McCorkle v. Great Atlantic Ins. Co., 53703

• Decision Date: 03 November 1981
• Docket Number: No. 53703,53703
• Citation: 1981 OK 128,637 P.2d 583
• Parties: Madison McCORKLE, Jr., Appellee, v. GREAT ATLANTIC INSURANCE CO., of Delaware, a foreign insurance company, and Community Bank and Trust Company, an Oklahoma banking corporation, Appellants.
• Court: Oklahoma Supreme Court

Page 583

637 P.2d 583

1981 OK 128

Madison McCORKLE, Jr., Appellee, v. GREAT ATLANTIC INSURANCE CO., of Delaware, a foreign

insurance company, and Community Bank and Trust

Company, an Oklahoma banking

corporation, Appellants.

No. 53703.

Supreme Court of Oklahoma.

Nov. 3, 1981.

Appeal from the District Court of Tulsa County; Patricia M. Hoebel, Trial Judge.

Insured brought suit against insurance company for breach of contract, for tort of bad faith, and for attorney fees, pursuant to 36 O.S. § 3629(B). Jury awarded actual and punitive damages and trial court awarded attorney fees. Insurance company appeals.

AFFIRMED.

Jack B. Sellers Law Associates, Inc. by April Sellers White, Sapulpa, for appellee; Joe A. Moore, Memphis, Tenn., of counsel on the brief.

Ray H. Wilburn & Associates by Ray H. Wilburn and Dennis King (attys. of record on the appeal only), Tulsa, for appellant, Great Atlantic Ins. Co.

BARNES, Vice Chief Justice.

This case arises out of a fire-insurance contract wherein the insurer refused to pay the policy limits for fire damage to the insured's house. The insured brought suit alleging breach of contract, tortious bad-faith handling of his claim, and oppression and malice on the part of the insurance company. He sought actual and punitive damages.

The facts, which are largely undisputed, are as follows: The appellee bought a house for investment purposes. Although the house was valued at only $7,500.00 by the lender, the appellee renovated the house through his own efforts and through bartered-for labor and contracted labor for which he still owes $1,500.00. When he sought insurance coverage, the insurance agent valued the property at $15,000.00. The value of the house was evidently somewhat higher because witnesses for both the insured and the insurer at the trial placed the value in the range of $20,000.00. Nonetheless, appellant issued a fire-insurance policy for $15,000.00, with a $100.00 deductible.

The insured rented the house and shortly thereafter suffered a heart attack, necessitating a six-month recovery period. During his hospitalization there was extensive fire damage to the house. His insurer was contacted and two estimates for repairs were submitted. One was for $16,845.00, the other for $17,088.00.

The insurer never sent a proof-of-loss form but employed a contractor, frequently used by its company to make estimates, to make a third estimate. He estimated the damage at $6,629.52.

The $6,629.52 estimate made no allowance for water damage, although the contractor making the estimate admitted that the fire department had done "quite a lot of water damage," and no allowances for plumbing repairs, for exposing and inspecting electrical wiring, for replacement of broken windows, or replacement of damaged sheet-rock walls in the living room, dining room, hall, kitchen, front bedroom, or utility room. The exterior of the house was to be "touched up" but not repainted. In short, this estimate was based on the premise that the fire was basically confined to the back bedroom and attic, that water-damaged areas would dry in time, and that the smoke damage could be patched and painted over.

The insurer's adjuster then reduced this estimate $2,000.00 for depreciation and offered to settle for $4,872.00. At trial he could give no rational basis for this reduction. The adjuster testified that he had not seen the house prior to the fire, had not talked to the agent who appraised the house prior to the issuance of the insurance policy or the contractor who made the $6,629.52 estimate. He based his offer on the purchase price of the house, not the renovated house on which the insurance policy was issued. He made no contact with any of the contractors who made estimates in an effort to resolve the disparity between the appraised damage. No arbitration was sought. He denied having seen a proof-of-loss form although one was produced at trial bearing his signature and a notation withdrawing the settlement offer of $4,872.00.

Subsequently, because of the fire damage, the roof, living room and porch of the house collapsed, and the City of Tulsa ordered the house torn down. The house was bulldozed and the lot cleared.

The insured sued the insurer for $14,900.00 damages, the policy limit minus the $100.00 deductible, plus $40,000.00 punitive damages, plus attorney fees pursuant to 36 O.S. §§ 1103, 1105 and 3629. The jury awarded actual damages of $10,000.00 and punitive damages of $10,000.00. The trial court awarded $5,000.00 attorney fees.

Appellant urges a reversal based on nine alleged errors. Additionally, it asks this court to reconsider Christian v. Home Assurance Company, 577 P.2d 899 (Okl.1978), and overrule it, or in the alternative to limit its application on the basis that the intentional tort of bad-faith recognized in Christian is violative of due process, and is, therefore, unconstitutional under the Fourteenth Amendment to the United States Constitution and Article Two, Section Seven, of the Oklahoma Constitution.

I

Initially, the court notes that appellant Great Atlantic Insurance Company ¹ alleged nine errors in its petition in error, but declines to brief all nine. Since this court as a general principle addresses only those issues properly and timely presented, argued and supported with authority, Gaskins v. State ex rel. Dept. of Highways, 425 P.2d 979 (Okl.1967), we will limit this review to those issues properly before us.

II

The appellant states in Proposition Two:

THE TRIAL COURT ERRED IN OVERRULING GREAT ATLANTIC'S DEMURRER TO THE EVIDENCE BECAUSE THE PLAINTIFF NEVER PLED NOR PROVED A TORTIOUS BREACH OF THE INSURANCE CONTRACT.

Inasmuch as the record shows that the appellant proceeded at trial to elicit evidence in support of its defense after it had demurred to appellee's evidence, this assignment of error is deemed waived. Osburn v. Bendix Home Systems, Inc., 613 P.2d 445, 448 (Okl.1980), citing Chicago, Rock Island and Pacific Railroad v. Kinsey, 372 P.2d 863 (Okl.1962); McMillan v. Lane Wood & Company, 361 P.2d 487, 491 (Okl.1961); Oklahoma City-Ada-Atoka Railroad Company v. Nickels, 343 P.2d 1094, 1096 (Okl.1959). Our review will, therefore, be confined to the remaining issues.

III

Appellant contends in Proposition Three:

THE INSTRUCTIONS GIVEN BY THE TRIAL COURT WERE DEFECTIVE IN THAT THEY FAILED TO STATE THE LAW SETTING FORTH A CAUSE OF ACTION FOR A TORTIOUS BREACH OF AN INSURANCE CONTRACT AND WERE SO ONE-SIDED AS TO BE PREJUDICIAL TO THE DEFENDANT.

Appellant submits that no single instruction was erroneous, but that the totality of the jury instructions had a cumulative effect that was prejudicial and fundamentally incomplete when read in conjunction with the record.

Appellant failed in the trial court to save exceptions to the instructions by proper objections and notations statutorily required by 12 O.S.1960 § 578. ² Such failure requires our review to be limited to prejudicial error, erroneous statements of fundamental law, appearing upon the face of the instructions, and review of the entire record in an effort to discover latent errors is precluded. ³ In the instant case the questioned instructions contain no misstatement of any fundamental principle of law.

IV

For its fourth proposition, the appellant argues:

THE PLAINTIFF DID NOT PROVIDE ANY PROOF TO SHOW THAT THE DENIAL OF ANY POLICY BENEFIT WAS DONE WITH OPPRESSION, FRAUD OR MALICE.

To the contrary, the record, much of which is summarized in the introduction, supra, and will not be repeated here, supports the verdict.

This court does not weigh evidence or correctness of findings of fact by the jury, Akins v. Altus Newspaper, Inc., 609 P.2d 1263 (Okl.1977), but examines only to determine whether the evidence, together with permissible inferences to be drawn therefrom, reasonably sustains the jury's verdict and the judgment based thereon. Osborn v. White Eagle Oil Co., 355 P.2d 1041 (Okl.1960). Under this standard and based on the record, this court finds sufficient evidence to affirm the jury's finding that appellant's conduct was unreasonable and malicious through an indifference to or conscious disregard of the appellee's rights and justifies the award of punitive damages. Smith v. Johnston, 591 P.2d 1260, 1264 (Okl.1979); Christian v. American Home Assurance Company, 577 P.2d 899, 904 (Okl.1978). We note that the punitive damages, together with actual damages awarded, total $20,000.00, the amount that appellant's own witness testified was a fair market value of the appellee's house prior to the fire damage.

V

Appellant argues that the trial court erred in awarding attorney fees of $5,000.00 to appellee. The award of attorney fees to the prevailing party in a suit by an insured against the insurer is provided for by statute in Oklahoma. 36 O.S. (Supp.1981) § 3629(B). Furthermore, since appellant neither preserved error in objecting to the amount of attorney fees nor presented evidence in contradiction of the amount, but merely objected to the award of attorney fees, we hold that the amount of attorney fees is not subject to our review because any objection, which would have preserved this issue for appeal, was waived. J. V. v. State Department of Institutions, Etc., 572 P.2d 1283 (Okl.1977).

VI

Appellant in its next proposition states:

THE TORT OF BAD-FAITH BREACH OF CONTRACT SHOULD BE REJECTED IN OKLAHOMA OR LIMITED SO THAT IT DOES NOT APPLY TO CASES WHERE THE AMOUNT DUE IS UNASCERTAINED.

In asking this court to overrule or retreat from its holding in Christian v. American Home Assurance Company, 577 P.2d 899 (Okl.1978), the basic thrust of appellant's argument is that Christian destroys the balance of interests between the insurance industry and the consumer to the point of being unconstitutionally prejudicial to the insurance industry under the Fourteenth Amendment and Article Two, Section Seven, of Oklahoma's Constitution.

The appellant's argument is that fire-insurance claims...