FEDERAL KEMPER INSURANCE COMPANY, MOVANT v. JAMES HORNBACK AND MABEL HORNBACK, RESPONDENTS, 711 S.W.2d 844

Summary

Respondent policyholder brought an action against movant insurance company, alleging a bad faith refusal to settle a fire loss. The trial court entered judgment and imposed punitive damages against movant, and movant subsequently sought review of the court of appeals affirming of the judgment. On appeal, the court reversed the decision of the trial court in favor of respondent. The court ruled that movant had an obligation to pay money according to the terms of the insurance contract, and a failure or refusal to pay gave rise to a suit for breach of contract, not a suit in tort. The court held that punitive damages were not recoverable for a mere breach of contract. Finally, the court held that sanctions for a frivolous defense were sufficient to deter insurance companies from refusing to pay according to the terms of a contract without cause.