Dixie Ins. Co. v. Mooneyhan

• Decision Date: 07 March 1996
• Docket Number: No. 91-CA-01124-SCT,91-CA-01124-SCT
• Citation: 684 So.2d 574
• Parties: DIXIE INSURANCE COMPANY v. James MOONEYHAN and Jewell Marie Mooneyhan.
• Court: Mississippi Supreme Court

Page 574

684 So.2d 574

DIXIE INSURANCE COMPANY v. James MOONEYHAN and Jewell Marie Mooneyhan.

No. 91-CA-01124-SCT.

Supreme Court of Mississippi.

March 7, 1996.

Rehearing Denied Sept. 12, 1996.

Appeal No. 7792 from Judgment dated August 14, 1991, John Leslie Hatcher, Ruling Judge, Coahoma County Circuit Court.

Rebecca Lee Wiggs, Watkins & Eager, Jackson, for appellant.

Dana J. Swan, Ralph E. Chapman, Chapman Lewis & Swan, Clarksdale, and C. Kent Haney, Clarksdale, for appellee.

Silas W. McCharen, and Charles L. Bearman, Daniel Coker Morton & Bell, Jackson, for amicus curiae.

En Banc.

JAMES L. ROBERTS, Jr., Justice, for the Court:

This case comes to us from a jury verdict and judgment of the Coahoma County Circuit Court in favor of James and Jewell Marie Mooneyhan ("the Mooneyhans") and against Dixie Insurance Company ("Dixie") for $542.00 in actual damages and $1,000,000.00 in punitive damages on a bad faith denial of a claim. Dixie's motions for new trial, JNOV or remittitur were denied. Thereafter, Dixie perfected this appeal.

Finding no reversible error as to actual damages, we affirm in part. However, we reverse and remand for new trial on the issue of punitive damages.

PROCEDURAL HISTORY

This suit arose out of an automobile accident in which the Mooneyhans while driving their 1976 Dodge truck, which had been turned into a wrecker, were hit in the rear by an uninsured motorist. The truck sustained approximately $742.00 in damage; neither of the Mooneyhans were injured. On August 17, 1986, the Mooneyhans turned in an uninsured motorist claim for property damage through the Mitchell Company, Inc., ("Mitchell"), the agency which had procured their insurance with Dixie. Dixie subsequently denied the claim in December of 1986.

Initially, James Mooneyhan filed suit against Dixie, a Florida Corporation, Stonewall Insurance Company, John A. Williams and James L. Jones, in Coahoma County Circuit Court. Dixie's defense was that Mr. Mooneyhan had materially misrepresented the nature of the risk by seeking personal auto coverage on a commercial wrecker. Dixie counterclaimed alleging intentional misrepresentation and fraud on the part of the Mooneyhans and filed a cross-complaint seeking a declaratory judgment that the policy was void ab initio since they were not licensed in Mississippi to insure commercial vehicles. Dixie asked for $40,000.00 actual damages, $1,000,000.00 in punitive damages and Rule 11 sanctions against the Mooneyhans and their attorneys. Dixie did not pursue the claims of fraud and damages at trial.

A Petition to Remove to Federal Court was filed by Dixie and Stonewall on February 25, 1987. Subsequently Mitchell was added as a defendant and Dixie filed a cross-claim against Mitchell. The case was remanded to the Coahoma Circuit Court on February 4, 1988. Stonewall, Dixie, and Mitchell each filed Motions for Summary Judgment in January of 1988. These motions were denied almost two years later in an order filed December 21, 1990.

Trial began on August 7, 1991. During the course of the trial, the Mooneyhans dismissed defendants Stonewall Insurance, Williams and Jones and settled with Mitchell. Dixie then dismissed its cross-claim against

Mitchell. The only remaining issues to go before the jury was whether Dixie wrongfully denied the Mooneyhans' claim and if so, whether punitive damages were warranted. The jury returned its verdict in favor of the Mooneyhans on August 9, 1991 and awarded them $542.00 in actual damages and $1,000,000.00 in punitive damages.

STATEMENT OF FACTS

On August 10, 1984, Mooneyhan went to Mitchell in Clarksdale for the purpose of obtaining insurance coverage for his 1969 Dodge pickup which he had equipped with a wrecker bed. He used the wrecker in his business as a mechanic. Mooneyhan also used the truck for personal use. At Mitchell, Mooneyhan dealt with Annie Riley. Mooneyhan testified that he informed Riley that the 1969 Dodge was a wrecker and was used for business as well as personal purposes. This was evidenced by a sheet from a scratch pad taken from the agency's file on the Mooneyhans. On the scratch pad, Riley had written the words "69 Dodge wrecker" and made some computations as to the premiums. The computations correspond to those on the application filled out by Riley for the Moore Group, Inc., entitled "Mississippi Private Passenger Automobile Application." On that application Riley described the vehicle to be insured as a '69 Dodge pickup. There was no mention on the application of the truck being a wrecker. In fact, under the question, "Is any listed vehicle used in a business or newspaper delivery?" it was checked "no." Mooneyhan signed the application, but stated that Riley had him sign it and told him she would fill it out later.

The Mooneyhans did not specify what insurance company they wanted to deal with, but relied on Riley to select an insurance company for them. On June 24, 1986, Jewell Mooneyhan went to Mitchell to obtain insurance on a 1977 Mercury Marquis. Riley filled out an application for insurance with Dixie and switched the '69 Dodge to Dixie as well. The Dixie application reflected the '69 Dodge to be a pickup and under "Use of Car(s)", pleasure use was checked but business use was not. Mrs. Mooneyhan stated that the application had not been filled out at the time she signed it. Riley testified that she would have had to have filled it out in Mrs. Mooneyhan's presence or she would not have known a lot of the information.

Riley testified that if she ever knew the '69 Dodge was a wrecker she had forgotten by the time the Dixie application was filled out in 1986. She stated that there was no reason for either her or Mooneyhan to intentionally misrepresent the fact that the truck was a wrecker because the premiums would be the same either way. The only difference was she would have used an insurance company other than Dixie because Dixie was not authorized in Mississippi to insure commercial vehicles. Riley testified she made a mistake. The policy the Mooneyhans received from Dixie was what is known as a plain language policy entitled "Your Family Car Policy."

On July 30, 1986, Mooneyhan notified Riley that he wanted the 1969 Dodge deleted from the insurance policy and a 1976 Dodge added. Riley filled out an endorsement requesting Dixie delete the '69 Dodge pickup from the Mooneyhans' policy and add a '76 Dodge pickup. There is no mention on the form that the '76 Dodge was a wrecker or that it was used for business purposes. The form did not require Mooneyhan's signature.

On August 15, 1986, the Mooneyhans were driving the '76 wrecker on a personal errand when they were hit in the rear by an uninsured motorist. The fact that the accident was not the Mooneyhans' fault was never in dispute.

Mooneyhan came by the offices of Mitchell on August 18, 1986, to report the accident and file a claim under his uninsured motorist coverage. Mooneyhan made no attempt to conceal the fact that the truck was a wrecker. In fact, he drove the wrecker to Mitchell's that day. Riley went outside to look at the damage to the truck and that is when she realized it was a wrecker and not just a pickup. James Maclin, a Mitchell stockholder, also went outside and saw that the truck was a wrecker. At that time he told Mooneyhan that insurance for a wrecker could not be written on the type of policy he had and immediately went inside and filled out an application for the wrecker with the Mississippi Automobile Insurance Plan. It was Maclin and Riley both testified that they did not discuss with Mooneyhan the probability of Dixie paying the claim. They went ahead and filed Mooneyhan's claim with Dixie and asked that the coverage be cancelled. The estimated damage to the truck was between $716 and $742. There was a $200 deductible. Mooneyhan ended up repairing the wrecker himself.

assigned to the Northland Insurance Company. The policy cost four dollars more a year than did the Dixie policy.

After receiving the claim and the estimates, Dixie's claims department investigated the claim. An adjuster telephoned Mooneyhan, Riley and Maclin and took recorded statements. In his statement and at trial Mooneyhan acknowledged that the damaged vehicle was a wrecker used in his business. He also stated that he told this to the agent at the time he applied for insurance.

The transcribed statements of Riley and Maclin showed their answers as being inaudible, but the adjuster's handwritten notes and Riley and Maclin's testimony at trial were consistent. Both Riley and Maclin stated that they did not know the '76 Dodge was a wrecker until they saw it themselves when Mooneyhan came in to report the claim. Dixie chose to believe its agents.

Dixie was advised by its attorney in a letter dated November 25, 1986, that if the facts in the claim file were accurate and the insurance application did not reflect the truck was a wrecker used for business purposes and if Dixie did not write policies for business vehicles then it probably did not owe the claim. The letter also stated that Dixie would have to reimburse the Mooneyhan's premiums plus interest. In a letter to Mooneyhan dated December 29, 1986, Dixie denied the claim stating that it did not write policies for vehicles used for business purposes.

Roger Varner was the manager of processing operations at Dixie in 1986. He stated that when Dixie received the request that Mooneyhan's policy be cancelled they sent a check for the unused portion of the premium to Mitchell to return to Mooneyhan. After the claim was denied, another calculation was done and a check for approximately fifty-six dollars was sent to Mooneyhan. It was later discovered that a mistake had been made and so Mooneyhan was sent another check for forty dollars. All the checks totaled amounted to a full refund of the premiums paid by Mooneyhan plus 10 percent interest. Varner stated that if Dixie had known that the application for insurance was for a...