Arnold v. Mountain West Farm Bureau Mut. Ins. Co., Inc.
| Decision Date | 09 October 1985 |
| Docket Number | No. 84-252,84-252 |
| Citation | 707 P.2d 161 |
| Parties | Martha ARNOLD and Paul H. Arnold, Appellants (Plaintiffs), v. MOUNTAIN WEST FARM BUREAU MUTUAL INSURANCE COMPANY, INC., Appellee (Defendant). |
| Court | Wyoming Supreme Court |
John E. Stanfield (argued) of Smith, Stanfield & Scott, Laramie, and Sharon A. Fitzgerald (argued), Cheyenne, for appellants.
Paul B. Godfrey and George E. Powers, Jr. (argued) of Godfrey & Sundahl, Cheyenne, for appellee.
Before THOMAS, C.J., and ROSE, ROONEY, BROWN and CARDINE, JJ.
This appeal is from a judgment entered upon a jury verdict awarding the appellants thirty-two thousand dollars ($32,000). Appellants' appeal raises four issues which are set out in the following fashion:
We affirm.
On February 22, 1981, appellants, Paul Arnold (the driver) and Martha Arnold (a passenger), were travelling in their automobile heading west out of Scottsbluff, Nebraska. When Mr. Arnold stopped to turn left off the highway, a pickup rear-ended the Arnold automobile. The driver of the pickup was Glenn Ford, an uninsured motorist.
As a result of the accident, the Arnold automobile was damaged and Mrs. Arnold suffered physical injury. One doctor testified that she had a "chronic cervical sprain." He indicated that some permanent damage had been done, and Mrs. Arnold would always experience some discomfort because of the injury.
At the time of the accident the Arnolds insured three vehicles, including the automobile involved in the accident, through the defendant, Mountain West Farm Bureau Mutual Insurance Company (hereinafter Mountain West). Separate premiums were paid on each of the three policies. Each policy provided for uninsured motorist coverage in the amount of $10,000 per person and $20,000 per occurrence.
Following the accident, the Arnolds submitted a Notice of Loss to Mountain West. In response, Mountain West's claim representative contacted Mrs. Arnold on February 23, 1981. The claim representative advised the Arnolds that they would need to get bids on the cost of repairing the automobile and discussed the policy coverage with Mrs. Arnold, explaining that under the terms of the insurance policy Mountain West would provide only excess medical coverage, i.e., medical coverage for those bills not paid under any primary medical coverage. Mrs. Arnold indicated that she did have primary coverage through Blue Cross and Blue Shield. As a result, it was Mountain West's position that it would only pay medical bills that Blue Cross and Blue Shield refused to pay.
Subsequently, a dispute developed concerning Mountain West's obligations. Initially the dispute concerned the Arnold's claim for damages to their car. At that time the Arnolds engaged an attorney to represent them. The parties then also disagreed regarding Mountain West's obligations for Mrs. Arnold's medical bills.
On April 2, 1981, the Arnolds' attorney wrote Mountain West demanding payment of the sum of $10,000 which he believed was the maximum coverage under the uninsured motorist provision of the policy. Mountain West responded by requesting certain documentation in support of the claim which included, among other things, proof of damages and proof that Glenn Ford was an uninsured motorist. During the ensuing one-year period, the parties exchanged letters discussing what documentation was necessary.
As of May 1982, Mountain West had paid the Arnolds the following:
1. March 24, 1981 (highway
report) ................... $ 2.00
2. July 9, 1981 (medical
expenses) ................... 60.11
3. September 23, 1981
medical report) ............. 85.00
4. October 2, 1981 (medical
expenses) .................. 143.50
On May 5, 1982, appellants' attorney, by letter, again demanded the full amount of uninsured motorist coverage under the policy limits, which he believed was $10,000. Shortly after this letter, settlement negotiations began between the Arnolds' attorney and an attorney for Mountain West. The Arnolds received a settlement offer of $6,000 but rejected it.
In August 1982, the Arnolds' attorney discussed the matter with Mountain West's director of claims. During the conversation both men lost their tempers. As a result, the Arnolds' attorney withdrew from their representation and was replaced by a second attorney who, in October 1982, initiated this lawsuit.
The matter was tried to a jury commencing July 26, 1984. The trial took six days to complete. In its verdict the jury found:
(1) Martha Arnold suffered $75,000 in damages for personal injury as a result of the automobile accident;
(2) Paul Arnold suffered $7,500 in damages as a result of loss of consortium;
(3) Mountain West did not act in good faith in handling the Arnolds' claims;
(4) As a result of the bad faith, each of the Arnolds were awarded $1,000 in damages;
(5) Mountain West's misconduct was not willful or wanton;
(6) Mountain West's refusal to pay benefits was not unreasonable or without cause; and
(7) At the time of the accident three insurance policies were in effect which provided uninsured motorist benefits.
As a result of the verdict, the district court determined that the insurance policies should be stacked such that Mountain West was obligated up to the $10,000 limit on each policy. Thus, Mountain West was found obligated to pay $30,000 under the terms of the insurance policy. In addition Mountain West was ordered to pay $2,000 for its breach of the implied covenant of good faith.
The first issue raised by the Arnolds on appeal concerns the jury's decision denying an award of punitive damages. The Arnolds contend that the trial court erred in instructing over objection that punitive damages could only be awarded if the jury found Mountain West guilty of willful and wanton misconduct. The Arnolds argue that the trial court erred in refusing to instruct that punitive damages may also be awarded upon a finding of fraud, malice, misrepresentation, or oppression.
However, this argument must fail. "Punitive damages are not a favorite of the law * * *." Town of Jackson v. Shaw, Wyo., 569 P.2d 1246, 1252 (1977). They are awarded only in extraordinary circumstances in order to "publicly condemn some notorious action or inaction * * *." Campen v. Stone, Wyo., 635 P.2d 1121, 1123 (1981).
Punitive damages are generally not recoverable in an action upon a contract where the parties have made a written agreement between themselves setting their respective rights and obligations. Punitive damages may be recoverable in an action in tort if the conduct constituting the breach rises to the level of an independent tort, but that claim is not here presented nor is it decided by us. In United States v. Redland, Wyo., 695 P.2d 1031 (1985), we held that punitive damages are not proper in an action upon a contract to recover damages resulting from a breach of the contract. We said that to recover punitive damages in an action upon a contract, "there must be evidence of spite, ill will or willful and wanton misconduct at the inception of a fraudulent contract * * *." Id. at 1039. The proper remedy for wrongful acts occurring afterwards is compensatory damages. Waters v. Trenckmann, Wyo., 503 P.2d 1187 (1972). Where one party breaches the contract in bad faith, the injured party can seek damages for breach of the implied covenant of good faith. The jury found bad faith and awarded each of the Arnolds $1,000 in damages.
There was no evidence of willful or wanton misconduct at the time the parties entered into their contractual agreements. All the evidence which was produced concerned Mountain West's conduct following the receipt of the Notice of Loss. To the extent that the trial judge failed to instruct the jury that willful and wanton misconduct had to occur at the contract's inception, the Arnolds received the benefit of a more favorable instruction than that to which they were entitled. They will not now be heard to argue that they were entitled to an even more favorable instruction. We find no reversible error in appellants' first contention.
The second issue raised on appeal concerns the jury's finding that Mountain West's refusal to pay benefits was not unreasonable or without cause. The Arnolds contend that the trial court erred in refusing "to instruct the jury that an unreasonable or unjustifiable failure to timely pay benefits to its insured is the equivalent of a 'refusal to pay' benefits."
The significance of this question arises by virtue of § 26-15-124(c),...
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