
settle,
agreed
and thе
do so.
judge
refusal to
objected
requested
read at trial defendant
and
charge
after
of
The court
and
portion
charge.
complied
re-instruction on a
any
until this
objection's
appeal.
defendant did not make
further
Procedure,
Rules Appellate
party
to the N.C.
According
“[a]
may
any portion
jury
of the
or omission
charge
as error
assign
jury
to con-
objects
therefrom unless he
thereto before
retires
10(b)(2)(1992).
its
. .” Rule
of Rule
purpose
sider
verdict.
.
10(b)(2)
unnecessary
due to faulty
is to avoid
new trials
instructions
if brought
which the court сould have corrected
to its attention.
559, 564,
130,
State v.
91 N.C.
373 S.E.2d
Bradley,
See
(1989).
(1988),
denied,
114,
disc.
LOVELL App. 416 failure to that dеfendant’s with and hold We agree special its request to submit trial and failure timely object assignment review of this our writing precludes instructions error. III. Punitive
trial [3] As judge’s its third denial assignment of its motion for error, a new trial defendant on the basis of challenges At we nóte award. the outset damage an excessive Authority of Additional a Memorandum has submitted Defendant appeal. portion to this append which it seeks (4th 1991), F.2d 95 Cir. Corp., 947 Mattison v. Dallas Carrier cites law on down South Carolina struck in which the Fourth Circuit and unconstitu process of due being violative constitu the issue оf the raised party previously Neither tional. scheme, tionality of North Carolina’s Cooke, v. See State this Court. not now before properly issue is (1982) (constitutional issue 291 S.E.2d 306 N.C. normally will not be court upon trial passed not raised and Hunter, State appeal) (quoting considered on (1982)). pro- Procedure Rules of Civil 59 of the North Carolina Rule grounds on the may granted new trial vides that a “[e]xcessive under the given to have been damages appearing inadequate or 59(a)(6) 1A-1,Rule . . .” N.C.G.S. passion prejudice. influence of *9 (1990). to determine judge the trial disсretion of It is within the sole the grounds new trial on 59 motion for a Rule grant whether to 478, v. 305 N.C. Worthington Bynum, See damages. of excessive 482, (1982). 599, may re- decision judge’s The 602 290 reasonably con- “is court only appellate if the appeal versed ruling probably judge’s the trial the cold record vinced a “manifest justice” of miscarriage to a substantial amounted 605, 487, 482, 290 S.E.2d at Id. . . .” at of discretion. abuse must Furthermore, decision judge’s the trial party challenging 604; 484-85, S.E.2d at 290 Id. at heavy proof. burden of meet a 327, 324, 545, 550, Vestal, 393 S.E.2d App. v. 99 N.C. Burgess (1990). 632, denied, 324 399 S.E.2d 327 N.C. disc. rev. $225,000.00 award damages punitive Defendant contends any logical not bear it “does because “clearly unreasonable” conduct claim or medical payments to the amount relation” had judge a trial held that Recently, this Court Nationwide. IN THE COURT LOVELL v. NATIONWIDE MUTUAL INS. CO.
'
App.
N.C.
abused his discretion
a Rule 59
denying
motion for new
$175,000.00
trial on the
punitive
basis that the
damages
were
excessive when
to the
compared
compensatory
damages
Builders,
343,
Maintenance
Equip.
Godley
Co.
App.
(1992).
353-54,
199,
420 S.E.2d
204-05
Court noted that
are
damages
beyond
awarded “above and
damages”
actual
in order
354,
to punish the
Id. at
wrongdоer.
The trial who judge, actively participated trial and had first-hand knowledge of the proceedings, clearly in a much position better than this Court to determine whether award was Worthington, excessive. 305 N.C. at at 605. Supreme Our Court stated in Worthington that the appellate courts “should place great ability and confidence in the dеcision, our trial judges fairly to make the right and without Moreover, partiality, necessity regarding for a new trial.” Id. trial should their judges use discretion “in “sparingly,” and proper Hairston, finality sanctity deference to the jury’s of a findings.” S.E.2d at 796. We find no abuse of discre- tion here. $15,000.00
The fact that plaintiff requested in punitive *10 factor, damages complaint the is a but is not determinative' as to whether the verdict was excessive. Had the plead correctly, merely the complaint would have requested punitive
IN THE MUTUAL INS. CO. NATIONWIDE LOVELL v. 8(a)(2)(1990). 1A-1, Rule in excess of N.C.G.S. rule in this that “longstanding This Court has noted the than the rather presented, the evidence governed state are County Biggs Hosp. v. Cumberland for relief. . . .” claim made (1984). 547, 550, Inc., The 317 S.E.2d Sys., 69 N.C. App. jury’s support trial was sufficient presented evidence a much lower complaint figure contains verdict. The fact that the the trial abused his judge this Court that persuade does not discretion. both the support was sufficient presented
The evidence to settle a the tort refusal finding of The We find no error. decision punitive damages award. superior court is Affirmed WYNN concurs.
Judge WALKER dissents.
Judge dissenting.
Judge WALKER majority opinion, portion $225,000 I from that dissent respectfully damages. jury’s award of which upholds are sufficient to support the facts this case agree I Although conduct, actionable, so the trial court aggravating finding “the jury, the issue properly submitted excessively is not to be punitive damages] amount assessed [as Tate, 53 N.C.App. Carawan v. to the circumstances.” disproportionate 161, 165, aff’d, 304 280 S.E.2d modified (1982). Realty v. Savoy See Swinton 286 S.E.2d (The (1953) award must jury’s limits”). in awarding discretion jury’s be “within reasonable “within constraints” exercised reasonable damages must be Insurance Com satisfy Mutual process. in order to due Pacific Life (1991). ---, Having reviewed 499 U.S. L.Ed.2d pany Haslip, case, award I believe that instant evidence a new trial was circumstances and that was excessive pursuant Rule granted have been warranted and should strikes at the heart one’s It case unquestionable way killed home tragically Allison Lovell emotions. *11 IN THE COURT APPEALS OF LOVELL v. NATIONWIDE MUTUAL INS. CO. (1993)]
[108 from her high school prom. There was evidence that defendant pressured the Lovells for with meeting adjuster prior funeral, Allison’s and that although expected Lovells to address the damage to the car and the payments provision medical at this meeting, adjustеr immediately instead began discussing coverage policy.
Aside from the liability, discussion of there was evidence that defendant’s adjuster assured the Lovells the medical payments provision was a matter independent of contract from submitted, coverage, and that once those bills would be within paid However, ten days. to fourteen timely when the submitted bills unpaid, remained the complaint was filed. Defendant’s answer ad- that plaintiff mitted had submitted the requisite documentation and stated that is ready, “defendant willing, and able . . . $2,000.00 medical benefits of ly, which are available to her.” Additional- Rusty
the funeral for bills Lewis had been submitted to defend- date, July ant on the same were paid under the Lovells’ medical payments within provision two or three weeks. I find
Although such conduct to be I objectionable, cannot conclude that the amount assessed not excessively dispropor- tionate to the I circumstances. do not supports believe the evidence a finding of conduct so patently offensive or outrageous as to war- $225,000 rant in the amount of can conclude that this given award was “undеr the influence of passion” because the emotional nature of the I Additionally, case. note that the complaint asserted a claim for punitive $15,000. 1A-1, amount of this (Although pleading violates G.S. Rule 8(a)(2),defendant did not it and challenge the issue is not before on appeal.) Court The fact jury’s award exceeded the amount sought complaint not reversible error as a (3rd Shuford, Ed.), matter of law. N.C. Civ. Prac. & Proc. Sec. However, 1A-1, 54-7. G.S. Rule 8 provides part: (a) A which pleading sets forth a claim for relief . . . shall contain
(2) A demand for judgment the relief to which he
deems himself entitled. therefore, $15,000 I infer from the pleading, considered conduct, to be appropriate sanction for defendant’s and it is THE IN INCO, INC. ERECTORS v. STEEL
SOUTHEASTERN App. 429 $225,000 award was excessive the jury’s further evidence that the circumstances. *12 Godley v. Equipment Co. cites Maintenance majority opinion
Builders, in which this N.C.App. $4,550 compensatory an award of upheld Court $175,000 case, there was sufficient In that damages. in punitive knew find that defendants which the could evidence from subject property; was in possession operations; the grading to discontinue requested plaintiff’s request refused land was defendants graded, after the and that defendant damages; it was” and for it back like “put follow again he would the same circumstances Godley stated under supported conduct egregious of action. Such the same course $175,000 it was not “ex- damages, assessment contumely to the circumstances cessively disproportionate 205, quoting 420 S.E.2d at Id. at case.” indignity present Tate, v. supra. Carawan remand, examined that the conduct to be my it is view
On should be claim for plaintiff’s as the basis for payments the medical promptly failure to limited to defendant’s contract, as to defend- opposed the terms of the pursuant claim. to settle attempts out of arising ant’s conduct awarded, any, if the amount of regard, In this conduct con- to the defendant’s relationship rational should bear a coverage timely payments the medical its failure to cerning $2,000. ERECTORS, INCO, INC. STEEL INC. SOUTHEASTERN No. 919SC807 1993) (Filed January (NCI4th)— third tier rental —lessor not § crane 1. Liens 44A lien —no Ch. labor or materials —not subcontractor tier subcontrac- for use a second The lessor of a crane Ch. entitled to an N.C.G.S. was not jobs” on “various tor which the crane project 44A a construction lien on (1) third tier as a acting lessor was not used because