Companies v. Jordan

• Decision Date: 20 May 2010
• Docket Number: No. 2007-CA-01422-COA.,2007-CA-01422-COA.
• Citation: AmFed Cos. v. Jordan, 34 So.3d 1177 (Miss. App. 2010)
• Parties: AMFED COMPANIES, LLC and American Federated Insurance Company, Appellants,v.Jennifer Brown JORDAN, Appellee.
• Court: Mississippi Court of Appeals

34 So.3d 1177

AMFED COMPANIES, LLC and American Federated Insurance Company, Appellants,v.Jennifer Brown JORDAN, Appellee.

No. 2007-CA-01422-COA.

Court of Appeals of Mississippi.

Aug. 25, 2009.

Rehearing Denied Dec. 15, 2009.

Certiorari Granted March 31, 2010.

Certiorari Dismissed as Improvidently Granted May 20, 2010.

[34 So.3d 1177 1179]

Robert P. Thompson, Caryn Lynne Anlage, Lori Jordan Graham, Ridgeland, for Appellants.

William H. Jones, for Appellee.

Before MYERS, P.J., IRVING and ROBERTS, JJ.

ROBERTS, J., for the Court.

¶ 1. This is an appeal of a jury's determination that a workers' compensation insurance carrier acted in bad faith when it delayed paying on a claim. Jennifer Brown Jordan filed a bad-faith claim based on the failure of the carrier to timely pay benefits. A jury sitting before the Jones County Circuit Court found AmFed Companies, LLC, the workers' compensation carrier, liable for bad faith and awarded compensatory damages which were later set off against money AmFed tendered to Jennifer after she filed her lawsuit, but prior to trial, for a final compensatory damages award of approximately $34,000. The jury also awarded Jennifer $200,000 in punitive damages. Additionally, the circuit court awarded Jennifer $32,500 in attorney's fees. Aggrieved, AmFed appeals. After careful consideration, we find that the circuit court improperly instructed the jury during the punitive-damages portion of the bifurcated proceedings. However, we do not disturb the jury's decision regarding

[34 So.3d 1177 1180]

compensatory damages. Accordingly, we affirm in part and reverse and remand in part.

FACTS AND PROCEDURAL HISTORY

¶ 2. On May 4, 2001, James H. Brown III died in a work-related electrocution incident during his employment with A & B Electric Company in Jones County, Mississippi. James's widow, Jennifer, and his dependent children filed a claim for workers' compensation benefits. A & B's workers' compensation carrier, AmFed, assigned the claim to adjuster Stacy Stuart.

¶ 3. In May 2001, Stuart mailed the first benefit payments to James's widow, Jennifer. Those payments were payable to Jennifer as James's widow and James's three dependent children. Stuart set up Jennifer's claim in AmFed's deferred payment system. That system was to issue bi-weekly checks to Jennifer as well as James's three children. However, when Stuart set up Jennifer's payments, Stuart inadvertently directed the program to pay Jennifer approximately $170 every two weeks, instead of $340. In other words, Jennifer and the children would receive one-half of the benefits that they were due.

¶ 4. In June 2001, Jennifer, acting on her own, obtained a lump-sum order from the Mississippi Workers' Compensation Commission (the Commission). Jennifer did not file the lump-sum order, so AmFed was unaware of it. Meanwhile, Jennifer had hired attorney Glenn White to file a wrongful death action based on James's electrocution.¹

¶ 5. In February 2002, Stuart's replacement, adjuster Daron Perkins, called Jennifer. Perkins contacted Jennifer to ask how the children were doing. Perkins was not aware that Jennifer had filed a wrongful death claim. Jennifer did not mention her lump-sum order. On February 7, 2002, White sent Perkins a letter. White informed Perkins that he was representing Jennifer and the estate. White also informed Perkins that “[a]ll future communications concerning this matter should be directed to [his] office.” Consequently, AmFed did not again attempt to contact Jennifer directly.

¶ 6. On April 11, 2003, White informed his client, Jennifer, that the wrongful-death suit was futile and that it should be dismissed. That same day, Jennifer called adjuster Nita Cox, Perkins's replacement, and asked why she had not received her lump-sum payment.² According to AmFed, that was the first time it had any notice that Jennifer had obtained a lump-sum order. During that conversation, Jennifer also notified Cox that she had remarried in August 2002. As a result, AmFed terminated Jennifer's widow's benefits.

¶ 7. Three days later, Jennifer called Cox again. Cox reported that she had been unable to obtain the lump-sum order. On April 16, 2003, attorney T.G. Bolen, representing AmFed, wrote a letter to Cox and attached a copy of the lump-sum order to that letter. However, Cox was on her honeymoon and was out of the office at that time. Cox did not return to the office until April 30, 2003.

¶ 8. When Cox returned from her honeymoon, she discussed the order with her

[34 So.3d 1177 1181]

supervisor, Bob Blackledge, and then asked Bolen to contact the Commission to obtain a calculation of benefits that Jennifer was due. Cox followed up with Bolen on May 5th and May 12th, but there was no new information. On May 16, 2003, Bolen told Cox that he had written a draft of a letter to the Commission regarding Jennifer's calculation, but he wanted to discuss it with her before he sent it. Bolen then revealed that he had discovered Stuart's initial error in setting up Jennifer and the children's bi-weekly deferred payments and that, as a result, Jennifer and the children had been receiving one-half of the benefits to which they had been entitled.

¶ 9. On May 27, 2003, Bolen wrote a letter to the Commission. Bolen requested a calculation of benefits. He also reported that AmFed became aware of the order only when Jennifer called and asked about it. Finally, Bolen stated that AmFed was prepared to forward the value of the order immediately after receiving the Commission's calculation of benefits.

¶ 10. On May 29, 2003, attorney William H. Jones filed Jennifer's complaint for bad faith. Jennifer claimed that AmFed acted in bad faith regarding payment of her benefits. Incidentally, on the same day, the Commission issued its calculation of benefits, including interest, owed to Jennifer and the children. The Commission calculated that AmFed owed Jennifer approximately $72,000. As for James's three children, the Commission calculated that AmFed owed each of the two minor children approximately $3,500.³ On May 30, 2003, the Commission mailed its calculation to Bolen.

¶ 11. On June 10, 2003, Bolen faxed the Commission's calculation to AmFed. On June 26, 2003, seventy-six days after Jennifer first notified AmFed of her order, Bolen sent Jones a letter and three checks. One check represented the amount due to Jennifer. The other two checks represented the amounts that were owed to the children. In his letter, Bolen explained the error in setting up the bi-weekly payments. Bolen also explained that the checks to the children were intended to correct the mistake. Until then, Jennifer was unaware of the under payments.

¶ 12. On July 7, 2003, Jones wrote back to Bolen. Jones requested that AmFed pay Jennifer and the children a 10% penalty for late payment as set forth in Mississippi Code Annotated section 71-3-37(5) (Rev.2000). Having received no response, Jones sent a second later to Bolen on July 21, 2003, and a third letter on August 1, 2003.

¶ 13. On August 4, 2003, Bolen responded to Jones. Bolen reported that he had been and was continuing to locate an order from the Commission regarding whether penalties were allowed. Bolen also noted that “the calculation by the Commission's statistician did not include the penalty.” According to Bolen, the Commission's failure to include a penalty “raises the question as to whether [penalties] were due.”

¶ 14. Bolen wrote another letter to Jones on August 8, 2003. Bolen reported that AmFed agreed to pay a penalty, but due to an error in listing the payee's name, Bolen had requested that AmFed reissue the check. Bolen finally sent Jones the penalty payment on August 13, 2003. Bolen sent Jones a check for approximately $17,808.35. That figure represented a 20% penalty pursuant to Mississippi Code Annotated section 71-3-37(6) (Rev.2000), as opposed to the 10% penalty Jones had

[34 So.3d 1177 1182]

requested. Bolen stated that, unless Jones took issue with his analysis of the penalty, he would “consider this aspect of the claim closed and[,] of course[,] the ongoing weekly benefits will continue to the minor children as required by the statute.”

¶ 15. Over two months later, Jennifer amended her initial complaint. Jennifer raised additional claims on behalf of the children. She also claimed AmFed acted in bad faith regarding the mistake involved with setting up the deferred bi-weekly benefits paid between May 4, 2001, and August 8, 2003.

¶ 16. On March 5, 2007, the parties went to trial. The proceedings were bifurcated as follows: (1) compensatory-damages phase and (2) punitive-damages phase. AmFed unsuccessfully requested a directed verdict after Jennifer presented her case-in-chief. After the compensatory-damages phase of the bifurcated proceedings, the jury returned a verdict for Jennifer and awarded Jennifer $130,568 in compensatory damages.

¶ 17. Jennifer then moved to submit the punitive damages issue to the jury. Over AmFed's objection, the circuit court granted Jennifer's motion. After deliberating, the jury awarded Jennifer $200,000 in punitive damages. In total, the jury awarded Jennifer $330,568 in damages.

¶ 18. Post-trial, AmFed moved to set off the jury's awards by the amounts AmFed paid when it tendered the award and the 20% penalty. Additionally, Jennifer filed a post-trial motion for attorney's fees. The circuit court granted both motions, set off the amounts previously paid by AmFed, and ordered AmFed to pay Jennifer $32,500 in attorney's fees.

¶ 19. On July 30, 2007, the circuit court entered a final judgment of approximately $266,500 for Jennifer. AmFed filed unsuccessful post-trial motions for a judgment notwithstanding the verdict (JNOV) or, alternatively, for a new trial. Aggrieved, AmFed appeals. AmFed claims that the evidence was insufficient to find that it acted in bad faith at any point in resolving Jennifer's claims. AmFed also claims that the circuit court erred when it submitted the punitive damages issue to...