Sylvia F. Minor v. United Services Automobile Association

IN THE COURT OF APPEALS OF THE STATE OF MISSISSIPPI

NO. 2014-CA-00372-COA

THE ESTATE OF SYLVIA F. MINOR AND
PAUL S. MINOR APPELLANTS

v.

UNITED SERVICES AUTOMOBILE
ASSOCIATION APPELLEE

DATE OF JUDGMENT: 09/20/2013
TRIAL JUDGE: HON. RICHARD TODD BENNETT
COURT FROM WHICH APPEALED: JACKSON COUNTY CIRCUIT COURT
ATTORNEYS FOR APPELLANTS: F. GERALD MAPLES
W. CORBAN GUNN
CHUCK R. MCRAE
SETH C. LITTLE
ATTORNEYS FOR APPELLEE: CHARLES G. COPELAND
WALKER REECE GIBSON
REBECCA SUZANNE BLUNDEN
TIMOTHY JOHN STERLING
NATURE OF THE CASE: CIVIL - INSURANCE
TRIAL COURT DISPOSITION: JURY VERDICT OF $1,547,293.37 IN
FAVOR OF APPELLANTS; PARTIAL
SUMMARY JUDGMENT GRANTED IN
FAVOR OF APPELLEE ON ISSUES OF
PUNITIVE AND EXTRACONTRACTUAL
DAMAGES
DISPOSITION: AFFIRMED IN PART; REVERSED AND
REMANDED IN PART: 06/27/2017
MOTION FOR REHEARING FILED:
MANDATE ISSUED:

EN BANC.

GRIFFIS, P.J., FOR THE COURT:

¶1. Paul and Sylvia Minor’s home was destroyed by Hurricane Katrina on August 29,

2005. The Minors had a homeowner’s insurance policy with United Services Automobile
Association (USAA). The policy provided coverage limits for: house – $1,028,000,

boathouse and shed – $102,800; guest cottage – $108,000; detached carport – $41,000;

personal property – $771,000; and jewelry, watches, furs, and silverware – $4,000. The

policy also included a two-percent named-storm deductible and covered damage caused by

wind but excluded damage caused by storm surge or flood.

¶2. The Minors reported their loss to USAA in January 2006. USAA assigned adjusters

to inspect the property and hired an independent engineering firm to inspect the structure to

determine the extent of damage as a result of Hurricane Katrina’s storm surge or winds.

USAA issued payments for the damage that it concluded was caused by wind and did not pay

for damage it determined was caused by storm surge or flood.

¶3. The Minors were not satisfied with USAA’s payments and claimed that they suffered

a total loss caused by wind. The Minors demanded USAA pay the policy limits.

¶4. On August 14, 2008, the Minors filed a complaint in the Circuit Court of Jackson

County. The complaint asked for “monetary damages for all losses incurred,” and punitive

and extracontractual damages due to USAA’s bad-faith refusal to pay their claim for benefits

under the homeowner’s policy.

¶5. On August 9, 2013, USAA served a motion for partial summary judgment as to the

Minors’ claims for punitive and extracontractual damages. The circuit court agreed and

granted the motion.

¶6. The case then went to trial on all other claims. A jury returned a verdict, on

September 20, 2013, in the amount of $1,547,293.37. After the posttrial motions were

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denied, the Minors filed this appeal.

ANALYSIS

I. Whether the circuit court erred by granting the motion for partial
summary judgment on the issue of punitive and extracontractual
damages.

A. Standard of Review

¶7. In Karpinsky v. American National Insurance Co., 109 So. 3d 84, 88-89 (¶¶9-11)

(Miss. 2013), the Mississippi Supreme Court ruled:

I. Standard of Review

We review the grant or denial of a motion for summary judgment de novo,
viewing the evidence in the light most favorable to the party against whom the
motion has been made.

II. The Summary Judgment Standard

Summary judgment is appropriate and shall be rendered if the pleadings,
depositions, answers to interrogatories and admissions on file, together with
the affidavits, if any, show that there is no genuine issue as to any material fact
and that the moving party is entitled to judgment as a matter of law.
Importantly, the party opposing summary judgment may not rest upon the mere
allegations or denials of his pleadings, but his response, by affidavit or as
otherwise provided in this rule, must set forth specific facts showing that there
is a genuine issue for trial. If he does not so respond, summary judgment, if
appropriate, will be entered against him.

This Court has explained that in a summary judgment hearing, the burden of
producing evidence in support of, or in opposition to, the motion is a function
of Mississippi rules regarding the burden of proof at trial on the issues in
question. The movant bears the burden of persuading the trial judge that: (1)
no genuine issue of material fact exists, and (2) on the basis of the facts
established, he is entitled to judgment as a matter of law. The movant bears
the burden of production if, at trial, he would bear the burden of proof on the
issue raised. In other words, the movant only bears the burden of production
where [he] would bear the burden of proof at trial. Furthermore, summary

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 judgment is appropriate when the non-moving party has failed to make a
showing sufficient to establish the existence of an element essential to the
party’s case, and on which that party will bear the burden of proof at trial.

(Internal citations and quotations omitted).

B. USAA’s Motion for Partial Summary Judgment

¶8. USAA served the motion for partial summary judgment on the deadline to file

motions set in the scheduling order. The motion was scheduled for hearing and was

rescheduled several times. The circuit court heard argument on the motion on September 9

and entered an order granting the motion on September 10, the same day that voir dire began.

Opening statements began on September 11. At the conclusion of the trial, the Minors asked

the court to reconsider its earlier ruling on the motion for partial summary judgment, and the

court declined.

¶9. USAA’s motion raised three issues:

1. USAA has had legitimate and arguable reasons for handling the
Minors’ claims as it has.

2. USAA never acted with malice, gross negligence or reckless disregard
for the Minors’ rights.

3. As a matter of law, the Minors cannot recover extra-contractual
damages because they cannot prove that USAA did not have an
arguable basis for its actions.

¶10. The Minors’ punitive damage claim was for USAA’s alleged bad-faith failure to pay

their claim or its delay in payment. To prevail, the Minors had to prove that USAA did not

have a legitimate and arguable reason for how it adjusted and paid the Minors’ claims.

According to USAA, the supreme court has defined an “arguable reason” as follows:

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 An arguable reason is one in support of which there is some credible evidence.
There may well be evidence to the contrary. A person is said to have an
arguable reason for acting if there is some credible evidence that supports the
conclusions on the basis of which he acts.

Blue Cross & Blue Shield, Inc. v. Campbell, 466 So. 2d 833, 851 (Miss. 1984). The Court

has further held:

We are of the opinion that the term “legitimate or arguable reason,” although
spawning much comment in our cases and in briefs and arguments of counsel,
is nothing more than an expression indicating the act or acts of the alleged
tortfeasor do not rise to the heightened level of an independent tort.
Additionally, the very term expresses the holding of this Court establishing a
distinction between ordinary torts, the product of forgetfulness, oversight, or
the like; and heightened torts, which are the product of gross, callous or
wanton conduct, or, if intentional, are accompanied by fraud or deceit.

State Farm Fire & Cas. Co. v. Simpson, 477 So. 2d 242, 250 (Miss. 1985).

¶11. USAA argued that there was no genuine issue as to a material fact in dispute and that

it was entitled to a judgment as a matter of law. M.R.C.P. 56(c). This required that the

circuit court and now this Court use the summary-judgment standard to review whether

USAA conducted a timely investigation into the losses, the loss mechanisms, and the Minors’

claims that arose therefrom.

¶12. The Minors’ property was significantly damaged. The Minors did not have flood

insurance, but did have a standard homeowner’s policy. It contained a water-damage

exclusion that excluded claims caused by “flood, surface water, waves, tidal water, overflow

of a body of water, or spray from any of these, whether or not driven by wind.” “Storm

surge” was contained within the “water damage” exclusion. Corban v. United Servs. Auto.

Ass’n., 20 So. 3d 601, 611 (¶26) (Miss. 2009) (holding that “storm surge” is contained

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unambiguously within the “water damage” exclusion of a USAA policy, and no other

“logical interpretation” exists). During its investigation and adjustment, USAA sought to pay

the amounts that it determined were owed under the policy for wind-related damage and not

pay for damage caused by storm surge.

¶13. USAA explained how it handled the Minors’ claims. USAA began its investigation

after the Minors reported the claim. The initial investigation included, but was not limited

to: a site inspection by a USAA adjuster; discussions with the Minors, including a request

for an inventory of contents; and an inspection, investigation, and preparation of a report on

the loss mechanisms by PT&C, an independent professional engineering firm. USAA

specifically requested that PT&C take the following action:

a. inspect the structure and . . . determine the extent of the damage as a
result of Hurricane Katrina’s storm surge and/or winds, and

b. determine the feasibility of repair to the structure as well as the integrity
of the structures and foundations at the time of PT&C’s inspection.

After inspection, PT&C prepared an assessment that concluded:

a. the insured property experienced wind-related damage to the shingles;
canopies and/or overhangs; trim material; window systems; and soffit
and fascia material around the eaves of the structure as a result of
winds, with estimated speeds above 110 miles per hour; and

b. the remainder of the structure was destroyed by the estimated ten (10)
foot storm surge.

¶14. As a result of its investigation and the PT&C report, USAA adjusted the

dwelling/other structures claim and issued a $37,245.86 check to the Minors (which included

$2,000 for additional living expenses). USAA did not submit a payment for the Minors’

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contents claim because it claimed the Minors had not yet submitted an inventory.

¶15. USAA also argues that it repeatedly asked the Minors to provide more information

so USAA could further adjust the claim. After several requests, USAA argues, Paul Minor

finally submitted a floor plan and several pre-storm photographs of the house. He also

notified the USAA adjusters that his house had been evaluated for value in the past and that

evaluation by vendors for USAA would contain more photographs and diagrams. USAA

contends it then immediately recalled the value evaluations from storage, used the additional

floor plan and photographs, and reevaluated the estimates of wind damage based upon this

new information. Shortly thereafter, USAA updated its original adjustment and issued a

supplemental check in the amount of $194,322.85 for damage to the dwelling/other

structures. At this point, USAA had made a total dwelling/other structures payment for wind

damage of $231,568.71.

¶16. USAA also argues that the Minors did not present a contents list to USAA until after

filing the complaint and in response to discovery. Further, USAA claimed that the list did

not give specific descriptions of the contents, did not include estimated purchase prices, and

did not include the condition of the property. Nevertheless, USAA evaluated the contents

lists for the items that may have been damaged by wind or windblown rain, and made

payment.

¶17. USAA also argued that the Mississippi Supreme Court decision in United Services

Automobile Association v. Lisanby, 47 So. 3d 1172 (Miss. 2010), was “instructive.” USAA

asserted that, in Lisanby, the supreme court held that USAA had an arguable basis for its

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denial of a claim. Id. at 1178-79. Thus, USAA argued that the following facts were

sufficient for the Lisanby court to find that USAA had legitimate and arguable reasons for

its claims handling:

1. USAA did not arbitrarily declare that the damage was caused solely by
flood;

2. USAA opened a homeowners’ claim;

3. USAA completed its investigation before attributing the majority of the
damage to flood; and

4. USAA prepared the wind damage estimates after receiving the
independent engineering report.

In essence, USAA argued that the facts in this case were the same as in Lisanby; therefore,

USAA asked the court to find that there was no genuine issue of a material fact in dispute

and USAA was entitled to a judgment as a matter of law. M.R.C.P. 56(c).

C. The Circuit Court’s Findings

¶18. The circuit court agreed with USAA. The court entered an order that found:

The Minors made claims for extra-contractual damages, including attorney’s
fees and punitive damages. The undisputed facts show that USAA had an
arguable or reasonable basis for its claims decisions. The Minors did show
credible material proof that USAA did not have a reasonable or arguable
reason to make its claims decisions. United Servs. Auto. Ass’n v. Lisanby, 47
So. 3d 1172, (Miss. 2010) provided this Court with the necessary guidance. In
Lisanby, the Mississippi Supreme Court ruled in favor of USAA on the
extracontractual and punitive damages claims based upon USAA’s same
claims handling practices and decisions for the same Hurricane Katrina. As
a matter of law, USAA acted with an arguable basis, and without malice,
reckless disregard or gross negligence.

D. This Court’s Analysis

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¶19. A motion for summary judgment is governed by Mississippi Rule of Civil Procedure

56(c), which provides:

The judgment sought shall be rendered forthwith if the pleadings, depositions,
answers to interrogatories and admissions on file, together with the affidavits,
if any, show that there is no genuine issue as to any material fact and that the
moving party is entitled to a judgment as a matter of law.

There are two parts to this rule. First, the court must determine that there is “no genuine

issue as to any material fact.” Id. Second, the court must determine that the movant is

“entitled to a judgment as a matter of law.” Id.

¶20. Our review is de novo. But we start with the circuit court’s order and consider its

findings. The order appears to contain an obvious contradiction.

¶21. The circuit court found that “[t]he undisputed facts show that USAA had an arguable

or reasonable basis for its claims decisions.” Yet, in the next sentence, the court also found

“[t]he Minors did show credible material proof that USAA did not have a reasonable or

arguable reason to make its claims decisions.” (Emphasis added). As early as Brown v.

Credit Center, Inc., 444 So. 2d 358, 362 (Miss. 1983), the court recognized:

A motion for summary judgment lies only where there is no genuine issue of
material fact; summary judgment is not a substitute for the trial of disputed fact
issues. Accordingly, the court cannot try issues of fact on a Rule 56 motion;
it may only determine whether there are issues to be tried.

¶22. A summary judgment motion requires that the circuit court and this court consider not

whether USAA has presented evidence to prove that it possessed a legitimate or arguable

basis for its claims decisions. Instead, we must decide whether there is a genuine issue of

a material fact in dispute as to whether USAA possessed a legitimate or arguable basis for

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its claims decisions.

¶23. The circuit court’s finding that “[t]he Minors did show credible material proof that

USAA did not have a reasonable or arguable reason to make its claims decisions” leads to

the conclusion that this finding was and should have been enough to defeat the motion for

partial summary judgment. This finding acknowledges that there was a genuine issue of a

material fact in dispute, which would prohibit the grant of a summary judgment under Rule

56(c) of the Mississippi Rules of Civil Procedure.

¶24. Next, the circuit court relied on Lisanby, to conclude that, “[a]s a matter of law,

USAA acted with an arguable basis, and without malice, reckless disregard or gross

negligence.” Lisanby is indeed “instructive,” but there are important differences. In Lisanby,

the circuit court did not grant a partial summary judgment as to punitive or extracontractual

damages before trial. Instead, after hearing all of the evidence presented at trial, the court

“declined to submit the issue of punitive damages to the jury, but awarded the plaintiffs an

additional $302,920.44 in attorneys’ fees and $211,069.47 in litigation expenses.” Lisanby,

47 So. 3d at 1175 (¶5).

¶25. Further, the Lisanby court did not rule that USAA’s Hurricane Katrina claims

practices were proper. Instead, the court merely affirmed the circuit court’s decision to deny

further consideration of punitive damages because it found: “[O]n appeal, the plaintiffs cite

numerous instances of conduct that they contend support a finding that USAA acted in bad

faith. However, most of these allegations are not supported by the record, and USAA

persuasively disputes all of them without response from the plaintiffs.” Id. at 1178 (¶19)

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(emphasis added). We find that the circuit court’s finding that “[i]n Lisanby, the Mississippi

Supreme Court ruled in favor of USAA on the extra-contractual and punitive damages claims

based upon USAA’s same claims handling practices and decisions for the same Hurricane

Katrina” was an incorrect statement of the supreme court’s ruling in Lisanby. In fact, in

Lisanby, the supreme court held that the plaintiffs failed to present sufficient evidence that

would allow the punitive- and extracontractual-damage claims from going to the jury. Id.

at 1178-79 (¶¶19-24). Hence, the court affirmed the circuit court’s decision, after hearing

evidence at trial, to deny the plaintiffs an opportunity to present their punitive-damage claim

and reversed and rendered the award of attorney’s fees and litigation expenses. Id. at 1179

(¶24). Such finding does not support the grant of summary judgment here.

¶26. Based on our review, we find that there was evidentiary support for several issues that

would support the Minors’ claims for punitive and extracontractual damages. We limit our

discussion to two important issues.

¶27. First, the evidence of USAA’s failure to consider the information that the Minors had

provided to USAA in the pre-Katrina underwriting was a genuine issue of material fact in

dispute. In paragraph 16 above, we discuss USAA’s contention that “it repeatedly requested

the Minors to provide more information so USAA could further adjust the claim” and then

USAA argued that “after many requests, Paul Minor . . . notified the USAA adjusters that his

house had been evaluated for value in the past and that evaluation by vendors for USAA

would contain more photographs and diagrams.”

¶28. On at least two occasions before Hurricane Katrina, in 1994 and again in 2001, USAA

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sent underwriters to visit the Minors’ property. The purpose of these visits was for USAA

to evaluate the underwriting risk and determine the appropriate premium to be charged.

Thus, before the storm and the damage, USAA had a substantial amount of information about

the Minors’ property that would be, and ultimately was, useful in the adjustment of the

Minors’ claims. This was evidence that USAA had detailed information in its possession

from the beginning of the Minors’ claim that it did not use; and had USAA used the

information in a timely manner, the Minors’ claims would have been paid much sooner. In

fact, once USAA used this information, it issued a supplemental check for damage to

dwelling/other structures. The Minors correctly argue that this information was at all times

available to USAA, as it was part of USAA’s corporate records.

¶29. From the time the claim was initiated, USAA had in its possession the 1994 and 2001

inspections and appraisal reports that established and set the value of the structures and

contents; along with detailed diagrams showing square footage of the home, guest house and

other structures; in addition to the numerous photographs of these buildings showing the

location of all windows (approximately 90) and the unique floor-to-ceiling glass doors and

windows that are 360 degrees around the house. Included in the appraisal reports were

numerous photographs that depicted the Minors’ personal contents located in every room in

the house and “special features” that discussed the high quality of their personal property,

i.e., “antique rugs throughout the home”; “special marble”; “fine arts and expensive jewelry”;

and “a collection of fine wine” in the wine cellar.

¶30. Also, USAA had an engineer’s report entered into its Information Management

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System (IMS) by adjuster Teri Bergstrom that put USAA on notice that all the window

systems had been damaged by the wind forces of Katrina, along with her “confidential”

conclusion that this report makes USAA “accountable to replace all the windows and opens”

up payment for “contents in all the rooms (the entire house) with windows.” The

confidential memo, which was not entered in the IMS, included a comment by Bergstrom

about what their USAA team leader would think about the engineer’s window observations:

“If we’re paying for all the windows it would open up contents in all the rooms with

windows. You may want to discuss this with your team leader.” Bergstrom’s final words

were, “You know he won’t be happy w/that.”

¶31. Based on this information, it appears that USAA’s adjuster concluded that USAA was

accountable to pay for the losses to contents in the entire home. Yet USAA did not make a

payment for loss of contents for almost four years, until May 2013, approximately three

months before the commencement of the trial, and for only $67,864.23.

¶32. This is certainly evidence that there is a genuine issue as to a material fact in dispute

as to why USAA had engineering information in its possession, since March 2006, that

concluded all of the windows in the main structure were destroyed by wind and that would

make USAA liable for all of the contents in those rooms; yet no payment was made until just

before the trial. There was also evidence that there is a genuine issue as to a material fact in

dispute as to why USAA told the Minors, in a letter dated June 18, 2006, that “based on its

engineer report” USAA would only consider payment for contents on the southern elevation,

when the engineer and the USAA adjuster had said the insurance company was accountable

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for contents in all of the rooms.

¶33. We find that this evidence was sufficient to conclude that there was a genuine issue

of a material fact in dispute as to whether USAA had an arguable and legitimate basis to deny

or delay payment to the Minors.

¶34. Second, there was a genuine issue of material fact in dispute as to the damage caused

by the storm surge. As discussed in paragraph 14 above, USAA hired PT&C, an independent

professional engineering firm, which opined that “the remainder of the structure was

destroyed by the estimated ten (10) foot storm surge.” There was evidence of an Elevation

Certificate, dated April 2006, that indicated the Minors’ property was at an elevation of

almost fifteen feet, which would have been above the storm surge. In fact, the exact amount

of storm surge was in dispute in this trial. There was evidence at trial that the storm surge

was as high as twenty-one feet. Regardless, there was conflicting evidence as to the height

of storm surge and whether there was a legitimate or arguable basis for USAA to determine

that a storm surge caused or contributed to the destruction of the residence. Ultimately, this

was an issue decided by the jury.

¶35. To be clear, this Court does not find that the Minors are entitled to present their claims

for punitive or extracontractual damages to a jury. Instead, we merely find that there was a

genuine issue of material fact in dispute and that USAA was not entitled to a judgment as a

matter of law on this issue before trial. Thus, we conclude that it was reversible error for the

circuit court to grant USAA’s motion for partial summary judgment and dismiss the Minors’

claim for punitive and extracontractual damages before trial. Therefore, we reverse and

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remand this issue for further proceedings consistent with this opinion.

II. Whether the court erred in giving Jury Instruction D-29b.

¶36. Next, the Minors argue the circuit court was in error when it gave Jury Instruction D-

29b. They claim that this prevented the possibility of an award of the policy limits based on

a total loss.

¶37. “Jury instructions are within the discretion of the trial court and the settled standard

of review is abuse of discretion.” Melvin v. Cleveland Nursing & Rehab., LLC, 159 So. 3d

623, 626 (¶8) (Miss. Ct. App. 2015). “[T]he instructions are to be read as a whole.” Id. “On

appeal, [we] analyze whether a jury instruction correctly stated the law and was supported

by the evidence.” Id.

¶38. USAA submitted Jury Instruction D-29, and it was later withdrawn. The court made

modifications, at the Minors’ request, in Instruction D-29a. It was further modified and was

given to the jury as Instruction D-29b. The following is Jury Instruction D-29b, and the

jury’s answers are included and underlined:

Please answer the following questions by applying the instructions of law
given to you. Answer the questions in order. Follow the instructions and
brackets concerning which questions to answer.

Number 1 — Do you find by a preponderance of the evidence that USAA
correctly estimated $524,606.63 as the total covered damages under the
plaintiffs’ insurance policy and correct[ly] tendered $297,432.94 as the total
amount owed after reductions for the deductible and recoverable depreciation?
If your answer to Question Number 1 was yes, then you can stop.
(YES or NO) No

Number 2 — Do you find by a preponderance of the evidence that any damage
over and above $288,719.39 was caused to the Minors’ house solely by wind

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or wind-driven rain? And there’s a place for you to mark yes or no. If your
answer to Question Number 1 was no, then you skip Question Number 3 and
go on to 4. If your answer to Question 2 was yes, then you answer Number 3.
(YES or NO) Yes

Number 3 — What additional actual cash value dollar amount of damage, if
any, was caused to the Minors’ house solely by wind or wind-driven rain? The
figure you fill in the blank below cannot exceed $739,280.61 and there is a
blank for you to place the dollar amount.
$ 739,280.61

Number 4 — Do you find by a preponderance of [the] evidence that any
damage over and above $27,797.09 was caused to the Minors’ detached
carport and guest cottage solely by wind or wind-driven rain? Answer yes or
no. If your answer to Question Number 4 was no, then you skip Question
Number 5 and go to Question Number 6. If your answer to Question 4 was
yes, then you answer Number 5.
(Yes or No) Yes

Number 5 — What additional actual cash value dollar amount of damage, if
any, was caused to the Minors’ detached carport and guest cottage solely by
wind or wind-driven rain? The figure you fill in cannot exceed $121,202.91
and there is a blank for you [to] place an amount.
$ 121,202.91

Number 6 — Do you find, by a preponderance of [the] evidence, that any
damage over and above $208,090.15 was caused to the Minors’ contents solely
by wind or wind-driven rain? And there’s a blank for you to answer yes or no.
If your answer to Question 6 was no, skip Question 7 and go on to Question
8. If your answer to Question 6 was yes, then you answer Question 7.
(Yes or No) Yes

Number 7 — What additional dollar amount of damage, if any, was caused to
the Minors’ contents solely by wind or wind-driven rain? The figure you fill
in the blank cannot exceed $562,909.85, and there’s a blank for a dollar
amount.
$ 562,909.85

Number 8 — Do you find by a preponderance of the evidence that the Minors
incurred any additional or increased living expenses over and above $2,000
during the year following Hurricane Katrina because their Ocean Springs

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house was rendered unfit to live in due to damage caused solely by wind or
wind-driven rain? And there’s a blank for you [to] answer, yes or no. If your
answer to Question 8 was no, skip Question 9 and go to Question 10. If your
answer to Question 8 was yes, then answer Question 9.
(Yes or No) No

Number 9 — What additional dollar amount, if any, of additional increased
living expenses did the Minors incur within the year following Hurricane
Katrina? The figure you fill in the blank below cannot exceed $203,600, and
there’s a blank for a figure for you to fill in if that [is] appropriate.
$ 0

Number 10 — Do you find by a preponderance of the evidence that the Minors
incurred any loss of refrigerated products because of damage caused solely by
power failure or mechanical breakdown? There’s a blank for a yes or a no
answer. If your answer to Question 10 was no, stop here. If your answer to
Question 10 was yes, then answer 11.
(Yes or No) Yes

Number 11 — What additional dollar amount of damage, if any, was caused
to the Minors’ refrigerated products solely by power failure or mechanical
breakdown? The figure you fill in the blank cannot exceed $500, and there’s
a blank for a dollar amount.
$ 500.00

Number 12 — Do you find from a preponderance of the evidence that the
Minors incurred a loss of the boathouse and shed, as unscheduled structures,
caused solely by wind or wind driven rain? And there is a blank for you to
answer yes or no. If your answer to [Q]uestion 12 is no, then proceed to
[Q]uestion 14, below. If you answer is yes, go to [Question] 13, below.
(Yes or No) Yes

Number 13 — What additional dollar amount, if any, was caused to the Minors
as a result of the loss of the boathouse and shed? The figure you fill in the
blank below cannot exceed $102,800.00
$ 102,800.00

Number 14 — Do you find that the Minors incurred a loss as a result of being
charged two deductibles of $20,600.00 for a total of $41,200.00? If your
answer is no, proceed no further. If your answer is yes, then proceed to
question 15, below.

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 (Yes or No) Yes

Number 15 — The Minors were damaged in the amount of $ 20,600.00 as
a result of being charged twice for deductibles.

¶39. The review of an insurance claim begins with the wording of the policy. Corban v.

United Servs. Auto. Ass’n, 20 So. 3d 601, 608 (¶17) (Miss. 2009). Homeowner’s insurance

policies “typically require that property losses be computed on an actual cash value or on a

replacement value basis, with the latter coverage being more expensive as it allows a more

generous valuation.” Jeffrey Jackson & D. Jason Childress, Mississippi Insurance Law and

Practice § 15:27 (2016). Here, the USAA policy issued to the Minors was a replacement-

cost policy.

¶40. The purpose of a replacement-cost policy is “[t]o protect homeowners from the

predicament of not having enough assets to replace depreciated property that is destroyed or

damaged.” Robert H. Jerry II, Understanding Insurance Law § 93, at 689 (3d ed. 2002).

Replacement cost, as defined in the policy, is “the cost, at the time of loss, of a new item

identical to the one damaged, destroyed or stolen.” If an identical item is no longer available,

“replacement cost will be the cost of a new item which is similar to the insured [item], and

of like quality and usefulness.”

¶41. A replacement-cost policy requires that the homeowner actually rebuild a home in

order to receive the replacement-cost benefit of the policy. 5 Jeffrey E. Thomas & Susan

Randall, New Appleman on Insurance Law § 53.05[3][c][iii] (2016). “Requiring an insured

to rebuild is designed to avoid the moral hazard of leaving an insured in a better situation

18
after a loss.” Id. “Mere intention to rebuild or replace is not sufficient to receive proceeds

based on replacement costs.” Id.

¶42. Also, “[u]nder a replacement cost policy, an insured will only receive actual cash

value until the property is actually repaired or [replaced].” Id. Actual cash value is the

replacement cost of property, less depreciation.” Mississippi Insurance Law and Practice,

at § 15:27. Depreciation “takes into account the age of the property at the time of loss, the

extent of its use, its obsolescence, and other factors affecting its value.” Understanding

Insurance Law, at 691. How depreciation is calculated is a factor in the determination of the

homeowner’s recovery. New Appleman on Insurance Law, at § 53.05[1]. Here, the Minors’

policy did not define depreciation, nor did it specify how depreciation would be calculated.

¶43. Pursuant to the “Loss Settlement” provisions of the Minors’ policy, when a covered

property loss occurs under Coverage A (dwelling) or Coverage B (other structures), losses

are settled at replacement cost without deduction for depreciation, subject to the following:

(1) If, at the time of loss, the amount of insurance in this policy on the
damaged building is 80% or more of the full replacement cost of the
building immediately before the loss, [USAA] will pay the cost to
repair or replace, after application of deductible and without deduction
for depreciation, but not more than the least of the following amounts:

(a) the limit of liability under this policy that applies to the
building;

(b) the replacement cost of that part of the building damaged
for like construction and use on the same premises; or

(c) the necessary amount actually spent to repair or replace
the damaged building.

19
 (2) If, at the time of loss, the amount of insurance in this policy on the
damaged building is less than 80% of the full replacement cost of the
building immediately before the loss, [USAA] will pay the greater of
the following amounts, but not more than the limit of liability under this
policy that applies to the building:

(a) the actual cash value of that part of the building
damaged; or

(b) that proportion of the cost to repair or replace, after
application of deductible and without deduction for
depreciation, that part of the building damaged, which
the total amount of insurance in this policy on the
damaged building bears to 80% of the replacement cost
of the building.

....

(4) [USAA] will pay no more than actual cash value of the damage unless:

(a) actual repair or replacement is complete. . . .

(5) You may disregard the replacement cost loss settlement provisions and
make claim under this policy for physical loss to buildings on an actual
cash value basis. You may then make claims within 180 days after loss
for any additional liability on a replacement cost basis.

¶44. When a covered property loss occurs under Coverage C (personal property), losses

are settled at full replacement cost without deduction for depreciation, subject to the

following loss settlement procedures:

(a) [I]t is [USAA’s] option to:

(1) replace or pay you our cost to replace the property with
new property of like kind and quality without deduction
for depreciation, or

(2) pay you the cost to repair or restore the property to the
condition it was in just before the loss, or

20
 (3) pay you the necessary amount actually spent to repair or
replace the damaged property.

(b) [USAA] will pay no more than actual cash value until repair or
replacement of the damaged property is completed, unless the entire
loss is less than $500.

(c) You may make a claim for loss on an actual cash value basis and then
make claim within 180 days after the loss for any additional liability
under the terms of this endorsement.

¶45. The Minors argue that Instruction D-29b peremptorily capped and limited the amount

of damages the jury could award. Specifically, they claim that Instruction D-29b “incorrectly

included $86,947.78 for depreciation and deductible” for the main house.1 The Minors argue

that rather than allowing the jury to award the total value owed to the Minors, the circuit

court “invaded the province of the jury and preempted their verdict by incorrectly allowing

USAA to receive credits of the main structure for ‘recoverable depreciation.’” However,

such argument does not consider the clear and unambiguous policy language that included

a two-percent deductible and required payment of actual cash value unless repair or

replacement was complete.

¶46. The Minors also argue that Instruction D-29b incorrectly included depreciation of

$140,225.92 for the personal property. The Minors argue that by incorrectly allowing USAA

to depreciate the true value of the contents, Instruction D-29b left the Minors with a shortfall

of $140,225.92. However, the policy clearly provided for payment on an actual-cash-value

basis. To determine the actual cash value, USAA was required to estimate replacement cost,

1
The total amount of $86,947.78 includes depreciation of $66,387.77 and a
deductible of $20,560.

21
less depreciation.

¶47. The amounts included in Instruction D-29b for the house and personal property

represent the estimated replacement cost of the wind-damaged items. Pursuant to the policy,

the Minors were compensated for these wind-damaged items on an actual-cash-value basis,

with depreciation to be paid when replacement was complete.

¶48. There was no evidence that the Minors repaired or replaced the items to which the

recoverable depreciation applies. Thus, the Minors are not entitled to recover the

depreciation. Although the Minors take issue with USAA’s adjustment of their claims, such

issue does not affect the plain language of their policy.

¶49. USAA inspected the property and issued payment for damage it concluded was caused

by wind. Instruction D-29b asks the jury to determine whether there was any additional

damage caused by wind over and above what was already considered by USAA. Although

Instruction D-29b limits the amount of damages the jury can award, such limitation was

consistent with the policy language and was supported by the facts. Thus, we find no error

in the circuit court’s decision to give Instruction D-29b.

III. Whether the court erred in failing to correct the judgment to award
policy limits.

¶50. During argument on their motion for a judgment notwithstanding the verdict (JNOV),

the Minors asked the court to correct the verdict and to render a judgment in the amount of

the policy limits. The motion was denied.

¶51. We apply a de novo standard of review to a circuit court’s denial of a motion for a

22
JNOV. Miss. Transp. Comm’n v. United Assets, LLC, 188 So. 3d 508, 514 (¶24) (Miss.

2016). A motion for a JNOV “tests the legal sufficiency of the evidence supporting the

verdict.” Watts v. Radiator Specialty Co., 990 So. 2d 143, 150 (¶21) (Miss. 2008). In

reviewing a court’s denial of a motion for a JNOV, “[w]e are required to consider the

evidence in the light most favorable to the non-moving party.” McKenzie v. Supervalu, Inc.,

883 So. 2d 1188, 1192 (¶17) (Miss. Ct. App. 2004). “[I]f the facts are so overwhelmingly

in favor of the moving party that a reasonable juror could not have agreed with the verdict

at hand, we must reverse.” Id. “If there is substantial evidence, however, in support of the

verdict, such that . . . reasonable [people] may have reached different conclusions, we must

affirm.” Id.

¶52. Here, we find sufficient evidence to support the verdict. The jury considered the

evidence and found additional damage was caused solely by wind or wind-driven rain. The

damages awarded were consistent with the policy language and supported by the facts. The

Minors’ request for the policy limits ignores the clear and unambiguous language in their

policy that USAA will pay no more than the actual cash value of the damage unless actual

repair or replacement is complete. Thus, we find no merit to this issue.

¶53. Finally, on appeal, the Minors ask this Court to correct the judgment by granting an

additur in the amount of $88,647.75 for the structures and $140,225.92 for the personal

property. Thus, the Minors want this Court to award the depreciation amounts as well as the

deductible. As previously discussed, such an award is contrary to the policy language, as the

Minors have neither repaired nor replaced the damaged property. Therefore, we find the

23
Minors’ request for an additur is not well taken.

¶54. Further, we note that the Minors did not file a motion for an additur or for a new trial.

Instead, the Minors only filed a motion for a JNOV and requested that the court “enter

judgment in favor of [the Minors] in the amount of $524,606.63.” Now, on appeal, the

Minors argue that they should have been granted an additur of $228,873.67.

¶55. “An additur is only appropriate when the trial judge makes a finding that the damages

awarded by the jury are inadequate because the jury was ‘influenced by bias, prejudice, or

passion’ or the award was ‘contrary to the overwhelming weight of [the] credible evidence.’”

Henson v. Riggenbach, 982 So. 2d 432, 434 (¶9) (Miss. Ct. App. 2007) (citing Miss. Code

Ann. § 11-1-55 (Rev. 2002)). Here, no such finding was made by the circuit court, as the

Minors never moved for an additur.

¶56. “Issues raised for the first time on appeal are procedurally barred from review as they

have not first been addressed by the trial court.” Burns v. Haynes, 913 So. 2d 424, 429 (¶18)

(Miss. Ct. App. 2005). As the Minors failed to raise this issue before the circuit court, their

request for an additur is procedurally barred.

¶57. THE JUDGMENT OF THE CIRCUIT COURT OF JACKSON COUNTY IS
AFFIRMED IN PART, AND REVERSED AND REMANDED IN PART FOR
FURTHER PROCEEDINGS CONSISTENT WITH THIS OPINION. ALL COSTS OF
THIS APPEAL ARE ASSESSED ONE-HALF TO THE APPELLANTS AND ONE-
HALF TO THE APPELLEE.

BARNES AND WESTBROOKS, JJ., CONCUR. IRVING, P.J., CONCURS IN
PART AND IN THE RESULT WITHOUT SEPARATE WRITTEN OPINION. LEE,
C.J., CONCURS IN RESULT ONLY WITHOUT SEPARATE WRITTEN OPINION.
CARLTON, J., CONCURS IN PART AND DISSENTS IN PART WITH SEPARATE
WRITTEN OPINION, JOINED BY WILSON, J. ISHEE, FAIR AND GREENLEE,

24
JJ., NOT PARTICIPATING.

CARLTON, J., CONCURRING IN PART AND DISSENTING IN PART:

¶58. I would affirm the judgment of the circuit court. I therefore concur in part and dissent

in part from the opinion of the majority. I submit this separate opinion to set forth my

dissenting view on the application of the law to the facts of this case.

¶59. I dissent from the majority’s finding that the circuit court committed reversible error

in granting USAA’s motion for partial summary judgment and in dismissing the Minors’

claim for punitive and extracontractual damages before trial. I respectfully submit that the

record reflects no error in the circuit court’s grant of summary judgment in favor of USAA

or in its finding that the facts showed that USAA possessed an arguable, or reasonable, basis

for its claims decisions. The record reflects that the circuit court concluded that as a matter

of law, USAA acted with an arguable basis and without malice, reckless disregard, or gross

negligence.2

¶60. Applicable law reflects that “an arguable reason for the denial of an insured’s claim

. . . has been defined as ‘one in support of which there is some credible evidence.’” Tipton

v. Nationwide Mut. Fire Ins., 381 F. Supp. 2d 572, 579 (S.D. Miss. 2004). Arguable reason

still exists even if there is “evidence to the contrary.” Hood v. Sears Roebuck & Co., 532 F.

Supp. 2d 795, 803 (S.D. Miss. 2005). Jurisprudence also reflects that just because a jury

disagrees with the insurance company’s decision regarding coverage does not mean that the

2
Any party to a civil action may move for summary judgment upon a claim as to
which there is no genuine issue of material fact and upon which the moving party is entitled
to prevail as a matter of law. See M.R.C.P. 56(c).

25
company did not have an arguable basis. United Servs. Auto. Ass’n (USSA) v. Lisanby, 47

So. 3d 1172, 1179 (¶24) (Miss. 2010).3 Under the applicable law, the plaintiff bears a heavy

burden and must establish that the insurance company committed more than mere negligence

in performing the investigation. Id. at 1178 (¶18).4

¶61. In United American Insurance v. Merrill, the supreme court cited Windmon v.

Marshall, 926 So. 2d 867, 872 (Miss. 2006), and Murphree v. Federal Insurance, 707 So.

2d 523, 529 (Miss. 1997), which set forth established jurisprudence that “if there is a finding

that there was a reasonable arguable basis to deny the claim then the appellant is not entitled

to have the jury consider any bad faith award against the insurance company.” United Am.

Ins. v. Merrill, 978 So. 2d 613, 634 (¶105) (Miss. 2007). Further, “the plaintiff has a heavy

burden to demonstrate to the circuit court that there was no reasonably arguable basis for the

insurance carrier to deny the claim.” Blue Cross & Blue Shield of Miss., Inc. v. Campbell,

466 So. 2d 833, 844 (Miss. 1984). In the case before us, the record reflects credible evidence

that USAA possessed an arguable or reasonable basis for the adjustment and payment of the

Minors’ insurance claims. Therefore, in accordance with applicable law, no genuine dispute

of material fact exists showing that the Minors are not entitled to have the jury consider any

bad faith, extracontractual damages, or punitive damages.

¶62. After examining the applicable law and the evidence in the record, I submit that both

the law and the record sustain the circuit court’s findings in support of its decision granting

3
See also Sobley v. S. Nat. Gas Co., 302 F.3d 325, 330 (5th Cir. 2002).
4
See also Essinger v. Liberty Mut. Fire Ins., 529 F.3d 264, 271 (5th Cir. 2008).

26
summary judgment.5 A claim for extracontractual damages requires that the insured prove

the insurance company acted in bad faith and lacked an arguable basis when it made its

determination regarding the insured’s claim. Lisanby, 47 So. 3d at 1178 (¶18). A successful

claim for punitive damages requires the insured to prove more than the lack of an arguable

basis since the insured must also prove that “the insurance company acted with malice or

gross and reckless disregard for the rights of the insured.” U.S. Fid. & Guar. Co. of Miss.

v. Martin, 998 So. 2d 956, 970 (¶48) (Miss. 2008). “[W]here there is a legitimate or arguable

basis in the delay or denial of payments, there is no valid claim for punitive damages.” Miss.

Power & Light Co. v. Cook, 832 So. 2d 474, 479 (¶8) (Miss. 2002).6

¶63. On appeal in seeking reversal of the summary judgment granted below, the Minors

assert the two following arguments as support for their claim for punitive and

extracontractual damages: (1) that USAA lacked an arguable basis for its conclusion that a

storm surge caused or contributed to the destruction of the Minors’ residence and (2) that

USAA lacked an arguable basis for its decision to not immediately pay the Minors their

personal-property limits. I will separately address the record support for the circuit court’s

5
See Lisanby, 47 So. 3d at 1185-86 (¶56) (reversing a jury verdict for
extracontractual damages after finding that USAA’s reliance on a report from an engineer,
information from an adjuster, and information from the insured provided USAA with an
arguable basis for its determination that only a portion of the insured’s damage was caused
by wind); Anglado v. Leaf River Forest Prod., Inc., 716 So. 2d 543, 547 (¶13) (Miss. 1998)
(a de novo standard of review is applied to the appeal of a circuit court’s grant of summary
judgment).
6
See generally D. Jason Childress, Mississippi Insurance Law and Practice § 13:14
(2016).

27
findings and grant of summary judgment for the dwelling/other structures claim and the

personal-property claim.

¶64. Regarding the Minors’ dwelling/other structures claim, the record herein supports the

circuit court’s determination that USAA possessed an arguable basis when determining a

storm surge caused some of the damage, as evidenced by USAA’s reliance on independent

engineer reports, adjustment inspections, photographs, and adjustment decisions.7 The record

is undisputed that Hurricane Katrina hit on August 29, 2005, and that the Minors reported

their loss to USAA on January 16, 2006. The record shows that USAA immediately assigned

adjusters to inspect the property and, within a week of the Minors’ claim, USAA hired

PT&C, an independent professional engineering firm, to inspect and offer a professional

opinion as to causation, i.e., wind versus flood/storm surge, to determine if direct physical

loss by wind contributed to the damage to the residence. USAA sought clarification from

PT&C regarding damage to the window systems, and PT&C submitted the engineering report

to USAA on March 2, 2006.

¶65. On March 20, 2006, USAA asked the Minors for a floor plan of the residence but

failed to receive the information from the Minors for over seven months. Despite lacking

the floor plan, the record reflects that USAA adjusted the loss by relying on the engineer’s

report, adjuster information, and photographs. The record also reflects that on June 18, 2006,

7
See also Hoover v. United Servs. Auto. Ass'n, 125 So. 3d 636, 643 (¶21) (Miss.
2013) (concluding that USAA possessed an arguable basis for denying a portion of the
Hoovers’ damages wherein USAA relied on the investigation of its adjusters and the reports
of an engineering firm in denying aspects of the claim deemed excluded).

28
USAA advised the Minors that the majority of the damage to their home was the result of

flooding and that an estimate of the wind damage was created based upon information then

available. The replacement cost for the covered damage to the main dwelling, the guest

house, and the carport was $55,805.86, and USAA paid the actual cash value of $35,245.86.

¶66. The record further reflects that USAA informed the Minors by letter dated June 18,

2006, that the dwelling/other structures claim was being held open because USAA had not

yet received the requested floor plan, pre-loss photos, and personal-property list. According

to the record, on October 24, 2006, and on December 5, 2006, Paul Minor provided the floor

plan for the house and a few photos of the exterior of the home and explained that the

remainder of the photos were lost in the hurricane.

¶67. In response to information provided by Paul, USAA then tracked down prior

evaluations from 1994 and 2000. Despite still lacking some requested details, USAA then

used this new information to estimate the wind damage more accurately. On March 29,

2007, USAA made a supplemental actual-cash-value payment to the Minors of $194,322.85.

The record reflects that the Minors were advised that the amount of $66,387.77 was still

available in recoverable depreciation that they could obtain for the covered damage upon

completion of the repairs, in accordance with the terms of the Minors’ replacement-cost

policy.

¶68. The record shows that Minors received total payments of $229,568.71 for the wind

damage to their insured structures. The Minors failed to provide any information to USAA

disputing the PT&C engineer report until the Minors presented their expert reports as part

29
of this lawsuit. Clearly, the record supports the circuit court’s finding of an arguable basis

in support of USAA’s payment and adjustment decisions regarding the Minors’

dwelling/other structures claims given the evidence of USAA’s reliance on the report of an

independent engineer, claims-adjuster inspections, photographs, and information provided

by the insured.

¶69. With respect to the adjustment of the Minors’ personal-property claim, the record also

supports the circuit court’s determination that USAA’s decisions similarly possessed an

arguable basis. In adjusting the Minors’ personal-property claim, the record reflects that

USAA relied on PT&C’s engineer report, information from the adjuster, information from

the Minors, and photographs to determine which rooms could have had contents damaged

by wind prior to the storm surge of Hurricane Katrina. Moreover, the record reflects that

USAA repeatedly requested a list of the Minors’ damaged personal property and that for

three years, the Minors failed to provide any information about their personal property.

Moreover, the list eventually provided by the Minors failed to contain the amount of detail

required under the policy or in the discovery request; specifically, the list provided no

quantity, description, actual cash value, and amount of the loss. The Minors also failed to

provide any bills, receipts, and related documents to justify the figures in the inventory.

USAA even resorted to filing a motion to compel for the depositions of the Minors’ children,

both of whom possessed knowledge of the house and its contents prior to the hurricane.

¶70. Despite the lack of required detail, the record shows that USAA adjusted the Minors’

personal-property claim relying on information about the damage to the structure when

30
determining which damaged contents were covered. Using the independent engineer and the

adjuster reports, USAA adjusted the Minors’ personal-property claim, paying for certain

items in rooms that had wind-related damage, and the adjuster researched the value of the

damaged items. As acknowledged by the majority opinion, the record reflects without

dispute that the Minors possessed a replacement-cost insurance policy that excluded damage

caused by water/flood or storm surge. The record is also not in dispute that the Minors

possessed no flood insurance. The record shows that since the contents had not been

replaced, USAA provided the policy-mandated actual-cash-value payment.

¶71. Based upon the foregoing, the undisputed record reflects no unreasonable delay by

USAA in the payment of and adjustment of the Minors’ personal-property claim. In support

of the circuit court’s grant of summary judgment and findings, the record also shows without

dispute that USAA possessed an arguable basis for its payment and adjustment decisions in

its reliance upon the independent engineer reports, photographs, adjuster information, and

information from the Minors, including the delinquently provided contents list that lacked

the required detail.8 I therefore would affirm the judgment of the circuit court.

WILSON, J., JOINS THIS OPINION.

8
See Lisanby, 47 So. 3d at 1185-86 (¶56) (reversing a jury verdict for
extracontractual damages after finding that USAA’s reliance on a report from an engineer,
information from an adjuster, and information from the insured provided USAA with an
arguable basis for its determination that only a portion of the insured’s damage was caused
by wind).

31