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Hilborn v. Metropolitan Group Property and Casualty Insurance Co.

United States District Court, D. Idaho

June 3, 2014

ROBERT W. HILBORN AND JEAN ANNE S. HILBORN, Plaintiffs,
v.
METROPOLITAN GROUP PROPERTY AND CASUALTY INSURANCE CO., Defendant.

MEMORANDUM DECISION AND ORDER

B. LYNN WINMILL, Chief District Judge.

INTRODUCTION

The Court has before it the Hilborns' Motion to Add a Claim for Punitive Damages (Dkt. 57), Metropolitan's Motion for Reconsideration of Evidentiary Ruling (Dkt. 70), and the Hilborns' Motion To Strike and Exclude Defendant's Expert Witness William Hight (Dkt. 66). For the reasons expressed below, the Court will grant the Hilborns' Motion to Add a Claim for Punitive Damages, deny Metropolitan's Motion for Reconsideration of Evidentiary Ruling, and deny the Hilborns' Motion To Strike and Exclude Defendant's Expert Witness William Hight.

BACKGROUND

The Hilborns allege two counts in their Complaint. In Count I, they claim that Metropolitan denied part of their homeowners insurance in bad faith after their house burned down. In Count II, they claim that Metropolitan breached its contract with the Hilborns by denying their homeowners insurance claim. Earlier, the Court denied cross-motions for summary judgment.

The Hilborns now ask for permission to add a claim for punitive damages. They also ask the Court to exclude Metropolitan's expert from testifying at trial. Metropolitan asks the Court to reconsider its earlier decision regarding attorney/client privileged matters.

1. Motion to Add a Claim for Punitive Damages

Conduct justifying punitive damages requires "an intersection of two factors: a bad act and a bad state of mind." See Linscott v. Rainier Nat. Life. Ins. Co., 100 Idaho 854, 606 P.2d 958, 962 (1980). The defendant must (1) act in a manner that was an extreme deviation from reasonable standards of conduct with an understanding of-or disregard for-its likely consequences, and must (2) act with an extremely harmful state of mind, described variously as with malice, oppression, fraud, gross negligence, wantonness, deliberately, or willfully. See Myers v. Workmen's Auto Ins. Co., 140 Idaho 495, 95 P.3d 977, 983 (2004). For plaintiffs to be entitled to amend their complaint to add a claim for punitive damages, they need to show "a reasonable likelihood of proving facts at trial sufficient to support an award of punitive damages." See Idaho Code ยง 6-1604(2). This section is substantive in nature and therefore controlling in this federal diversity case. Windsor v. Guarantee Trust Life Ins. Co., 684 F.Supp. 630, (D. Idaho, 1988).

In addition to these general concerns, the courts in Idaho have laid out five specific factors that play a determinative role in deciding whether there is sufficient evidence to support a punitive damages award: (1) the presence of expert testimony; (2) whether the unreasonable conduct actually caused harm to the plaintiff; (3) whether there is a special relationship between the parties, as in the... insured-insurer relationship; (4) proof of a continuing course of oppressive conduct; and (5) proof of the actor's knowledge of the likely consequences of the conduct. Cuddy Mountain Concrete Inc. v. Citadel Const., Inc., 121 Idaho 220, 824 P.2d 151, 160-61 (Idaho Ct.App.1992). With these guidelines in mind, the Court concludes that plaintiff has established a reasonable likelihood of proving facts supporting a punitive damages award.

A. Expert Testimony

The Hilborns suggest they will present expert testimony. They have hired an insurance and SIU[1] expert, Elliott Flood, to review Metropolitan's conduct in this case and render an opinion. Mr. Flood is an insurance expert (and attorney) who has overseen many insurance investigations, including SIU claims handling. Pl. 's Br. at 13, Dkt. 57-1. The Hilborns intend to use Mr. Flood's testimony to demonstrate that Metropolitian's conduct fell below industry standards. Id.

B. Actual Harm

The Hilborns argue that "[i]n addition to the financial loss and hardship imposed on them by the loss of their home and all its contents, MET has exacerbated the impact by dragging the Hilborns through protracted and unnecessary litigation." Pl. 's Br. at 15, Dkt. 57-1. Additionally, the Hilborns argue that the "record in this case is replete with evidence of the harm ...


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