Firstmark Standard Life Ins. Co. v. Goss, 49A02-9708-CV-582

Decision Date20 August 1998
Docket NumberNo. 49A02-9708-CV-582,49A02-9708-CV-582
Citation699 N.E.2d 689
PartiesFIRSTMARK STANDARD LIFE INSURANCE COMPANY, Appellant-Defendant, v. Marie I. GOSS, Appellee-Plaintiff.
CourtIndiana Appellate Court


Case Summary

Firstmark Standard Life Insurance Company ("Firstmark") appeals a jury verdict in favor of Marie Goss ("Goss"). We affirm in part and reverse and remand in part.


Firstmark presents four issues which we consolidate and rephrase as follows:

I. Whether the jury's verdict that Firstmark breached an insurance contract was supported by substantive evidence of probative value;

II. Whether the trial court properly utilized compounded prejudgment interest on the jury's verdict; and,

III. Whether damages are recoverable for emotional distress and mental anguish in an action against an insurer for breach of its duty of good faith and fair dealing, and, if so, whether substantive evidence supported the jury's award in this regard.

In her cross appeal, Goss contends that the trial court erred in granting Firstmark's motion for judgment on the evidence on her claim for punitive damages.

Facts and Procedural History

Firstmark issued a life insurance policy to Goss' husband, Donald, on May 4, 1976. The policy was assigned to Goss later that year. The contract contained a death benefit of $75,000 at the time of issuance, and was the type that accumulated dividends. The policyholder could elect to have dividends applied under one of five options. The relevant option, number three, provided that dividends could be "used to purchase additional participating paid-up level insurance of the same type (herein called dividend additions)." Record at 18. The policy further provided:

Any option may be elected in the application for this policy or by written request to the Company at its home office and such election will be effective until revoked; provided that any election of Dividend Option 5 shall be subject to evidence of insurability satisfactory to the Company. Election of any option or revocation thereof shall apply only to dividends becoming due thereafter, except that, at the option of the Owner, election of any option may be made retroactive to a dividend due or within thirty-one days prior thereto. If no dividend option is elected prior to the date a dividend becomes due or within thirty-one days thereafter, such dividend will be applied by the Company under Dividend Option 3 unless the laws of the state in which this policy is delivered require otherwise.


In the fall of 1987, Goss contacted Firstmark with inquiries regarding the type of policy she owned and the benefits that were payable. Michael Davis, a customer service representative for Firstmark, sent Goss a letter on December 3, 1987, informing her that the accumulated dividends on the policy were in the amount of $7,785.75. Davis also informed Goss of her option to use the dividends to purchase $44,025.00 of additional paid-up insurance which would enable her to avoid paying tax on interest income attributable to her.

Davis, however, miscalculated the amount of paid-up insurance that could be purchased under the dividend option. This error was the result of adding up yearly figures for paid-up insurance for each year Donald owned the policy, when in fact the figures for paid-up insurance were cumulative for each year and included all prior years paid-up insurance. Record at 915-16. Davis requested in his December 3 letter that Goss advise Firstmark as to how she wished the dividends to be applied.

Davis wrote Goss again on January 22, 1988, requesting that she specify which dividend option she wished to elect because he had not received any response to his previous correspondence. The letter stated that if no specific election was received within fourteen days of the date of the letter, "we will assume that you wish the dividends to be utilized to purchase paid-up additional insurance and proceed accordingly." Record at 523.

In a letter dated March 5, 1988, Davis notified Goss that the dividends had been used to purchase $44,025.00 in additional paid-up insurance because Firstmark had not received a reply to its letter of January 22. On September 26, 1988, in response to a specific inquiry from Goss regarding surrender of the policy, Davis wrote Goss a letter which incorporated the miscalculation of the amount of additional paid-up insurance, and erroneously indicated that the amount of insurance coverage totaled $121,434.51. 1

Donald died on December 28, 1988, after suffering a heart attack. Goss demanded payment under the policy, and Firstmark paid the sum of $85,200 along with interest in the amount of $3,769.37. Goss filed a breach of contract action against Firstmark on June 7, 1990, demanding an additional $36,234.51 allegedly due under the contract. Firstmark filed a motion for summary judgment on February 1, 1994, which the trial court subsequently granted.

Goss appealed. In an unpublished opinion, another panel of this court reversed the grant of summary judgment and remanded the case to the trial court for further proceedings. In October of 1995, Goss moved to file an amended complaint to assert a claim for punitive damages against Firstmark. The trial court granted the motion and Goss filed her amended complaint. Firstmark filed its answer and affirmative defenses.

A jury trial was held on April 22 and 23 of 1997. At the close of the evidence, Firstmark moved for judgment on the evidence on Goss' claim for emotional distress caused by an insurer's breach of its duty of good faith. The motion was denied. Firstmark renewed its motion for judgment on the evidence on the claim for punitive damages. The trial court granted that motion and withdrew the claim for assessment of punitive damages from the jury's consideration. Goss moved to reconsider the granting of Firstmark's motion for judgment on the evidence on her claim for punitive damages. The trial court denied both that motion as well as a motion to find as a matter of law that there was a contract created between the parties.

After the jury found in favor of Goss, the trial court accepted authority from both parties regarding whether prejudgment interest was to be simple or compounded. The May 9, 1997 judgment provided:

[T]he issues [have] been duly tried with the jury rendering a verdict for [Goss] for contractual damages of $36,234.51 and compensatory damages of $34,630.00. The parties have further stipulated and agreed that the Court shall determine prejudgment interest upon the contractual damages from December 28, 1988, until the date of the verdict. The Court thus awards prejudgment interest to [Goss] in the sum of $34,101.66.

It is therefore ORDERED, ADJUDGED, AND DECREED that [Goss] shall recover from [Firstmark] the sum of $104,966.17, together with interest thereon at the rate of eight percent (8%) as provided by law, costs to be paid by [Firstmark].

Record at 450.

Discussion and Decision
I. Verdict Supported

Firstmark challenges the jury's finding that it breached the insurance contract. Specifically, Firstmark asserts that when Davis and Goss corresponded about the insurance contract, neither of them understood that a new offer was being made. Thus, there could not have been an acceptance that altered the existing contract. Therefore, Goss should not have received the benefit of a bargain which was never intended.

An insurance policy is a contract between the parties, and the objective is to ascertain and enforce the intent of the parties to the contract. Stockberger v. Meridian Mut. Ins. Co., 182 Ind.App. 566, 395 N.E.2d 1272 (1979). In determining whether there has been a meeting of the minds, acceptance may be by any acts, words, or deed of the insured which manifest an intent to accept. Cook v. Michigan Mut. Liab. Co., 154 Ind.App. 346, 289 N.E.2d 754 (1972). Any facts demonstrating a meeting of the minds could support a finding that a contract was in effect. Id.

"[T]he jury, as the trier of fact, must weigh the evidence, draw any reasonable inferences, resolve conflicts in the evidence, determine the credibility of witnesses and decide in whose favor the evidence preponderates." Planned Parenthood of Northwest Indiana, Inc. v. Vines, 543 N.E.2d 654, 658 (Ind.Ct.App.1989), trans. denied. Consequently, our standard of review allows us to overturn a jury's verdict only if there is no evidence on the elements of the plaintiff's claim which will support the verdict. Id.

Viewing the record in the light most favorable to the verdict, and without reweighing evidence or rejudging credibility, we conclude that the record supports an inference that Goss accepted the offer in precisely the manner that was specified in Davis' letter of January 22, 1988. Rather than completely reiterating our discussion on this issue, we refer Firstmark to our prior memorandum decision. Goss v. Firstmark Standard Life Ins. Co., No. 49A02-9409-CV-518, 647 N.E.2d 705 (Ind.Ct.App. Mar.31, 1995).

II. Compounded Prejudgment Interest

The trial court's judgment awarded prejudgment interest compounded monthly from December 28, 1988, the date of Donald's death. Firstmark contends that the prejudgment interest should not have been compounded absent an underlying agreement of the parties. Instead, it urges that simple interest should have been applied. We agree.

An award of prejudgment interest in a contract claim is warranted if the terms of the contract make the claim ascertainable and the amount of the claim rests on mere mathematical computation. Sand Creek Country Club, Ltd. v. CSO Architects, Inc., 582 N.E.2d 872, 876 (Ind.Ct.App.1991). Firstmark does not argue that prejudgment interest was...

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