Town & Country Mut. Ins. Co. v. Hunter

• Decision Date: 08 January 1985
• Docket Number: No. 1-1283A384,1-1283A384
• Parties: TOWN & COUNTRY MUTUAL INSURANCE COMPANY, Defendant-Appellant v. Dale HUNTER, Individually and as Administrator of the Estate of Sadie Marie Hunter, Deceased, Plaintiff-Appellee, Carol S. Bulmer and Clifford D. Bulmer, Defendant-Appellees.
• Court: Indiana Appellate Court

Page 1265

472 N.E.2d 1265

TOWN & COUNTRY MUTUAL INSURANCE COMPANY, Defendant-Appellant v. Dale HUNTER, Individually and as Administrator of the Estate of Sadie Marie Hunter, Deceased, Plaintiff-Appellee Carol S. Bulmer and Clifford D. Bulmer, Defendant-Appellees.

No. 1-1283A384.

Court of Appeals of Indiana First District.

Jan. 8, 1985.

C. Wendell Martin, Martin, Wade, Hartley & Hollingsworth, Indianapolis, for defendant-appellant.

C. Jack Clarkson, John O. Worth, Clarkson & Worth, Rushville, for plaintiff-appellee.

David P. Barrett, Barrett & Wilhelm, Brookville, for appellee Dale Hunter, Individually and as Administrator of the Estate of Sadie Marie Hunter, Deceased.

NEAL, Judge.

STATEMENT OF THE CASE

Defendant-appellant Town & Country Mutual Insurance Company (Town & Country), appeals from a jury verdict and judgment of the Fayette Circuit Court granting plaintiff-appellee Dale Hunter (Hunter), an award of compensatory and punitive damages in his own right and as Administrator of the estate of his wife, Sadie Marie Hunter (Sadie), in his personal injury and wrongful death claim arising out of a collision with an uninsured motorist.

We affirm in part and reverse in part.

STATEMENT OF THE FACTS

On May 23, 1975 at approximately 6:00 p.m., a collision occurred between a borrowed motorcycle which Hunter was driving, with Sadie as his passenger, and a 1965 Pontiac automobile owned by Clifford and Carol Bulmer, which Mrs. Bulmer was driving. Mr. Bulmer and the Bulmers' son and daughter were also in the car at the time of the collision.

Immediately before the accident both vehicles had been traveling south on Highway 121 outside of Laurel, Indiana. The collision occurred when the Bulmers' car began to turn right into a driveway, while Hunter was attempting to pass on the right. The motorcycle struck and glanced off of the Bulmers' front fender heading straight into a guardrail curving along the driveway which the Bulmers were attempting to enter.

As a result of the accident Hunter suffered severe injuries, including two broken legs, a dislocated shoulder and a broken arm, which required surgery and his hospitalization for a month. Sadie sustained severe internal injuries in addition to broken bones and died of her injuries several hours after the collision. Hunter had in effect at the time two policies of insurance with Town & Country which included uninsured motorist coverage for him and Sadie. The Bulmers were uninsured motorists.

Hunter had been at the Laurel Hotel for lunch on May 23, 1975. Sadie met him there and they left the hotel on the borrowed motorcycle. Hunter testified to Mrs. Bulmer's erratic driving from the time he first observed the Bulmer car outside the Laurel Hotel, until the collision took place. He stated that she nearly ran him off the road when she passed him on Highway 121, stopped in the middle of a bridge for over a minute at one point and immediately before the accident had crossed the center line and appeared to be preparing to turn left across the northbound lane of Highway 121 into an open area on the far side of the highway. Mr. and Mrs. Bulmer denied Hunter's claims and agreed between themselves that Hunter had sped out in front of them by the Laurel Hotel and that they thereafter passed him and drove at a consistent rate of speed until signalling their right turn into the driveway.

Pursuant to its investigation of the accident Town & Country discovered evidence that Hunter had some beer while at the Laurel Hotel. Town & Country could find no liability of Bulmers for the collision and therefore denied Hunter's uninsured motorist claim although reserve accounts had been set up in Hunter's name.

The Bulmers made a later, inconsistent statement at Hunter's attorney's office, admitting Mrs. Bulmer had slowed down on the bridge and had "swept out" over the center line before beginning her right turn into the driveway and Hunter may have been confused by her actions such that he believed he should pass the car on the right. She said her decision to turn into the driveway had been a sudden one. After reading this statement, Town & Country indicated a desire to reach a settlement agreement with Hunter on his uninsured motorist claim. However, the Bulmers later retracted their statements recorded in Hunter's attorney's office and reverted to their original version of the incident, admitting no fault on their part.

In early 1976 Town & Country paid $8,109.77 to Hunter as the full limits of the medical payment claims under both insurance policies and the death benefits. This suit proceeded only on the uninsured motorist claim and Hunter's request for punitive damages. The jury awarded Hunter $6,000 against the Bulmers and $10,000 against Town & Country as damages for his personal injuries, and $4,000 against the Bulmers and $30,000 against Town & Country as Administrator of Sadie's estate for damages caused by her wrongful death. In addition, the jury assessed $85,000 punitive damages against Town & Country for its failure to settle Hunter's uninsured motorist claims.

ISSUES

Town & Country presents the following issues for our review:

I. Whether the trial court erred in awarding Hunter punitive damages; whether clear and convincing evidence of bad faith on the part of Town & Country had been presented.

II. Whether the awards of compensatory damages assessed against Town & Country were excessive.

III. Whether the award of compensatory damages to Hunter was erroneous as a matter of law because of his contributory negligence.

IV. Whether the trial court erred in refusing to give Town & Country's tendered instruction No. 7 stating Town & Country's interpretation of Hunter's insurance policies' liability clauses.

V. Whether the trial court erred in giving Hunter's Instruction No. 17 dealing with the defense to contributory negligence of willful and wanton behavior.

DISCUSSION AND DECISION

I. Punitive Damages.

In order to warrant punitive damages, conduct on the part of the defendant reflecting malice, fraud, gross neglect, oppression or bad faith must be shown by clear and convincing evidence. Travelers Indemnity Company v. Armstrong, (1982) Ind., 442 N.E.2d 349. A good faith dispute over the amount of damages, if any, an insured is entitled to recover under his insurance policy will not supply the grounds for punitive damages. Jones v. Abriani, (1976) 169 Ind.App. 556, 350 N.E.2d 635. Nor is Town & Country bound to be correct in its evaluation of Hunter's claim. Travelers Indemnity, supra. Proof of bad faith on the part of Town & Country in denying Hunter's uninsured motorist claim is necessary to uphold the trial court's award of punitive damages. Hoosier Insurance Company v. Mangino, (1981) Ind.App., 419 N.E.2d 978.

Hunter argues Town & Country handled his claim in bad faith from the beginning; taking the side of the Bulmers and only speaking to him once, via telephone, while he was still in the hospital. Hunter alleges Town & Country failed to make a complete investigation, which would have favored his recovery, and was not even aware that Sadie had died until mid-June. Hunter further complains that Town & Country set up a reserve account in his name but denied his claim, and hired the attorney who represented the Bulmers.

Initially, we agree with Hunter that our uninsured motorist laws are remedial in nature and should be construed in favor of the insured. Patton v. Safeco Insurance Company, (1971) 148 Ind.App. 548, 267 N.E.2d 859. However, this concept cannot be taken to the extreme so that claims become nondisputable. As noted in Travelers Indemnity, supra, this would result in a prohibitive social cost to the insurance premium paying public. Courts must take care not to discourage honest litigation by allowing punitive damages against a party which is exercising its right to adjudicate a real dispute, even if that party is found to be in error and the litigation injures the other party. First Federal Savings and Loan Association of Indianapolis v. Mudgett, (1979) Ind.App., 397 N.E.2d 1002. In order for Hunter to prevail on his request for punitive damages, he must prove that Town & Country denied his uninsured motorist claim with the knowledge it had no legitimate basis for denying coverage. A jury may infer malice or oppressive conduct from such evidence. Mangino, supra.

The uninsured motorist clause appearing in one of Hunter's insurance policies states that Town & Country agrees "to pay all sums which the insured or his legal representative shall be legally entitled to recover as damages from the owner or operator of an uninsured automobile because of bodily injury, sickness or disease, including death resulting therefrom, herein called 'bodily injury', sustained by the insured, caused by accident and arising out of the ownership, maintenance or use of such uninsured automobile ..." This is substantially similar to the related provision in Hunter's other policy. Thus under Hunter's uninsured motorist coverage, he must have a good cause of action against the Bulmers before he can recover from Town & Country. From a cursory review of the evidence we find a conflict in the parties' recitations of fact, one version of which would negate Hunter's right to recover due to his contributory negligence. Town & Country's denial of Hunter's claim was not so ludicrous and outside the bounds of reason as to be tainted by fraud, oppression, bad faith, or gross negligence. Nationwide Mutual Insurance Co. v. Neville, (1982) Ind.App., 434 N.E.2d 585, 595.

We do not find evidence to support Hunter's claim that Town & Country's investigation of the accident was insufficient simply because it does not bear out his version of the events. The facts that Town & Country did not discover Sadie's death until two weeks after the accident and initially assured Hunter that he was covered, are attributable to mere human error and do not infer bad faith. See Travelers Indemnity, supra...