Hangarter v. Paul Revere Life Ins. Co.

Citation236 F.Supp.2d 1069
Decision Date12 November 2002
Docket NumberNo. C 99-5286 JL.,C 99-5286 JL.
PartiesJoan HANGARTER, Plaintiff, v. THE PAUL REVERE LIFE INSURANCE COMPANY, et al., Defendants.
CourtUnited States District Courts. 9th Circuit. United States District Courts. 9th Circuit. Northern District of California

Ray Bourhis, Jill K. Schlichtmann, Alice J. Wolfson, Bourhis Wolfson & Schlichtmann, San Francisco, CA, Daniel U. Smith, Daniel U. Smith Law Offices, Kentfield, CA, for plaintiff.

Horace W. Green, Lori K. Bernard, Barger & Wolen, LLP, San Francisco, CA, Evan M. Tager, Mayer Brown Rowe & Maw, Washington, DC, for Paul Revere Life Ins. Co., UnumProvident Corp., defendants.

ORDER DENYING JUDGMENT AS A MATTER OF LAW OR NEW TRIAL

FINDINGS OF FACT AND CONCLUSIONS OF LAW FINDING VIOLATION OF CAL. BUS. & PROF. CODE § 17200

LARSON, United States Magistrate Judge.

INTRODUCTION

Defendants' Motion for Judgment as a Matter of Law or for a New Trial came on for hearing on June 5, 2002. Appearing for Plaintiff were Ray Bourhis, Alice Wolfson, David Lilienstein, and Daniel U. Smith. Appearing for Defendants was Horace Greene and Evan Tager, who participated by telephone from Washington, D.C. After reviewing the parties' extensive briefs and the record in this case and hearing oral argument, the court concludes that Defendants' motion should be denied. The jury's verdict was based on substantial admissible evidence of Defendants' bad faith breach of the insurance contract with Plaintiff, including evidence that Plaintiff was totally disabled under California law, that Defendants conducted a biased investigation of her claim and that her benefits were wrongfully terminated. The court committed no prejudicial error by admitting or excluding either evidence or witness testimony or in the jury instructions. The verdict reflected the weight of the evidence. The awards for compensatory and punitive damages were legally sound and not excessive. The jury awarded attorney fees after proper instruction by the court according to the California Supreme Court's holding in Brandt.

The court also hereby issues its findings of fact and conclusions of law with respect to Plaintiffs cause of action under Cal. Bus. & Prof.Code § 17200, the Unfair Competition Act. The court finds that the same actions which led to the jury verdict in this case constitute violations of § 790.03 of the California Insurance Code, the Unfair Insurance Practices Act. Further, the jury found, and this court agrees, that Defendants acted in bad faith. Consequently, Defendants have also violated § 17200 and the court enjoins Defendants from committing any further violations.

BACKGROUND

After eleven days of trial, on February 4, 2002, a jury of six men and one woman returned a unanimous verdict for plaintiff Joan Hangarter against Defendants Paul Revere Life Insurance Company and UnumProvident Co. The total awarded was $7.67 million, including $5 million for punitive damages, $1,520,849 for past and future unpaid benefits, $400,000 for emotional distress and $750,000 for attorneys' fees. Defendants filed a motion to overturn this verdict, for judgment as a matter of law ("JMOL") or for new trial.

The jury made the following findings in the Special Verdict:

1. After May 21, 1999, the date her benefits were terminated by Defendant, Plaintiff was unable to perform the substantial and material duties of her own occupation in the usual and customary way with reasonable continuity;

2. Plaintiff is entitled to recover her past benefits, up to the present day, as a result of Defendant's breach of contract;

3. The present value of Plaintiff's past disability benefits is $320,849;

4. Defendant breached the duty of good faith and fair dealing to Plaintiff;

5. Plaintiff is entitled to recover the present value of her future policy benefits as a result of Defendant's breach;

6. The present value of Plaintiff's future disability benefits is $1,200,000;

7. Plaintiff suffered mental and emotional damages as a result of Defendant's unreasonable conduct;

8. The amount of damages that will fairly compensate Plaintiff for her mental and emotional distress is $400,000;

9. Plaintiff is entitled to recover her reasonable attorneys' fees and costs incurred in obtaining the benefits due under her policy;

10. The amount the jury wishes to award in attorneys' fees and costs is $750,000;

11. Defendant acted with oppression, fraud or malice in handling Plaintiff's claim and denying her benefits 12. The amount the jury wishes to award in punitive damages is $5,000,000.

The Special Verdict was signed by the foreperson and the jury was polled in open court and its members affirmed that their verdict was unanimous.

JURY INSTRUCTIONS

The jury received the following instructions prior to their deliberations:

INDEX OF INSTRUCTIONS

1. Duties of Jury to Find Facts and Follow Law

2. Instructions to be Considered as a Whole

3. Jury Not to Take Cue from Judge

4. Juror Forbidden to Make Any Independent Investigation

5. Corporations and Partnership — Fair Treatment

6. What Is Evidence

7. What Is Not Evidence

8. Statements of Counsel — Evidence Stricken Out — Insinuations of Questions

9. Direct and Circumstantial Evidence

10. Direct and Circumstantial Evidence — Inferences

11. Weighing Conflicting Testimony

12. Credibility of Witnesses

13. Deposition Testimony

14. Interrogatories

15. Requests for Admissions

16. Charts and Summaries Not Received In Evidence

17. Charts and Summaries In Evidence

18. Stipulated Testimony

19. Discrepancies In Testimony

20. Witness Willfully False

21. Impeachment — Inconsistent Statements or Conduct — Falsus In Uno Falsus In Omnibus

22. Extrajudicial Admissions — Cautionary Instruction

23. Opinion Evidence (Expert Witnesses)

24. Expert Testimony — Qualifications of Expert

25. Weighing Conflicting Expert Testimony

26. Hypothetical Questions

27. Statements Made By Patient To Physician

28. Failure to Deny or Explain Adverse Evidence

29. Burden of Proof and Preponderance of Evidence

30. Contract — A Definition

31. Insurance Policy Defined

32. Insurance — Policy Provisions

33. Insurance — Ambiguity in Policy

34. Plaintiff's Burden to Prove Coverage

35. Breach — Essential Elements

36. Total Disability

37. Transitional Instruction

38. Covenant of Good Faith — Standard

39. Insurance Company's Obligations — Implied Obligation of Good Faith

40. Insurance Company's Obligations

41. Good Faith/Proper Cause

42. Duty to Investigate

43. Ongoing Nature of the Duty of Good Faith and Fair Dealing

44. Good Faith — Equal Consideration

45. Not Given

46. Good Faith — Conduct Before Denial

47. Good Faith — Genuine Dispute

48. Good Faith — Policy Coverage

49. Liability of Corporations — Scope of Authority Not In Issue

50. Act of Agent is Act of Principal — Scope of Authority Not In Issue

51. Effect of Instructions As To Damages

52. Damages/Proof

53. Pleadings or Argument — Not Evidence of Damages

54. Damages — Reasonable — Not Speculative

55. Legal Causation

56. Economic and Non-Economic Damages — Defined

57. General Damages/Breach of Contract

58. Damages/Breach of the Covenant of Good Faith and Fair Dealing

59. Emotional Distress

60. Emotional Distress — Defined

61. Susceptibility of Plaintiff

62. Damages Arising in the Future — Discount to Present Cash Value

63. Damages — Attorney's Fees

64. Future Disability Benefits

65. Residual Disability

66. Punitive Damages — Burden of Proof

67. Punitive Damages — Conduct

68. Clear and Convincing Evidence

69. Punitive Damages — Standard

70. Amount of Punitive Damages

71. Punitive Damages — Interest

72. Chance or Quotient Verdict Prohibited

73. Duty to Deliberate

74. Communication with Court

75. Return of Verdict

PLAINTIFF'S COMPLAINT

Plaintiff's Amended Complaint, filed August 13, 2001, sought the following relief:

[First Cause of Action for violation of Cal.Bus & Prof.Code § 17200, is discussed hereafter].

The Second Cause of Action for Breach of Contract against Paul Revere, UnumProvident and Doe Defendants. Plaintiff sought damages of $8100 per month in unpaid benefits.

The Third Cause of Action for Breach of the Covenant of Good Faith and Fair Dealing against Paul Revere, UnumProvident and Doe Defendants. Plaintiff sought damages of $8100 per month in unpaid benefits and punitive damages.

The Fourth Cause of Action for Intentional Misrepresentation against Paul Revere, UnumProvident and Doe Defendants. Plaintiff sought damages of $8100 per month in unpaid benefits and punitive damages.

GENERAL STATEMENT OF THE LAW

Judgment as a matter of law is only appropriate when the evidence permits only one reasonable conclusion, contrary to the jury's verdict. Gilbrook v. City of Westminster, 177 F.3d 839, 864 (9th Cir.1999), cert. denied, 528 U.S. 1061, 120 S.Ct. 614, 145 L.Ed.2d 509. If conflicting inferences may be drawn from the facts, then the case must go to the jury. Pierce v. Multnomah County, Or., 76 F.3d 1032, 1037 (9th Cir.1996). In ruling on a motion for JMOL, the court is not to make credibility determinations or weigh the evidence and should view all inferences in the light most favorable to the non-moving party. Winarto v. Toshiba America Electronics Components, Inc., 274 F.3d 1276, 1283 (9th Cir.2001). As this court said in denying summary judgment in this case, whether an insurer's denial of a claim is unreasonable is a question of fact, unless only one inference may be drawn from the evidence, citing Carlton v. St. Paul Mercury Ins. Co., 30 Cal.App.4th 1450, 1456, 36 Cal.Rptr.2d 229 (1994).

A new trial is proper only if the verdict is contrary to the clear weight of the evidence or is based upon evidence which is false, or to prevent, in the sound discretion of the trial court, a miscarriage of justice. Silver Sage Partners, Ltd. v. City of Desert Hot Springs, 251 F.3d 814, 818-819 (9th Cir.2001). A district court may not grant a new trial simply because...

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    ...of Appeals held that there was no error in excluding the proposed expert testimony. In Hangarter v. Paul Revere Life Insurance Co. , 236 F. Supp.2d 1069 (N.D.Cal. 2002), the court found that it would be reasonable for experts in bad faith insurance practices to look to the relevant statutor......
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