Submitted: April 4, 2017
from United States District Court for the District of South
Dakota - Sioux Falls
WOLLMAN, RILEY, and BENTON, Circuit Judges.
BENTON, Circuit Judge.
found The Charter Oak Fire Insurance Company liable for
breach of contract and deceit for its handling of Laura
Dziadek's underinsured-motorist claim. After partly
granting judgment as a matter of law, the district
court approved some of the compensatory damages
and all of the punitive damages. Dziadek v. Charter Oak
Fire Ins. Co., 213 F.Supp.3d 1150, 1162 (D.S.D. 2016).
Having jurisdiction under 28 U.S.C. § 1291, this court
Oak issued a Commercial Insurance Policy to Billion Empire
Motors, Inc., an auto dealership in Sioux Falls. Billion
loaned a car to Lori Peterson. On September 22, 2008,
Peterson lost control of the car, crashing in a ravine. Laura
Dziadek, a passenger, was severely injured. She hired Zimmer
Duncan & Cole (ZDC) to represent her.
early 2009, Billion's insurance agent notified Charter
Oak about the accident. Faith Styles was Charter Oak's
claims representative. She learned Peterson was insured by
Progressive but only for $100, 000 liability coverage. On
February 6, Styles spoke with ZDC attorney Jeffery A. Cole
about coverage for Dziadek. According to Cole, she said
Dziadek had no coverage under the Charter Policy. Days later,
she wrote Cole a letter stating "no coverage for your
client [Dziadek] exists under this policy."
February 18, Cole sent Styles a letter requesting the
declaration sheet and "a true and correct copy" of
the Policy. She sent back the declarations sheet and excerpts
of the Policy. Styles did not send the entire Policy. In the
excerpts Styles sent, Dziadek was not an "insured."
February 24, Progressive offered Peterson's $100, 000
limit in exchange for a full release from Dziadek. Cole
declined because Dziadek's medical bills exceeded $100,
000 and he hoped to collect more from Peterson and other
alleged tortfeasors. Over the next two years, ZDC pursued
claims against Peterson, the State of South Dakota, various
state officials, and a signage company.
2011, ZDC attorney Daniel K. Brendtro reviewed the Charter
Policy to see if Dziadek was covered. He noticed the UIM
coverage and told a paralegal to get a copy of the entire
Policy from Styles. In response, Styles asked the paralegal
to request specific parts of the Policy, asserting it could
be over 2, 000 pages. The paralegal narrowed the request.
Styles did not respond. The following week, the paralegal
repeated the request. On July 21, Styles sent a full copy of
reviewing the entire Policy, ZDC wrote Styles for
confirmation that Dziadek was an insured with UIM coverage.
After 50 days with no response, Dziadek filed this lawsuit in
September 2011, alleging breach of contract, deceit, and bad
faith. Charter Oak's answer admitted the existence of UIM
and medical-payments coverage. Charter Oak also agreed to
Dziadek's settlement with Peterson and Progressive for
the $100, 000 limit. On February 21, 2012, Charter Oak paid
$900, 000 in UIM coverage (the $1 million limit minus $100,
000 from the Progressive policy), plus $5, 000 in
jury found Charter Oak liable for deceit and breach of
contract. It awarded Dziadek $250, 000 for additional legal
fees; $500, 000 of "other harm . . . including mental
and emotional harm"; and prejudgment interest. In phase
two of the trial, the jury awarded $2.75 million in punitive
damages. Charter Oak and Dziadek both appeal.
Oak argues that Dziadek's deceit and breach of contract
claims fail as a matter of law. This court reviews de novo
the denial of a motion for judgment as a matter of law,
taking all facts and reasonable inferences most favorably to
Dziadek. See Hudson v. United Sys. of Ark., Inc.,
709 F.3d 700, 702 (8th Cir. 2013).
Oak believes that the "independent duty rule" bars
Dziadek's deceit claim because "there is no
independent tort claim for the failure to perform a contract
duty that would be unenforceable separate from and
independent of ...