United States Court of Appeals
FOR THE EIGHTH CIRCUIT
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No. 98-2132
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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Foremost County Mutual Insurance; * [UNPUBLISHED]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. *
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Submitted: April 21, 1999
Filed: May 14, 1999
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Before BEAM and HANSEN, Circuit Judges, and KOPF,1 District Judge.
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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
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