In Montesi v. Nationwide Mut. Ins. Co., 970 F. Supp.2d 784 (W.D. Tenn. Aug. 8, 2013), the United States District Court for the Western District of Tennessee allowed a policyholder’s claim for punitive damages to proceed, holding that punitive damages are recoverable in a stand-alone claim for negligence infliction of emotional distress. Ms. Montesi was sued in Alabama for defamation, a case that ended poorly for her with a $70,000 adverse judgment. Following the Alabama defamation suit, Montesi filed an insurance claim with Nationwide, seeking reimbursement under her policies for the $70,000 loss she incurred. Nationwide failed to honor the claim, and Montesi sued Nationwide in Tennessee for several claims, including the tort claim of negligent infliction of emotional distress and punitive damages. Not surprisingly, Nationwide sought dismissal of the punitive damages claim, asserting that the bad faith penalty statute provides the exclusive remedy for actions against an insurance company. Montesi responded her negligent infliction of emotional distress claim carries with it the availability of punitive damages. The court agreed with Montesi, and allowed Montesi’s request for punitive damages to stand.
This case is yet another example of the established law that the bad faith statute is not the sole and exclusive remedy for extra-contractual type damages. It is noteworthy that Ms. Montesi did not seek punitive damages associated with Nationwide’s asserted breach of contract, but under the authority of Riad v. Erie Ins. Exchange, 2013 Tenn. App. LEXIS 712 (Tenn. Ct. App. Oct. 31, 2013) and similarly holding cases, such a claim would have been upheld as well if she could have demonstrated that the insurance company acted intentionally, fraudulently, maliciously, or recklessly. For a discussion of that issue, see my prior post here.