James Gallion v. Phillip Cole and Nationwide Mutual Insurance Company

NOT DESIGNATED FOR PUBLICATION

ARKANSAS COURT OF APPEALS

MARGARET MEADS, JUDGE

DIVISION II

JAMES GALLION

APPELLANT

V.

PHILLIP COLE AND NATIONWIDE MUTUAL INSURANCE COMPANY

APPELLEES

CA00-297

November 8, 2000

APPEAL FROM THE CRAIGHEAD COUNTY CIRCUIT COURT

[NO. CIV-97-247]

HON. SAMUEL TURNER,

CIRCUIT JUDGE

AFFIRMED

Appellant, Jim Gallion, was injured in an automobile accident on June 6, 1995. After collecting the policy limits from the tortfeasor's insurance company, Gallion made a claim on his insurance, held by appellee Nationwide Mutual Insurance Company ("Nationwide"), for underinsured motorist benefits. Nationwide denied Gallion's claim based on the assertion that he had rejected underinsured motorist benefits. In support of this assertion, Nationwide produced a photocopied rejection of underinsured motorist benefits purportedly signed by Gallion. Gallion hired a handwriting expert, who opined that an original of Gallion's signature had been xeroxed onto the rejection document. After receiving this information, Gallion made demand on Nationwide to pay the underinsured limits, which Nationwide refused to do.

Gallion filed suit for the underinsured benefits and included claims for fraud and outrage against Nationwide and its agent, Phillip Cole. Nationwide filed its answer and then paid the underinsured policy limits into the registry of the court. A hearing was held to determine whether Nationwide was liable to Gallion for a penalty, interest, and attorney's fees; at the same time, the court heard Nationwide's motion to dismiss the fraud and outrage claims for failure to state a claim pursuant to Ark. R. Civ. P. Rule 12(b)(6). Gallion was awarded a penalty, interest, and attorney's fees on his claim against Nationwide for the underinsured benefits, and the trial judge dismissed the fraud and outrage claims against Nationwide and Phillip Cole pursuant to Rule 12(b)(6). Gallion then refiled his fraud and outrage claims, and Nationwide again filed a Rule 12(b)(6) motion to dismiss. The trial judge granted Nationwide's motion to dismiss with prejudice. Gallion now appeals, arguing that the trial court erred in dismissing his claims for fraud and outrage pursuant to Rule 12(b)(6). We affirm.

When a trial court decides a Rule 12(b)(6) motion, it must look only to the complaint. Brown v. Tucker, 330 Ark. 435, 954 S.W.2d 262 (1997). Arkansas is a fact-pleading state, and this court will look to the underlying facts supporting an alleged cause of action to determine whether the matter has been sufficiently pleaded; in order to state a cause of action, the complaint must allege facts and not mere conclusions. Country Corner Food & Drug, Inc. v. First State Bank, 332 Ark. 645, 966 S.W.2d 894 (1998). When reviewing a trial court's decision on a motion to dismiss, we treat the facts alleged in the complaint astrue and view them in the light most favorable to the plaintiff. Hames v. Cravens, 332 Ark. 437, 966 S.W.2d 244 (1998).

Fraud

Gallion first argues that he properly pleaded facts to establish fraud on the part of Nationwide and Phillip Cole. Actual fraud is established by proving the existence of the following five elements: (1) a false representation, usually of a material fact; (2) knowledge or belief by the defendant that the representation is false; (3) intent to induce reliance on the part of the plaintiff; (4) justifiable reliance by the plaintiff; and (5) resulting damage to the plaintiff. Country Corner Food & Drug, Inc., supra. In order to prevail on a Rule 12(b)(6) motion, Gallion must plead sufficient facts to support all five elements of fraud. The complaint must state more than mere conclusions and must clearly set forth the facts relied upon for the basis of fraud; it is not sufficient to summarily characterize actions as fraudulent. Hames, supra.

In his complaint, Gallion alleged that he requested a "full coverage" policy when he originally applied for insurance with Nationwide through Cole; however, the policy did not provide underinsured motorist benefits, although he was led by Cole to believe he had all coverages under his policy. Gallion alleged that he justifiably relied on Cole's representations to him that he had underinsured motorist benefits, only to discover after his June 1995 accident that he did not have this coverage. Nationwide refused to pay Gallion underinsured motorist benefits, asserting that he had rejected those benefits in writing, whichhe did not do. It was only after Gallion sued Nationwide for the underinsured benefits that Nationwide paid him the policy limits on the underinsured benefits, as well as a twelve percent penalty, interest, and an attorney's fee.

Assuming these facts are true, and considering them in the light most favorable to Gallion, his claim for fraud was properly dismissed. It is apparent from his complaint that Gallion has not suffered any actual damages, because Nationwide has paid the amount he was entitled to receive - the underinsured policy limits as well as a penalty, interest, and an attorney fee. Therefore, any damages sought by Gallion in his fraud action were punitive in nature. However, punitive damages are dependent upon the recovery of actual damages. Elliott v. Hurst, 307 Ark. 134, 817 S.W.2d 877 (1991). Because Gallion has already recovered the policy benefits and has not alleged any actual damages to which he is entitled, he cannot recover any punitive damages.

Outrage

Gallion also argues that he pleaded sufficient facts to establish the tort of outrage. To establish the tort of outrage, Gallion must prove the following elements: (1) the actor intended to inflict emotional distress or knew or should have known that emotional distress was the likely result of his conduct; (2) the conduct was extreme and outrageous, beyond all possible bounds of decency, and utterly intolerable in a civilized community; (3) the conduct was the cause of the plaintiff's distress; and (4) the plaintiff's emotional distress was so severe in nature that no reasonable person could be expected to endure it. Brown v. Tucker, supra; Hunt v. Riley, 322 Ark. 453, 909 S.W.2d 329 (1995); Perrodin v. Rooker, 322 Ark.117, 908 S.W.2d 85 (1995). Our supreme court gives a narrow view to the tort of outrage, and it has taken a strict approach in determining the validity of outrage cases. Crockett v. Essex, 341 Ark. 558, 19 S.W.3d 585 (2000).

In addition to the allegations discussed above, Gallion also alleged in his complaint that Cole's fraudulent act of attaching his signature to the rejection of underinsured motorist coverage was "outrageous and so extreme in character and degree as to go beyond all possible bounds of decency and is atrocious and utterly intolerable in a civilized society." Gallion further alleged that as a proximate result of Cole's conduct, he sustained severe emotional distress that no reasonable person could be expected to endure in that he had to borrow money to survive; had bills turned over to collection agencies; lost his credit rating; feared having to refuse medical treatment; lost sleep; and feared having to file bankruptcy.

Even after considering the statements contained in the pleading in the light most favorable to Gallion, his claim for outrage must fail because these facts simply do not rise to the level of outrage. Merely describing conduct as outrageous does not, in itself, make it so. Hunt, supra. Gallion pleaded no facts that showed Cole or Nationwide intended to inflict emotional distress upon him or should have known that their actions would likely cause emotional distress. See Perrodin, supra. Furthermore, there was no indication that Gallion's emotional distress, if any, was so severe in nature that no reasonable person could be expected to endure it.

For the reasons discussed above, the trial court was correct in dismissing Gallion's claims for fraud and outrage pursuant to Rule 12(b)(6) of the Arkansas Rules of Civil Procedure.

Affirmed.

Robbins, c.j. and Hart, JJ., agree.