Date: 01-17-2002

Case Style: Columbia National Insurance Company v. Gary Freeman and Peggy Freeman

Case Number: 01-614

Judge: Ray Thornton

Court: Supreme Court of Arkansas

Plaintiff's Attorney: John M. Belew and Harvey Bell of Belew & Bell, Batesville, Arkansas and Scott Ellington, Jonesboro, Arkansas

Defendant's Attorney: Robert J. Donovan, Marianna, Arkansas

Description: On October 27, 1997, a fire caused major damage to Circle F Trading Company, a western wear and general store, owned and operated by appellees, Gary and Peggy Freeman. The Freemans were insured against losses to the building, its contents, continuing business expenses, and other coverage, by appellant, Columbia National Insurance Company. Appellant responded promptly to the notice of the fire and concluded that the inventory was destroyed.

Before it would pay for appellees' continuing business expenses, appellant requested that appellees provide it with an itemization of those business expenses. Appellees provided an itemized list of expenses, but it is disputed whether the actual bills and invoices were submitted to appellant. No payment for business expenses, including the mortgage payment, was ever made by appellant.

Appellant sought to locate a mobile building to serve as a temporary office for Circle F's continuing operations, but no such building was provided. Because the first inventory of the merchandise was based upon the retail value of the merchandise and amounted to $107,905.13, appellant obtained a second appraisal of the inventory of $71,231.69.

On May 14, 1998, appellees filed a complaint in the Circuit Court of Cleburne County. The complaint alleged three causes of action: (1) breach of contract; (2) the tort of bad faith; and (3) tortious interference with contract/business expectancy. At trial, the court determined that there was sufficient evidence of bad faith to submit that issue to the jury. The case was submitted to the jury on two interrogatories. The issue before the jury was whether appellant had acted in bad faith in its dealings with appellees. The jury returned a verdict for appellees and awarded $170,000 in compensatory damages and$200,000 in punitive damages.

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Click the case caption above for the full text of the Court's opinion.

Outcome: Appellant brings this appeal, raising seven points for our consideration. We find no error and affirm the trial court on all points.

Plaintiff's Experts: Bill Green, an insurance adjuster.

Defendant's Experts: Unknown

Comments: C.L.