Dependable Life Ins. Co. v. Harris

Decision Date09 July 1987
Docket NumberNo. 86-492,86-492
Citation510 So.2d 985,12 Fla. L. Weekly 1661
Parties12 Fla. L. Weekly 1661 DEPENDABLE LIFE INSURANCE COMPANY, a corporation, Appellant/Cross-Appellee, v. John J. HARRIS, Appellee/Cross-Appellant.
CourtFlorida District Court of Appeals

S. Gordon Blalock, of Blalock, Holbrook & Akel, P.A., Jacksonville, for appellant/cross-appellee.

Stephen A. Hilger, of Gray, Harris & Robinson, P.A., Orlando, for appellee/cross-appellant.

SHARP, Judge.

Dependable Life Insurance Company appeals from a final judgment after a jury trial which awarded Harris a total of $15,607.79 (including prejudgment interest) in actual damages for failure to pay under a disability insurance policy, $47,585.00 in compensatory damages, and $95,170.00 in punitive damages for the tort of wrongful infliction of emotional distress. Dependable questions the actual damage award as containing overlapping or duplicative elements. Dependable also challenges the $56,250.00 award of attorney's fees to Harris pursuant to section 627.428(1). We affirm the judgment, but reverse the award of attorney's fees.

In a prior appeal to this court we affirmed, per curiam, Dependable's liability for coverage under its disability policy to Harris. Thus, the only issue in this case was the amount due Harris and the actual damages for Dependable's failure to pay under the contract.

The verdict was based on a form agreed to by both parties. It contained the overlapping elements of which Dependable now complains. In fact, Dependable agreed that all the elements were proper, and counsel permitted the court to direct a verdict as to the amounts. Failure of Dependable to object to the form of the verdict and the sums agreed to constitutes a waiver of all but fundamental errors. 1 Here the error (amounting to a maximum of $3,500.00) does not rise to that level.

The correctness of the compensatory and punitive damage awards turns upon whether Harris sufficiently established the prima facie tort of intentional infliction of emotional distress. Harris also attempted to plead and prove a cause of action based on Dependable's bad faith refusal to pay under its insurance policy. Harris justifies these awards based solely on the tort of intentional infliction of emotional distress. 2

To establish a cause of action for the intentional infliction of emotional distress, four elements must be proven: (a) deliberate or reckless infliction of mental suffering; (b) outrageous conduct; (c) the conduct must have caused the emotional distress; and (d) the distress must be severe. Dominguez v. Equitable Life Assurance Society of the United States, 438 So.2d 58 (Fla. 3rd DCA 1983), approved, 467 So.2d 281 (Fla.1985). All of these elements are met here.

In determining whether the element of "outrage" was sufficiently established to support the jury verdict, we must look at the evidence in the light most favorable to Harris. 3 In October of 1979, Harris applied for a loan at Florida Center Bank in Orlando, to purchase a new car. The loan officer solicited his purchase of a credit disability policy from Dependable. No physical examination or application was required by Dependable. The policy required Dependable to make car payments to the bank if Harris became totally disabled.

At the time the policy was issued, Harris was self-employed and relatively active. However, he was receiving $1,000.00 per month under a professional disability policy. By profession Harris had been a pharmacist, but due to polyneuropathy, a nerve condition affecting his legs, he was unable to work as a pharmacist because he could not stand for long periods of time. Dependable admitted this earlier, partial disability would not affect its liability for Harris' total disability if the total disability occurred after issuance of the policy and was due to a separate physical cause.

In December of 1979, while trimming a Christmas tree, Harris felt for the first time a sharp new pain in his back. Early in January he went to see his physician, Dr. Louis Murray, who diagnosed a severe degenerative disease of the spine, and declared him to be totally disabled. He prepared a report for Harris to submit to the Social Security Administration ("SSA"). At trial, Dr. Murray testified unequivocally that Harris' leg problems were not related in any way to Harris' degenerated spine, and that the latter condition had not been diagnosed until January of 1980.

Based on Dr. Murray's report and Harris' application, SSA processed Harris' claim. In order to extend to Harris maximum possible benefits, the SSA counselor issued an award certificate in January 1980 which made Harris' award retroactive to 1979.

Harris submitted Dr. Murray's medical report to Dependable, and called upon Dependable to honor its credit disability policy. Dependable made payments through July of 1981. At that time, Dr. Murray had been submitting medical reports to Dependable on its claim forms, every two to three months, certifying that Harris' total disability was continuing.

In August, a new claims manager, Diana Clark, decided to challenge Harris' claim. She had no new or different information, but nevertheless stopped making payments to the bank. Shortly thereafter she employed an investigator from Equifax. Clark testified she was trying to decide whether or not to pay the car loan off in advance to avoid interest payments. Equifax erroneously advised Clark that Harris had been receiving total disability payments since 1976. However, Clark's own records show that her decision (agreed to by her supervisor) to stop payments under the policy was made prior to her receipt of the Equifax report.

At that point Clark and Harris communicated by letter and telephone. Harris told her the information was wrong. He voluntarily gave Dependable a copy of his Social Security award letter, showing a January 1980 award date.

Based on this information, Clark and her supervisor decided on September 21, 1981, that their rejection of Harris' claim could "stick" on the grounds that his total disability was based on a "pre-existing" condition. However they had absolutely no evidence to support this. Further, they made no additional inquiry of Dr. Murray, or the SSA office or counselor. Nor did they check into Harris' explanation about his professional partial disability policy. Instead, Clark undertook a vicious verbal attack on Harris.

On at least two occasions, Clark told Harris that he was a cheat and a fraud. She threatened to advise the SSA that he had defrauded the government by receiving disability payments if he persisted in his claim against Dependable. She contended she used to work with SSA, that she had "contacts" with them, and that they would come after him for repayment of all funds SSA had paid him. Clark also threatened to sue Harris to recover the payments Dependable had already made under the policy if he did not relinquish his claim. She said Dependable's "battery" of attorneys could outlast any attorney he might hire.

When Harris protested that without Dependable's disability payments he could not meet his financial obligations and that his automobile would be repossessed, Clark retorted that that was not her problem--Dependable was not a "welfare agency." As Harris described it, she was extremely nasty and vicious. At the time, Harris was in great pain, and too physically ill to work.

Harris experienced severe mental depression and distress as a result of Dependable's actions. This was established through the testimony of a psychiatrist and Harris' treating physician, Dr. Murray. Harris' car was repossessed by the bank, in front of his neighbors and friends. He was forced into bankruptcy. He testified his self-respect as a competent member of the community was shattered. He became severely depressed.

In the context of a suit on an insurance policy brought by an insurance beneficiary against the insurance company, the Florida Supreme Court adopted the Restatement (Second) of Torts definition of the tort of intentional infliction of emotional distress. Metropolitan Life Insurance Company v. McCarson, 467 So.2d 277 (Fla.1985). Section 46 of the Restatement (Second) of Torts (1965) provides:

One who by extreme and outrageous conduct intentionally or recklessly causes severe emotional distress to another is subject to liability for such emotional distress, and if bodily harm to the other results from it, for such bodily harm.

However, in McCarson, the supreme court held that the conduct of the insurance company was not sufficiently outrageous, because the insurance company was merely insisting on its rights under the policy to receive proof the beneficiary was not eligible for medicare before commencing payment under the policy. It quoted with approval comment "g" to the Restatement:

The conduct, although it would otherwise be extreme and outrageous, may be privileged under the circumstances. The actor is never liable, for example, where he has done no more than to insist upon his legal rights in a permissible way, even though he is well aware that such insistence is certain to cause emotional distress.

Id. at 279.

Whether or not the evidence at trial 4 or allegations of the complaint 5 sufficiently present conduct which is outrageous enough to rise to the level required by this tort appears to be a question of law. 6 This court has recently recognized the tort but held the factual scenario insufficient. Campbell v. Prudential Insurance Co., 480 So.2d 666 (Fla. 5th DCA 1985); Food Fair, Inc. v. Anderson, 382 So.2d 150 (Fla. 5th DCA 1980). In Campbell we held the insurance company's "mere negligence" in failing to pay a claim was not adequately outrageous, and in Anderson we emphasized that the wrongful conduct had to be extreme in degree, beyond all possible bounds of decent civilized behavior.

However, there is authority for the view that a heightened degree of outrageousness can be supplied by the...

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