Bannister v. State Farm Mut. Auto. Ins. Co.

• Decision Date: 05 September 2012
• Docket Number: 11–6186.,Nos. 11–6174,s. 11–6174
• Citation: 692 F.3d 1117
• Parties: James BANNISTER, Plaintiff–Appellant/Cross–Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellee/Cross–Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

692 F.3d 1117

James BANNISTER, Plaintiff–Appellant/Cross–Appellee,

v.STATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Defendant–Appellee/Cross–Appellant.

Nos. 11–6174, 11–6186.

United States Court of Appeals,Tenth Circuit.

Sept. 5, 2012.

Jacob L. Rowe, (Jim Buxton of Buxton Law Group, and Billy Coyle, with him on the briefs), Oklahoma City, OK, for Plaintiff–Appellant/Cross–Appellee.

Reid E. Robison of McAfee & Taft, P.C., (Mark D. Spencer, Michael K. Avery, McAfee & Taft, P.C., and Daniel C. Andrews, Jones, Andrews & Oritz, P.C., of Counsel, with him on the briefs), Oklahoma City, OK, for Defendant–Appellee/Cross–Appellant.

Before TYMKOVICH, EBEL, and HOLMES, Circuit Judges.

EBEL, Circuit Judge.

Plaintiff James Bannister was injured in a motorcycle accident on the freeway near Oklahoma City in 2009. According to Bannister, he was forced to lay down and slide his motorcycle at a high speed when a car in front of him braked suddenly, that car having been cut off by another car. Bannister slammed into the wall of the freeway and suffered substantial injuries. He did not collide with any other vehicle; neither of the aforementioned cars remained at the scene of the accident; and no witnesses besides Bannister ever gave an account of the crash.

Bannister filed an insurance claim with his insurer, defendant State Farm AutomobileInsurance Company (“State Farm”). State Farm denied Bannister's claim, finding him to be majority at fault in the accident, which precluded recovery under his insurance policy. Bannister subsequently filed suit in Oklahoma state court, and State Farm removed the case to the Western District of Oklahoma. By the time the case went to trial, Bannister sought relief solely on a tort theory: that State Farm violated its duty of good faith and fair dealing in denying his claim.

The jury found in favor of Bannister, but the district court granted State Farm's renewed motion for judgment as a matter of law (“JMOL”), ruling essentially that the evidence showed that State Farm's denial of Bannister's claim was based on a reasonable dispute regarding whether Bannister was majority at fault, and that no evidence suggested that further investigation would have undermined the reasonableness of that dispute. Meanwhile, the district court conditionally denied State Farm's alternative motion for a new trial based on the jury's irregular calculation of damages as well as on allegedly improper prejudicial statements by Bannister's counsel at trial.

Exercising jurisdiction under 28 U.S.C. § 1291 over this diversity action, we AFFIRM the district court's JMOL ruling in favor of State Farm. Accordingly, we DISMISS AS MOOT State Farm's cross-appeal, regarding whether the district court abused its discretion in conditionally denying State Farm's alternative motion for a new trial.

I. BACKGROUND

1. The motorcycle accident

On Thursday afternoon, January 22, 2009, Bannister was driving his motorcycle in the left-hand lane on Interstate 40, en route to pick up his wife at work. According to his own testimony at trial, Bannister was driving at a speed of approximately 65–70 mph, or 5–10 mph above the legal limit. Bannister had been drinking beforehand at a motorcycle bar in Oklahoma City, where he had two beers and a shot of whisky over the course of perhaps two and a half hours. The police report for the accident indicated that Bannister was driving under the influence of alcohol.¹

At trial, Bannister claimed that, just prior to his accident, he was following a beige car at a safe distance when a red car, apparently in the right lane, came alongside him and began to encroach into his lane.² Bannister revved his engine so as to send an auditory warning to the driver of the red car (in effect, a honk). The red car stayed in its lane, passed the beige car, and then cut off the beige car, causing it to brake suddenly. The beige car slid into the emergency lane, and Bannister locked his brakes.

Bannister's recollection of the crash is foggy. He testified that, to avoid hitting the vehicle in front of him,³ he executed a ‘lay down’ of his motorcycle—essentially a deliberate (though necessarily somewhat uncontrolled) fall-and-slide. The maneuver sent Bannister into the freeway's barrier wall at a high speed. Bannister hit his head against the wall and suffered head trauma, broken bones, bruising, lacerations, and other injuries that kept him in the hospital for eight days. Neither the red car nor the beige car remained at the scene of the accident; an unidentified other vehicle stopped to assist Bannister.

2. The insurance claim

The day after the crash, January 23, 2009, Bannister's wife reported the accident to State Farm. State Farm's first relevant substantive log entry in Bannister's claim file (entry No. 7) was recorded by State Farm claim representative Wendy Jeffus based on Jeffus's conversation with Bannister's wife. That log entry characterized the crash as having involved a vehicle in front of Bannister slamming on its brakes, and Bannister swerving to avoid that vehicle, and rolling ⁴ his motorcycle. The log further noted that investigation was needed to determine whether Bannister's uninsured motorist (“UM”) coverage—coverage that could apply to unknown “miss-and-run” vehicles—would apply, as well as whether Bannister was majority at fault, which would negate coverage. The log indicated that Jeffus explained as much to Bannister's wife.

Three days later, on January 26, 2009, another claim representative, Edwina Kelley–Gilliam of the UM division of State Farm, updated Bannister's claim log after speaking with a team manager named Collins, who worked in the auto claims, or liability, division.⁵ Kelley–Gilliam's log entry (entry no. 14) reflected: “[T]he liability [investigation] does not appear complete. In addition, the insured appears to be majority at fault based on the facts of the loss. Moving file back to [the auto claims division] pursuant to our discussion. UM retains nothing....” ROA v. V at 1500. It apparently took Kelley–Gilliam three minutes to enter that determination.

The next significant event occurred on February 9, 2009, when another State Farm claim representative, Gloria Mercado of the motorcycle collision division, met with Bannister. Mercado's purposes were to examine the crashed motorcycle and to complete a vehicle inspection report concerning the damage incurred by the motorcycle.In other words, Mercado's primary mission was to evaluate damages to the motorcycle as relevant to Bannister's collision coverage, rather than to investigate Bannister's liability. However, in addition to evaluating the motorcycle, Mercado discussed the accident with Bannister over the course of their meeting. And at trial, Bannister testified that the account of the accident that he related to Mercado was a truthful one. Mercado did not electronically record the conversation, but she summarized it in a claim log (entry no. 37). As reflected in that log, Bannister told Mercado that

2 other cars flew by him on the right and switched over in front of the car directly ahead of him. Then the car in front of him had to hit brake [sic] and [Bannister] wasn't able to get slowed fast enough so he laid [his motorcycle] over to keep from hitting car in front of him, he has over 30 years ['] experience riding [a motorcycle] & this was his 1st wreck. He's unsure why cars slammed on brakes as none of them stopped for him. A car behind him saw what happened and stopped his car sideways to keep any other traffic from running over [him]....

Id. at 1495. This log entry was largely consistent, then, with the earlier-made entry no. 7.⁶ Meanwhile, this new entry added the information about Bannister's riding experience as well as the reference to the other car, behind Bannister, whose driver allegedly witnessed the accident. However, Bannister never gave Mercado or anyone else any identifying information about that alleged individual.

At trial, Mercado testified that she believed that based on these facts, Bannister would be at fault. She reasoned that due to the fact that the car in front of Bannister was able to stop without collision, Bannister—driving behind that car—likewise should have been able to stop safely, if Bannister had been following at a reasonable distance per his duty as a motorist.

On February 17, 2009, State Farm obtained a copy of the police report for Bannister's accident. The next substantive entries in the claim log were a pair of entries (entries nos. 73–74) by Patrick Dreier of State Farm's auto claims division on February 25. Dreier's entries essentially summed up State Farm's knowledge to date—the history of State Farm's investigation, one might say. The entries indicated that the accident was a single-vehicle wreck, that Bannister had been driving under the influence of alcohol, and that no second vehicle was involved in any collision. Further, they concluded that Bannister was 100 percent at fault and that, accordingly, he was not entitled to UM coverage, to which an insured is not entitled if the insured is more than fifty percent at fault. The entries did not specify which prior logs/information their conclusions were based on, or to what extent. At trial, Bannister's attorney emphasized that, judging from the claim log, Dreier appeared to take eleven minutes to reach these conclusions. Also, the February 25 date of these entries is the date that Bannister's attorney stressed at trial as the cutoff date of when State Farm stopped “investigating” Bannister's claim and “denied” coverage. See, e.g., ROA v. III–IV at 700, 752, 755, 806, 827, 943, 952. ⁷

On March 17, 2009, State Farm communicated to Bannister that his UM claim would be denied, though the exact context of this communication is unclear. Bannister testified he did “recall calling [State Farm after his doctor told him that he had not received payment for Bannister's treatment] and speaking to somebody [who said] that State Farm...