Travelers Indem. Co. v. Wetherbee

• Decision Date: 14 March 1979
• Docket Number: No. 50769,50769
• Parties: The TRAVELERS INDEMNITY COMPANY, Defendant/Appellant, v. Carl W. WETHERBEE et ux, Plaintiffs/Appellees.
• Court: Mississippi Supreme Court

Page 829

368 So.2d 829

The TRAVELERS INDEMNITY COMPANY, Defendant/Appellant, v. Carl W. WETHERBEE et ux, Plaintiffs/Appellees.

No. 50769.

Supreme Court of Mississippi.

March 14, 1979.

Rehearing Denied April 4, 1979.

Megehee, Brown & Williams, John M. Kinard, Pascagoula, for defendant/appellant.

C. R. McRae, Pascagoula, for plaintiffs/appellees.

Before PATTERSON, SUGG and BOWLING, JJ.

PATTERSON, Chief Justice, for the Court:

Travelers Indemnity Company appeals from a judgment of the Circuit Court of Jackson County. The suit was based upon a fire insurance policy purchased by Carl and Lula Bell Wetherbee for coverage on their dwelling, its contents and additional living expenses. The judgment against Travelers resulted from a jury verdict of $50,000, compensatory damages, and $50,000, punitive damages. The agency, Wortman & Mann, which sold the insurance and held the Wetherbees' mortgage, was also a defendant in the trial court but was nonsuited at the conclusion of the evidence.

The Wetherbees purchased their home in early 1975 by assuming a loan of $17,500. At the time the dwelling was protected by a policy of Travelers which was renewed and the coverage increased in December 1975 at the suggestion of Travelers' agent. The renewed policy limits were $20,000 upon the dwelling, $6,000 upon its contents and $2,000 additional living expense in case of loss.

The dwelling was severely damaged by fire on February 14, 1976, which was reported to Travelers on February 17, 1976, and a draft for $500 was promptly issued to the Wetherbees. On February 18, 1976, Barry Wallace, a claims representative of Travelers, inspected the burned dwelling with the Wetherbees to ascertain the extent of damage. While this investigation was under way, Fire Marshal Rivers arrived and requested Wallace to speak with him apart from the Wetherbees. They retired and Rivers advised Wallace that Wetherbee was "a prime suspect in the fire of his own house as well as at another place." Wallace informed the Wetherbees of this report and after advising them of the provisions for their cooperation in the policy, sought information concerning their whereabouts and activities at the time of the fire. He also requested and received their consent to submit to a polygraph examination. Thereafter, his "Account Reevaluation Notice" was filed with Travelers who cancelled the policy on March 21, 1976, and declined payment to the Wetherbees during the course of the fire marshal's investigation.

Meanwhile, the Wetherbees resided in motels until their funds were exhausted and then moved into a low income housing project while they sought a more suitable place of abode. More recently they have lived with their five children in various apartments, none of which afforded the accommodations they had previously enjoyed in their dwelling. During this time they continued to make mortgage payments, with difficulty, on their burned dwelling to prevent its foreclosure. Faced with both dwelling and apartment payments and inconvenience, they engaged an attorney on March 31, 1976, to conclude their claim against Travelers.

During this interval Wallace had requested the Wetherbees to obtain an estimate of cost to repair the dwelling and when none was forthcoming engaged Waymon Clegg, a building contractor, on March 23, 1976, to make such. Shortly thereafter, Clegg's estimate of $14,137.24 was submitted to Wallace.

Also during this interim Honorable Guy Faggard, the Wetherbees' attorney, had written Wallace that his clients were anxious to cooperate with Travelers so they might bring their claim to an early conclusion. Wallace contacted Faggard in response and the claim was discussed and later, April 13, Faggard sent Wallace a list of the contents of the house which had been destroyed, as well as an estimate of repair of the dwelling which had been submitted by Patel Properties, a construction concern, at the request of his clients. This estimate was $23,889.38, a sum in excess of the policy limit. At this time Faggard also advised of the extra living expenses incurred by his clients because of their inability to occupy their residence and requested prompt payment.

On May 21, 1976, Faggard wrote Wallace reminding him of his previous correspondence and again requested an early settlement which was not forthcoming.

Thereafter, on May 25, 1976, the fire marshal's report exonerating the Wetherbees of arson terminated that investigation.

Two days later, May 27, 1976, Wallace attempted to settle the claim, but without success. Apparently, this offer of settlement was upon the basis of a communication from his superior which states in part: "Please try to compromise with attorney for buildings and contents only and eliminate any ADL . . . ." The "ADL" within the quotation was explained as a reference to additional living expenses. During the course of the trial, after acknowledging a dispute as to the repair of the building, Faggard testified concerning his request for payment of the destroyed contents as follows:

Q. Prior to obtaining this bid, had he ever made any objections to you?

A. I don't know if he already had the bid from Clegg or not. In other words, he wouldn't pay the Patel bid. I know that.

Q. Did you on any occasion ask him to pay the contents after you had a dispute with him on the other?

A. Oh, yeh.

Q. Did he pay the contents?

A. No, he did not.

Q. Did he agree with you that this company owed the $6,000 on contents?

A. No question about the value of the contents. The value of the contents, according to the list that they made up, is over $15,000. They had some $6,000 coverage on the contents.

Q. But he would never pay that?

A. He wanted to settle both the repair of the dwelling and the contents at the same time.

Q. Did he ever make the statement that that was a company policy not to separate the two?

A. That's correct.

Q. Did you then have your clients, Mr. and Mrs. Wetherbee, to obtain another estimate?

A. Yes, sir.

Faggard went on to relate that within a month of May 21 when he had written Wallace, that Wallace responded with an offer of settlement based upon the repair estimate of approximately $14,000 and payment of $6,000 for loss of contents. Although this offer was unacceptable to the Wetherbees, it nevertheless led to further discussion and tentative agreement to arbitrate. To this end the Wetherbees obtained another estimate from a different concern which was submitted on June 22, 1976, in the sum of $23,537.85. Travelers also obtained an estimate from General Adjustment Bureau on August 30, 1976, in the sum of $14,196.14. General Adjustment Bureau, who was also agreed upon by the parties to arbitrate the difference, declined to do so.

Sometime in July 1976 the Wetherbees retained Honorable C. R. McRae to replace their previous attorney. On July 23 and again on September 1, 1976, he wrote Travelers demanding prompt settlement of the claim or claims. An explication of this correspondence might be best portrayed by quoting the cross-examination of Witness Wallace by Attorney McRae:

Q. Now, you said you were never called upon to pay any additional living expenses. Mr. Faggard says he asked you to do it in his letters and talking to you. But disregarding that, just look over to the next page. After you have had the instructions from Mr. Watts to eliminate them, you had a certified letter from me, didn't you? On July 23rd, 1976.

A. The letter was to me; right.

Q. Addressed to you, certified mail, and the date of that letter was what?

A. July 23, 1976.

Q. And in that letter did I not request that we are also calling on you to pay immediately the contents and additional amount of money for advanced living expenses? As you recalled, you advanced and this is where I had gotten the understanding that that first $500.00 was advanced living, but it was contents as we found out advanced within a week's time $500.00 for the advanced living expenses. However, you have refused to forward any other money. As you know, this puts the insured in a position to force them to settle the case at a lower price. We therefore call upon you to immediately release the advanced living expenses as called upon in the policy the contents money, as well as the money to fix the house.

A. But you didn't send any receipts with the letter. There was no proof. There was just strictly a letter.

Q. Now you made some notations on my letter of July the 3rd, did you not, in your own handwriting at the bottom? Rent, $284.00 a month.

A. This is a figure I believe you mentioned.

Q. It's not mentioned in the letter.

A. In our meeting of 9-1.

Q. Oh, so that was done in 9-1?

A. I made that entire notation on 9-1.

Q. Okay, let's get on to my next letter in September. "You further advised that you would not pay the contents now or any more advanced payment until our client agreed to your terms this was confirming our meeting of 9-1 and accepted the offer that is being made by you. We advise you that our client is in dire financial circumstances due to the fact that as a result of the case being dragged out, it has caused a tremendous financial burden on them, and they are desirous of the $6,000.00 for contents and the cost of living money that should have been advanced to them some time ago. You stated that it is your company's policy that they would not settle the case not settle anything further or write any more checks until the case is settled in its entirety. We feel that this is very arbitrary and capricious position on your company's part and we again call upon you to forthwith settle the contents and give the additional $1500.00 for advanced payments that they are due and owing to our clients, in particular since there is no dispute over these items."

You stated the Clegg estimate. We go on here again about that. But in that letter we also go in to about the Regency the apartment rent is $284; but you don't make any notation on that. You made it on the July letter.

A. But you...