SIMMONS FOODS, INC., Plaintiff-Appellee v. INDUSTRIAL RISK INSURERS, an Unincorporated for Profit Association; Swiss Reinsurance America Corporation; Westport Insurance Corporation; Ironshore Specialty Insurance Company, Defendants-Appellants
No. 15-3755, No. 15-3845
United States Court of Appeals, Eighth Circuit.
July 11, 2017
Submitted: January 11, 2017
863 F.3d 792
(emphasis added).
Once more, the instructions together inform the jury that, unlike the mens rea for the stolen firearm charge, the mens rea for the unregistered firearm charge is limited to knowledge of possession and does not require knowledge of any specific facts related to the firearm‘s physical traits. To read the instructions any other way would require the jury to interpret Instruction No. 16 such that the word “knowingly” in element one also applies to element two, which appears in a separate paragraph. We find that no reasonable jury would employ such a strained interpretation, particularly given that it would require the jury to either ignore the obvious difference between the instructions or to attribute no meaning to the repeated mens rea in Instruction No. 17. The more natural reading of Instructions No. 1, 16, and 17, is that White could be convicted of possessing the unregistered Street Sweeper without knowing that the Street Sweeper had the bore diameter identified in element two. Because knowledge of the bore diameter is a necessary element of the offense, we hold that the jury instructions failed to sufficiently apprise the jury of the government‘s burden. See Pereyra-Gabino, 563 F.3d at 328. Accordingly, White‘s conviction for possession of an unregistered firearm is reversed.
III. Conclusion
In addition to affirming the unregistered firearm conviction, the panel (1) reversed White‘s conviction for possession of a stolen firearm due to insufficient evidence proving White knew or had reasonable cause to believe the Romarm Draco was stolen, and (2) upheld the submission of evidence at trial that White was a subject of law enforcement‘s investigation of a series of violent crimes. White, 824 F.3d at 789, 792. We agree with the panel‘s sound reasoning supporting its reversal of the stolen firearm conviction, and we therefore reinstate Part II of the panel opinion. Because both convictions are reversed and remanded, we decline to address White‘s challenge to the evidentiary ruling in his earlier trial. Thus, Part IV of the panel opinion—which affirmed the evidentiary ruling—remains vacated.
In sum, White‘s convictions for possession of an unregistered firearm and for possession of a stolen firearm are reversed. We remand for further proceedings consistent with this opinion.
Counsel who presented argument on behalf of the appellee/cross-appellant was John L. Elrod of Fayetteville, AR. The following attorney(s) also appeared on the brief; Todd P. Lewis, Vicki D. Bronson, and Kerri E. Kobbeman, of Fayetteville, AR.
Before RILEY,1 Chief Judge, LOKEN and BENTON, Circuit Judges.
RILEY, Chief Judge.
In 2011, Simmons Foods, Inc., made a claim under two property insurance policies it had with Industrial Risk Insurers and Ironshore Specialty Insurance Company
I. BACKGROUND
Simmons is a large, family-owned poultry and pet-food company that is incorporated in Arkansas and headquartered in Benton County, Arkansas. The insurers issued two materially identical property insurance policies to Simmons, with a coverage term from September 1, 2010, to September 1, 2011, and a joint liability limit of $100 million. According to Simmons‘s Assistant Risk Manager, the policies were “negotiated, entered, issued, and delivered to Simmons at its corporate office in Benton County, Arkansas,” and the policy premiums were paid from Arkansas. The policies covered 51 properties Simmons owned, specifically: 21 in Arkansas, 13 in Oklahoma, and 17 scattered throughout Kansas, Missouri, New Jersey, and Canada.
In February 2011, a snowstorm swept through Oklahoma and Missouri and damaged several of Simmons‘s covered buildings and farms. Simmons made a claim for all of its damaged properties under the policies, which provided that the insurers’ liability “shall not exceed the smaller of the following: 1. the cost to repair, rebuild or replace on the same site with new materials of like kind and quality, whichever is the smallest; 2. the actual expenditure incurred in repairing, rebuilding or replacing on the same site or another site, whichever is the smallest.” The parties resolved most of the claim without issue. The exception was a dispute about Simmons‘s can-making facility in Fort Gibson, Oklahoma, a 300-foot by 400-foot metal structure that sustained considerable damage to its roof and supporting columns. The parties disagreed on how the policies covered the situation—Simmons contended it was entitled to recover the cost to rebuild the structure, while the insurers asserted they were only obligated to pay for the cost to repair specified damages. Simmons elected to rebuild the facility despite this impasse, and eventually submitted invoices to the insur-
Simmons filed suit in the Western District of Arkansas on September 20, 2013, seeking $3,584,041.90 for the insurers’ alleged breach of contract. See
At trial, the parties presented conflicting evidence on the two issues the jury needed to decide. First, the parties continued their quarrel over whether the facility could have been repaired. Second, if the rebuild were proper, the parties disputed whether Simmons was entitled to the full $3,584,041.90 it sought. On this point the insurers claimed Simmons‘s figure included certain “betterments” that were not covered by the policies—for example a new dock door, additional exhaust fans, and higher-quality steel—while Simmons posited these expenses were either required by local code or would save money in the long run. Following the jury‘s findings, Simmons was entitled to $2,817,380.11 in damages. The district court later awarded Simmons prejudgment interest. See
II. DISCUSSION
A. Motion to Dismiss
The insurers first contend Simmons‘s suit was untimely and therefore should have been dismissed. Whether this contention has merit hinges largely on which state‘s law we must apply. Under Arkansas law, an insured has five years to sue an insurer for breach of a property insurance policy and “[a]ny stipulation or provision in the policy or contract requiring the action to be brought within any shorter time or be barred is void.”
With that in mind, the first step is to determine whether the timeliness issue is procedural or substantive in nature. If it is procedural, then Arkansas law applies; if it is substantive, then further analysis is needed. See Travis Lumber Co. v. Deichman, 2009 Ark. 299, 319 S.W.3d 239, 255 (2009). The insurers posit “[e]very court to consider the enforceability of a suit limitation provision in an insurance contract has treated it as a substantive, not procedural, issue.” However the insurers offer scant support for this bold claim—they cite two out-of-circuit, district-level decisions.6 More importantly, the statement almost directly conflicts with a case from the only court whose classification controls: the Arkansas Supreme Court.
In Gulf Insurance v. Holland Const., an Oklahoma-based insured obtained a property insurance policy from a Texas-based insurer. Gulf Ins. Co. v. Holland Const. Co., 218 Ark. 405, 236 S.W.2d 1003, 1004 (1951). The insured made a claim under that policy when some of its property was damaged in Arkansas, and the insurer denied coverage. See id. Three years passed from the date of the incident before the insured filed suit in Arkansas state court. See id. Like here, the insurer pointed to a limitation provision within the policy stat-
[T]he period of limitation in which suit may be filed . . . is a matter of procedure and not of substantive law. . . . Where the statutes of the forum make void all agreements whereby the time for the bringing of actions is fixed at a period less than that prescribed by law, a contractual stipulation made in another jurisdiction is not available as a defense.
Id. at 1006 (emphasis added) (citation and internal quotation marks omitted). The Arkansas Supreme Court declined to give effect to the limitation provision and affirmed the jury verdict in favor of the insured. See id.
The insurers try to avoid a similar result here by contending in oral argument Gulf Insurance is “distinguishable on many, many grounds.”7 We disagree. At oral argument, the insurers first suggested Gulf Insurance “was going to be governed by Arkansas law under any sort of choice-of-law analysis” because the damage occurred in Arkansas. Whether some other choice-of-law principle would have called for application of Arkansas law is irrelevant, because the Arkansas Supreme Court did not rely on any such other principle—it relied solely on its determination that the timeliness issue was procedural and governed by the forum‘s law. See id. We are also unpersuaded by the insurers’ attempt to highlight slight differences between the limitation provision in Gulf Insurance and the one here.8 The operative language struck down by the Arkansas Supreme Court was a clause shortening the time an insured could sue an insurer. That language similarly exists here.
Last, the insurers orally argued “the law has come a long way since the Gulf case as to how [courts] treat suit-limitation provisions.” Maybe so. However, “[a]s a federal court, our role in diversity cases is to interpret state law, not to fashion it.” Wivell v. Wells Fargo Bank, N.A., 773 F.3d 887, 896 (8th Cir. 2014) (quoting Dannix Painting, LLC v. Sherwin-Williams Co., 732 F.3d 902, 905 (8th Cir. 2013)). When dealing with an issue of state law we are bound by rulings on that issue from the state‘s highest court. See id. at 896-97. We are faced with an issue of Arkansas law, and the Arkansas Supreme Court has decided that issue, so we are bound by that decision regardless of whether we think it wise or in accordance with the supposed national trend. If the Arkansas Supreme Court or legislature wants to change state law, then they can do so—we cannot. Simmons‘s suit was timely, and the district court was right to deny the insurers’ motion to dismiss.
The insurers next argue Simmons is not entitled to prejudgment interest, which is another issue we decide (this time without dispute) under Arkansas law. See Maddox v. Am. Airlines, Inc., 298 F.3d 694, 699 (8th Cir. 2002). “Prejudgment interest is compensation for recoverable damages wrongfully withheld from the time of the loss until judgment.” Dorsett v. Buffington, 2013 Ark. 345, 429 S.W.3d 225, 232 (2013). A prevailing plaintiff is entitled to prejudgment interest “if the amount of damages is definitely ascertainable by mathematical computation, or if the evidence furnishes data that make it possible to compute the amount without reliance on opinion or discretion.” Id. However “[i]f the damages are not by their nature capable of exact determination, both in time and amount, prejudgment interest is not an item of recovery.” Id. at 232-33.
The parties disagree about how these rules apply in this case. To the insurers, this case is similar to Woodline Motor Freight, Inc. v. Troutman Oil Co., Inc.. We agree that case is “instructive.” In Woodline, a vehicle driver caused a crash that damaged a convenience store. See id. at 566. The building owner sued.9 See id. At trial “[t]here was conflicting testimony as to whether the building needed to be completely torn down, or whether part of the structure could have been repaired.” Id. at 569. The jury awarded $100,000 of the $202,000 the owner sought for property damage. See id. at 566-67. Given that “the estimates to repair or replace [the] building varied substantially,” the Arkansas Supreme Court held prejudgment interest was improper because “it was impossible to compute the amount of [the plaintiff‘s] damages without reliance on opinion or discretion.” Id. at 569. In Simmons‘s case, the jury had to exercise discretion to reach a verdict based on “conflicting testimony” and estimates that “varied substantially” as to Simmons‘s damages. This suggests “the amount due [Simmons] was neither liquidated as a dollar sum nor ascertainable by fixed standards.” Id.
Simmons still maintains prejudgment interest was proper because the policies provided a “method” to ascertain damages: the insurers owed either “the cost to repair, rebuild or replace” the facility or “the actual expenditure incurred in repairing, rebuilding or replacing” the facility, whichever was less. To Simmons, the damages were capable of exact determination because there was “no dispute concerning the amount Simmons spent to replace the building.” Thus, once the jury decided what Simmons posits was the only issue at trial—“whether the entire building needed to be replaced at all“—there was no room left for “opinion or discretion,” nothing for the jury to ascertain. Dorsett, 429 S.W.3d at 232. But the record and verdict show that was not the case.
The parties stipulated to how much Simmons actually spent on the facility and how much the insurers voluntarily paid Simmons. If the jury simply plugged these figures into Simmons‘s proffered damages formula, without relying on any opinion or discretion, it would have awarded about $3.5 million in damages. Yet, as Simmons said at oral argument, “juries do
C. Statutory Damages and Attorney Fees
For its part, Simmons claims it should have received statutory damages and attorney fees.11 Under
The Arkansas Supreme Court has made clear the statute is “strictly construed in favor of the party sought to be penalized” and “should not be held to apply except in cases that come clearly within the statute.” Primerica Life Ins. Co. v. Watson, 362 Ark. 54, 207 S.W.3d 443, 448 (2004). Whether this case comes “clearly within the statute” depends on whether Simmons recovered at least 80% of the amount it “demanded” or “sought in the suit.” After thorough analysis, the district court found “Simmons fail[ed] to chin this statutory bar, as its net recovery of $2,817,380.11 is only 78.6% of its $3,584,041.90 demand.” We review the district court‘s legal conclusion de novo, and the factual findings supporting it for clear error. See, e.g., Jackson v. Allstate Ins. Co., 785 F.3d 1193, 1206 (8th Cir. 2015).
Simmons proposes two reasons why the district court was wrong. First, Simmons
Alternatively, Simmons contends the district court failed to grasp the “substance” of its demand. Notwithstanding the above approach, Simmons says it was “undisputed” Simmons was suing to recover the difference between what it spent to replace the facility and what the insurers voluntarily paid. That difference was $3,488,761.13, and using this as the “amount demanded” would mean a recovery rate of 80.8%. The district court was right to reject this attempt at revisionist history. Given the parties’ stipulations, this is the correct difference and appears to be the most Simmons could have recovered. . . . Yet, for some unknown reason, Simmons consistently demanded an amount almost $100,000 more than that. Consider: In its pre-suit demand letter, Simmons sought $3,584,041.90; the complaint stated the suit was for $3,584,041.90, and asked for an additional 12% of that amount as statutory damages; pretrial disclosures and reports reflect this higher number; and the jury was told this was the stipulated amount Simmons was seeking. When the district court mid-trial expressed concern about the origin of this number, Simmons doubled down and reaffirmed that “at the end of the day . . . this lawsuit is for 3.584 million.” The closest Simmons came to reducing its demand was in closing arguments when counsel acknowledged some expenses did relate to so-called betterments that were not technically covered by the policies, but even then Simmons sought to justify the costs. It seems clear to us that all parties operated under the assumption Simmons was seeking $3,584,041.90, and Simmons never made a full and timely attempt to make a “new and lesser demand.” Id. at 358. Because Simmons failed to recover at least 80% of that amount, it was not entitled to statutory damages or attorney fees.
III. CONCLUSION
We affirm the district court‘s decision to deny the insurers’ motion to dismiss, because the limitation provision is procedural and is void under Arkansas law. We reverse and vacate the award of prejudgment interest, because the jury had to exercise discretion in determining Simmons‘s loss. We affirm the denial of Simmons‘s request for statutory damages and attorney fees, because Simmons did not recover the statutory threshold of at least 80% of the amount it demanded in the suit.