Hambelton v. Canal Insurance Company ( 2010 )

FILED
United States Court of Appeals
Tenth Circuit
December 16, 2010
UNITED STATES COURT OF APPEALS
Elisabeth A. Shumaker
Clerk of Court
FOR THE TENTH CIRCUIT
DOUG HAMBELTON,
Plaintiff–Appellee,
v. No. 10-6069
(D.C. No. 5:09-CV-00208-F)
CANAL INSURANCE COMPANY, (W.D. Okla.)
Defendant–Appellant.
ORDER AND JUDGMENT *
Before LUCERO, EBEL, and O’BRIEN, Circuit Judges.
Doug Hambelton hit a deer with his tractor-trailer truck and his
transmission failed about two weeks later. Canal, his insurer, refused to pay for
the transmission repair, contending it was a mechanical failure. Hambelton sued
Canal for breach of contract and bad faith. A jury found and awarded in favor of
Hambelton on both claims, awarding actual damages, punitive damages, and
*
After examining the briefs and appellate record, this panel has determined
unanimously that oral argument would not materially assist the determination of
this appeal. See Fed. R. App. P. 34(a)(2); 10th Cir. R. 34.1(G). The case is
therefore ordered submitted without oral argument. This order and judgment is
not binding precedent, except under the doctrines of law of the case, res judicata,
and collateral estoppel. It may be cited, however, for its persuasive value
consistent with Fed. R. App. P. 32.1 and 10th Cir. R. 32.1.
attorneys’ fees. 1 After judgment was entered on the verdict, this appeal was
commenced. We affirm.
I
On inspection following the accident, Hambelton noticed body damage to
his truck, but did not file an insurance claim. About two weeks later, however,
his transmission failed. According to a mechanic, the failure was caused by the
same deer strike. Hambelton filed a claim with Canal, which allowed the
body-damage claim but denied the transmission repair claim concluding it was
“likely . . . a result of mechanical failure.”
Hambelton sued Canal, and a jury awarded $5,366.98 on his breach of
contract claim, $117,555.00 on his bad-faith claim, $75,000.00 in punitive
damages, and $72,982.50 in attorneys’ fees.
II
On appeal, Canal argues: (1) the district court should have applied
Missouri bad-faith law; (2) the verdict was based on insufficient evidence; and (3)
the bad faith and punitive damage awards were unconstitutionally excessive.
A
The district court analyzed Hambelton’s claim under Oklahoma law.
1
Canal separately appealed the attorneys’ fees award.
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Canal argues the court should have applied Missouri law, which does not
recognize a first-party bad-faith tort claim, see Catron v. Columbia Mutual
Insurance Co., 723 S.W.2d 5, 6 (Mo. 1987), and would have required Hambelton
to bring a so-called “vexatious refusal to pay” claim, which greatly limits
damages awards, see Mo. Rev. Stat. §§ 375.296, 375.420. 2
We review choice of law questions with undisputed facts de novo. U.S.
Aviation Underwriters, Inc. v. Pilatus Bus. Aircraft, Ltd., 582 F.3d 1131, 1143
(10th Cir. 2009). In diversity cases, the forum state’s choice of law rules govern.
Berry & Murphy, P.C. v. Carolina Cas. Ins. Co., 586 F.3d 803, 808 (10th Cir.
2009).
Oklahoma applies the law of the state having “the most significant
relationship to the occurrence and the parties” in tort disputes. 3 Hightower v.
Kan. City S. Ry. Co., 70 P.3d 835, 842 (Okla. 2003) (quotation omitted). To
determine which state’s relationship is most significant, Oklahoma courts
consider four “place” factors: (1) where the injury occurred; (2) where the
conduct causing the injury occurred; (3) each party’s domicile, residence,
nationality, place of incorporation and place of business; and (4) where the
2
Hambelton’s maximum award beyond actual damages under Missouri law
would have been $686.90, instead of the $117,555.00 the jury awarded him under
Oklahoma bad faith law.
3
Canal does not contest the district court’s application of Oklahoma contract
law.
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relationship, if any, between the parties occurred. Brickner v. Gooden, 525 P.2d
632, 637 (Okla. 1974). Courts may also consider the relevant policies and
interests each conflicting state law seeks to vindicate. See Beard v. Viene,
826 P.2d 990, 995 n.18 (Okla. 1992) (quotations omitted).
As the district court noted, Oklahoma, South Carolina, and Missouri each
have a relationship to this case. Hambelton purchased his policy in Oklahoma
from an Oklahoma insurance agent while working for an Oklahoma company, and
reported the loss to his Oklahoma agent. Canal is headquartered in South
Carolina, Hambelton’s premium payments were received in South Carolina, and it
was there that Canal decided to deny the claim. Hambelton lives in Missouri, the
accident was in Missouri, and the claim was investigated in Missouri.
On these facts, the district court concluded that the Brickner factors were
“fairly evenly divided” among the three states. But policy considerations broke
the tie. Missouri’s prohibition on bad faith claims against insurers protects
Missouri insurers. Yet Canal is not a Missouri insurer. South Carolina allows
bad faith claims in order to protect the rights of South Carolina insureds. But
Hambelton is not a South Carolina insured. Oklahoma, however, seeks to prohibit
the wrongful refusal to pay claims made under Oklahoma insurance policies by
allowing punitive damages to deter such conduct. Because the contractual
relationship, which gave rise to the duty of good faith Oklahoma law seeks to
protect, came into existence in Oklahoma, the district court correctly held that
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applying Oklahoma law protects Oklahoma’s policy interest without violating the
policy of Missouri or South Carolina.
On appeal, Canal relies primarily on a Tenth Circuit decision for the
proposition that “in jurisdictions following the ‘most significant relationship’ test,
the law of the state in which the insured property, object or other risk is located
normally governs issues concerning the validity or effect of the insurance
contract.” See Mitchell v. State Farm Fire & Cas. Co., 902 F.2d 790, 793 (10th
Cir. 1990). Canal’s argument might be compelling were Mitchell a tort case
rather than a contract case. But Canal only appeals the district court’s choice of
law determination regarding bad faith, a tort. Unlike Canal, the district court
correctly identified the relevant Oklahoma tort conflict of laws analysis,
considered this case’s facts in light of that law, and thoroughly explained its
conclusion that Oklahoma law should apply to Hambelton’s bad-faith tort claim.
There was no error.
B
Canal also challenges the sufficiency of the evidence underlying the jury
verdict. This argument is waived. At trial, after Hambelton’s case-in-chief,
Canal moved for judgment as a matter of law under Fed. R. Civ. P. 50(a). But
Canal did not renew the motion by filing a Fed. R. Civ. P. 50(b) motion after the
jury verdict. A party’s “failure to comply with Rule 50(b) forecloses its
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challenge to the sufficiency of the evidence” under Rule 50(a). Unitherm Food
Sys., Inc. v. Swift-Eckrich, Inc., 546 U.S. 394, 404 (2006).
The cases Canal cites for a more liberal interpretation of Rule 50 all
pre-date the Supreme Court’s Unitherm decision. Moreover, Canal is simply
wrong in suggesting that this court may remand for a new trial even if it cannot
reverse the trial court’s judgment. See Unitherm, 546 U.S. at 402. The issue of
sufficiency of the evidence is not properly before us.
C
Canal argues the bad-faith and punitive damage awards are so excessive as
to be unconstitutional. This contention is also waived. Regarding this issue,
Canal neither moved for a new trial after the jury verdict nor filed a post-trial
motion to set aside the verdict. It cannot do so for the first time on appeal. See
Hardeman v. City of Albuquerque, 377 F.3d 1106, 1122 (10th Cir. 2004).
III
AFFIRMED.
Entered for the Court
Carlos F. Lucero
Circuit Judge
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