867 F.3d 1003 (8th Cir. 2017), 16-4070, Dziadek v. Charter Oak Fire Ins. Co.

Docket Nº:16-4070, 16-4210
Citation:867 F.3d 1003
Opinion Judge:BENTON, Circuit Judge.
Party Name:Laura Dziadek, Plaintiff - Appellant v. The Charter Oak Fire Insurance Company, Defendant - Appellee
Attorney:For Laura Dziadek, Plaintiff - Appellant (16-4210): Mike Abourezk, Daniel Everett Holloway, ABOUREZK LAW FIRM, Rapid City, SD. For The Charter Oak Fire Insurance Company, Defendant - Appellee (16-4210): Thomas Henry Boyd, WINTHROP & WEINSTINE, Minneapolis, MN; Michael R. Cashman, Jonathan D. Jay,...
Judge Panel:Before WOLLMAN, RILEY, and BENTON, Circuit Judges.
Case Date:August 15, 2017
Court:United States Courts of Appeals, Court of Appeals for the Eighth Circuit
 
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Page 1003

867 F.3d 1003 (8th Cir. 2017)

Laura Dziadek, Plaintiff - Appellant

v.

The Charter Oak Fire Insurance Company, Defendant - Appellee

Nos. 16-4070, 16-4210

United States Court of Appeals, Eighth Circuit

August 15, 2017

Submitted April 4, 2017.

Appeals from United States District Court for the District of South Dakota - Sioux Falls.

For Laura Dziadek, Plaintiff - Appellant (16-4210): Mike Abourezk, Daniel Everett Holloway, ABOUREZK LAW FIRM, Rapid City, SD.

For The Charter Oak Fire Insurance Company, Defendant - Appellee (16-4210): Thomas Henry Boyd, WINTHROP & WEINSTINE, Minneapolis, MN; Michael R. Cashman, Jonathan D. Jay, HELLMUTH & JOHNSON, Edina, MN; Timothy A. Clausen, KLASS LAW FIRM, Sioux City, IA.

Before WOLLMAN, RILEY, and BENTON, Circuit Judges.

OPINION

BENTON, Circuit Judge.

A jury found The Charter Oak Fire Insurance Company liable for breach of contract and deceit for its handling of Laura Dziadek's underinsured-motorist claim. After partly granting judgment as a matter of law, the district court1 approved some of the compensatory damages and all of the punitive damages. Dziadek v. Charter Oak Fire Ins. Co., 213 F.Supp.3d 1150, 1162 (D.S.D. 2016). Having jurisdiction under 28 U.S.C. § 1291, this court affirms.

I.

Charter Oak issued a Commercial Insurance Policy to Billion Empire Motors, Inc., an auto dealership in Sioux Falls. Billion loaned a car to Lori Peterson. On September 22, 2008, Peterson lost control of the car, crashing in a ravine. Laura Dziadek, a passenger, was severely injured. She hired Zimmer Duncan & Cole (ZDC) to represent her.

In early 2009, Billion's insurance agent notified Charter Oak about the accident. Faith Styles was Charter Oak's claims representative. She learned Peterson was insured by Progressive but only for $100,000 liability coverage. On February 6, Styles spoke with ZDC attorney Jeffery A. Cole about coverage for Dziadek. According to Cole, she said Dziadek had no coverage under the Charter Policy. Days later, she wrote Cole a letter stating " no coverage for your client [Dziadek] exists under this policy."

On February 18, Cole sent Styles a letter requesting the declaration sheet and " a true and correct copy" of the Policy. She sent back the declarations sheet and excerpts of the Policy. Styles did not send the entire Policy. In the excerpts Styles sent, Dziadek was not an " insured."

On February 24, Progressive offered Peterson's $100,000 limit in exchange for a full release from Dziadek. Cole declined because Dziadek's medical bills exceeded $100,000 and he hoped to collect more from Peterson and other alleged tortfeasors. Over the next two years, ZDC pursued claims against Peterson, the State of South Dakota, various state officials, and a signage company.

In June 2011, ZDC attorney Daniel K. Brendtro reviewed the Charter Policy to see if Dziadek was covered. He noticed the UIM coverage and told a paralegal to get a copy of the entire Policy from Styles. In response, Styles asked the paralegal to request specific parts of the Policy, asserting it could be over 2,000 pages. The paralegal narrowed the request. Styles did not respond. The following week, the paralegal repeated the request. On July 21, Styles sent a full copy of the Policy.

After reviewing the entire Policy, ZDC wrote Styles for confirmation that Dziadek was an insured with UIM coverage. After 50 days with no response, Dziadek filed this lawsuit in September 2011, alleging breach of contract, deceit, and bad faith. Charter Oak's answer admitted the existence of UIM and medical-payments coverage. Charter Oak also agreed to Dziadek's settlement with Peterson and Progressive for the $100,000 limit. On February 21, 2012, Charter Oak paid $900,000 in UIM coverage (the $1 million limit minus $100,000 from the Progressive policy), plus $5,000 in medical-payments coverage.

The jury found Charter Oak liable for deceit and breach of contract. It awarded Dziadek $250,000 for additional legal fees; $500,000 of " other harm . . . including mental and emotional harm" ; and prejudgment interest. In phase two of the trial, the jury awarded $2.75 million in punitive damages. Charter Oak and Dziadek both appeal.

II.

Charter Oak argues that Dziadek's deceit and breach of contract claims fail as a matter of law. This court reviews de novo the denial of a motion for judgment as a matter of law, taking all facts and reasonable inferences most favorably to Dziadek. See Hudson v. United Sys. of Ark., Inc., 709 F.3d 700, 702 (8th Cir. 2013).

A.

Charter Oak believes that the " independent duty rule" bars Dziadek's deceit claim because " there is no independent tort claim for the failure to perform a contract duty that would be unenforceable separate from and independent of the contract." In South Dakota, the tort of deceit is: (1) The suggestion, as a fact, of that which is not true, by one who does not believe it to be true;

(2) The assertion, as a fact, of that which is not true, by one who has no reasonable ground for believing it to be true;

(3) The suppression of a fact by one who is bound to disclose it, or who gives information of other facts which are likely to mislead for want of communication of that fact; or

(4) A promise made without any intention of performing.

S.D. Codified Laws § 20-10-2. " [A]n omission to perform a contract obligation is never a tort, but . . . that . . . breach of legal duty upon which a tort is based may arise out of a relation or state of facts created by contract." Karas v. Am. Family Ins. Co., 33 F.3d 995, 998 (8th Cir. 1994), citing

Smith v. Weber, 70 S.D. 232, 16 N.W.2d 537, 539 (S.D. 1944) (internal quotation marks omitted).

Although Dziadek's claim may " grow out of" a contract, " [t]he fact that there existed a contract between the plaintiffs and the defendant would not immune the latter from the...

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