Viking Ins. Co. of Wisconsin v. Jester

• Decision Date: 20 July 1992
• Docket Number: No. 91-253,91-253
• Citation: 836 S.W.2d 371,310 Ark. 317
• Parties: VIKING INSURANCE COMPANY OF WISCONSIN, Appellant, v. Ramona JESTER, Appellee.
• Court: Arkansas Supreme Court

Page 371

836 S.W.2d 371

310 Ark. 317

VIKING INSURANCE COMPANY OF WISCONSIN, Appellant, v. Ramona JESTER, Appellee.

No. 91-253.

Supreme Court of Arkansas.

July 20, 1992.

Laser, Sharp, Mayes, Wilson Bufford & Watts, Little Rock, Griffin, Rainwater & Draper, Crossett, for appellant.

Travis Mathis, Arkadelphia, for appellee.

DUDLEY, Justice.

The plaintiff, Ramona Jester, sued her insurance company, Viking Insurance Company of Wisconsin, for the conversion of her car and the first party tort of bad faith in refusing to settle her claim for damages to her car. The defendant insurance company answered, but the trial court later struck the answer because the insurance company violated a court order requiring it to produce its entire claim file and because of a pattern of conduct designed to obstruct the discovery process. The trial court also entered a default judgment as to liability against the defendant. The case went to trial, and the jury returned a verdict of $1,000.00 compensatory damages and $250,000.00 punitive damages. The insurance company appeals. We affirm the judgment.

The facts, viewed in the light most favorable to the appellee-plaintiff, as we must do, are as follows. The plaintiff, a single parent with five children and ten grandchildren, some of whom live with her, lives on a dirt road in a remote area sixteen miles from Gurdon and works at the International Paper Company mill that is located one mile from Gurdon. She commutes the thirty-four miles each working day, and, when she was without a car, sometimes had to hitchhike to and from work. Her principal job is to cut logs as they come into the mill. She described her job as running a chainsaw, rolling logs with a cant hook, and using a shovel. The record fairly implies that she has a very limited education.

In September 1988, the plaintiff traded her older model Chevrolet Camaro for a newer 1984 model Chevrolet Camaro and paid the difference between her trade-in and the new Camaro with a loan from the First State Bank of Gurdon. She figured that the amount of the loan plus the value of her older car amounted to a purchase price of about $5,500.00 on her 1984 Camaro. The bank required her to have collision insurance on the car. She went to the bank's inhouse agency, the First State Bank Insurance Agency, and purchased insurance. The agency placed the insurance with the defendant insurance company, and the defendant issued its policy which insured "damage to your car" less a $1,000.00 deductible. The premium for one year was $1,038.00 payable at the rate of $173.00 per month for the first six months of the policy. Plaintiff made the premium payments at all material times.

On August 2, 1989, the plaintiff was involved in a one-car accident in which her car was damaged beyond repair. The state trooper who investigated the accident caused her car to be towed to a nearby service station. The plaintiff promptly notified the insurance agent who relayed the information to the defendant, and one of the defendant's employees told the agent that the plaintiff must give a recorded statement about the details of the accident. Plaintiff went to the agency and, by telephone, gave a recorded statement to defendant's claims representative in Austin, Texas. After the recorder was turned off, the claims representative, Ms. Cantu, asked the plaintiff whether she wanted to keep the salvage. Plaintiff, who had no experience in settling claims, responded that she did not want the salvage if the defendant paid her a just amount for the car. The plaintiff, who still owed the bank $2,150.00 on the car loan, asked a bank employee what her car was worth at the time of the accident. The employee replied that it had a value of $3,800.00, so the plaintiff guessed that, even with the deductible, she would receive a settlement of a few hundred dollars more than the outstanding loan amount, which was enough for a down payment on another car.

A few days later the claims representative, Ms. Cantu, called the plaintiff at the mill where she worked. There are 450 employees at the mill, and when a call comes for an employee who works out in the mill, it is necessary to relay the call to a foreman. The foreman then goes out to the employee and informs him or her of the call, and the employee then goes into the area where the telephones are located. Understandably, the company has a strict policy against employees receiving non-emergency calls at the mill. The plaintiff returned the call after she got off work and, after explaining the company's policy, asked Ms. Cantu not to call her again at work. Plaintiff explained to Ms. Cantu that she had critically ill family members, and when she received calls at work it scared her. Ms. Cantu responded, "Oh, well, that just sounds like a personal problem to me," and she offered to pay onlythe amount of the car loan to the bank plus $50.00 to the plaintiff. The plaintiff declined the offer. Ms. Cantu mailed to the plaintiff something she said explained her appraisal, but the plaintiff said it looked like "a bunch of [newspaper] clippings" to me.

A week later Ms. Cantu again called the plaintiff at the mill. The call angered plaintiff's foreman. After work, the plaintiff returned the call. Ms. Cantu said that it was time to settle the claim and that the plaintiff needed to accept the $50.00. She asked the plaintiff why she was asking more than $50.00 and the plaintiff responded that a car dealer had told her that her car was worth between $3,800.00 and $4,200.00. Ms. Cantu replied that the car dealer said that "expecting you to jew [him] down." Ms. Cantu additionally told the plaintiff that she "did not know how big business is handled" and that she was "just a dumb broad from a hick town in Arkansas." The plaintiff again declined the offer.

In a later phone conversation, the plaintiff explained to Ms. Cantu that she could sell the parts from her car for more than $50.00, and so she would keep it rather than take the $50.00 for it. The plaintiff saw that her car was no longer at the service station and asked where it was. Ms. Cantu did not answer but instead transferred her to a man in the insurance company's salvage section who told her that her car was still at the service station. A few moments later, Ms. Cantu called the plaintiff and asked if she had gotten the salvage matter straightened out. The plaintiff said she had not, and Ms. Cantu told her that she was going to pay the amount of the car loan to the bank and pay $50.00 to her. Again, the plaintiff declined the offer. Ms. Cantu responded: "Well, hell, you're going to have to take what we offer anyway."

In their final conversation, Ms. Cantu told the plaintiff that she was going to pay the bank the amount of the loan and pay her $50.00, and if she did not accept the $50.00 right then, she would keep it and use the money to clean the car's dirty carpet, and if that happened the plaintiff would get nothing. The plaintiff then learned that the defendant had sold the salvage to a man named Randy Weeks who had already partially dismantled the car.

The plaintiff employed counsel and filed suit in which she alleged that the defendant insurance company was guilty of the first party tort of bad faith in refusing to settle her claim and of converting her car to its own use. Subsequently, the trial court issued its order compelling discovery, and in it, directed the defendant to provide "[y]our entire claim file pertaining to Plaintiff's claim for damages, including but not limited to any and all documents relating to Plaintiff's claim for damages." The order also contained the following clear notice:

Failure to comply with this Order shall result in the imposition of sanctions against the Defendant in conformity with the Arkansas Rules of Civil Procedure and shall include the award of attorney's fees to the Plaintiff's attorney.

Obviously, a central issue in the conversion count of the suit was whether the defendant insurance company was authorized to dispose of the wrecked car. The defendant's files were critical to discovering the truth about the matter. The plaintiff's attorneys suspected that Ms. Cantu had told the salvage department to dispose of the car before Ms. Cantu talked with the plaintiff, and that was a part of an oppressive strategy to force the plaintiff to accept the offer. The defendant originally maintained a master file of the claim along with a salvage subfile. At some time before the order compelling discovery, these two files were merged into one, but the defendant did not provide the plaintiff's attorneys with the salvage section of the file prior to discovery. The day before the claims representative was to give her deposition, the trial attorney for the insurance company learned of his client's failure to supply the salvage part of the file, but said nothing about it to plaintiff's counsel. This part of the file contained most of the pertinent information concerning the conversion of plaintiff's car. Also missing from the file was an underwriting risk notice and a request for evaluation form. The evaluation form was material to whether the defendant acted in bad faith in evaluating its offer of settlement. Plaintiff's counsel's pointed and persistent questions during the deposition of the claims representative brought out the fact that the salvage part of the file was missing. The defendant supplied the salvage subfile at that time but did not provide the underwriting risk notice or the evaluation request form.

At the same deposition, the plaintiff's attorney tried to question Ms. Cantu about the sequence of the events surrounding the conversion of the car. Ms. Cantu stated that she made entries out of sequence in the activity report. The plaintiff's attorney asked to see the original activity report in order to examine the different colors of ink used in making the entries on different days since that might reflect the sequence of making...