Willis v. Shelter Mutual Insurance Company
ORDER granting Defendant's 12 Motion for Partial Summary Judgment; denying Plaintiff's 19 Motion to Amend. Simultaneous briefs on jurisdiction are due 11/30/2012. Signed by Judge D. P. Marshall Jr. on 11/15/2012. (mcz)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
PINE BLUFF DIVISION
ROBERT WILLIS, JR.
SHELTER MUTUAL INSURANCE COMPANY
Willis's house burned down, so he called his insurance company. The
next day, his Shelter claim-agent, Montgomery, started collecting information
-including a recorded statement from Willis - and processing the claim. A
few months later, Shelter sent Willis a check for $54,967.37. Though Willis's
house recently appraised at $84,000.00, the parties agree that the policy limit
was $62,200.00, with a $750.00 deductible. Willis says Shelter owes him the
full policy value. He also says that Shelter handled the claim in bad faith,
pointing to conduct he thinks was oppressive and malicious. Shelter moves
for summary judgment on the bad-faith claim. Document No. 12. Willis
moves to add a claim that Shelter tortiously interfered with his relationship
with his lawyer. Document No. 19.
Willis has a heavy burden to create a genuine issue of material fact that
Shelter acted in bad faith. Arkansas courts are clear about what type of
behavior constitutes bad faith: "dishonest, malicious, or oppressive conduct
in order to avoid a just obligation to its insured, carried out with a state of
mind characterized by hatred, ill will, or a spirit of revenge." Watkins v.
Southern Farm Bureau Casualty Ins. Co., 2009 Ark. App. 693, at 13, 2009 WL
3400697. There must be affirmative misconduct. Ibid. To illustrate, the
Arkansas Supreme Court found bad faith when an insurer affirmatively
altered insurance records to create the appearance that the holder's coverage
had lapsed. Employers Equitable Life Ins. Co. v. Williams, 282 Ark. 29 (1984).
Arkansas Courts are likewise clear about what conduct is not bad faith:
negligence, bad judgment, nightmarish red tape, hardball, and delaying
investigations for months. Even an insurer's failure to provide a reason for
the company's initial refusal of payment will not suffice. Farm Bureau Mut.
Ins. Co. of Arkansas, Inc. v. Guyer, 2011 Ark. App. 710, 2011 WL 5562735.
The facts, viewed in Willis's favor are these:
Montgomery called Willis and asked for a second recorded audio
statement without giving a reason;
Montgomery got between Willis and his lawyer by directing two
phone calls and the claim check to Willis and not his lawyer;
Shelter tried to settle the claim by mailing Willis a check for
Shelter failed to pay Willis the full value of the policy.
There is contradictory testimony about the audio recordings. Willis
initially said that Shelter told him the first tape "didn't come out clear."
Document No. 12-3 at 70. But even if Montgomery didn't give Willis a reason
for needing a second statement, as Willis now contends, Document No.16-1 at
2, the behavior was at most rude or inconsiderate, but hardly malicious. See,
e.g., Farm Bureau Mut. Ins. Co of Arkansas, Inc. v. Guyer, 2011 Ark. App. 710,
2011 WL 5562735.
Shelter never interfered with Willis's contractual relationship with his
lawyer. To do so, Shelter had to cause a breach or termination of the
relationship between Willis and his lawyer. Walt Bennett Ford, Inc v. Pulaski
County Special School District, 274 Ark. 208 (1981 ). The company didn't. Willis
never says otherwise. He does say he approached his lawyer days after
receiving the insurance check, and letting his attorney "[take] it from there."
Document No. 12-3, at 75. With no breach in the attorney-client relationship,
there can be no interference. For this reason, as well as the others listed in
Shelter's opposition to the proposed amendment asserting a tortious-3-
interference claim, Document No. 21, the new claim would be futile because it
fails as a matter of law. The motion to amend is therefore denied.
Nothing suggests that Shelter tried to settle the claim simply by mailing
a check. Montgomery ran the claim estimate by Willis and his lawyer a
month before sending Willis the check. Document No. 12-11. Outside of
asking where the number came from, nothing indicates Willis or his lawyer
objected to the amount. And Willis's concern that the proper procedures were
not followed, such as the lack of a recording, Document No. 16 at 8, only
worked to his benefit. He got the check sooner; and that helps undermine his
claim that Shelter was looking in bad faith for reasons to deny the claim. A
reasonable fact finder could not conclude from this record that Shelter
engaged in affirmative misconduct that was dishonest, oppressive, or
malicious. Willis's breach of contract claim survives; his bad-faith claim fails.
Motion for partial summary judgment, Document No. 12, granted. The
bad-faith claim is dismissed with prejudice. Motion to amend, Document No.
19, denied because a tortious-interference claim would be futile.
The Court is concerned about its subject matter jurisdiction in this
diversity case. If the Court has done its math correctly, the parties have a
$6482.63 coverage dispute. A reasonable attorney's fee is in prospect. Ark.
Code Ann. § 23-79-208(a)(1). Assuming the 12% penalty is too, that would
add $7,374.00 to the amount in controversy ($62,200.00-$750.00 = $61,450.00
x .12). How is it possible for this case to meet the $75,000.00 (less interest and
costs) threshold? 28 U.S.C. § 1332(a). Simultaneous briefs on jurisdiction due
30 November 2012.
D.P. Marshall Jr.
United States District Judge
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