Leslie Joe Nance v. Kentucky National Insurance Company

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 06-1511
LESLIE JOE NANCE,
Plaintiff - Appellee,
versus
KENTUCKY NATIONAL INSURANCE COMPANY,
Defendant - Appellant,
and
NATIONWIDE INSURANCE AGENCY, INCORPORATED,
Defendant.
Appeal from the United States District Court for the Southern
District of West Virginia, at Charleston. John T. Copenhaver, Jr.,
District Judge. (2:02-cv-00266)
Argued: March 14, 2007 Decided: May 8, 2007
Before MICHAEL and KING, Circuit Judges, and HAMILTON, Senior
Circuit Judge.
Affirmed by unpublished per curiam opinion.
ARGUED: Douglas Michael Palais, LECLAIR RYAN, P.C., Richmond,
Virginia, for Appellant. William Lowell Mundy, MUNDY & NELSON,
Huntington, West Virginia, for Appellee. ON BRIEF: Cameron S.
Matheson, LECLAIR RYAN, P.C., Richmond, Virginia, for Appellant.
Unpublished opinions are not binding precedent in this circuit.

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PER CURIAM:
In the present appeal, Kentucky National Insurance Company
(Kentucky National) seeks reversal of the district court’s entry of
judgment against it in the amount of $233,000 in compensatory
damages and $850,000 in punitive damages. The judgment resulted
from the jury’s verdict in favor of Leslie Joe Nance (Nance), one
of Kentucky National’s insureds, on Nance’s claim in the present
diversity action that Kentucky National violated the West Virginia
Unfair Claim Settlement Practices Act, W. Va. Code § 33-11-4(9), in
handling his uninsured motorist claim. According to Kentucky
National, reversal is appropriate because the district court erred
in denying its motion for judgment as a matter of law, made
pursuant to Federal Rule of Civil Procedure 50(b). We affirm.
I.
Because this appeal challenges the district court’s refusal to
grant Kentucky National’s Rule 50(b) motion, we must view the
evidence in the light most favorable to Nance (and in support of
the jury’s verdict), drawing every legitimate inference in Nance’s
favor. International Ground Transp. v. Mayor and City Council of
Ocean City, Md., 475 F.3d 214, 218-19 (4th Cir. 2007). Therefore,
we present the facts in accord with this standard.
On December 15, 1998, at approximately 7:20 a.m., Nance was
driving a tractor-trailer, owned by his employer, on U.S. Route

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25-E in Barbourville, Kentucky. At the time, Nance was thirty-
eight years old. He was traveling the speed limit, fifty-five
miles per hour, which speed was later corroborated by the tractor-
trailer’s on-board computer.
As Nance approached the intersection of U.S. Route 25-E and
Noeville Lane, with the fourteen lights on his tractor-trailer
illuminated, Lisa Cordell (Cordell) pulled out directly in front of
Nance, despite the fact that her lane of traffic was controlled by
a stop sign. Trying to avoid striking Cordell’s vehicle, Nance
slammed on his brakes and swerved to the left. Nonetheless, Nance
was unable to avoid hitting Cordell’s vehicle; the impact causing
his tractor-trailer to jackknife.
Paramedics quickly arrived on the scene, extracted Nance from
the cab of his tractor-trailer, and transported him via an
ambulance to the hospital for treatment of his physical injuries.
Within four minutes after the accident, two police officers arrived
on the scene and conducted an investigation. Upon arrival, the
officers immediately noted that the windows of Cordell’s vehicle
were frosted over, which had prevented her from seeing Nance’s
vehicle approaching. The police officers also determined that
Cordell had failed to yield the right of way and that Nance had not
engaged in any improper driving.
As a result of the accident, Nance suffered serious injuries
to his head, neck, shoulder, back, and brain. The brain injury

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caused him continuous headaches. Due to his injuries, Nance
underwent extensive treatment, including back surgery, chiropractic
treatment, and physical therapy. In addition to his medical
expenses, Nance incurred significant past lost wages and future
lost wages as a result of the accident.
Also as a result of the accident, Nance suffered a significant
loss of enjoyment of life. For example, due to Nance’s injuries,
he could no longer perform tasks around his farm and he could no
longer engage in the activities that he once enjoyed with his
family. During the trial in the present action against Kentucky
National, Conrad Diaz, Nance’s expert witness in claims adjusting,
valued Nance’s damages from the accident at between $750,000 and
$1,300,000, with a figure exceeding $1,000,000 “more likely,” (J.A.
663).
At the time of the accident, Cordell was uninsured. Nance did
not learn of her uninsured status until a year after the accident.
A policy issued by Liberty Mutual Insurance Company (Liberty
Mutual) provided Nance the first $50,000 in uninsured motorist
coverage. A policy issued by Kentucky National provided Nance an
additional $100,000 in uninsured motorist coverage, which coverage
was secondary to that provided under the Liberty Mutual policy.
Finally, a policy issued by Nationwide Mutual Insurance Company
(Nationwide) also provided Nance $100,000 in uninsured motorist
coverage, which coverage was also secondary to that provided under

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1Liberty Mutual was joined as a party in the 1999 Underlying
Action in late 2000.
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the Liberty Mutual policy. Notably, the parties agree that
Kentucky National’s uninsured motorist coverage would not trigger
until the $50,000 policy limit under the Liberty Mutual policy had
been exhausted.
In November 1999, when Nance was first advised that Cordell
might not have insurance, the one-year statute of limitations on
his claims in Kentucky was about to expire. Therefore, to preserve
his claims, Nance promptly filed suit in Kentucky state court (the
1999 Underlying Action) against Cordell, Kentucky National, and
Nationwide.1 Of relevance here, Nance’s complaint in the 1999
Underlying Action alleged tort liability based upon a negligence
theory against Cordell and contractual liability against Kentucky
National.
Immediately after Nance filed the 1999 Underlying Action, on
November 29, 1999, counsel for Nance faxed a copy of the police
report to Kentucky National. The jury heard testimony establishing
that despite the clarity of liability, Kentucky National repeatedly
attempted to create bogus issues of negligence against Nance in
order to devalue his claim. For example, with no evidence
whatsoever, Kentucky National asserted that Nance’s brakes on the
tractor-trailer were defective at the time of the accident.
Kentucky National later admitted that it never had any evidence to

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2The record is unclear whether the Department of
Transportation was a federal or state agency.
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support this assertion. In fact, the Department of
Transportation’s inspection of the tractor-trailer demonstrated
that everything was working properly. 2 For a second example,
Kentucky National also accused Nance of speeding until the tractor-
trailer’s onboard computer indicated otherwise. For a third
example, Kentucky National sought to work with Cordell in order to
place blame on Nance.
For yet a fourth example, approximately three years after
Nance filed the 1999 Underlying Action, four years after the
accident occurred, and after a mediation between Nance and Kentucky
National, Kentucky National hired an accident reconstructionist.
Nance’s expert witness at trial regarding claims adjusting, Conrad
Diaz, testified that, under the circumstances of this case,
including Kentucky National’s timing in hiring the accident
reconstructionist, Kentucky National hired the accident
reconstructionist in an attempt to place liability for the accident
on Nance. However, the accident reconstructionist placed no fault
on Nance.
As early as January 2000, Nance attempted to discuss with
Kentucky National an amicable settlement. Kentucky National
refused to even discuss settlement, and after one and one-half
years of undergoing discovery, Nance attempted to set the 1999

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Underlying Action for trial. However, Kentucky National opposed
setting the case for trial and instead requested mediation, which
mediation the court ordered. Therefore, on September 17, 2001,
Nance, his wife, and Nance’s counsel traveled over three hours to
attend a mediation conference. At this mediation conference, on a
date chosen and agreed to by Kentucky National, Kentucky National
refused to even make an offer to Nance to settle his claim and then
unilaterally aborted the mediation at noon. Nance testified during
the trial in the present case that his dire financial situation and
the burden of litigation with Kentucky National, both caused by
Kentucky National’s mishandling of his uninsured motorist claim,
caused him extreme stress. The stress was so great that, beginning
in either 2000 or 2001, he began taking prescription anti-anxiety
medication, which medication he continued to take at the time of
the trial in the present case (November 2005). In November 2001,
Nance settled with Liberty Mutual for the policy limit of $50,000.
The evidence at trial in the present case showed that, despite
clear liability on a claim worth between $750,000 and $1,300,000,
Kentucky National did not make its first settlement offer of
$25,000 until October 11, 2002, three years after Nance filed the
1999 Underlying Action, seven months after Kentucky National admits
that it learned Liberty Mutual had settled with Nance for Liberty

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Mutual’s $50,000 policy limit, and approximately two weeks before
the scheduled trial date in the 1999 Underlying Action.
Approximately one week later, on October 18, 2002, Kentucky
National upped its offer by $10,000 to $35,000. Prior to this
second offer, Kentucky National’s defense counsel suggested to
Kentucky National that it offer Nance $80,000, a recommendation
which Kentucky National rejected. Because of a technical problem
with the jury, the trial court in the 1999 Underlying Action
continued the start of that trial until April 2003. As the
rescheduled trial date approached, although the facts of the case
and the amount of damages had not changed, Kentucky National
increased its offer to $50,000, just half of its policy limit.
Nance rejected the offer.
Despite the fact that Nance had been treated by over twenty
physicians, some required by Workers’ Compensation, and armed with
his medical records, Kentucky National asked Nance to undergo a
medical examination in Lexington, Kentucky, approximately two and
one-half hours from his home. Nance requested that he be permitted
to see a doctor closer to his home as his medical condition made
travel difficult, but Kentucky National refused. After the two and
one-half hour trip, Kentucky National’s designated doctor examined
Nance for only approximately eight to ten minutes.
After Nance and his wife Debra left the appointment with
Kentucky National’s designated doctor, the Nances became aware that

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someone had been following them, which frightened the couple. At
trial in the present case, Nance’s wife specifically testified
regarding the events which took place after they left the doctor’s
office in Lexington, Kentucky:
Well, we had parked in a parking garage, and when we
pulled out of the parking garage, we just looked back in
the mirror and we noticed there’s a guy, the car behind
us, has a video camera up to our car, and we thought
that’s kind of weird, you know, a guy in a parking garage
filming somebody. So we pull out of the parking garage.
The guy proceeds to pull out with us. We make a right,
he makes a right. He has still got that video camera.
Me and Joe start to think there’s something weird -–
something is weird about this. So we had to get on 64 to
come home. So we get on 64, this brown car gets on to
64. The guy is still filming us. We change lanes, he
changes lanes. We get faster, he gets faster. By this
time, you know, I’m getting a little scared, I’m thinking
what is this guy after, what -– what’s he wanting, you
know? We didn’t know what he was after.
* * *
[W]e gave Todd Biddle[, one of the lawyer’s
representing Nance in the 1999 Underlying Action,] a
call because, I mean, it was getting scary because he was
right up on us, and we couldn’t see his license plate
number, and we asked Todd should we call the police, and
Todd said that more than likely we were being followed by
the insurance company.
(J.A. 717-18).
Nance testified on the matter as follows:
When we come out of the doctor’s office, I mean,
there were several people in the garage. I seen this
man, but you don’t think nothing of it. But when the car
starts staying real close to you, made me start getting
kind of nervous of what is going on. He followed us.
Every turn I made, he just kept staying right with us,
and that’s when I got pretty nervous. I did not know,
you know, what the intentions of this man was and it
scared me. So I did -– I had my cellphone with me, and

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I called Todd Biddle, and I told him because I did
suspect, after we got out on the interstate and nothing
had happened yet, that maybe this guy was like an
investigator following us. So I called Todd and asked
him should I call the state police and have this
gentleman stopped or what I should do, and he said, “I
will take care of it.”
(J.A. 782). The evidence at trial established that Kentucky
National and Nationwide jointly hired the private investigator who
frightened the Nances.
The jury in the present action also heard evidence of similar
bad-faith refusal-to-settle-conduct by Kentucky National. The
first incident involved Kentucky National’s handling of an
underinsured motorist claim filed by James Garland (Garland).
Attorney Guy Bucci (Attorney Bucci) represented Garland. A drunk
driver, who had just stolen gas from a convenience store, traveling
at a high rate of speed, down a busy street, without any lights on,
crossed the center line and struck Garland traveling in his
employer’s vehicle. Garland suffered substantial physical injuries
while the passenger riding with the drunk driver was killed.
Like the present case, Kentucky National contested liability
in Garland’s case. Moreover, Kentucky National attempted to create
issues of liability and place the blame on its own insured by
baselessly alleging Garland had crossed over the center line.
Throughout its handling of Garland’s claim, Kentucky National
refused to acknowledge that Garland had a legitimate claim for his
substantial injuries until the eve of trial. Throughout the course

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of litigation, none of the circumstances had changed to warrant
Kentucky National’s sudden offer of the policy limit to settle
Garland’s claim other than the fact that trial was about to occur
and that Kentucky National had not done a proper evaluation of
Garland’s claim in the first place. As Attorney Bucci explained,
Kentucky National’s attitude with regard to claims handling
amounted to “fight and delay.” (J.A. 405).
In the second case exemplifying Kentucky National’s fight-and-
delay approach to claims handling, Joe Holstein (Holstein) was a
passenger in a vehicle driven by a Kentucky National insured who
was speeding and wrecked in a single vehicle accident. Holstein’s
counsel, William Tiano (Tiano), testified in the present case that
Kentucky National offered Holstein an amount substantially less
than even his documented medical bills to settle his claim.
Kentucky National forced Holstein to file suit against it. After
several additional unreasonable offers, and on the eve of trial,
Kentucky National finally offered its policy limit to settle
Holstein’s claim.
The jury also heard expert testimony from Vincent King (King),
who is a West Virginia licensed attorney, a West Virginia licensed
insurance adjuster, a former Deputy Insurance Commissioner for West
Virginia, and a former General Counsel for West Virginia’s
Insurance Commissioner. King testified to multiple dealings with
Kentucky National during his time at the West Virginia Insurance

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Commission and in private practice in which Kentucky National
violated ordinary claims practices standards.
As with both Garland and Holstein, Kentucky National’s fight-
and-delay approach to claims handling began to wear on Nance and
his wife. As a result of Kentucky National’s refusal to make a
good faith settlement offer, the Nances suffered major financial
difficulty. The Nances’ financial position became so precarious
that they were required to re-mortgage their house at a high
interest rate, even though it was free of debt at the time, in
order to prevent repossession of some of their assets. Over the
years, as the claim process with Kentucky National dragged on, the
Nances continued to have difficulty making ends meet, causing them
to have yard sales to raise cash, which yard sales resulted in
great embarrassment to Nance as some of his coworkers attended.
The financial distress also caused the Nances to sell, inter alia,
a dump truck, a flatbed truck, a horse, training equipment for
horses, and dogs and equipment for coon hunting. Additionally,
Kentucky National’s fight-and-delay approach to claims handling
caused the Nances to deplete both a personal savings account and an
account for their son’s college education. The jury also heard
evidence to the effect that Nance suffered mental and emotional
trauma due to Kentucky National’s delay tactics and refusal to
offer a good faith settlement.

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3Nationwide settled with Nance for $50,000.
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Eventually, in April 2003, just a couple of days before the
start of the rescheduled trial in the Underlying 1999 Action,
Kentucky National offered $60,000 to Nance to settle his claim
against it. At trial in the present case, Conrad Diaz expertly
opined that Kentucky National’s $60,000 offer was neither prompt
nor a good faith offer based upon the value of the claim.
Ultimately, Kentucky National wore Nance down so much
emotionally and financially that he accepted its $60,000 offer.
The Nances knew that to continue litigation would cost additional
money and take additional time with the possibility of an appeal.
At this point, the Nances had $80 in their savings account. As
Nance testified during trial in the present case, “[Kentucky
National] had finally beat me down.” 3 (J.A. 793).
In the present case, Nance alleged that Kentucky National
violated the West Virginia Unfair Claim Settlement Practices Act,
W. Va. Code § 33-11-4(9), in handling his uninsured motorist claim.
Of relevance in this appeal, the West Virginia Unfair Claim
Settlement Practices Act provides:
(9) Unfair claim settlement practices. - No person shall
commit or perform with such frequency as to indicate a
general business practice any of the following:
* * *
(c) Failing to adopt and implement reasonable
standards for the prompt investigation of claims
arising under insurance policies;

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(d) Refusing to pay claims without conducting a
reasonable investigation based upon all available
information;
* * *
(f) Not attempting in good faith to effectuate
prompt, fair and equitable settlements of claims in
which liability has become reasonably clear . . . .
Id.
The district court conducted a jury trial in the present case
from November 1, 2005 through November 7, 2005. At the close of
Nance’s evidence, Kentucky National moved for judgment as a matter
of law. See Fed. R. Civ. P. 50(a). The district court denied the
motion. At the close of Kentucky National’s case in defense,
Kentucky National orally renewed its motion for judgment as a
matter of law. The district court again denied the motion.
The jury returned a verdict in favor of Nance, awarding him:
(a) $150,000 for increased costs and expenses; (b) $100,000 for
aggravation, inconvenience, and annoyance; (c) $100,000 for
emotional distress; and (d) $850,000 in punitive damages, for a
total of $1,200,000. On November 18, 2005, the district court
entered judgment in the amount of $1,200,000. Upon motion by
Kentucky National and with the agreement of Nance, the district
court remitted the $150,000 figure to $33,000. Thus, the district
court entered an amended judgment in favor of Nance for a total of
$233,000 in compensatory damages and $850,000 in punitive damages
(combined total of $1,083,000). This resulted in a 1 to 3.64 ratio

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of compensatory damages to punitive damages. The district court
denied the remainder of Kentucky National’s post-trial motion for
judgment as a matter of law, or in the alternative, for a new
trial. See Fed. R. Civ. P. 50(b).
Kentucky National noted a timely appeal, raising two distinct
challenges to the judgment. We address each in turn.
II.
On the issue of punitive damages, the district court
instructed the jury as follows:
In addition to compensatory damages, punitive
damages may be awarded for violation of the Unfair Claims
Settlement Practices Act if such violation or violations
occurred during the plaintiff’s claim, and we’re talking
about the plaintiff’s underlying claim, and constitute
both a general business practice and rise to the level of
a high threshold of actual malice toward the plaintiff in
the settlement process.
Actual malice in this context means that the
insurance company actually knew that the policyholder’s
claim was proper, but willfully, maliciously, and
intentionally utilized an unfair business practice in the
manner it dealt with its insured, the plaintiff, in
handling the plaintiff’s claim in this case. I should
say, in the underlying case, as it were.
(J.A. 1025). On appeal, while Kentucky National does not take
issue with the actual content of these instructions, it does take
issue with the district court’s decision to send the issue of
punitive damages to the jury. In this vein, Kentucky National
challenges as erroneous the district court’s denial of its motion
for judgment as a matter of law with respect to the issue of

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4Nance’s first response to Kentucky National’s argument on
this issue is to claim that Kentucky National failed to preserve
this issue for appellate review. Our review of the record
convinces us otherwise. Accordingly, we will review Kentucky
National’s challenge to the district court’s submission of the
punitive damages issue to the jury under our normal standard of
review, which is de novo. Bryant v. Aiken Reg’l Med. Ctrs. Inc.,
333 F.3d 536, 543 (4th Cir. 2003).
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punitive damages. According to Kentucky National, insufficient
evidence existed for the issue of punitive damages to go to the
jury. 4
Kentucky National’s challenge poses the following question on
appeal: Did a legally sufficient evidentiary basis exist for a
reasonable jury, viewing the evidence in the light most favorable
to Nance, to find actual malice on the part of Kentucky National in
its handling of Nance’s uninsured motorist claim. See Fed. R. Civ.
P. 50(a); Bryant, 333 F.3d at 543. If reasonable minds could
differ with respect to the finding of actual malice, we are obliged
to affirm. See Bryant, 333 F.3d at 543. As with other legal
rulings, we review de novo the conclusions of law on which a trial
court’s denial of a motion for judgment as a matter of law is
premised. Benner v. Nationwide Mut. Ins. Co., 93 F.3d 1228, 1233
(4th Cir. 1996).
In denying Kentucky National’s motion for judgment as a matter
of law on this issue, the district court stated as follows in its
March 28, 2006 written memorandum opinion and order:

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Punitive damages are available if a plaintiff shows
that his insurer acted with actual malice. The West
Virginia Supreme Court has explained that actual malice
means “that the company actually knew that the
policyholder’s claim was proper, but willfully,
maliciously and intentionally utilized an unfair business
practice in settling, or failing to settle, the insured’s
claim.” Syl. pt. 2, McCormick v. Allstate Ins. Co., 505
S.E.2d 454 (W.Va. 1998). Defendant asserts that there
was no “clear and convincing evidence” that it acted with
actual malice, and the testimony adduced at trial showed
that “the litigation was handled as other litigation in
Knox County, Kentucky.” (Def. Mem. at 7).
[T]he evidence presented at trial showed little or
no action by defendant with respect to plaintiff’s claim
for a very long time. Though Diaz testified that
liability was reasonably clear based on the accident
report, nearly three years passed before any offer of
settlement was made to plaintiff. Additionally, through
witnesses like King and Bucci, plaintiff showed that
defendant had engaged in similar conduct as a general
business practice, which may be evidence of intent.
State Farm Mutual Ins. Co. v. Stephens, 425 S.E.2d 577,
584 (W.Va. 1992). Under these circumstances, the jury’s
determination that defendant acted with actual malice is
warranted.
(J.A. 1259-60).
We hold the district court did not err in allowing the issue
of punitive damages to go to the jury. The evidence presented at
trial, viewed in the light most favorable to Nance, shows that
Kentucky National, at a minimum, should have immediately offered
its policy limit of $100,000 to Nance in March 2002, when Kentucky
National learned that Liberty Mutual (insurer of the tractor-
trailer driven by Nance) had settled for its $50,000 policy limit.
Expert witness testimony by Conrad Diaz established that, at this
point in time (indeed, as early as February 2001), liability on the

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part of Cordell was reasonably clear, and the fact that Nance’s
damages well exceeded Liberty Mutual’s $50,000 policy limit and
Kentucky National’s $100,000 policy limit was reasonably clear to
Kentucky National. Nonetheless, Kentucky National waited an
additional seven months to offer Nance even the paltry sum of
$25,000, all the while knowing that the accident had occurred
almost four years prior in December 1998. Then, although nothing
had changed, Kentucky National took an additional five months to
offer Nance $50,000, just half of its policy limit.
Additionally, several factual circumstances established by
Nance at trial, when viewed collectively and in conjunction with
the expert testimony of Conrad Diaz, establish actual malice: (1)
Kentucky National took steps to place liability on the part of
Nance, when the circumstances clearly showed that Nance was not at
fault; (2) Kentucky National refused to follow the advice of its
outside counsel to offer Nance $80,000 without any plausible reason
for so doing; and (3) the jury heard testimony from Attorneys King,
Tiano, and Bucci, demonstrating that it was Kentucky National’s
company policy to use unfair claims practices, to delay, and to
fight the payment of just claims.
In conclusion, we hold the district court did not err in
denying Kentucky National’s motion for judgment as a matter of law
on the issue of punitive damages.

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III.
Next, Kentucky National challenges the jury’s $850,000
punitive damage award as excessive in violation of the Due Process
Clause of the Fifth Amendment. U.S. Const. amend. V. Our review
of the record discloses that Kentucky National did not make such a
challenge below. Accordingly, we are constrained to review for
plain error. See In re: Celotex Corp., 124 F.3d 619, 630-31 (4th
Cir. 1997) (adopting plain error standard of review used in
criminal cases, as set forth in United States v. Olano, 507 U.S.
725 (1993), for application in civil cases when party failed to
preserve error below).
Under the plain error standard of review, we may only exercise
our discretion to correct a forfeited error, if we: (1) find error;
(2) find the error is plain; (3) find the error affects the
substantial rights of the party or parties alleging the error; and
(4) after examining the particulars of the case, find the error
seriously affects the fairness, integrity or public reputation of
judicial proceedings. Id. We conclude that even if Kentucky
National could satisfy the first prong of Olano’s plain error test,
which we doubt, it certainly cannot satisfy the second prong of
establishing that the error is plain, which prong requires the
error to be clear or equivalently obvious. Olano, 507 U.S. at 734
(explaining that for purposes of plain-error review, “‘[p]lain’ is
synonymous with ‘clear’ or, equivalently, ‘obvious’”).

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5We note that BMW involved an excessiveness challenge to a
punitive damages award under the Due Process Clause of the
Fourteenth Amendment, while Kentucky National’s challenge to the
punitive damages award here is properly brought under the Due
Process Clause of the Fifth Amendment, given that the governmental
action challenged involved a federal tribunal. Johnson v. Hugo’s
Skateway, 974 F.2d 1408, 1411 n.1 (4th Cir. 1992) (en banc)
(punitive damages award arising from federal tribunal is properly
challenged under the Due Process Clause of the Fifth Amendment).
Because the parties agree that BMW applies in the Fifth Amendment
context, and there appears no sound reason to apply a different
excessiveness test in the Fifth Amendment context as opposed to the
Fourteenth Amendment context, Morgan v. Woessner, 997 F.2d 1244,
1255 (9th Cir. 1993) (“The two Clauses should be applied in the
same manner when two situations present identical questions
differing only in that one involves a proscription against the
federal government and the other a proscription against the
States.”), we apply BMW.
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In BMW of North Am., Inc. v. Gore, 517 U.S. 559, 562 (1996),
the Supreme Court set forth three guideposts for appellate courts
to consider de novo in reviewing a punitive damage award for
excessiveness: “(1) the degree of reprehensibility of the
defendant’s misconduct; (2) the disparity between the actual or
potential harm suffered by the plaintiff and the punitive damages
award; and (3) the difference between the punitive damages awarded
by the jury and the civil penalties authorized or imposed in
comparable cases.” 5 State Farm Mut. Auto. Ins. Co. v. Campbell,
538 U.S. 408, 418 (2003) (citing BMW). The Supreme Court has
further stated:
“[T]he most important indicium of the reasonableness of
a punitive damages award is the degree of
reprehensibility of the defendant’s conduct.” We have
instructed courts to determine the reprehensibility of a
defendant by considering whether: the harm caused was
physical as opposed to economic; the tortious conduct

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evinced an indifference to or a reckless disregard of the
health or safety of others; the target of the conduct had
financial vulnerability; the conduct involved repeated
actions or was an isolated incident; and the harm was the
result of intentional malice, trickery, or deceit, or
mere accident. The existence of any one of these factors
weighing in favor of a plaintiff may not be sufficient to
sustain a punitive damages award; and the absence of all
of them renders any award suspect.
Campbell, 538 U.S. at 419 (internal citations omitted).
Application of the first and most important BMW guidepost
unequivocally cuts in favor of the reasonableness of the jury’s
punitive damages award in favor of Nance. The evidence at trial
established that the harm caused by Kentucky National’s actions and
inaction in handling Nance’s uninsured motorist claim was not
limited to economic harm. Indeed, the jury heard testimony from
both Nance and his wife that Kentucky National’s tortious tactics
in handling Nance’s uninsured motorist claim caused them
significant emotional and mental suffering, including being
frightened on their return trip from Lexington, Kentucky, upon
discovering they were under surveillance. Nance’s emotional and
mental distress required treatment with prescription anti-anxiety
medication, which treatment continued through the time of trial in
the present case. Kentucky National’s tortious conduct evinced an
indifference to or a reckless disregard of at least the emotional
and mental health of Nance and his wife. The record also leaves
little doubt that Nance, as the target of Kentucky National’s
tortious conduct, had financial vulnerability. The record shows

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that Kentucky National’s conduct involved repeated actions taken
with intentional malice, resulting in harm to Nance and his wife.
In short, each of the factors the Supreme Court has instructed us
to consider in determining the degree of reprehensibility of a
defendant supports the conclusion that the degree of Kentucky
National’s reprehensibility is indeed high.
We conclude the second BMW guidepost cuts in favor of Nance
also. Although the Supreme Court has refused to endorse a bright-
line ratio, it approved a 1 to 4 ratio of compensatory damages to
punitive damages in Pacific Mutual Life Insurance Company v.
Haslip, 499 U.S. 1, 18 (1991), which ratio is slightly higher than
we have in the present case of 1 to 3.64. Id. (approving $800,000
punitive damage award against life insurance company in fraud
case). Moreover, in a medical malpractice case, the Eighth Circuit
subsequently relied upon Haslip to remit a 1 to 10 ratio of
compensatory damages to punitive damages ($500,000 in compensatory/
$5,000,000 in punitive) to a 1 to 4 ratio ($500,000 in
compensatory/$2,000,000 in punitive) stating “the four-to-one ratio
approved . . . by the U.S. Supreme Court in Haslip [is an]

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6In Stogsdill, the Eighth Circuit conditionally affirmed the
judgment of the district court, subject to the plaintiff’s
acceptance of its remittitur of the jury’s $5,000,000 punitive
damages award to $2,000,000. Id. at 834. If the plaintiff chose
not to accept the remittitur, the Eighth Circuit ruled that it
reversed and remanded for a new trial on liability and damages.
Id.
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appropriate due process maximum.” 6 Stogsdill v. Healthmark
Partners, L.L.C., 377 F.3d 827, 833 (8th Cir. 2004).
Relying on Campbell, 538 U.S. at 426, Kentucky National argues
that we can only compare the ratio between the $33,000 (remitted
from $150,000) the jury awarded Nance to compensate him for his
out-of-pocket damages with the $850,000 in punitive damages,
because the remaining $200,000 the jury awarded Nance in
compensatory damages was based upon a component of damages
duplicated in the jury’s punitive damages award. See id. (citing
Restatement (Second) of Torts § 908, Comment c, p. 466 (1977) (“In
many cases in which compensatory damages include an amount for
emotional distress, such as humiliation or indignation aroused by
the defendant’s act, there is no clear line of demarcation between
punishment and compensation and a verdict for a specified amount
frequently includes elements of both.”)).
Based upon the evidence in the present case, we reject
Kentucky National’s duplicative damages argument. “Compensatory
damages are intended to redress the concrete loss that the
plaintiff has suffered by reason of the defendant’s wrongful
conduct.” Campbell, 538 U.S. at 416 (internal quotation marks

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omitted). In contrast, punitive damages are “aimed at deterrence
and retribution.” Id. Our review of the record in this case,
discloses that the jury’s noneconomic award of compensatory damages
was not duplicative of its punitive damages award. Rather, the
$100,000 the jury awarded Nance for emotional distress and the
$100,000 the jury awarded Nance for aggravation, inconvenience, and
annoyance was intended by the jury to compensate him for harm that
he actually suffered and was proximately caused by Kentucky
National’s tortious conduct. Indeed, the district court aptly
summarized the evidence in this regard in rejecting Kentucky
National’s post-trial arguments that the jury’s award for emotional
distress was nothing more than an award of punitive damages and
that Nance presented no evidence to distinguish his claims of
emotional distress from his claims for aggravation, inconvenience,
and annoyance:
[T]here appears to be ample evidence to support an
award for aggravation, inconvenience and annoyance and a
separate award for emotional distress. Plaintiff
testified that his experience in dealing with his
insurance company was “always a fight.” He was
“bothered” that his insurance company was “blaming” him
for the accident. He ultimately entered into a
settlement in the underlying claim because his insurer
“had finally beat [him] down.” Certainly, this testimony
evidences possible aggravation, annoyance, and
inconvenience suffered as a result of defendant’s having
engaged in unfair claims settlement practices.
But plaintiff further testified to high levels of
emotional distress brought on by the underlying
litigation and by his precarious financial situation. He
described his savings account as “exhausted” and
testified that he was forced to obtain a loan against his

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home, though the mortgage had been paid off, and to sell
a great deal of his personal property. He testified that
his family physician began treating him for stress in
either 2000 or 2001, and that he now takes medication for
stress. The jury’s verdict is supportable by this
evidence.
(J.A. 1258). We also add that Nance testified at trial that prior
to Kentucky National’s misconduct, he had no more problems with
stress than a normal person.
Finally, the last BMW factor -- the difference between the
punitive damages awarded by the jury and the civil penalties
authorized or imposed in comparable cases -- does not offer much
guidance one way or the other. If West Virginia’s Commissioner of
Insurance finds that an insurer committed or performed unfair
claims settlement practices with such frequency as to indicate a
general business practice, the maximum civil penalty that can be
imposed under the West Virginia Unfair Claim Settlement Practices
Act is $250,000. See West Virginia Code § 33-11-6(c). However,
such a penalty does not take into consideration Kentucky National’s
malice as found by the jury in its handling of Nance’s claim.
Neither party has pointed to any other civil-penalty schemes for
our comparison.
In sum, Kentucky National has not established that the
district court committed plain error by failing sua sponte to remit
the jury’s punitive damages award on the ground of excessiveness in
violation of the Due Process Clause of the Fifth Amendment.

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IV.
In conclusion, we affirm the judgment below.
AFFIRMED

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