Hatch v. State Farm Fire & Casualty Co.

Wyoming Supreme Court
930 P. 2d 382, 1997 WL 8972, 1997 Wyo. LEXIS 9 (1997)

ELI5:

Rule of Law:

To establish a claim for intentional infliction of emotional distress, the plaintiff must prove conduct so extreme and outrageous as to be utterly intolerable in a civilized community, and emotional distress so severe that no reasonable person could be expected to endure it. The court serves as a gatekeeper to determine, as a threshold matter, whether the evidence is sufficient on these elements before the claim can be submitted to a jury.

Facts:

The Hatch family held a home fire insurance policy with State Farm Fire and Casualty Company.
A fire occurred in the basement of the Hatch family's home on August 4, 1987.
Fire investigators found gasoline in carpet samples in the basement.
A gasoline container was found tipped on its side in the garage.
The Hatch family proposed that their dog knocked over the gas can, causing gasoline to leak into the basement.
State Farm, through its agents Garry Kitchens and Dennis Murphy, investigated the fire and suspected arson by Frank J. Hatch, III.
Based on its investigation, State Farm denied the family's insurance claim for the fire loss.
During the investigation, State Farm had access to a briefcase belonging to Mr. Hatch which contained personal family documents, including his daughter Corinna's juvenile records.

Procedural Posture:

The Hatch family sued State Farm and its agents in a Wyoming district court (trial court) for breach of contract, bad faith, and intentional infliction of emotional distress after their claim was denied.
The trial court initially granted summary judgment in favor of State Farm.
The Hatch family (as appellants) appealed to the Wyoming Supreme Court, which affirmed in part, reversed in part, and remanded the case for trial on several claims in a decision known as Hatch I.
The case proceeded to a jury trial in the district court.
During the trial, the judge granted a motion for a directed verdict (judgment as a matter of law) in favor of the insurance agents, and in favor of State Farm on the claims for intentional infliction of emotional distress and punitive damages.
The jury returned a verdict in favor of State Farm on the remaining claims, finding that Frank J. Hatch, III had intentionally set the fire.
The Hatch family (as appellants) appealed the judgment on the jury verdict and the directed verdicts to the Wyoming Supreme Court; State Farm and its agents are the appellees.

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Issue:

Did the trial court commit reversible error by directing a verdict on the claim for intentional infliction of emotional distress, making various evidentiary rulings, and improperly instructing the jury on the insurer's arson defense?

Opinions:

Majority - Thomas, J.

No, the trial court did not commit reversible error. The court correctly granted a judgment as a matter of law on the intentional infliction of emotional distress (IIED) claim, properly handled evidentiary issues, and accurately instructed the jury. The court reasoned that to sustain an IIED claim, the defendant's conduct must be 'extreme and outrageous' and the plaintiff's distress must be 'severe,' and it is the court's role to make this threshold determination. Here, State Farm's conduct—requiring detailed inventories, conducting aggressive interviews, and sharing information with prosecutors—was insensitive but not 'beyond all possible bounds of decency.' Similarly, the family's distress, described as crying and stress, did not rise to the level of 'severe' emotional distress required by law. The court also held that expert testimony regarding State Farm's 'good neighbor' advertising slogan was properly excluded as irrelevant to the legal standard of good faith, and that instructing the jury not to consider Mr. Hatch's criminal acquittal on arson charges was correct due to the different burdens of proof in civil and criminal proceedings.

Concurring - O'Brien, District Judge

Yes, I agree with the majority's legal conclusions and affirmance of the judgment. This special concurrence is written to underscore the unprofessional and acrimonious conduct of the plaintiffs' lead counsel throughout the trial. The attorney's constant personal attacks and 'near religious fervor' blinded him to the realities of the case, infected the trial with personal issues, and demeaned the judicial process. Such conduct, aimed at victory rather than justice, perpetuates a negative 'hired gun' image of the legal profession and turns a rational exercise into an emotional ordeal.

Analysis:

This decision reinforces the high evidentiary standard for intentional infliction of emotional distress claims, particularly in the insurance context, and solidifies the court's gatekeeping function in preventing claims based on insufficiently outrageous conduct or severe distress from reaching a jury. It clearly distinguishes legal duties of good faith from marketing slogans, preventing the latter from creating an independent legal standard of care. The case also provides a clear precedent on the inadmissibility of a criminal acquittal in a subsequent civil trial on the same matter, thereby preserving the distinction between the 'beyond a reasonable doubt' and 'preponderance of the evidence' standards.

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