Buhmeyer v. Case New Holland, Inc.

• Decision Date: 29 August 2006
• Docket Number: No. 3:04-cv-90095.,3:04-cv-90095.
• Citation: 446 F.Supp.2d 1035
• Parties: Timothy BUHMEYER, Plaintiff, v. CASE NEW HOLLAND, INC. and Gallagher Basset Services, Inc., Defendants.
• Court: U.S. District Court — Southern District of Iowa

446 F.Supp.2d 1035

Timothy BUHMEYER, Plaintiff, v. CASE NEW HOLLAND, INC. and Gallagher Basset Services, Inc., Defendants.

No. 3:04-cv-90095.

United States District Court, S.D. Iowa, Davenport Division.

August 29, 2006.

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Christopher D. Spaulding, Berg, Rouse, Spaulding & Schmidt, PLC, Donald G. Beattie, Beattie Law Firm PC, Des Moines, IA, for Plaintiff.

Craig A. Levien, Martha L. Shaff, Betty Neuman & McMahon, Davenport, IA, for Defendants.

ORDER ON DEFENDANTS' MOTION FOR JUDGMENT AS A MATTER OF LAW

PRATT, Chief Judge.

I. INTRODUCTION

Before the Court is Defendants' Motion for Judgment as a Matter of Law (Clerk's No. 85; see also Clerk's No. 82), filed July 13, 2006. As an alternative to judgment as a matter of law, Defendants seek amendment of the judgment or a new trial. Plaintiff, Timothy Buhmeyer ("Buhmeyer"), resisted the motion on July 20, 2006 (Clerk's No. 86). Defendants filed a Reply brief on July 26, 2006 (Clerk's No. 87). The matter is fully submitted. This Court has jurisdiction over this case pursuant to 28 U.S.C. § 1332.

II. BACKGROUND & PROCEEDINGS

The following facts are from a Stipulation between the parties that Buhmeyer's attorney read into evidence at trial. See Tr. 106-08. Timothy Buhmeyer was employed by Defendant Case New Holland, Inc. ("Case New Holland") from March 1972 until October 2001. Tr. 106. Defendant Gallagher Basset Services, Inc., ("Gallagher Basset") is the administrator of workers' compensation claims for Case New Holland. Id. On May 16, 1994, Buhmeyer underwent a right carpal tunnel release surgery. Id. He was given a full duty release to return to work effective June 27, 1994. Id. On July 16, 1996, Buhmeyer underwent another carpal tunnel release surgery. Id. He was given a full duty release to return to work effective September 3, 1996. Id. at 107. Buhmeyer received benefits for these surgeries under an accident and sickness policy. Id. On or around July 11, 2000, Buhmeyer suffered a workplace injury. Buhmeyer saw a doctor named Dr. Jameson, who found "a positive Tinel's sign over the cubital tunnel on the right and left arm[s], bilateral ulnar neuritis, medial epicondylitis, and right carpal tunnel syndrome." Id. On February 20, 2001, Dr. Jameson issued a report finding that Buhmeyer had reached maximum medical improvement. Id. On July 16, 2001, Buhmeyer visited another doctor, Dr. Hines, who found a permanent functional impairment of thirty-six percent of the body as a whole. Id. Even after Dr. Hines' opinion, Defendants refused to pay permanent partial disability payments. Defendants knew that Buhmeyer had not been compensated through workers' compensation for his carpal tunnel syndrome. Id. at 107-08. A Deputy Commissioner at the Iowa Workers' Compensation commission eventually awarded Buhmeyer 200 weeks of permanent partial disability benefits at the rate of $538.34 per week, plus interest, from October 20, 2000. Id. at 108.

Based on the facts set forth above, Buhmeyer filed an Amended Complaint (Clerk's No. 14) in this Court on March 7, 2005, alleging that Defendants acted in bad faith by wrongfully denying him permanent partial disability benefits in violation of Iowa law. Am. Compl. ¶ 11. Defendants moved for summary judgment on May 15, 2006 (see Clerk's No. 33). The Court denied Defendants' Motion for Summary Judgment because it was untimely. See Order Denying Defs.' Mot. for Summ. J. (Clerk's No. 34). In doing so, the Court observed that the magistrate judge had already denied Defendants' late-filed motion for an extension of the deadline for dispositive motions. The Court held a jury trial from June 27, 2006 through June 29, 2006 (see Clerk's Nos. 67, 69, 73, 78, and 80). The jury returned a verdict for Buhmeyer, finding that the Defendants acted in bad faith in their handling of Buhmeyer's workers' compensation claim, and finding that Defendants' actions were a proximate cause of injuries to Buhmeyer. The jury awarded Buhmeyer $0 for past, present and future emotional distress, and $10,000 for monetary losses and expenses. See Clerk's No. 74. The jury also awarded Buhmeyer punitive damages in the amount of $275,000. See Clerk's No. 76. Defendants moved for judgment as a matter of law before the case was submitted to the jury, and the Court denied the motion. Tr. 330. Defendants filed the current motion pursuant to Federal Rule of Civil Procedure Rule 50(b).

III. STANDARD FOR A RULE 50(b) MOTION

Federal Rule of Civil Procedure 50(b) allows a party to renew a motion for judgment as a matter of law after trial. Rule 50(b) states:

If, for any reason, the court does not grant a motion for judgment as a matter of law made at the close of all the evidence, the court is considered to have submitted the action to the jury subject to the court's later deciding the legal questions raised by the motion. The movant may renew its request for judgment as a matter of law by filing a motion no later than 10 days after entry of judgment—and may alternatively request a new trial or join a motion for a new trial under Rule 59. In ruling on a renewed motion, the court may:

(1) if a verdict was returned:

(A) allow the judgment to stand,

(B) order a new trial, or

(C) direct entry of judgment as a matter of law.

Fed R. Civ. P. 50(b). "Judgment as a matter of law is appropriate when `there is no legally sufficient evidentiary basis for a reasonable jury to find for [the prevailing] party.'" Wash Solutions, Inc. v. PDQ Mfg., Inc., 395 F.3d 888, 892 (8th Cir.2005) (quoting Fed R. Civ. P. 50(a)(1)). The Court will grant a motion for judgment as a matter of law "when all the evidence points one way and is susceptible of no reasonable inferences sustaining the position of the nonmoving party." Ehrhardt v. Penn Mut. Life Ins. Co., 21 F.3d 266, 269 (8th Cir.1994). Judgment as a matter of law should be granted "when the record contains no proof beyond speculation to support a verdict." Wash Solutions, 395 F.3d at 892. In considering the motion, the Court views the record in the light most favorable to the prevailing party. Id. The Court must also assume that all conflicts in the evidence were resolved in favor of the prevailing party, and the Court must assume as proved all facts that the prevailing party's evidence tended to prove. E.E.O.C. v. Kohler Co., 335 F.3d 766, 772 (8th Cir.2003). The Eighth Circuit has observed that "judges must be extremely guarded in granting judgments as a matter of law after a jury verdict." Id. Despite this strict standard, "[a] mere scintilla of evidence is inadequate to support a verdict." Meyers v. Starke, 420 F.3d 738, 744 (8th Cir.2005).

IV. LAW AND ANALYSIS

A. Claim for Bad Faith Under Iowa Law

Under Iowa law, an employee may sue an employer or the employer's workers' compensation carrier for a "bad faith" delay in the payment of benefits. Mcllravy v. N. River Ins. Co., 653 N.W.2d 323, 329 (Iowa 2002). A claim for first-party bad faith arises from " the knowing failure to exercise an honest and informed judgment' on the part of a defendant from whom the employee seeks compensation due to work-related injuries." Id. (quoting Kiner v. Reliance Ins. Co., 463 N.W.2d 9, 12 (Iowa 1990)). In order to prevail in a claim for bad faith, the insured party must prove by substantial evidence: "(1) that the insurer had no reasonable basis for denying benefits under the policy and, (2) the insurer knew, or had reason to know, that its denial was without basis." Id. (quoting United Fire & Cas. Co. v. Shelly Funeral Home, Inc., 642 N.W.2d 648, 657 (Iowa 2002)); see also Seastrom v. Farm Bureau Life Ins. Co., 601 N.W.2d 339, 346 (Iowa 1999). The first element is objective, and the second element is subjective. See Bellville v. Farm Bureau Mut. Ins. Co., 702 N.W.2d 468, 473 (Iowa 2005).

In considering bad faith tort cases against insurers, the Iowa Supreme Court has held that "[a] reasonable basis to deny a claim exists when the claim is fairly debatable." See Wetherbee v. Economy Fire & Cas. Co., 508 N.W.2d 657, 662 (Iowa 1993). Whether a claim is fairly debatable is generally a question of law. Id.; see also Bellville, 702 N.W.2d at 473. "The fact that the insurer's position is ultimately found to lack merit is not sufficient by itself to establish the first element of a bad faith claim. The focus is on the existence of a debatable issue, not on which party was correct." Bellville, 702 N.W.2d at 473.

In examining whether a defendant knew or should have known that there was no reasonable basis for denying a plaintiff's claim, the Court must focus "on the defendant's initial denial as well as `whether, at some later date, [the insurer] became aware there was no reasonable basis to continue denying [the plaintiff's] claim.'" Mcllravy, 653 N.W.2d at 331 (quoting Dirks v. Farm Bureau Mut. Ins. Co., 465 N.W.2d 857, 862 (Iowa 1991)); see also Bellville, 702 N.W.2d at 474 (explaining that "[a]n insurer's negligent or subpar investigation or evaluation of a claim is relevant to the fact finder's determination of whether the insurer should have known its denial lacked a reasonable basis"). Bad faith may be inferred from a flawed or inadequate investigation by the insurer. See Mcllravy, 653 N.W.2d at 333. As such, "[i]t is appropriate, in applying the test, to determine whether a claim was properly investigated and whether the results of the investigation were subjected to a reasonable evaluation and review." Dolan v. Aid Ins. Co., 431 N.W.2d 790, 794 (Iowa 1988) (citation omitted).

B. Whether Defendants Admitted Liability at Trial

Buhmeyer contends that Defendants cannot now deny liability because their attorney, Craig Levien, admitted liability at trial. Specifically, Buhmeyer refers to Levien's closing argument during the punitive damages phase of the trial. Citing the Iowa Supreme Court's decision in State v. Howell, 290 N.W.2d 355, 359 (Iowa 1980), Buhmeyer contends that admissions of an attorney...