S & W Agency v. Foremost Insurance ( 1999 )


Menu:
  •                     United States Court of Appeals
    FOR THE EIGHTH CIRCUIT
    ________________
    No. 98-2132
    ________________
    S & W Agency, doing business as        *
    Farm and City Insurance Services,      *
    Inc.; Gaylord Wooge,                   *
    *
    Appellees,                 *
    *      Appeal from the United States
    v.                               *      District Court for the
    *      Northern District of Iowa.
    Foremost Insurance Company;            *
    Foremost County Mutual Insurance;      *      [UNPUBLISHED]
    American Federation Insurance          *
    Company; Foremost Signature            *
    Insurance Company; George H.           *
    Shattuck,                              *
    *
    Appellants.                *
    *
    ____________________________           *
    *
    National Association of                *
    Independent Insurers,                  *
    *
    Amicus on Behalf           *
    of Appellant.              *
    ________________
    Submitted: April 21, 1999
    Filed: May 14, 1999
    ________________
    Before BEAM and HANSEN, Circuit Judges, and KOPF,1 District Judge.
    ________________
    PER CURIAM.
    Gaylord Wooge owns and operates Farm and City Insurance Services, an
    independent insurance agency located in Forest City, Iowa. Mr. Wooge conceived of
    a unique insurance endorsement that was particularly well-suited for recreational
    vehicle (RV) owners. Foremost Insurance Company (Foremost) provided the
    necessary underwriting for Wooge's product.         Over the years, Mr. Wooge's
    endorsement became known in the industry as the "Wooge endorsement," and it was
    very successful. The relationship between Mr. Wooge and Foremost was also unique
    in that Mr. Wooge conceived of and secured various agreements with RV
    manufacturers and RV manufacturers' associations that were necessary to make the
    Wooge endorsement viable and profitable. These efforts cost Mr. Wooge a
    considerable amount of time and money, and also earned him substantial commissions
    from Foremost.
    After several years of a peaceful working relationship between Mr. Wooge and
    Foremost, Foremost began secret plans to directly market a competing endorsement and
    to eliminate or severely reduce Mr. Wooge's earned and future commissions. During
    this time, whenever Mr. Wooge became suspicious, Foremost provided him with
    various reassurances. In June 1992, Foremost was finally in a position to capture Mr.
    Wooge's RV business and it terminated his agency. Upon terminating Mr. Wooge,
    Foremost attempted to thwart his efforts to transfer his book of business to another
    insurance underwriter, thus compounding the harm suffered by Mr. Wooge.
    1
    The Honorable Richard G. Kopf, United States District Judge for the
    District of Nebraska, sitting by designation.
    2
    Mr. Wooge then commenced the present diversity action alleging the following
    claims: (1) breach of contract; (2) tortious interference with a contract; (3) fraudulent
    misrepresentation; (4) fraudulent nondisclosure by a fiduciary; and (5) misappropriation
    of trade secrets. A jury returned a verdict in favor of Mr. Wooge on all claims, and
    awarded him $688,000 in compensatory damages and $8 million in punitive damages.
    On Foremost's posttrial motions, the district court2 upheld the jury's verdict as to
    liability and the amount of compensatory damages. The district court granted a new
    trial limited to the question of punitive damages. The parties waived their right to a
    jury trial on the punitive damages issue. After hearing evidence in the second trial, the
    district court concluded that Mr. Wooge had presented compelling evidence of
    fraudulent conduct on the part of Foremost, and it awarded Mr. Wooge $4 million in
    punitive damages.
    Having carefully reviewed the record and having considered the 31 separate
    issues Foremost argues on appeal, see Financial Holding Corp. v. Garnac Grain Co.,
    Inc., 
    965 F.2d 591
    , 596 (8th Cir. 1992), we agree with the district court's
    determinations as to liability and compensatory damages. We further agree with the
    district court's conclusion that the evidence of Foremost's fraudulent conduct warrants
    a substantial award of punitive damages in the amount of $4 million. We are not
    persuaded by Amicus's arguments that by affirming the district court's judgment in this
    case, we are upsetting settled legal expectations that exist between insurers and
    independent insurance agents. The relationship between Mr. Wooge and Foremost was
    atypical to say the least. Moreover, Foremost's conduct, we hope, was also
    atypical—nobody has a settled expectation to engage in, or to be engaged by,
    fraudulent conduct.
    2
    The Honorable John A. Jarvey, Chief United States Magistrate Judge for the
    Northern District of Iowa, to whom the case was assigned with the consent of the
    parties. See 28 U.S.C. § 636(c).
    3
    In sum, we believe that the district court thoroughly and correctly addressed the
    controlling issues involved in this case. Accordingly, we affirm the judgment of the
    district court. See 8th Cir. Rule 47B.
    A true copy.
    Attest:
    CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT
    4
    

Document Info

Docket Number: 98-2132

Filed Date: 5/14/1999

Precedential Status: Non-Precedential

Modified Date: 4/18/2021