The opinion of the court was delivered by: Banks, Justice, For The Court
DATE OF JUDGMENT: 08/17/95
TRIAL JUDGE: HON. WILLIAM F. COLEMAN
COURT FROM WHICH APPEALED: HINDS COUNTY CIRCUIT COURT
NATURE OF THE CASE: CIVIL - INSURANCE
MOTION FOR REHEARING FILED: 1/2/98
¶1. The motion for rehearing is granted. The original opinions are withdrawn and these opinions are substituted therefor.
¶2. In this matter we have for review a judgment based upon a jury award of actual and punitive damages arising out of the failure to pay an insurance claim for theft. After careful review of the record we conclude that the evidence presented was sufficient such that we cannot say that the trial court erred in allowing the issue of punitive damages to go to the jury and to allow a fair minded fact finder to conclude as the jury did. Accordingly, we affirm.
¶3. Earl Grimes, an investigator with the Biloxi Police Department, owned a 1969 Corvette which he purchased in 1989 for $2,600.00 On the morning of July 21, 1991, Grimes noticed that the car was missing, and he reported the apparent theft to the Jackson County Sheriff's Office two hours later. Later that day, the Corvette was recovered from an apartment complex parking lot a few blocks from Grimes' home. Although the exterior of the vehicle was not damaged, the engine, transmission, drive shaft, front shock absorbers, radiator, stereo, and battery had been removed. Grimes made a theft claim to State Farm, his auto insurer, on July 22, 1991.
¶4. Over the next few weeks, State Farm inspected the car and interviewed Grimes and other witnesses. Estimator Dennis Laubmeir reviewed the claim and reached an early Conclusion that "this claim stinks." The claim was sent to the State Farm Special Investigation Unit on July 30, 1991. On August 21, Grimes gave a statement under oath before State Farm counsel with his own counsel present. The statement under oath was adjourned until August 28, at which time Grimes was questioned once again. A third questioning under oath was conducted on September 11, 1991, at which time Grimes provided various authorizations and financial documents to State Farm.
¶5. Following this investigation, State Farm concluded that the circumstances of the loss and recovery of the car were inconsistent with a theft. State Farm points to information which it gathered which indicated that Grimes was tired of mechanical problems with the car, that he seldom drove it, and that he had filed prior claims for theft and vandalism. State Farm further notes that Grimes was a racing enthusiast and hobbyist mechanic who, it contend, possessed the skill and expertise needed to remove the parts stolen from the Corvette.
¶6. From this information, State Farm concluded that Grimes had the motive and opportunity to steal the parts himself in order to defraud State Farm and it denied his theft claim. State Farm supports its decision by noting that Grimes was not awakened by the theft of the car, although Grimes testified that he had taken sleeping pills the night before the theft. State Farm also notes that there was no physical indication that the car was towed from its parked location outside of Grimes' residence. State Farm also asserts that the physical condition of the car following the alleged theft was not typical of cars following theft.
¶7. Based on these and other factors, State Farm formally notified Grimes that his claim was being denied on November 11, 1991. On December 30, 1991, Grimes filed suit in the Circuit Court of Hinds County against State Farm, seeking both compensatory and punitive damages as well as attorney's fees. A trial was held on July 17-20, 1995, following which the jury returned a verdict of $1,900.00 in contractual damages and $1,250,000.00 in punitive damages against State Farm. State Farm's post trial motions were denied, and State Farm timely filed an appeal before this Court, raising a number of issues with which we deal ad seriatum.
A. THE VERDICT ON THE THEFT CLAIM IS CONTRARY TO THE OVERWHELMING WEIGHT OF THE EVIDENCE.
¶8. The standard for deciding upon a motion for judgment notwithstanding the verdict requires this Court to consider the evidence in the light most favorable to the non-moving party and to give the non-moving party the benefit of all favorable inferences that may reasonably be drawn from the evidence. If the facts are nevertheless so overwhelmingly in favor of the moving party that reasonable and fair-minded jurors could not have arrived at a contrary verdict, then this Court must reverse and render in favor of the moving party. Fitzner Pontiac-Buick-Cadillac, Inc. v. Smith, 523 So. 2d 324, 326 (Miss. 1988).
¶9. This Court concludes that the facts of the present case are not so strongly in favor of State Farm as to warrant the imposition of a judgment notwithstanding the verdict. State Farm's evidence which points to possible fraud on the part of Grimes does raise a slight degree of suspicion that Grimes may have removed the engine and transmission himself. However, granting all reasonable inferences to Grimes, this evidence is clearly not so overwhelmingly in favor of State Farm that impartial and fair jurors could not have validly concluded that State Farm wrongfully denied coverage under the theft policy. The jury's verdict regarding the denial of the theft claim is affirmed.
B. THE PUNITIVE DAMAGES VERDICT WAS AGAINST THE OVERWHELMING WEIGHT OF THE EVIDENCE.
C. THE AMOUNT OF THE PUNITIVE DAMAGES IS EXCESSIVE.
¶10. A closer issue is presented by the jury's award of $1,250,000.00 in punitive damages. The trial Judge refused to grant Grimes a directed verdict with regard to the denial of the theft claim, and State Farm argues that this fact indicates that it did in fact have an arguable basis for denying the claim. This Court has held that the fact that a trial Judge denied a motion for directed verdict on the underlying contract claim generally indicates that a punitive damages instruction should not have been submitted to the jury. Blue Cross & Blue Shield of Mississippi, Inc. v. Campbell, 466 So. 2d 833, 843 (Miss. 1984). However, this Court has, in recent cases, backed away from a blanket holding that a punitive damages instruction should not be submitted to the jury if a directed verdict was denied on the underlying contract issue. This Court noted in Dixie Insurance Co. v. Mooneyhan, 684 So. 2d 574 (Miss. 1996) that:
"Where the trial Judge determines there was no arguable reason to deny the claim and the insurer may be deemed to have acted unfairly and in bad faith, the issue of punitive damages should be submitted to the jury regardless of whether or not a directed verdict was granted to the insured." Id. at 583 (citing Andrew Jackson Life Ins. Co. v. Williams, 566 So. 2d 1172, 1185 (Miss. 1990)).
¶11. This Court in Mooneyhan thus noted that a Judge may validly conclude that an insurer lacked an arguable reason to deny the claim and that it acted in bad faith notwithstanding the fact that he refused a directed verdict on the underlying contract claim. There are subtle yet important differences in the applicable standards for deciding upon a directed verdict on the underlying contract claim and in deciding whether a punitive damages instruction should be submitted to the jury. *fn1 It is also true that there is a natural tendency on the part of many trial Judges to allow an empaneled jury, which has given up its time and diligently viewed the evidence, to reach a decision on the merits of the case rather than rendering judgment himself. A strict rule of law which held the denial of a directed verdict motion to be inconsistent with the submission of a punitive damages instruction to the jury, while containing a certain logic and appeal, would therefore be unsound.
¶12. The law of this State does not impose punitive damages in cases in which a carrier is determined to have merely reached an incorrect decision in denying a given claim. The issue of punitive damages should not be submitted to the jury unless the trial ...