Guy et al v. State Farm Mutual Automobile Insurance Company et al

Filing 50

ORDER granting 36 Defendant State Farm's Motion for Partial Summary Judgment. Signed by Judge James M. Moody on 09/25/2012. (jak)

IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
JONESBORO DIVISION
ADRIAN GUY, GABRIELLE GUY,
and ESTELLA GUY
V.

PLAINTIFFS

3:10CV00255JMM

STATE FARM MUTUAL AUTOMOBILE
INSURANCE CO.; WELLS FARGO AUTO
FINANCE, LLC

DEFENDANTS

ORDER
Pending is State Farm’s motion for partial summary judgment. Plaintiffs filed a
response, to which State Farm filed a reply.

For the reasons stated below, State Farm’s motion

is GRANTED.
FACTS
The plaintiffs in this case are Adrian Guy, his wife, Gabrielle, and his mother, Estella
Guy. In 2003, Estella, purchased a truck for Adrian. Adrian purchased an insurance policy on
the truck from State Farm.
On September 6, 2008, Adrian went to meet friends on Beale Street in Memphis, TN.
Upon arrival, he parked his truck and set off on foot to join his friends. When he returned to
where he had parked his truck, he found broken glass in its stead. Adrian immediately reported
the theft to a Memphis police officer, who filed a report. Two days later, Adrian notified State
Farm that his truck had been stolen.
On September 23, Adrian gave an oral statement to State Farm. Dissatisfied with State
Farm’s progress in addressing his claim, Adrian requested status updates. In response, State
Farm told him the claim was still under investigation.

On October 31, State Farm’s attorney requested Adrian give an Examination Under Oath
on November 4. During the examination, State Farm’s attorney questioned Adrian regarding his
income and tax filings, his friends’ drug usage, he and his friends’ alcohol consumption on the
night of the theft, and his acquaintance on that night with a woman other than his wife.
On March 16, 2009, State Farm denied Adrian’s claim. State Farm did not offer its
factual bases for the denial, instead citing two policy provisions for its decision:
THERE IS NO COVERAGE FOR:
1.
Any covered vehicle that is:
a. Intentionally damaged; or
b. stolen;
c. By or at the direction of an insured.
GENERAL TERMS
...
11. CONCEALMENT OR FRAUD
There is no coverage under this policy if you or any other person insured
under this policy has made false statements with the intent to conceal or
misrepresent any material fact or circumstance in connection with any claim under
this policy.
(Docket # 47, Ex. 7). When the plaintiffs’ attorney requested that State Farm provide facts to
support denying Adrian’s claim, State Farm responded by referring him to the March letter.
Plaintiffs now allege State Farm committed the tort of bad faith by 1) questioning Adrian
about matters irrelevant to his theft claim, 2) failing to investigate Adrian’s claim, 3) falsely
accusing the plaintiffs of participating in stealing the truck, 4) falsely accusing the plaintiffs of
concealing or and misrepresenting material facts surrounding the theft, 5) refusing to provide
plaintiffs with the basis for its accusations, and 6) not investigating the claim in good faith.
SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate when there is no genuine issue of material fact and the
dispute may be decided solely on legal grounds. Seymour v. City of Des Moines, 519 F.3d 790,

796 (8th Cir.2008); Fed.R.Civ.P. 56. The initial inquiry is whether there are genuine factual
issues that can be properly resolved only by a finder of fact because they may reasonably be
resolved in favor of either party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 106 S.Ct.
2505, 91 L.Ed.2d 202 (1986). Where a motion for summary judgment is properly made and
supported, an opposing party must set forth specific facts showing a genuine issue for trial. See
Fed.R.Civ.P. 56(e)(2).
DISCUSSION
Arkansas recognizes the tort of bad faith. Aetna Casualty & Surety Co. v. Broadway
Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1984). To prove bad faith, the insured must
demonstrate “affirmative misconduct by the insurance company, without a good faith defense,”
and the misconduct “must be dishonest, malicious, or oppressive in an attempt to avoid its
liability under the insurance policy.” Id., 664 S.W.2d at 465. Moreover, the insurer’s affirmative
misconduct must be carried out with a state of mind characterized by “hatred, ill will, or a spirit
of revenge.” State Auto Prop. & Cas. Ins. Co. v. Swaim, 338 Ark. 49, 56, 991 S.W.2d 555, 559
(1999). This standard is rigorous and difficult to satisfy. Delta Rice Mill, Inc. v. General Foods
Corp., 763 F.2d 1001 (8th Cir. 1985). Mere denial of a claim will not sustain an action for bad
faith. Swaim, 338 Ark. At 56, 991 S.W.2d at 559.
The plaintiffs have not shown that State Farm engaged in affirmative misconduct that
amounts to bad faith. The Swaim court listed misconduct that does:
Examples of cases where we have found substantial evidence of bad faith include
where an insurance agent lied by stating there was no insurance coverage;
aggressive, abusive, and coercive conduct by a claims representative, which
included conversion of the insured's wrecked car; and where a carrier intentionally
altered insurance records to avoid a bad risk.
338 Ark. at 58, 991 S.W.2d at 561.

Here, State Farm thoroughly investigated the plaintiffs’ claim. The plaintiffs disagree
with State Farm’s handling of the claim and, ultimately, its decision to deny the claim.
But none of their allegations demonstrate affirmative misconduct of the sort Arkansas
deems bad faith. And plaintiffs provide no evidence that “hatred, ill will, or a spirit of
revenge” characterized State Farm’s conduct. See Swaim, supra. A reasonable jury
could not find otherwise.
CONCLUSION
State Farm’s motion for partial summary judgment (Docket # 36) is granted.
IT IS SO ORDERED this 25th day of September, 2012.

___________________________________
James M. Moody
United States District Judge