Southern Farm Bureau Cas. Ins. Co. v. Allen

SOUTHERN FARM BUREAU CASUALTY INSURANCE
COMPANY v. Elisha ALLEN

96-122                                             ___ S.W.2d ___

                    Supreme Court of Arkansas
               Opinion delivered December 23, 1996


1.   Torts -- bad faith -- components of tort. -- The components of
     the tort of bad faith are affirmative misconduct by an
     insurer, without a good-faith defense, which is dishonest,
     malicious, or oppressive in an attempt to avoid liability
     under a policy; a claim for bad faith cannot be based upon
     good-faith denial, offers to compromise a claim or for other
     honest errors of judgment by the insurer; neither can this
     type claim be based upon negligence or bad judgment so long as
     the insurer is acting in good faith; in an action of this type
     for tort, actual malice is that state of mind under which a
     person's conduct is characterized by hatred, ill will, or a
     spirit of revenge; actual malice may be inferred from conduct
     and surrounding circumstances.
 
2.   Motions -- denial of directed verdict -- standard on review. -
     - The standard of review of the denial of a motion for
     directed verdict is whether the jury's verdict is supported by
     substantial evidence, which is evidence that goes beyond
     suspicion or conjecture and is sufficient to compel a
     conclusion one way or the other; it is not the appellate
     court's province to try issues of fact; it simply reviews the
     record for substantial evidence to support the jury's verdict;
     in determining whether there is substantial evidence, the
     court views the evidence in the light most favorable to the
     party against whom the verdict is sought and gives the
     evidence its strongest probative force.  

3.   Jury -- duty to resolve conflicts in testimony and determine
     witness credibility belongs to jury. -- Any conflicts in the
     testimony were for the jury to resolve; likewise, the jury
     also had a duty to determine the credibility of the two
     witnesses and the remainder of the evidence. 

4.   Torts -- two instances where jury question as to bad faith
     were raised -- trial court did not err in denying appellant's
     directed verdict motion. -- Viewing the conflicting testimony
     in the light most favorable to appellee, there was evidence
     from which a jury could have concluded that the agent lied
     about coverage available under appellee's policy and that
     appellant actively concealed this coverage from appellee; on
     appeal, the court simply determines if there is substantial
     evidence to support the jury's verdict; here, there were two
     instances of alleged wrongdoing on appellant's part to create
     a jury question as to appellant's bad faith; accordingly, the
     trial court did not err in submitting this issue to the jury
     and denying appellant's motion for a directed verdict.


5.   Appeal & error -- failure to obtain ruling on motion
     constitutes waiver on appeal. --  It was appellant's burden to
     obtain a ruling on his motion, and the absence of the ruling
     constituted a waiver of the issue on appeal.

6.   Appeal & error -- abstract did not show that complaint alleged
     cause of action for tort of outrage -- failure to obtain
     ruling on motion at trial constituted waiver of issue on
     appeal. -- Where the abstract did not reveal that the
     complaint alleged a cause of action for the tort of outrage,
     but did state that, at the close of appellee's case as
     plaintiff, in addition to moving for a directed verdict on the
     claim for bad faith, appellant also moved for a directed
     verdict on a claim for intentional infliction of emotional
     distress based on a lack of substantial evidence that appellee
     suffered severe emotional distress that a reasonable person
     could not be expected to endure; however, the abstract did 
     not reveal that the trial court ever ruled on this particular
     motion, the issue was waived on appeal; appellant's renewal at
     the close of all the evidence of his previous motion for
     directed verdict had no effect on preserving the issue for
     appellate review.


     Appeal from Desha Circuit Court, McGee District; Sam Pope,
Judge; affirmed.
     Laser, Wilson, Bufford & Watts, P.A., by: Sam Laser and Brian
Allen Brown, for appellant.
     Gibson Law Office, by:  C.S. "Chuck" Gibson, II, for appellee.

     Donald L. Corbin, Justice.
     Appellant, Southern Farm Bureau Casualty Insurance Company,
appeals the judgment of the Desha County Circuit Court awarding its
insured, Appellee Elisha Allen, $10,000.00 in compensatory damages
pursuant to directed verdicts and $75,000.00 in punitive damages
pursuant to a jury verdict.  Appellant also appeals from a
subsequent order awarding prejudgment and postjudgment interest,
costs, penalty, and attorney's fees.  For reversal, Appellant
argues the trial court erred in submitting to the jury the tort
claims of first-party bad faith and outrage.  This appeal involves
questions about the law of torts, and our jurisdiction is pursuant
to Ark. Sup. Ct. R. 1-2(a)(15).  We find no merit to Appellant's
arguments and affirm.
                  Facts and Procedural History
     The complaint alleges the following facts.  Appellee is
Appellant's insured.  Appellee's son, Anthony Dewayne Allen, was
living with Appellee when he was killed in a motor vehicle accident
on February 29, 1992.  Appellee's son, Eddie Allen, visited
Appellant's local office and informed the agent that the family had
incurred funeral expenses for Anthony Allen's funeral and that
Anthony Allen was living at Appellee's home.  The local agent, Joe
Herron, then informed Eddie Allen that there was no coverage for
Anthony Allen.  In May 1993, Appellant determined there was
coverage available for Anthony Allen and paid Leroy Hill, the
driver of the other vehicle involved in the accident on
February 29, 1992, $26,000.00 for personal and property damages.  
     Based on the aforementioned facts, the complaint alleges two
causes of action -- breach of contract and the tort of first-party
bad faith.  As to the claim for breach of contract, the complaint
states that Appellee's policy included coverage for Anthony Allen's
funeral expenses under "COVERAGE C. MEDICAL PAYMENTS" and that
Appellant breached its obligation pursuant to Ark. Code Ann.  23-
89-202 (Repl. 1992) to provide no-fault death-indemnity benefits. 
As to the tort claim for first-party bad faith, the complaint
alleges among other things, that Appellant's acts of bad faith
included failure to pay the funeral expenses under the medical-
payments coverage and failure to pay benefits to Appellee after
acknowledging coverage and paying benefits to Leroy Hill.
     The case was tried to a Desha County jury.  At the close of
Appellee's case as plaintiff and with agreement from Appellant, 
the trial court directed a $5,000.00 verdict for Appellee on the
medical-payments coverage.  Citing section 23-89-202, and Ark. Code
Ann.  23-89-203 (Repl. 1992), and American Nat'l Property &
Casualty Co. v. Ellis, 315 Ark. 524, 868 S.W.2d 469 (1994), and
over Appellant's protest, the trial court also directed a $5,000.00
verdict for Appellee on the death-benefits coverage on the basis
that Elisha Allen's rejection of that coverage in 1980 was no
longer effective because he had purchased and insured vehicles
since the 1980 rejection without signing subsequent rejections.
Appellant does not challenge the direction of these verdicts on
this appeal.
     The trial court denied Appellant's motion for directed verdict
on the tort of bad faith and instructed the jury that the issues of
medical-payments coverage and death-benefits coverage had already
been decided, thus the only issue that would be presented to them
was the issue of punitive damages.  The jury returned a general
verdict for Appellee and fixed punitive damages of $75,000.00.  The
trial court entered an order consistent with the directed verdicts
of $10,000.00 in compensatory damages and the jury verdict of
$75,000.00 in punitive damages.  This appeal followed.
                       Claim for Bad Faith
     At the close of Appellee's case as plaintiff, Appellant moved
for a directed verdict on Appellee's tort claim for bad faith on
the basis that Appellee had not presented any evidence of
affirmative wrongful acts by Appellant.  Appellant admitted
breaching its contract with Appellee, but contended the breach was
from oversight rather than from hatred, ill will, or dishonesty.
The trial court ruled that Herron's testimony presented a jury
question as to bad faith and denied Appellant's motion.  
     Appellant then presented its case, which consisted of a single
witness, Appellant's employee Steve Murray, and three exhibits: 
(1) no-fault endorsements for medical benefits, accidental-death
benefits, and income-disability benefits; (2) Appellee's
application for insurance dated January 4, 1980, where he rejected
uninsured-motorist coverage and no-fault coverage; and (3)
Appellee's 1980 declaration sheet.  Murray testified that he and
Scott St. John, a claims representative for Appellant, determined
that Anthony Allen was a resident of Appellee's household and
therefore coverage existed.  Murray stated that based on that
determination, Appellant paid $27,500.00 to Hill and Hill's
passenger.  Appellant then rested and "renew[ed] its motion for a
directed verdict for the reasons stated before."  Again, the court
denied the motion, ruling there were issues to be decided by the
jury.  
     As its first point for reversal of this ruling, Appellant
contends there was no evidence from which a reasonable person could
conclude Appellant committed the tort of bad faith, therefore the
trial court erred in submitting this issue to the jury. 
Specifically, Appellant contends there is no substantial evidence
of affirmative acts to support a claim of bad faith.  Rather, in
Appellant's view, there is only evidence that Appellant failed to
recognize that Appellee had medical-payments coverage.  In essence,
Appellant contends its actions were negligent but not malicious and
relies heavily on our prior decisions that negligence, gross
ignorance, or a complete failure to investigate a claim are not
sufficient to establish a claim for the tort of bad faith.  First
Marine Ins. Co. v. Booth, 317 Ark. 91, 876 S.W.2d 255 (1994);
Reynolds v. Shelter Mut. Ins. Co., 313 Ark. 145, 852 S.W.2d 799
(1993).
     We recently summarized our law on the tort of bad faith:
     The components of the tort of bad faith are affirmative
     misconduct by an insurer, without a good-faith defense,
     which is dishonest, malicious, or oppressive in an
     attempt to avoid liability under a policy.  Aetna
     Casualty and Surety Co. v. Broadway Arms Corp., 281 Ark.
     128, 664 S.W.2d 463 (1983).
R.J. Jones Excavating Contractor, Inc.. v. Firemen's Ins. Co., 324
Ark. 282, 289, 920 S.W.2d 483, 487 (1996).  This court has also
said that a claim for bad faith
     cannot be based upon good faith denial, offers to
     compromise a claim or for other honest errors of judgment
     by the insurer.  Neither can this type claim be based
     upon negligence or bad judgment so long as the insurer is
     acting in good faith. . . .[I]n an action of this type
     for tort, actual malice is that state of mind under which
     a person's conduct is characterized by hatred, ill will
     or a spirit of revenge.  Actual malice may be inferred
     from conduct and surrounding circumstances.
 
American Health Care Providers, Inc. v. O'Brien, 318 Ark. 438, 441-
42, 886 S.W.2d 588, 590 (1994) (quoting Aetna Casualty & Surety Co.
v. Broadway Arms Corp., 281 Ark. 128, 664 S.W.2d 463 (1983)).
     Our standard of review of the denial of a motion for directed
verdict is whether the jury's verdict is supported by substantial
evidence, which is evidence that goes beyond suspicion or
conjecture and is sufficient to compel a conclusion one way or the
other.  Barnes, Quinn, Flake & Anderson, Inc. v. Rankins 312 Ark.
240, 848 S.W.2d 924 (1993).  It is not our province to try issues
of fact, we simply review the record for substantial evidence to
support the jury's verdict.  John Cheeseman Trucking, Inc. v.
Dougan, 313 Ark. 229, 853 S.W.2d 278 (1993).  In determining
whether there is substantial evidence, we view the evidence in the
light most favorable to the party against whom the verdict is
sought and give the evidence its strongest probative force. 
Integon Indem. Corp. v. Bull, 311 Ark. 61, 842 S.W.2d 1 (1992).
     After reviewing the evidence in this case, we find two
instances of alleged wrongdoing on Appellant's part sufficient to
create a jury question as to Appellant's bad faith.  Those
instances are the two conversations that occurred between Eddie
Allen and Herron in Herron's office shortly after the fatal
accident and then about one year later.
     The central issue of the first conversation was Anthony
Allen's residence.  It is undisputed that, as a resident of
Appellee's household, Anthony Allen would be an omnibus insured
under Appellee's policy.  Eddie Allen testified that he and Herron
discussed that Anthony Allen's insurance policy had lapsed.  He
stated the two of them then began discussing coverage under
Appellee's policy.  Eddie Allen testified that Herron asked him
where Anthony Allen lived at the time of the accident and that he
told Herron Anthony Allen had been living with their father.  Eddie
Allen testified further that Herron informed him there was no
coverage for Anthony Allen under Appellee's policy.  
     Appellant relies on Herron's testimony as to this
conversation.  Herron stated that he never asked Eddie Allen any
questions about coverage for Anthony.  According to Herron's
testimony, he recalled that Eddie Allen inquired about coverage for
Anthony Allen and that he only checked for coverage under Anthony
Allen's policy.  Herron admitted knowing that people commonly
insure their children on their policies, but expressly denied
checking to see if Anthony Allen was covered under Appellee's
policy.   
     The central issue of the second conversation between Herron
and Eddie Allen, which occurred about one year after the first
conversation, was the dispute between the parties to this lawsuit. 
Eddie Allen testified that Herron asked him if St. John had been
out to talk to his father or had offered his father a settlement
and if St. John and his father had been able to reach any kind of
agreement.  Eddie Allen stated that he told Herron he did not think
they had reached an agreement and that Herron responded that the
matter would probably end up in court.  At trial, Herron denied
ever asking Eddie Allen whether St. John and his father had talked
or reached an agreement.
     Viewing this conflicting testimony in the light most favorable
to Appellee as we are required to do, it is evidence from which a
jury could have concluded that Herron lied about coverage available
under Appellee's policy and that Appellant actively concealed this
coverage from Appellee.  Any conflicts in the testimony were for
the jury to resolve.  Medlock v. Burden, 321 Ark. 269, 900 S.W.2d 552 (1995).  Likewise, it was for the jury to determine the
credibility of these two witnesses and the remainder of the
evidence.  Id.  On appeal, we simply determine if there is
substantial evidence to support the jury's verdict.  We conclude
that Eddie Allen's testimony that Herron asked about Anthony
Allen's residence, said he would check Appellee's policy for
coverage, and then told him there was no coverage provides
substantial evidence of an affirmative act made in a dishonest
attempt to avoid liability under a policy.  We also conclude that
Appellant's dishonesty and active concealment of available coverage
are substantiated further by Eddie Allen's testimony as to the
second conversation between Herron and him.  Accordingly, we cannot
say the trial court erred in submitting this issue to the jury and
denying Appellant's motion for a directed verdict.
                        Claim for Outrage
     Appellant's second point on appeal is that the trial court
erred in submitting the issue of the tort of outrage to the jury
based on insufficient evidence.  We are procedurally barred from
reaching the merits of this argument.
     Our review on appeal is limited to the record as abstracted in
the briefs.  Lakeview Country Club, Inc. v. Superior Prods., 325
Ark. 218, 926 S.W.2d 428 (1996).  Here, the abstract does not
reveal that the complaint alleged a cause of action for the tort of
outrage.  The abstract does state that, at the close of Appellee's
case as plaintiff, in addition to moving for a directed verdict on
the claim for bad faith Appellant also moved for a directed verdict
on a claim for intentional infliction of emotional distress based
on a lack of substantial evidence that Elisha Allen suffered severe
emotional distress that a reasonable person could not be expected
to endure.  However, the abstract does not reveal that the trial
court ever ruled on this particular motion.  It was Appellant's
burden to obtain a ruling on the motion, and the absence of the
ruling constitutes a waiver of this issue on appeal.  Haase v.
Starnes, 323 Ark. 263, 915 S.W.2d 675 (1996).  Given the absence of 
a ruling at this stage, Appellant's renewal at the close of all the
evidence of his previous motion for directed verdict has no effect
on preserving this issue for appellate review.
     Appellant waived this issue further because, although the
abstract reveals that the jury was instructed on the definition of
extreme and outrageous conduct, there is no indication in the
abstract that Appellant objected to such an instruction.  The
absence of an objection to the outrage instruction distinguishes
this case from Dillard Dep't Stores, Inc. v. Adams, 315 Ark. 303,
867 S.W.2d 442 (1993), where we stated that when a erroneous
instruction has been given and a jury has rendered a general
verdict from which prejudice due to the error cannot be
ascertained, we must reverse unless some additional factor renders
the erroneous instruction harmless.
     On this record, we find no merit to Appellant's arguments. 
The judgment is affirmed.
     Special Justices Noyl Houston and Eldon F. Coffman, join in
this opinion.
     Jesson, C.J., and Glaze, J., not participating.