Foster v. Allstate Insurance , 239 F. App'x 52 ( 2007 )

United States Court of Appeals
Fifth Circuit
IN THE UNITED STATES COURT OF APPEALS
FILED
FOR THE FIFTH CIRCUIT June 25, 2007
_____________________
No. 06-50398 Charles R. Fulbruge III
_____________________ Clerk
BOB FOSTER; CAROL FOSTER,
Plaintiffs-Appellants
v.
ALLSTATE INSURANCE COMPANY,
Defendant-Appellee
----------------------
Appeals from the United States District Court
for the Western District of Texas
(1:03-CV-767)
----------------------
Before HIGGINBOTHAM, DAVIS, and WIENER, Circuit Judges.
PER CURIAM*:
At the conclusion of the parties’ insurance-coverage trial,
the jury returned a verdict finding that Defendant-Appellant
Allstate Insurance Company (“Allstate”) had committed a breach of
contract under its Homeowners’ Policy (“the Policy”) insuring
Plaintiffs-Appellants Bob and Carol Foster (collectively, “the
Fosters”). The jury nevertheless found that this breach caused
the Fosters to suffer no damages.
Asserting irreconcilable inconsistencies in the jury’s
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
verdict, the Fosters filed motions seeking a post-trial judgment
as a matter of law and for a new trial. The district court
denied both these motions, concluding that (1) there was a
legally sufficient basis for the jury’s verdict, (2) the verdict
was not against the great weight of the evidence, and (3)
allowing the verdict to stand would not result in a miscarriage
of justice. We affirm.
I. FACTS AND PROCEEDINGS
After the Fosters discovered mold infestation in their home
in December 2001, they made a claim under the Policy. Allstate
determined that the mold was caused by a covered peril and began
adjusting the claim.
Mold Restoration, Inc. (“MRI”) was hired to perform the mold
remediation process on the Fosters’ home. As part of the
process, the Fosters’ personal property had to be removed from
the home. It ended up in three different locations: (1) the
Fosters’ temporary residence; (2) a storage unit at Lakeline
Storage; and (3) a storage unit at Public Storage.
While the remediation process was in progress, the Texas
Attorney General’s Office began investigating MRI for fraud. MRI
eventually went into receivership. As a result of its
predicament, MRI failed to pay rent at Public Storage. A
substantial portion of the Fosters’ personal property that was
2
being held there was sold at auction.
The remediation work in the Foster’s house was eventually
completed, but the Foster’s house remained in need of
considerable restoration work. Despite multiple estimates and
offers of payment between the parties, the Fosters and Allstate
were unable to agree on a cost for the restoration work, so it
was never completed.
In July 2003, the Fosters filed suit against Allstate in
Texas state court, which was subsequently removed to the district
court. In their complaint, the Fosters sought damages arising
from the uncompleted restoration work and the auction sale of
their personal property. They grounded their claims in (1)
breach of contract, (2) negligence, (3) violation of Article
21.21 of the Texas Insurance Code, (4) violation of Article 21.55
of the Texas Insurance Code, and (5) breach of the common law
duty of good faith and fair dealing. Only the breach of contract
claims concerning damage to the Fosters’ personal property are
relevant to this appeal.
The case proceeded to jury trial in April 2004, at the
conclusion of which the jury returned a special verdict. Among
other things, the jury found Allstate guilty of breach of
contract but also determined that the Fosters had suffered no
damages as a result of this breach.
3
Following the verdict, both parties made post-trial motions.
Allstate asked the district court to enter a take-nothing
judgment, and the Fosters sought a judgment as a matter of law,
asking that the district court disregard the jury’s “zero damage”
award for Allstate’s breach of contract and enter a judgment for
either $447,000.00 (the value of their lost personal property
including its sentimental value) or $191,400.00 (the value of
their lost personal property excluding its sentimental value).
Determining that there was a sufficient evidentiary basis for a
reasonable juror to award a $0.00 verdict, the district court
denied the Fosters’ motion and granted Allstate’s motion,
entering a take-nothing judgment.
After the district court rendered its judgment, the Fosters
filed a motion for new trial on the issue of their personal
property loss. The district court denied this motion, concluding
that (1) the verdict was not against the great weight of the
evidence and (2) allowing the verdict to stand would not result
in a miscarriage of justice. The Fosters timely filed a notice
of appeal.
II. LAW AND ANALYSIS
A. Standard of Review
On appeal, the Fosters challenge the district court’s denial
of their post-trial motions for judgment as a matter of law and
4
new trial, contending that the jury’s answers to special
interrogatories were conflicting and against the great weight of
the evidence. We review a district court’s denial of a motion
for judgment as a matter of law de novo, affording much
discretion to the jury’s verdict.1 Accordingly, judgment as a
matter of law will be granted only if the facts, and the
inferences to be drawn from them, are so strongly in favor of the
moving party that a reasonable juror could not reach a contrary
conclusion.2
Our standard of review for a denial of a motion for new
trial is more deferential than for a judgment as a matter of
law.3 We must affirm a district court’s denial of a new trial
motion unless the court abused its discretion.4
B. Merits
Special verdicts, such as that employed by the district
court here, are useful in clarifying a jury’s verdict and
focusing its attention on the disputed fact issues.5
1
Coffel v. Stryker Corp., 284 F.3d 625, 630 (5th Cir. 2002).
2
Id.3
DP Solutions, Inc. v. Rollins, Inc., 353 F.3d 421, 431 (5th
Cir. 2003).
4
Id.5
FDIC v. Munn, 804 F.2d 860, 866 (5th Cir. 1986).
5
Nevertheless, special verdicts simultaneously present the risk of
conflicting answers.6 When a jury’s answers present an apparent
conflict, it is our duty to reconcile the conflicts if at all
possible in an effort to uphold the jury’s verdict.7 Only when,
after a concerted effort, we cannot reconcile the answers, may we
grant a new trial.8
The question on appeal here is whether it is possible to
reconcile the jury’s findings that (1) Allstate breached its
contract and (2) the Fosters suffered no monetary damages from
that breach. We conclude that such reconciliation is legally
plausible.
The Fosters asserted three separate claims for breach of
contract. First, the Fosters claimed that Allstate’s refusal to
pay for the lost personal items breached the Policy (a failure-
to-indemnify claim). Second, the Fosters asserted that Allstate,
as an alleged bailee of the Fosters’ personal property, failed to
return such property, as required under either an express or
implied contract (i.e., that Allstate either hired or controlled
MRI and was thus liable under a bailment theory). Third, the
Fosters contended, as a separate breach of contract claim, that
6
Id.7
Id.8
Id.6
Allstate failed to accept or reject their personal property claim
in a timely manner, as Allstate was required to do under Texas
law.9 Tellingly, counsel for the Fosters argued at closing:
The next question you’re asked is, do you find
from a preponderance of the evidence that Allstate
Insurance Company failed to comply with the homeowners
policy provision to pay policy benefits as to Bob and
Carol Foster’s personal property? I’m sorry, I didn’t
put that up there well. A little typo in there, but
that’s the questions. Did they fail to comply with the
terms of the policy by not covering the personal
possessions? Did they breach the contract?
And the answer is yes, and there’s a number of
ways. The first way they breached the contract with us
on the personal possessions was, they made —— the
Fosters made the claim, and within 15 days, Allstate
did nothing. I think you’ll find that the evidence is,
the Fosters remembered it was about six weeks before
Allstate said no. I think you’re going to find the
evidence is, Allstate actually waited closer to almost
three months before they said no. But that’s the first
breach. (Emphasis ours).
Thus, the Fosters not only argued that Allstate breached the
Policy, viz., its contract with the Fosters, when it failed to
(1) pay for the lost personal property, and (2) return their
personal property as bailee, but (3) also charged Allstate with
breaching a contractual duty imposed by state law.
Under this last theory —— the first one mentioned by the
9
Under Texas law, an insurer generally has 15 days after
receipt of all required items and forms to give notice of its
acceptance or rejection of a claim. Tex. Ins. Code § 542.056. Our
review of the Policy fails to find a stipulated date by which
Allstate was required to accept or reject the Fosters’ claims.
7
Fosters’ counsel at closing argument —— the jury could well have
found that Allstate’s only breach of its contract was by failing
to act timely in accepting or rejecting the claim. At the same
time, the jury could have rejected the Fosters’ other two breach-
of-contract claims. It follows, then, that the jury could
plausibly have awarded the Fosters $0.00 in damages for the
breach of timeliness, classifying it as only a technical
violation of a state timing statute that produced no damage.
This is certainly one viable reading of the jury’s verdict.
Given the concerted reconciliation effort that we must make and
the substantial discretion we must afford a potentially
irreconcilable special verdict, we are bound to conclude that, as
there is a plausible explanation for the jury’s verdict here, it
was not irreconcilable and need not be reversed and remanded for
a new trial.
The Fosters also contend that the jury’s verdict was against
the weight of the evidence and thus the district court should
have ordered a new trial. After an independent review of the
record on appeal, however, we find more than sufficient evidence
supporting the jury’s verdict to conclude that the district court
did not abuse its discretion in denying the Fosters’ motion for a
new trial.
8
III. CONCLUSION
Based on the applicable law and our extensive review of the
parties’ briefs and the record on appeal, we hold that the jury’s
verdict was neither irreconcilable nor against the great weight
of the evidence. We therefore affirm the jury’s verdict and the
district court’s judgment based on it.
AFFIRMED.
9