Reply Brief — Pacific Mutual Life Insurance v. Haslip

No. 89-1279 7

IN THE ere

Supreme Court of the United States

OCTOBER TERM. 1989

PACIFIC MUTUAL LIFE INSURANCE COMPANY,

Petitioner,

vs

CLEOPATRA HASLIP, CYNTHIA CRAIG,

ALMA M. CALHOUN and EDDIE HARGROVE,

Re spondents

ON PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF ALABAMA

PETITIONER’S REPLY BRIEF

Of Counsel BRUCE A. BECKMAN

VICKI W.W. LAI Counsel of Record

ADAMS DUQUE & HAZELTINE | ADAMS DUQUE & HAZELTINE

523 West Sixth Street $23 West Sixth Street

Los Angeles, California 9001/4 Los Angeles, California 900/14

(213) 620-1240 213) 620-1240

OLLIE L. BLAN, Jr J. MARK HART

BERT S. NETTLES SPAIN, GILLON, GROOMS

SPAIN, GILLON, GROOM: BLAN & NETTLES

BLAN & NETTLES 2117 Second Avenue North

2117 Second Avenue North Birmingham, Alabama 35203

Birmingham, Alabama 35203 (20S) 328-4100

+ c >> ¢ ’

>) 3254/00

Attorneys for Pete ner

) ‘ 4 19) » | 7 ' y 7

Pacific Mutual Life Insurance Company

. 4.

No. 89-1279

IN THE

Supreme Court of the United States

OCTOBER TE’.mM. 1989

PACIFIC MUTUAL LIFE INSURANCE COMPANY,

Petitioner,

VS.

CLEOPATRA HASLIP, CYNTHIA CRAIG,

ALMA M. CALHOUN and EDDIE HARGROVE,

Respondents.

ON PETITION FOR WRIT OF CERTIORARI

TO THE SUPREME COURT OF ALABAMA

PETITIONER’S REPLY BRIEF

Of Counsel: BRUCE A. BECKMAN

VICKI W.W. LAI Counsel of Record

ADAMS DUQUE & HAZELTINE ADAMS DUQUE & HAZELTINE

523 West Sixth Street 523 West Sixth Street

Los Angeles, California 90014 Los Angeles, California 900/4

213) 620-1240 (213} 620-1240

OLLiE L. BLAN, Jr. J. MARK HART

BERT S. NETTLES SPAIN, GILLON, GROOMS,

SPAIN, GILLON, GROOMS, BLAN & NETTLES

BLAN & NETTLES 2117 Second Avenue North

2117 Second Avenue North Birmingham, Alabama 35203

Birmingham, Alabama 35203 (205) 328-4100

(205) 328-4100

Attorneys for Petitioner

Pacific Mutual Life Insurance Company

TABLE OF AUTHORITIES

ARGUMENT

A. The

-i-

TABLE OF CONTENTS

ee ae a «© & ££ es & & © 6

Due Process Clause Of The Four-

teenth Amendment Requires That The

Appropriate Governmental Authority

Define Punishable Conduct And Set

The

Permissible Range * Punishment

To Be Imposed By * ___.ive Damages

Prior To Commissio -y The Defen-

dant

Be Punishable

l.

Of The Condu . Determined To

Due Process Requires More Than

Notice, Hearing And A Neutral

Decisionmaker. It Also Requires

Procedures Which Do Not Give

Arbitrary Power To Juries Or

Courts To Punish Selectively And

To Determine The Limits Of

Punishment After The Fact. ... .

The Historical Acquiescence By

Courts In Granting Standardless

Discretion To Juries To Impose

Punishment Through Punitive

Damages Awards Does Not In-

sulate The Practice From Constitu-

tional Review. ...........

2s Fae =. ee ee er ee ae

Page

3. Alabama Law, And The Jury

Instructicn Below Which It

Authorized, Conferred Arbitrary,

Discretionary Power On The Jury

To Determine Punishment In

Violation Of Pacific Mutual’s

Rights Under The Due Process

RN aS Se Otc eae Sena eso % 2 7

4. Post-Trial Review By The Trial

Judge And Appellate Court Did

Not Cure The Due Process

Defects At The Trial Stage Of

The Proceedings Below. ........ 1U

5. The Requirements Of Fundamen-

tal Fairness And Notice Included

In The Due Process Clause Apply

To The Amount Of Punishment

As Well As Fair Notice Of

Prohibited Conduct. .......... 13

The Award Of Punitive Damages

Against Pacific Mutual For The Fraud

Of Mr. Ruffin Acting With Respect

To The Medical Insurance Policy Of

Another Company, And Against The

Interests Of Pacific Mutual, Violated

Es cee ee eee ee 8 OS 14

Additional Trial Safeguards Are Re-

quired By Due Process In Punitive

ee a ee a ee 17

- ili -

D. The Award Herein Was Excessive in

Violation Of Pacific Mutual’s Due

CC ot og ad eee ee ee ea 18

oe ee ee ee ee ee ee 19

APPENDIX A

PARTIAL LIST OF ALABAMA JURY VER-

DICTS AWARDING PUNITIVE DAMAGES

OF $500,000 OR MORE. ........+.4-. Al

APPENDIX B

PACIFIC MUTUAL’S LAPSED POLICY

DR 98 88 ea ee ee Bl

-iV-

TABLE OF AUTHORITIES

Page

Cases

Abel v. Conover

170 Neb. 926, 104 N.W.2d 684 (1960). ..... 6

American Society Of Mechanical Engineers

v. Hydrolevel Corp.

0 Ee ee ee 14, 15

Baggett v. Bullitt

ee ee sas ae oe & eke ee 11

Breaux v. Simon

235 La. 453, 104 So.2d 168 (1958),

Trans. 112 So.2d 121 (La. Ct. App. 1959)... . 6

Brown v. Swineford

ok Uf) a ea er er 5

Browning-Ferris Industries Of Vermont, Inc.

v. Kelco Disposal, Inc.

Se as MT CUED 66. 66 we oreo eee 8 8

Bruton v. Leavitt Stores Corp.

87 N.H. 304, 179 A. 185 (1935)... ...... 6

Burt v. Advertiser Newspaper Co.

154 Mass. 238, 28 N.E.1(1891)......... 6

Calder v. Bull

Oe es os A | re 13

Charter Hospital of Mobile, Inc. v. Weinberg

558 So.2d $09,

1990 Ala. Lexis 17 (1990). ......... 8, 11

-V-

Page

City of Lowell v. Massachusetts Bonding Co.

313 Mass. 257, 47 N.E.2d 265 (1943) ...... 6

Collens v. New Canaan Water Co.

155 Conn. 477, 234 A.2d 825 (1967). ...... 6

Detroit Daily Post Co. v. McArthur

a ea ee ee eae eee 5

Eichenseer v. Reserve Life Ins. Co.

894 F.2d 1414 (Sth Cir. 1990). ......... 17

Farley v. Engelken

241 Kan. 663,

vam uae ewe Cee, TFET). 6c 8 6 oe we 7

Fay v. Parker

ee ee LUO + 4.0.8 626.6 2 4.6.6.0 a 5

Fein v. Permanente Med. Group

38 Cal.3d 137,

O95 P.26 G65 (Cal. 1965) . 2 ww eet te 7

Giaccio v. Pennsylvania

VOR ee ee 2, 8, 13

Glissman v. Rutt

175 Ind. App. 493,

spe RE eB) fe | ee ee ee 6

Green Oil Co. v. Hornsby

539 So.2d 218 (Ala. 1989). ........... 10

Hammond v. City of Gadsden

493 So.2d 1374 (Ala. 1986) ....... 10-12, 19

-Vi-

Page

Hanna v. Sweeney

78 Conn. 492, 62 A. 785 (1906). ........ 6

Hibschman Pontiac, Inc. v. Batchelor

266 Ind. 310, 362 N.E.2d 845 (1977) ...... 6

Jones v. State Bd. Of Medicine

97 Idaho 859, 555 P.2d 399 (1976)... ..... 6

Kenyon v. Hammer

142 Ariz. 69, 688 P.2d 961 (Ariz. 1984)... .. 6

Land & Associates, Inc. v. Simmons

562 So.2d 140 (Ala. 1989)... ...... oe

Larson v. Lindahl

167 Colo. 409, 450 P.2d 77 (1968). ....... 6

Lassiter v. Dept. of Social Services

ee es I a ge ag We ee eng a og 2

Louis Pizitz Dry Goods v. Yeldell

GR Be 2, eee oe ee 14

Lucas v. U.S.

poe & @ — dy Oe eee 7

McBride v. General Motors Corp.

Tor ©. wae. 156s GO. Ge. 19FG). cc ce ws 6

McCoy v. Arkansas Natural Gas Co.

175 La. 487, '43 So. 383 (1932),

core Gem... Bal U.B. Ger Civaee). 6k eS ee 6

Michigan C.R. Co. v. Vree:.and

ee es a sb ea dae ee Brew RS 19

- Vii -

Miller v. Florida

ee ee, ee TE. 6 6 6-8 4-846 we

Miller v. Kingsley

194 Neb. 123, 230 N.W.2d 472 (1979). . ..

Murphy v. Hobbs

7 Game. S64, 3 F. LID CIGRS). 6 we we es

National Life Ins. Co. v. Reedy

y-p % Ee es, er cere

New York Central and Hudson River

R.R. Co. v. United States

an Gra ee Es kb a ws es ee ws

Nicholson’s Mobile Home Sales, Inc.

v. Schramm

164 Ind. App. 598,

ee See Fee Cee Tee ss kc ee ae ee eG

Pfost v. State

219 Mont. 206,

713 P.2d 495 (Mont. 1985). .

Richardson v. Carnegie Library Restaurant

763 P.2d 1153 (1988) ........

Roberts v. United States Jaycees

468 U.S. 609 (1984). ......

Roginsky v. Richardson-Merrell, Inc.

378 F.2d 832 (2d Cir. 1967). .

Rookes v. Barnard (1964)

A.C..1129, 1 All Eng. Rep. 367

.16

- Vili -

Page

Rosener v. Sears, Roebuck & Co.

110 Cal.App.3d 740 (1980) ..........., 4

Rummel v. Estelle

ee 11

Schall v. Martin

a ee ete ws &

Sofie v. Fibreboard Corp.

112 Wash. 636,

af yo, bees 7

Solem v. Helm

CC ee oe 18-20

Spokane Truck & Dray Co. v. Hoefer

2 Wash. 45, 25 P. 1072 (1891). ......... 6

Standard v. Bolin

88 Wash.2d 614, 565 P.2d94(1977). ...... 6

Standard Oil Co. of Indiana v. Missouri

pu a ee, « cw ct te ewan G

Stevens v. Armontrout

787 F.2d 1282 (8th Cir. 1986) .......... )

Travelers Indemnity Co. v. Armstrong

442 N.E.2d 349 (Ind.S.Ct. 1982). ........ 17

Union City Barge Line, Inc. v. Union Carbide Co.

823 F.2d 129 (Sth Cir. 1987). .......... 15

United States Automobile Association v. Wade

544 So.2d 906 (Ala. 1989). ........... 12

o £8 «

Page

United States v. Batchelder

SR 2, 13

Williams v. Illinois

De PE. 5g oes hclk eke 3

Wise v. Daniel

221 Mich. 229, 190 N.W. 746(1922) ...... 6

Constitution

United States Constitution

Fourteenth Amendment ....... 1, 12, 19, 20

Publications

Couch on Insurance 2d (Rev. Ed.)

ee ae ee 15

Hippard, “The Unconstitutionality Of

Criminal Liability Without Fault: An

Argument For A Constitutional Doctrine

Of Mens Rea,” 10 Houston L.Rev. 1039 (1973). . . .16

Restatement Agency 2d Section 217C,

ep ae ee 15

EE

PETITIONER’S REPLY BRIEF

Petitioner Pacific Mutual Life Insurance Company

(“Pacific Mutual”) respectfully submits its reply to Respon-

dents’ Brief as follows:

ARGUMENT

A. The Due Process Clause Of The Fourteenth

Amendment Requires That The Appropriate

Governmental Authority Define Punishable

Conduct And Set The Permissible Range Of

Punishment To Be Imposed By Punitive Dam-

ages Prior To Commission By The Defendant Of

The Conduct Determined To Be Punishable.

Respondents have asserted a number of arguments for the

Due Process viability of Alabama punitive damages law and

the jury instruction in this case which that law authorized.

While some of the propositions advanced by Respondents are

correct statements of the law in the abstract, none support

x.espondents’ position here.

1. Due Process Requires More Than

Notice, Hearing And A Neutral Deci-

sionmaker. It Also Requires Proce-

dures Which Do Not Give Arbitrary

Power To Juries Or Courts To Punish

Selectively And To Determine The

Limits Of Punishment After The Fact.

Respondents suggest that Alabama punitive damages

procedures are valid because they give notice, an opportunity

to be heard, and a neutral decisionmaker {Resp. Br. 17-18}.

Due Process, however, requires more. Arbitrary and

discriminatory enforcement of laws, including the determina-

x

tion of punishment, violates Due Process [United States v.

Batchelder, 442 U.S. 114, 123 (1979); Miller v. Florida, 482

U.S. 423, 429, 435-436 (1987); Giaccio v. Pennsylvania, 382

U.S. 399, 401-403 (1966)], and mandates fundamental fair-

ness at the hands of the law for all defendants at all times in

all circumstances [Lassiter v. Dept. of Social Services, 452

U.S. 18, 24-25 (1981)].

It is this aspect of Due Process which is relevant to the

Constitutional inquiry here. Pacific Mutual submits that the

power given to the jury below! to determine whether or not,

and how much, to punish based only upon the personal

predilections and subjective reactions of the twelve individu-

als who happened, on this single occasion, to be empowered

to determine the limits of punishment in this case, conferred

such arbitrary power, and therefore violated Pacific Mutual’s

Due Process rights.

2. The Historical Acquiescence By Courts

In Granting Standardless Discretion

To Juries To Impose Punishment

Through Punitive Damages Awards

Does Nat Insulate The Practice From

Constitutional Review.

Respondents contend that because jury instructions sub-

stantially identical to that given below have been in use and

upheld for 200 years, the Due Process compliance thereof is

. Respondents suggest that Pacific Mutual waived any right to raise Due

Process Clause challenges to the jury instruction below, because no specific

objection was made thereto, and no alternative instruction was submitted.

However, in an unsuccessful motion for directed verdict [J.A. 37], Pacific

Mutual’s trial counsel challenged the constitutionality of Alabama pro-

cedures generally under a broad array of issues. This was deemed suffi-

cient by the Alabama Supreme Court to preserve the issues, as shown by

the fact that such court in fact considered the Constitutional issues raised

before that court by Pacific Mutual, including the issue that Due Process

requires an effective limit on the amount of punitive damages the jury may

award.

ee

-S-

established (Resp. Br. 20-21]. Respondents also contend that

recent studies show that in fact there has been no increase in

the frequency or size of punitive damages awards [Resp. Br.

23-24]. Respondents then contend that the matter should be

left to state legislatures and courts to remedy [Resp. Br. 24].

Contrary to Respondents’ position, the longevity of a

doctrine does not establish its compliance with Constitu-

tional requirements.

In Williams v. Illinois, 399 U.S. 235 (1970), in which the

Court invalidated the time-honored practice of extending the

prison term of convicted defendants beyond the stated maxi-

mum for their offenses when they were unable to pay fines

and court costs, the Court stated, at pages 239-240:

“... [Neither the antiquity of a practice nor the

fact of steadfast legislative and judicial adherence

to it through the centuries insulates it from constitu-

tional attack... .

“The need to be open to reassessment of ancient

practices other than those explicitly mandated by

the Constitution is illustrated by the present case

since the greatly increased use of fines as a

criminal sanction has made nonpayment a major

cause of incarceration in this country... .”

Here, while Respondents cite three studies for the proposi-

tion that there has been no increase in the frequency or size

of punitive damages awards, such conclusion is contrary to

common sense and simple observation. A review of the

historical expansion of punitive damages awards in Alabama

and California set forth in Appendix A to Petitioner’s Brief,

as updated in Appendix A-1 hereto, in Appendix E to

Petitioner’s Reply Brief to Respondents’ Opposition to peti-

tion for writ of certiorari, and Appendices A and B to the

amicus curiae brief herein of the Association For California

Tort Reform, and a review of the analysis of punitive dam-

ages awards in the amicus curiae brief of the American

Institute Of Architects, et al., clearly demonstrates that

«Ge

considerable change has occurred both in the frequency and

amount of punitive damages awards.

Respondents’ conclusion contrasts sharply with the obser-

vations of a California appellate justice on the judicial firing

line while the transformation of punitive damages wa: taking

place. In Rosener v. Sears, Roebuck & Co., 110 Cal.App.3d

74€ (1980), Justice Elkington filed a reluctant concurrence,

e» pressing his observations on the changes in punitive dam-

ages law, as follows, at page 758:

“I am fearful that the law of punitive damages as

it has developed in this state no longer serves any

public policy, or the legitimate interests of the

unentitled recipients of its constantly accelerating

largess.”

Further, at page 760:

“In California’s history it had long been the rule

that punitive damages were recoverable only where

the defendant entertained ‘the wrongful personal

intention to injure’ the plaintiff ... and that the

essential element of malice must be ‘ “actual

malice (denoting] ill will on the part of the defen-

dant, or his desire to do harm for the mere satisfac-

tion of doing it”’”’ .... When properly awarded,

punitive damages then had a modest relation to

actual damages; ‘the granting of them [was] done

with the greatest of caution [and they were] only

allowed in the clearest of cases.’ .. .

“But notwithstanding those restrictive and

cautionary dicta, the bases, and frequency, and

measure, of punitive damages have expanded far

beyond the original legislative and judicial intent

and, in my respectful opinion, far beyond reason

and sound public policy.”

Justice Elkington then analyzed the expansion of the size

of approved punitive damages awards, finding that prior to

- oe

_ e

1959, the highest ratio of punitive to actual damages upheld

in a California reported decision was approximately twice the

actual damages [id. at page 760]. He then noted at page 761

that the proportionate relationship has continued to escalate

until an award of 190 to 1 has been upheld.

Justice Elkington observed [id. at page 761] that “the

circumstances under which punitive damages may be

awarded have been widely expanded,” now being allowed in

“tortious” breach of contract actions and in many negligence

actions.

Justice Elkington then reported his observation of the

great increase in the frequency of punitive damages awards

as follows, at page 762:

“These and perhaps other reasons, I think, have

brought about the present-day practice of seeking

punitive damages in substantially all damage ac-

tions, and what will reasonably be termed the

explosion of punitive damage awards. And such

punitive damage awards are observed not to be

generally confined to large corporations such as

defendant Sears Roebuck & Company, or so-called

‘wealthy’ defendants. They are regularly returned

also, against the ‘average’ defendants of damage

actions.”

Until about 1970, punitive damages were seldom sought

and were infrequently awarded. Such awards were modest,

and were imposed against intentional evil-doers. Even so,

punitive damages doctrine has been controversial since

virtually its inception. A number of courts have expressed

doubt as to the propriety or validity of punitive damages,”

2 Fay v. Parker, 53 N.H. 342, 382 (1873); Murphy v. Hobbs, 7 Colo. 541,

545, 5 P. 119, 122 (1885); Brown v. Swineford, 44 Wis. 282, 286-288

(1877); Detroit Daily Post Co. v. McArthur, 16 Mich. 447, 453 (1868);

Roginsky v. Richardson-Merrell, Inc., 378 F.2d 832, 838-841 (2d Cir.

1967).

y *

while other courts rejected the doctrine entirely,” and still

other courts have severely limited the availability of punitive

damages.“

It is submitted that Respondents’ argument that validity is

conferred on punitive damages by historical survival to date

is not well-taken.

Similarly, Respondents’ suggestion that this Court abstain

from considering the matter and leave any solutions to the

state legislatures and courts, is without merit. A strong trend

appears to be emerging for state supreme courts to invalidate

even the limited restraints which state legislatures have

attempted to place on some punitive damages awards.” A

3 Hanna v. Sweeney, 78 Conn. 492, 494, 62 A. 785 (1906); Collens v. New

Canaan Water Co., 155 Conn. 477, 488, 234 A.2d 825, 831-832 (1967).

(Allows recovery only of compensatory damages, but includes expenses of

litigation, less taxable costs); Burt v. Advertiser Newspaper Co., 154 Mass.

238, 28 N.E. 1 (1891) (Holmes, J.); City of Lowell v. Massachusetts

Bonding Co., 313 Mass. 257, 269, 47 N.E.2d 265, 272 (1943); Bruton v.

Leavitt Stores Corp., 87 N.H. 304, 305, 179 A. 185, 186 (1935); Larson v.

Lindahl, 167 Colo. 409, 411-412, 450 P.2d 77, 78 (1968); Abel v. Conover,

170 Neb. 926, 929, 104 N.W.2d 684, 688 (1960); Miller v. Kingsley, 194

Neb. 123, 124, 230 N.W.2d 472, 474 (1979); Spokane Truck & Dray Co. v.

Hoefer, 2 Wash. 45, 56, 25 P. 1072, 1073-1074 (1891); Standard v. Bolin,

88 Wash.2d 614, 621, 565 P.2d 94, 98 (1977); Breaux v. Simon, 235 La.

453, 459, 104 So.2d 168, 170 (1958), Trans. 112 So.2d 121, 123 (La. Ct.

App. 1959); McCoy v. Arkansas Natural Gas Co., 175 La. 487, 497, 143

So. 383, 385-386 (1932), cert. den., 287 U.S. 661 (1932).

4 Rookes v. Barnard [1964] A.C. 1129, 1220, 1223, 1 All Eng. Rep. 367,

410-411; Wise v. Daniel, 221 Mich. 229, 190 N.W. 746, 747 (1922);

Hibschman Pontiac, Inc. v. Batchelor, 266 Ind. 310, 362 N.E.2d 845

(1977); Nicholson's Mobile Home Sales, Inc. v. Schramm, 164 Ind. App.

598, 606, 330 N.E.2d 785, 790-791 (1975). Criticized in Glissman v. Rutt,

175 Ind. App. 493, 495, 372 N.E.2d 1188, 1190 (1978).

5 Tort Reform Act overturned:

Arizona - Kenyon v. Hammer, 142 Ariz. 69, 688 P.2d 961 (Ariz. 1984).

Georgia - McBride v. General Motors Corp., 737 F. Supp. 1563 (D. Ga.

1990).

Idaho - Jones v. State Bd. Of Medicine, 97 Idaho 859, 555 P.2d 399

(1976) [declined to decide on reconsideration, but intermediate scrutiny test

(continued)

ats

decision by this Court would assist, not impede, state

reforms. Also, Pacific Mutual is entitled to Due Process in

this case. .

3. Alabama Law, And The Jury Instruc-

tion Below Which It Authorized, Con-

ferred Arbitrary, Discretionary Power

On The Jury To Determine Punish-

ment In Violation Of Pacific Mutual’s

Rights Under The Due Process Clause.

Respondents contend that the jury instruction below was

valid under Due Pre~ess because it focused the jury’s atten-

tion on the purishment purpose of the award, and advanced

Alabama’s interest in flexible, individualized punishment

[Resp. Br. 25-27]. Respondents also contend that the unpre-

dictable, unlimited nature of the awards furthers state objec-

tives by preventing would be wrong-doers from predicting

and internalizing the penalties for wrongdoing [Resp. Br.

26].

Rather than accommodating, as Respondents contend,

Pacific Mutual’s interest in rational and fair decisionmaking,

and Alabama’s interest in individualized deterrence and

retribution, the jury instruction in this case was

(ftn. continued)

announced, and placed burden of defendants to show correlation between

Act and availability of health care].

Kansas - Farley v. Engelken, 241 Kan. 663, 740 P.2d 1058 (Kan. 1987);

New Mexico - Richardson v. Carnegie Library Restaurant, 763 P.2d

1153 (1988).

Montana - Pfost v. State, 219 Mont. 206, 713 P.2d 495 (Mont. 1985).

Texas - Lucas v. U.S., 757 S.W.2d 687 (Tex. 1988).

Washington - Sofie v. Fibreboard Corp., 112 Wash. 636, 771 P.2d 711

(Wash. 1989).

Upheld:

California - Fein v. Permanente Med. Group, 38 Cal.3d 137, 695 P.2d

665 (Cal. 1985) [app. dismissed, 474 U.S. 892).

-8-

“incomprehensibly vague and unintelligible” as a guide to

jurors in determining the amount of punishment to impose.°

Alabama law allowed the particular twelve people sitting as

the jury to determine punishment as they saw fit, with no

other guide than to consider the “character and degree of the

wrong” and the “need for deterring similar wrongs.” As

Justice Brennan noted in Browning-Ferris Industries Of

Vermont, Inc. v. Kelco Disposal, Inc., 109 S.Ct. 2909 (1989),

at page 2923:

“Guidance like this is scarcely better than no

guidance at all... The point is . . . that the instruc-

tion reveals a deeper flaw: the fact that punitive

damages are imposed by juries guided by little

more than an admonition to do what they think is

best.”

While this Court has recognized the propriety of flexibil-

ity and discretion in sentencing, that recognition has been in

the context of cases in which the punishable conduct was

defined, and the range of permitted punishment fixed by

Statute. This was recognized by this Court in Giaccio v.

Pennsylvania, 382 U.S. 399 (1966), wherein the Court spe-

cifically stated that the holding in that case was not intended

to call into question the practice of some states to allow

juries to fix sentences within legislatively permitted ranges

[382 U.S. at page 405 n. 8].

In Schall v. Martin, 467 U.S. 253 (1984), relied upon by

Respondents, this Court upheld trial court discretion to order

pretrial detention if it found a likelihood that the juvenile

would commit a crime if not detained. There, the length of

detention was limited to the amount of time which would

elapse between the pretrial detention hearing and the trial. A

© Charter Hospital of Mobile, Inc. v. Weinberg, 558 So.2d 909, 1990 Ala.

Lexis 17 (Jan. 12, 1990), [Houston, J., concurring at 1990 Ala. Lexis 17,

pages 20-23, and expressing his view of a substantially identical

instruction].

-9-

determination of the likelihood that a defendant would com-

mit a crime prior to his or her court appearance is different in

kind from determining, as a matter of first instance, the

punishment to be imposed for given conduct.

Respondents argue that in noncapital offense cases, states

are free to give untrammeled discretion in sentencing to the

judge or jury, citing statutes supposedly giving total discre-

tion to fix sentences at “any number of years” (Resp. Br. 41].

However, the flexibility given in noncapital offense cases

is discretion within the maximum sentence prescribed by the

legislatures.

The states which authorize sentences for “any number of

years” in fact set ranges of permitted punishment. For ex-

ample, in Stevens v. Armontrout, 787 F.2d 1282 (8th Cir.

1986) relied upon by Respondents [Resp. Br. 41, n. 63], the

Statute provided that defendants convicted of first degree

murder could be sentenced to death, and that a defendant

convicted of second degree murder was subject to “impri-

sonment during his natural life, or for any number of years”

not less than ten. The defendant’s sentence was for 200

years, which the Court of Appeals found to be effectively a

life sentence [787 F.2d at 1283-1284]. The Michigan,

Virginia and District of Columbia statutes cited are similar to

that in Armontrout.

Respondents’ argument that states can give unfettered

discretion to fix punishment is not supported by the authority

they cite.’ Discretion and flexibility within a legislatively

prescribed range of punishment is different in kind from the

arbitrary power given to juries in Alabama and other states to

determine the amount of punishment to be imposed by

7 In Standard Oil Co. of Indiana v. Missouri, 224 U.S. 270 (1912), relied

upon by Respondents [Resp. Br. 22], this Court considered the antitrust fine

in question to be punitive damages, and accepted the propriety of discretion

to fix such awards, subject to review for excessiveness. The Constitutional

validity of punitive damages was not before the Court.

-10-

punitive damages awards, in the total absence of any sugges-

tion of a permitted range of punishment.

It is this absence of prior governmental action in Alabama

to set the range of permitted punishment which invalidates

the award against Pacific Mutual in this case. This absence

was aggravated by tie lack of any other guidance to the jury

on how to determine whether Pacific Mutual merited punish-

ment, and if so, how much.

Respondents’ contention that the unlimited and unpredict-

able nature of punitive damages is justified by the asserted

deterrent effect thereof, misses the point. Due Process re-

quires that the range of permitted punishment be sét in ad-

vance of conduct, not to allow potential offenders to perform

a cost/benefit calculation, but rather, to protect citizens from

arbitrary and discriminatory punishment.

It is submitted that the guidance given to the jury below

was inadequate in violation of Pacific Mutual’s Due Process

rights.

4. Post-Trial Review By The Trial Judge

And Appellate Court Did Not Cure The

Due Process Defects At The Trial Stage

Of The Proceedings Below.

Respondents contend that any in.alidity in the proceeding

below caused by conferring standardless discretion upon the

jury to determine punishment was cured by post-trial review

at the trial court and appellate levels [Resp. Br. 28-38],

particularly in view of the Hammon procedures announced

in Alabama to review punitive damages awards [id.].

8 Hammond v. City of Gadsden, 493 So.2d 1374 (Ala. 1986); Green Oil

Co. v. Horr ~by, 539 So.2d 218 (Ala. 1989).

>

As pointed out in Petitioner's Brief at pages 41-46, the

damage is done at the trial level, by the absence of standards

and a prescribed range of permitted punishment.- The

Hammond standards amount only to a “gentle test of exces-

Siveness” based upon the subjective, visceral reactions of

each judge or justice [see Rummel v. Estelle, 445 U.S. 263,

275 (1980), Burger, C.J., dissenting].

Additionally, the unconstitutionality of a law, such as

Alabama punitive damages law, cannot be cured by a proce-

dure for review of decisions made thereunder [Baggett v.

Bullitt, 377 U.S. 360, 373 (1964)]. Unless the jury standards

are clear, no meaningful judicial review can be conducted to

determine whether the standards were adhered to [See

Roberts v. United States Jaycees, 458 U.S. 609, 629 (1934)].

Review of jury determinations made with reference to guid-

ance as “incomprehensible and unintelligible” as that given

in Alabama, merely transfers discretion to the reviewing

courts. .

The situation in Alabama is worsened by the fact that

review, even under Hammond standards, is still deferential,

and presumes that the jury verdict was correct. Justice Hous-

ton of the Alabama Supreme Court noted that Alabama’s

interpretation of the right to a jury trial in the Alabama

Constitution requires even greater deference to jury deter-

minations than that given by most states, which contributed

to his cenclusion that post-trial review could not cure the

Constitutional deficiencies at the jury level.?

Unless judicial review amounts to a de novo trial of the

issues and a determination of the punitive award upon a

Constitutionally proper basis, judicial review could not cure

the defects in the jury decision. Alabama review under

Hammond criteria is not a trial de novo. As noted by the

amicus curiae brief herein of the Alabama Defense Lawyers

» Charter Hospital Of Mobile, Inc. v. Weinberg, 558 So.24 909, 1990 Ala.

Lexis 17 (1990), at 1990 Ala. Lexis, p. 19.

_ -12-

Association, post-trial review under Hammond has not re-

sulted in any meaningful modification of the law. This is

exemplified by the affirmance of the verdict in this case by

the Alabama Supreme Court, primarily on the basis that jury

verdicts are presumed to be valid [Pet. Cert., B 13].

In Land & Associates, Inc. v. Simmons, 562 So.2d 140

(Ala. 1989), cited by Respondents [Resp. Br. 31], the trial

court remitted a $2,500,000 award to $600,000, stating,

“*The problem here is that $2,500,000 is simply too much

for the conduct of which defendants were guilty’ ” [id. at

28]. The court went on to state that considering the gravity

of the wrong, the injury to plaintiff, and comparing other

awards, the award should be reduced to $600,000. The

Alabama Supreme Court affirmed, on the grounds that

awards which shock the conscience of *.e court may be

considered to be excessive, and the trial :ourt’s consideration

of the gravity of the wrong, the injury to plaintiff, and other

awards satisfied Hammond.

Similarly, in United States Automobile Association v.

Wade, 544 So.2¢d 906 (Ala. 1989), the trial court denied a

motion for remittitur, after a bdench trial. The Alabama

Supreme Court ordered a remittitur of $1,000,000 on the

grounds that the $3,500,000 award was excessive [544 So.2d

at 917).

It is apparent that Hammond review in Alabama amounts

to no more than a subjective test of excessiveness, trans-

ferring essentially unlimited discretion to the reviewing

courts, in the absence of a prior prescription of the permitted

range of punishment.

Alabama’s procedures in this case, in sum and in part,

failed to comply with the requirements of the Due Process

Clause of the Fourteenth Amendment.

» £0

5. The Requirements Of Fundamental

Fairness And Notice Included In The

Due Process Clause Apply To The

Amount Of Punishment As Well As

Fair Notice Of Prohibited Conduct.

Respondents appear to contend that the requirements of

Due Process apply only to definitions of prohibited conduct,

but that unlimited discretion to impose punishment can be

conferred upon courts or juries in determining sentences

[Resp. Br. 38-43].

Respondents appear to contend that discretion to impose a

life sentence, or a lesser term of years, is unlimited discre-

tion. All of the statutes cited by Respondents set forth legis-

lative upper limits of punishment, which as to some serious

crimes, was either death, life imprisonment, or a lesser term

of years, usually with a minimum stated.

It is this lack of a governmental determination of the

upper limit of punishment in the punitive damages law of

Alabama and most other states, which distinguishes it from

the authorities relied upon by Respondents. Due Process

requires that defendants be protected from arbitrary, dis-

criminatory establishment of the degree of punishment after

the fact. [See United States v. Batchelder, 442 U.S. 114, 123

(1979); Miller v. Florida, 482 U.S. 423, 429, 435-436

(1987); Giaccio v. Pennsylvania, 382 U.S. 399, 401-403

(1966); Calder v. Bull, 3 U.S. (3 Dall.) 386, 390-391 (1798). ]

It is submitted that Due Process requires that permissible

ranges of punishment be prescribed in advance of the con-

duct to be punished by punitive damages awards. Alabama’s

failure to do so requires that the award herein be vacated.

ies

B. The Award Of Punitive Damages Against Pacific

Mutual For The Fraud Of Mr. Ruffin Acting

With Respect To The Medical Insurance Policy

Of Another Company, And Against The Inter-

ests Of Pacific Mutual, Violated Due Process.*

Respondents appear to contend that Pacific Mutual was

negligent in failing to control Mr. Ruffin, and actively con-

tributed to the success of Mr. Ruffin’s fraud by not sending

the lapse notices regarding the Pacific Mutual life insurance

policies to the individual Respondents [Resp. Br. 4-7].

Respondents then contend that liability without fault is

proper in all cases, and that punishment may be inflicted on a

principal in the absence of benefit or intent to benefit by the

agent. This argument is based primarily on the assertion that

if fault were required, companies would be encouraged not to

supervise agents [Resp. Br. 11-17].

It should first be noted that no evidence showed notice to

Pacific Mutual’s home office of Mr. Ruffin’s conduct, even

were Ms. Ault’s testimony to be fully credited. At most,

notice to Mr. Lupia was shown. Even here, Ms. Ault was not

able to say that the instances she related involved Pacific

Mvtual policies or policyholders [Pet. Reply Cert. Al1-14].

The assertion by the Alabama Supreme Court that notice to

Pacific Mutual’s home office was shown is without any

support in the record.

It should also be noted Pacific Mutual in fact sent its

lapse notices directly to Respondents [R.T. 836-837, and the

lapse notices from Trial Exhibit 14, attached hereto as Ap-

pendix B-1 through B-4]. Respondents’ argument that

Pacific Mutual contributed to the success of Mr. Ruffin’s

alleged fraud is incorrect.

Respondents rely upon American Soc.ety Of Mechanical

Engineers v. Hydrolevel Corp., 456 U.S. 556 (1982); and

Louis Pizitz Dry Goods v. Yeldell, 274 U.S. 112 (1927) for

oy ainda

~~ F

the proposition that punitive damages can be imposed with-

out benefit or intent to benefit the principal.

In each of those cases, this Court found that the primary

purpose of the awards was remedial and compensatory, not

punitive, and therefore distinguished those cases from the

requirements of purely punishment cases. Further, in

Hydrolevel, this Court relied in part upon Restatement

Agency 2d Section 217C, Comment c, which states that the

rule limiting a principal’s liability for punitive damages does

not apply to special statutes giving treble damages. This was

recognized in Union City Barge Line, Inc. v. Union Carbide

Co., 823 F.2d 129 (Sth Cir. 1987), in which the court con-

cluded that Hydrolevel did not authorize vicarious liability

for agents’ acts which harmed the principal.

It should also be noted that under settled law, the Respon-

dents had the insurance coverage for which they paid

premiums to Mr. Ruffin. To the extent Mr. Ruffin collected

the premiums, the companies were bound. Had Mrs. Haslip,

for example, submitted a claim to Union Fidelity, that com-

pany would have been bound to pay the claim [National Life

Ins. Co. v. Reedy, 115 So.2d 8 (Ala. 1927); Couch on Insur-

ance 2d (Rev. Ed.) Section 31:125].

However, Respondents elected not to contact the com-

panies, but to file suit.

Respondents also fail to distinguish between vicarious

liability for compensatory damages, and vicarious liability

for punishment.

Mr. Ruffin had authority to seil policies. That scope of

authority, however, did not extend to stealing premiums from

the companies. As noted, each company was liable on its

respective policy for the coverage paid for by Respondents,

but was deprived of the premiums by Mr. Ruffin’s acts. It is

an entirely different matter to assert that Pacific Mutual

should be punished because Mr. Ruffin misappropriated

premiums fromm it and from Union Fidelity.

- 16-

It is submitted that the authorities cited and discussed by

Pacific Mutual in its Brief Of Petitioner are controlling, and

that Due Process does not allow punishment to be imposed

upon Pacific Mutual for Mr. Ruffin’s acts under the cir-

cumstances of this case.

It is also submitted that the grounds upon which Pacific

Mutual asserts that it cannot be punished in this case under

Due Process do not require any dismantling of existing

regulatory criminal enforcement programs, as Respondents

assert.

While substantial questions can be raised regarding the

Constitutional viability of crimes without mens rea, and

punishment without fault [see, e. g., Hippard, “The Uncon-

stitutionality Of Criminal Liability Without Fault: An Argu-

ment For A Constitutional Doctrine Of Mens Rea,” 10

Houston L.Rev. 1039 (1973)], it is not necessary to reach

those issues here. Pacific Mutual’s position merely seeks

application of the basic rule established in New York Central

and Hudson River R.R. Co. v. United States, 212 U.S. 481,

495 (1909), that benefit to the company, or intent to benefit

the company, is a necessary prerequisite to imposing punish-

ment on a vicarious liability basis.

Mr. Ruffin was not acting in the business of Pacific

Mutual when pocketing the premiums on the Pacific Mutual

and Union Fidelity insurance policies, and clearly had no

intent to benefit either company by misappropriating

premiums due them, while binding them to the policy risks.

It is submitted that Due Process requires that the award

against Pacific Mutual be vacated.

=i.

C. Additional Trial Safeguards Are Required By

Due Process In Punitive Damages Cases.

Respondents contend that no enhanced burden of proof or

other trial safeguards are required in punitive damages cases

[Resp. Br. 46-48].

What Respondents ignore is the dynamics of punitive

damages cases. As here, plaintiffs are less interested in ob-

taining contract or other benefits (Respondents did not bother

to claim benefits) than in asserting a punitive damages claim

so they and their attorneys can play courtroom roulette.°

Both plaintiffs and their counsel have a primary interest in

obtaining a windfall award. The defendants are usually

unpopular, target defendants, such as insurance companies,

banks and employers.

All of this creates a significant risk of improper fact

finding. As noted by the Indiana Supreme Court in Travelers

Indemnity Co. v. Armstrong, 442 N.E.2d 349 (Ind.S.Ct.

1982), discussing the appropriate burden of proof in punitive

damages cases, at page 363:

“Neither should it be assumed that one who

stands to reap the harvest of a punitive damage

award will, in all cases, himself be reasonable and

forthright... .”

This is demonstrated in this case by the significant one

hundred eighty degree shifts in Mrs. Haslip’s testimony at

the trial, from her previous deposition testimony [J.A.

47-62).

10 See Eichenseer v. Reserve Life Ins. Co., 894 F.2d 1414 (Sth Cir. 1990)

(Jones, J., dissenting from denial of rehearing en banc, in which he stated,

at page 1422: “One of the most unseemly features of our current legal

System is its tendency to promote litigation as high-stakes gambling. .. .

Punitive damages are a key feature of the abuse of the litigation process.”]

=F

It is submitted that the additional procedural protections

suggested by Pacific Mutual are required by Due Proces to

improve the reliability of fact finding and decision making in

these cases.

D. The Award Herein Was Excessive In Violation

Of Pacific Mutual’s Due Process Rights.

Respondents’ arguments that the award herein is justified

when measured by the standard used to evaluate economic

regulations [Resp. Br. 43-46] are without merit.

Punitive damages are not economic regulations. They are

fines imposed to further a public interest in punishment. As

such, the award, and the substantive law and procedures

under which it was imposed, should properly be subjected to

heightened scrutiny.

Solem v. Helm, 463 U.S. 277 (1983), attempted to intro-

duce objectivity into excessiveness/proportionality review.

Such a review of punitive damages would properly consider

legislative criminal and civil penalties for similar conduct.

Respondents’ contention that such penalties are set in antici-

pation of supplemental punitive damage enforcement is

derived wholly from thin air.

It is submitted that the award below was excessive, in

violation of Pacific Mutual’s Due Process rights.

eo re. ee ee}

-19-

CONCLUSION

Respondents have asserted a number of propositions

which are not supported by the authority relied upon.

Further, none of the arguments advanced refute the basic

points asserted by Pacific Mutual.

Present punitive damage law in Alabama and most other

states is fundamentally unfair. It authorizes vague, incom-

prehensible and ineffective jury instructions which give no

guidance as to whether punishment is merited and if so, how

much. It fails to set limits on jury or court discretion by

limiting the awards which may be made by prior prescription

of a permitted range of punishment. Even if the Alabama

jury instruction had contained each of the Hammond criteria,

the discretion of both the jury and reviewing courts would

remain so broad that juries would still be free to render

awards based upon their individual backgrounds, tempera-

ments and societal concerns. As noted in Michigan C.R. Co.

v. Vreeland, 227 U.S. 59, 71-74 (1913), this throws “the door

open to the widest speculation.... These experiences,

which were to be the standard, would, of course, be as vari-

ous as [the jurors’] tastes, habits and opinion.”

It is submitted that the Due Process Clause of the Four-

teenth Amendment requires prior establishment of a permit-

ted range of punishment by awards of punitive damages.

Because of the broad range of conduct and fact situations

which may be found to subject a party to such awards, it

would appear that some substantial tailoring of fines to

categories of conduct would also be necessary to make the

System operate fairly and rationally. Otherwise, each award

would still raise a claim of excessiveness under either Due

Process or the tests in Solem v. Helm, 463 U.S. 277 (1983).

Because of the ambiguous context in which these cases

frequently arise, regarding whether or not punishable conduct

has occurred, some further guidance to juries appears

- 20 -

necessary for making determinations within the specified

permitted range of punishment.

It is submitted that the award of punitive damages herein

should be vacated as violating the rights of Pacific Mutual

under the Due Process Clause of the Fourteenth Amendment.

Such an order would not Federalize state punitive damages

law. It would merely require that the appropriate state

authority define the punishable conduct and set the permitted

ranges of punishment, therefore, prospectively, and that

juries be properly guided. The resulting standards would be

reviewable if necessary under Solem v. Helm, 463 U.S. 277

(1983).

Respectfully submitted,

Of Counsel: BRUCE A. BECKMAN

VICKI W.W. LAI Counsel of Record

ADAMS, DUQUE ADAMS, DUQUE & HAZELTINE

& HAZELTINE 523 West Sixth Street

Los Angeles, California 90014]

(213) 620-1240

OLLIE L. BLAN, JR. J. MARK HART

BERT S. NETTLES SPAIN, GILLON, GROOMS

SPAIN, GILLON, BLAN & NETTLES

GROOMS, BLAN 2117 Second Avenue North

& NETTLES Birmingham, Alabama 35203

(205) 328-4100

Attorneys for Petitioner

Pacific Mutual Life Insurance

Company

APPENDIX A

-A l-

PARTIAL LIST OF ALABAMA JURY VERDICTS

AWARDING PUNITIVE DAMAGES

OF $500,000 OR MORE

FROM JANUARY 1, 1990 TO AUGUST 7, 1990'

(* indicates wrongful death case)

1. Wilburn v. Luxaire, et al. $50,000,000*

Mobile County Circuit Court

CV-88-147 et seq. (April, 1990)

$50,000,000 punitive damages,

plus previous settlement of

$11,500,000 for wrongful death

of five-member family resulting

from alleged negligence involving

heating unit.

2. Helen Lewis Johnston, as parent 15,000,000*

and custodian of Barton Lewis

Griffin, deceased, and Ford Lewis

v. L. B. Chapman, B. W. Wilson

& Sons, and General Motors Corp.

Marengo County Circuit Court

CV-88-117 (August 3, 1990)

Wrongful death of child.

Alleged-defective product in vehicle

computer system.

Verdict against General Motors only.

Post-trial motions pending.

lThis is a correction and update to Appendix | of Petitioner’s main brief.

The lists are in all likelihood still incomplete due to the lack of any central

record or reporting system as to jury verdicts in Alabama. Magnifying the

significance of these lists is the fact that 90% to 95% of all civil cases are

settled. Obviously, the mushrooming number and size of punitive damage

verdicts impact tremendously on the money paid in those settlements.

Ww

-A 2-

Overstreet v. Insurance Company $10,000,000

of North America, et al.

Mobile County Circuit Court

CV-86-002312 (June 8, 1990)

Alleged insurance fraud.

$10,000,000 punitive damages

award against agency, individuals

dismissed.

Annie B. Smith v. MBL Life 4,500,000

Assurance Corp. and Mutual

Benefit Life Insurance Co.

Jefferson County Circuit Court

CV-84-3028 (June 1990)

$4,500,000 punitive damages and

$250,000 compensatory damages

in breach of contract, fraud and

bad faith case on question of exis-

tence of life insurance policy.

Post-trial motions pending.

Sue Chumney as Administrator 3,000 ,000*

of the Estate of Christopher E.

Long, deceased v. Flowers Hospital

Houston County Circuit Court

CV -87-587 (1990)

Wrongful death of child.

Settled post-trial.

Tate v. P.P.G. Industries 2,500,000*

U.S. District Court for the

Southern District of Alabama

(February 19, 1990)

Punitive damages for wantonness

in wrongful death case.

-A 3-

Shelby King v. Pioneer Life

Insurance Co.

Escambia County Circuit Court

CV-87-152 (July 31, 1990)

Breach of contract and bad

faith suit.

$2,000,000 verdict includes

approximately $23,000 compen-

satory damages and $1,977,000

punitive damages for breach of

contract.

Appeal pending.

Burden v. Empire Fire &

Marine Ins. Co.

Lauderdale County Circuit Court

CV-88-244 (March 2, 1990)

Allezed bad faith for failing to

settle uninsured motorist claim.

$400,000 awarded for compen-

satory damages and $1,000,000

for punitive damages.

Post-trial motions pending.

American Employers Insurance

Company v. Southern Seeding

Services, Inc., et al.

U.S. District Court for the

Northern District of Alabama

CV-87-G-0294S

Verdict awarding $400,000 in

compensatory damages and

$750,000 in punitive damages

on February 22, 1990.

Appeal filed March 27, 1990.

$ 2,000,000

1,400,000

1,150,000

10. Tom Beaty, Jr. v. Ford-New

11.

12.

-A 4-

$ 1,025,000

Holland Tractor Co. and

Larry Lilly

Barbour County Circuit Court,

Clayton Division

CV-89-012 (August 7, 1990)

Verdict awarding $25,000 in

compensatory damages and

$1,000,000 in punitive damages

in malicious prosecution suit.

Fuller v. Preferred Risk

Life Insurance Co.

Montgomery County Circuit Court

CV-88-744M (February 7, 1990)

Alleged breach of contract and

insurance fraud.

$16,764.82 compensatory damages

on breach of contract; $1,000,000

punitive damages and $1.00 com-

pensatory damages on fraud count.

Punitive damages remitted to $250,000

on Motion for JNOV/New Trial.

Appeal Pending.

1,016,765.82

Braden v. Dorsey Motor

Sales, Inc.

Autauga County Circuit Court

(April 3, 1990)

$1,000,000 punitive damages,

$15,600 compensatory damages

for alleged fraudulent misrepre-

sentation by car dealer that a used

car was “new.”

1,000,000

-A 5-

13. William Thornton v. Yamaha

Motor Co., Ltd., et al.

Montgomery County Circuit Court

CV-88-1639-TH (April 18, 1990)

Wrongful death.

No appeal pending.

$

750,000*

APPENDIX B

-Bl

PACIFIC MUTUAL

FINAL STATEMENT — LAPSED POLICY

DATE OF LAPSE: DEC 01 1981

POLICY NO.: 204 6097 0

INSURED: CYNTHIA E. CRAIG

PREM. MODE: MONTHLY

PREMIUM: 13.40

Agent | Agency | Issue Yr.| Age | Bill | Own’r | Caut.

Type| Code

OOY6X 362 81 24 64 10 1

MAILING NAME AND ADDRESS

CYNTHIA E. CRAIG

53! BOOKER STREET

ROOSEVELT AL 35020

SERVICE OFFICE

PACIFIC MUTUAL

BIRMINGHAM-LUPIA AGENCY

530 BEACON PARKWAY WEST

BIRMINGHAM AL 35259

SERVICING AGENT

RUFFIN LEMMIE L JR

POLICY INFORMATION

YOUR POLICY HAS NO VALUE TO BE USED TO

EXERCISE THE NON-FORFEITURE OPTION AND ALL

PROTECTION HAS CEASED

THE AUTOMATIC PREMIUM LOAN PROVISION DID

NOT APPLY BECAUSE THE POLICY’S VALUE WAS

INSUFFICIENT TO PAY THE PREMIUM

-B2-

Pé,.CIFIC MUTUAL

FINAL STATEMENT —LAPSED POLICY

DATE OF LAPSE: DEC 01 1981

POLICY NO.: 20461060

INSURED: EDDIE HARGROVE

PREM. MODE: MONTHLY

PREMIUM: 32.70

Agent | Agency | Issue Yr. | Age | Bill | Own’r | Caut.

Type| Code

OOY6X 362 81 47 64 10 1

MAILING NAME AND ADDRESS

EDDIE HARGROVE

3109 CLAREDON AVE

BESSEMER AL 35020

SERVICE OFFICE

PACIFIC MUTUAL

BIRMINGHAM-LUPIA AGENCY

530 BEACON PARKWAY WEST

BIRMINGHAM AL 35259

SERVICING AGENT

RUFFIN LEMMIE L JR

POLICY INFORMATION

YOUR POLICY HAS NO VALUE TO BE USED TO

EXERCISE THE NON-FORFEITURE OPTION AND ALL

PROTECTION HAS CEASED

THE AUTOMATIC PREMIUM LOAN PROVISION DID

NOT APPLY BECAUSE THE POLICY’S VALUE WAS

INSUFFICIENT TO PAY THE PREMIUM

-B3-

PACIFIC MUTUAL

FINAL STATEMENT — LAPSED POLICY

DATE OF LAPSE: DEC 01 1981

POLICY NO.: 20461040

INSURED: ALMA M. CALHOUN

PREM. MODE: MONTHLY

PREMIUM: 19.70

Agent | Agency | Issue Yr.| Age! Bill | Own’r | Caut.

Type| Code

OOY6X 362 81 36 64 10 1

MAILING NAME AND ADDRESS

ALMA M. CALHOUN

2214 IVEY ST

ROOSEVELT CITY AL 35020

SERVICE OFFICE

PACIFIC MUTUAL

BIRMINGHAM-LUPIA AGENCY

530 BEACON PARKWAY WEST

BIRMINGHAM AL 35259

SERVICING AGENT

RUFFIN LEMMIE L JR

POLICY INFORMATION

YOUR POLICY HAS NO VALUE TO BE USED TO

EXERCISE THE NON-FORFEITURE OPTION AND ALL

PROTECTION HAS CEASED

THE AUTOMATIC PREMIUM LOAN PROVISION DID

NOT APPLY BECAUSE THE POLICY’S VALUE WAS

INSUFFICIENT TO PAY THE PREMIUM

-B4-

PACIFIC MUTUAL

FINAL STATEMENT — LAPSED POLICY

DATE OF LAPSE: DEC 01 1981

POLICY NO.: 20461000

INSURED: CLEOPATRA HASLIP

PREM. MODE: MONTHLY

PREMIUM: 29.40

Agent | Agency | Issue Yr.| Age | Bill | Own’r | Caut.

Type| Code

OOY6X 362 81 46 64 10 1

MAILING NAME AND ADDRESS

CLEOPATRA HASLIP

318 WOODWARD AVE

ROOSEVELT CITY AL 35020

SERVICE OFFICE

PACIFIC MUTUAL

BIRMINGHAM-LUPIA AGENCY

530 BEACON PARKWAY WEST

BIRMINGHAM AL 35259

SERVICING AGENT

RUFFIN LEMMIE L JR

POLICY INFORMATION

YOUR POLICY HAS NO VALUE TO BE USED TO

EXERCISE THE NON-FORFEITURE OPTION AND ALL

PROTECTION HAS CEASED

THE AUTOMATIC PREMIUM LOAN PROVISION Div

NOT APPLY BECAUSE THE POLICY’S VALUE WAS

INSUFFICIENT TO PAY THE PREMIUM