Rodney Mohr, the insured, operated a farm and, after a fire loss talked to the company’s adjuster and signed a blank proof of loss form. The company issued checks in settlement for fire loss to a tractor and other pieces of equipment, but the insured rejected the checks on the ground they did not represent the actual cash value of the equipment. Negotiations were not successful and the insured brought suit to recover compensatory, consequential, and punitive damages for fraud, vexatious delay in settlement of the claim, and breach of contract.
The jury found that the company was not guilty of fraud, but it awarded the insured $120,000 in damages for the lost equipment , plus $105,000 as damages for lost profits. The court found that the company’s conduct constituted vexatious delay in settlement of the claim, and awarded costs, plus $42,666 in attorney fees, and punitive damages of $5,000. The company appealed.
Fire destroyed the insured’s barn and the equipment with in February, 1982 while the insured was away from home. The agent was promptly notified and hi, in turn, notified the company. A few days later, an adjuster for the company viewed the damage but did not discuss the loss at that time. He requested the insured to make a list of the destroyed items and their values. The adjuster returned a week later with other company representatives who also inspected the fire damage. In March, the adjuster was told that he could offer $87,000 plus or minus 10% in settlement of the loss.
Later in March, the adjuster met with the insured and his wife, but disagreed as to what occurred. They did agree that the adjuster brought a worksheet containing a list of items and their value, but the insured testified that he told the adjuster that he did not agree on the proposed valuations of many of the items. They did agree on some of the valuations. The insured testified that the adjuster had told him they would come back to the items which were in dispute.
The insured also testified that the adjuster had asked him to sign a blank proof of loss claim “to facilitate a settlement and save him a trip to the insured’s farm.” The insured’s wife corroborated his account of the meeting.
The adjuster testified that, after the meeting with the insured right after the fire, he had called several equipment dealers, as well as the tractor’s manufacturer, and had received estimates. The estimates on the tractor ranged from $60,000 to $80,000, while the estimates on the blade ranged from $6,000 to $13,000. He contended that he, the insured, and the insured’s wife had agreed that the total amount of the settlement would be $97.600 without attempting to agree on individual valuations.
The adjuster said that he had requested the insured to sign the blank proof of loss form because his own handwriting was very poor, and he wanted his secretary to type the information on the document. The company issued two checks, on e for $34,639.72 payable to the insured for property solely owned by him, and the other for $63,000 issued to the insured and the lienholder. Eventually, the company re-issued the checks in September, 1982, but these were never cashed by the insured.
Thereafter, the insured, his agent, and his attorney made several attempts, by calls and by letter, to arrange meetings with the company to discuss the settlement, but were not successful.
The insured leased about 687 acres on a cash-rent basis. In November 1981, he made the final settlement for 1981 and tendered 10% of the lease amount for 1982. He had completed the fall plowing of the tract, and had also disced the ground. It was shown that he had annually rotated the crop’s from corn to soybeans. Because of the fire, he was unable to farm the land. He contended he had lost an estimated profit varying from $40 to $60 per acre for 1982 and since costs remained the same in 1983 and 1984, he had lost the same estimated profit for both those years. The jury awarded $105,000 for lost profits.
The court, on appeal, ruled that a damage award cannot be speculative, and it reversed the award for 1983 and 1984.
However, the court agreed that the company’s conduct constituted vexatious and unreasonable delay in settlement of the loss. The testimony clearly showed that the company ignored repeated attempts by the insured and his representatives to discuss the dispute.
The jury had awarded compensatory damages of $120,000, and this was affirmed. The court noted that no error occurs when a jury accepts a high estimate of damages when both high and low estimates are presented to it.
The attorney fee which was allowed was based upon a contingent fee arrangement whereby the insured agreed to pay one third of the amount by which the jury verdict exceeded the initial settlement offer. Since, on appeal, the court determined that the profit figure was speculative, the attorney fee had to be reduced to $19,133 which was one-third of $58,000 (based upon the final verdict of $155,000).
The judgment for compensatory damages was affirmed, but the awards for lost profits and attorney fees were vacated and remanded for entry of judgment in accordance with this opinion.
Mohr v. Dix Mutual County Fire Insurance Company, Appellant, No.4-85-0490 – Appellate Court of Illinois, Fourth District. Filed May 13, 1986. Affirmed in part and Reversed/Remanded in part. (January, 1987, Rough Notes Magazine)