Lloyds of London v. Lock
| Citation | 454 N.E.2d 81 |
| Decision Date | 20 September 1983 |
| Docket Number | No. 1-982A268,1-982A268 |
| Parties | LLOYDS OF LONDON and Michael George Miller, Defendants-Appellants, v. Charles LOCK d/b/a Charles Lock Trucking, Plaintiff-Appellee. |
| Court | Court of Appeals of Indiana |
Jerry P. Belknap, James A. Strain, James E. Mahoney, Barnes & Thornburg, Indianapolis, Harvey M. Greene, Aurora, for defendants-appellants.
Bobby Jay Small, Indianapolis, William R. Wilson, Frank G. Kramer, Ewbank, Meyer, Kramer & Bush, Lawrenceburg, for plaintiff-appellee.
Appellants-defendants, Lloyds of London and Michael George Miller (collectively "Underwriters"), appeal a jury verdict rendered in the Dearborn Circuit Court in favor of appellee-plaintiff, Charles Lock, d/b/a Charles Lock Trucking (Lock). The trial court awarded actual and punitive damages for an allegedly wrongful denial of liability under an insurance policy covering two trucks and two trailers which were allegedly stolen.
Affirmed in part, reversed in part and remanded.
Lock has owned and operated a trucking business for about the last twelve to fourteen years. In December of 1979, he obtained an insurance policy through Midwest Insurance Agency (Midwest) underwritten by Underwriters covering certain trucks and trailers. The policy specified actual cash value for the equipment and contained a clause limiting liability to ($100,000).
On September 18th, Lock and his driver, Gerald Louden parked a 1979 Kenworth tractor with a Ravens trailer and a 1978 R-model Mack truck with a Trailmobile trailer at the South Dayton truck stop in Ohio. On September 22, 1980, Lock and Louden returned to pick up the trucks, but they were gone. Lock reported the loss to the police and to Underwriters.
On September 25, 1980, Underwriters sent Lock a letter and requested a thirty-day period before considering the claim. They also requested information about the vehicles. The letter stated that upon receipt of the information, they would give further consideration to the claim. They asked Lock to notify them if the vehicles were recovered.
In January of 1981, a Florida highway patrolman recovered the vehicles. Lock notified Underwriters about the recovery before going to Florida to retrieve the vehicles. The monthly payment on the stolen trucks was around $3,700.00. Lock stated that these two rigs were more than paying their own way and were responsible for keeping his business solvent. The trucks were still under full warranty when they were stolen and were not incurring any repair expenses.
Underwriters eventually denied the claim stating, On March 19, 1981, Lock filed his complaint for damages against Underwriters. On May 12, 1982, the trial court entered judgment on a jury verdict in favor of Lock and against Underwriters for $635,000.00, with $445,000.00 in punitive damages and $190,000.00 of compensatory damages.
The first issue concerns the award for punitive damages. Punitive damages are appropriate in a breach of contract action under certain circumstances. First Federal Savings and Loan Assoc. of Indianapolis v. Mudgett, (1979) Ind.App., 397 N.E.2d 1002. Our supreme court in Travelers Indemnity Co. v. Armstrong, (1982) Ind., 442 N.E.2d 349, has set forth certain standards to be applied in awarding punitive damages.
[P]unitive damages should not be allowable upon evidence that is merely consistent with the hypothesis of malice, fraud, gross negligence or oppressiveness. Rather some evidence should be required that is inconsistent with the hypothesis that the tortious conduct was the result of a mistake of law or fact, honest error of judgment, over-zealousness, mere negligence or other such noniniquitous human failing.
Id. at 362. Furthermore, Travelers set forth a new standard of proof requiring clear and convincing evidence in support of punitive damages, as opposed to a preponderance of the evidence. In support of its decision, the court stated:
A rule that would permit an award of punitive damages upon inferences permissibly drawn from evidence of no greater persuasive value than that required to uphold a finding of the breach of contract--which may be nothing...
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