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Keywords

contractlawsuitbreach of contractdamagesattorneytrialmotiondue processpunitive damagescompensatory damagesbad faith
damagestrialmotiondue processpunitive damagesbad faith

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McElgunn v. Cuna Mut. Ins. Soc., 700 F.Supp.2d 1141

Facts

Teri Powell purchased a credit disability insurance policy from Cuna Mutual Insurance Society and filed a claim after becoming disabled. Initially, the insurer denied her claim as untimely, but after intervention by her attorney, the denial was reversed, and benefits were paid for a year. However, after Powell's condition worsened, the insurer delayed further payments until after her death, leading to the lawsuit for breach of contract and bad faith.

Teri Powell purchased a credit disability insurance policy from Cuna Mutual Insurance Society and filed a claim after becoming disabled.

Issue

Did the insurer act in bad faith by delaying payment of the disability claim, and were the damages awarded excessive?

Did the insurer act in bad faith by delaying payment of the disability claim, and were the damages awarded excessive?

Rule

Under South Dakota law, an insurer can be held liable for bad faith if it denies or delays payment without a reasonable basis, and punitive damages must not exceed due process limits.

Under South Dakota law, an insurer can be held liable for bad faith if it denies or delays payment without a reasonable basis, and punitive damages must not exceed due process limits.

Analysis

The court found sufficient evidence to support the jury's conclusion that the insurer acted in bad faith by delaying payments despite knowledge of Powell's terminal condition. The jury's award of compensatory damages was deemed appropriate, while the punitive damages were reduced to align with constitutional standards.

The court found sufficient evidence to support the jury's conclusion that the insurer acted in bad faith by delaying payments despite knowledge of Powell's terminal condition.

Conclusion

The court denied the insurer's motion for a new trial but granted a partial remittitur, reducing the punitive damages from $6 million to $1.6 million.

The court denied the insurer's motion for a new trial but granted a partial remittitur, reducing the punitive damages from $6 million to $1.6 million.

Who won?

The prevailing party was Sharon McElgunn, as personal representative of Teri Powell's estate, because the jury found that the insurer acted in bad faith and awarded damages accordingly.

The prevailing party was Sharon McElgunn, as personal representative of Teri Powell's estate, because the jury found that the insurer acted in bad faith and awarded damages accordingly.

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