Aetna Life Insurance Company v. Lavoie

PETITIONER: Aetna Life Insurance Company
RESPONDENT: Lavoie
LOCATION: Livonia Police Station

DOCKET NO.: 84-1601
DECIDED BY: Burger Court (1981-1986)
LOWER COURT: Supreme Court of Alabama

CITATION: 475 US 813 (1986)
ARGUED: Dec 04, 1985
DECIDED: Apr 22, 1986

ADVOCATES:
Jack N. Goodman - on behalf of the Appellees
Theodore B. Olson - on behalf of the Appellant

Facts of the case

Question

Media for Aetna Life Insurance Company v. Lavoie

Audio Transcription for Oral Argument - December 04, 1985 in Aetna Life Insurance Company v. Lavoie

Are you relying significantly on the disqualification aspect?

Jack N. Goodman:

--Chief Justice Burger, the Court applied the principle it had established in the Chavers case and thereafter which indicated that a bad faith denial of claims by an insurance company will give rise to a tort action which may result in punitive damages.

Theodore B. Olson:

With respect to--

Jack N. Goodman:

The two issues this Aetna has argued were... in which Alabama law were changed were a statement in earlier cases that as a general matter, a partial payment of an insurance claim would preclude a finding of bad faith, and second, that in order for bad faith to be shown, the plaintiff must establish that on the contract claim he would be entitled to a directed verdict.

Of Justice Embry?

Jack N. Goodman:

And in both of... and in both of those instances, the Court previously had not established an absolute rule but merely a general presumption, rebuttable on showing of specific facts, and that characterization of the previous cases is not one only of the majority opinion, but was the unanimous holding of the Court here for both dissents agreed with the majority opinion on both those issues which were the two ones which Aetna has argued would have benefitted Justice Embry in his case.

Theodore B. Olson:

--Before this Court, we certainly are.

Now, in criminal cases I suppose you would agree in Alabama, judges must instruct particularly on a capital case on the factors which must be taken into account, that this Court has laid down, is that not true?

Well, you haven't, you haven't gone into that yet.

Jack N. Goodman:

Yes.

Theodore B. Olson:

I haven't addressed that.

Was there any limiting principle given by way of instruction here?

Theodore B. Olson:

I would like to address the question of the application of the Eighth Amendment to punitive damages, but I certainly--

Jack N. Goodman:

In the Court's opinion or in the trial--

Now, also tell us how we reach that sort of a question in a state court.

In the trial court.

Theodore B. Olson:

--The Eighth Amendment question, Mr. Chief Justice,--

Jack N. Goodman:

--In the trial court.

Well--

Jack N. Goodman:

As far as the punitive damages, they were charged, in addition to the matters in which Mr. Olson described, they were also charged with respect to the Gulf Life standard, which indicated that they should take into consideration the economic dislocation and the mental anguish which the Lavoies had suffered.

Theodore B. Olson:

--or the application of the disqualification?

Jack N. Goodman:

There was substantial evidence in the record that the Lavoies had been pursued rather mercilessly by the hospital in order to make this payment and were unable to do so.

--Judge Embry's participation.

Jack N. Goodman:

Finally, with respect to Justice Embry, his voting record in other bad faith cases shows that he was not acting out of his own interest for in the vast majority of cases that he sat on during the time when his suit was being prosecuted, he voted in favor of the insurer, including three times on the identical directed verdict standard which the Appellant argues he had set out to change.

This is... if this were a federal district judge or a Court of Appeals judge, we would have quite a different question, wouldn't we?

Jack N. Goodman:

And so there is little reason to believe on this very scanty record that he had any interest and he was doing anything improper.

Theodore B. Olson:

Yes, except that I think that under the circumstances here, the Court has the same power that it might have in the federal courts.

Jack N. Goodman:

But where, but to the contrary, where Blue Cross was a party before him, i.e., the party against whom he was suing, he very carefully recused himself, and that occurred only two weeks after the decision in the case at bar.

Theodore B. Olson:

We think that--

In any of the three cases in which he voted against the insurance company, would his vote have made a difference?