                     United States Court of Appeals
                           FOR THE EIGHTH CIRCUIT
                                   ___________

                                   No. 08-3238
                                   ___________

Timothy Moore; Sylvia Moore,        *
                                    *
           Appellees,               *
                                    * Appeal from the United States
     v.                             * District Court for the
                                    * District of North Dakota.
American Family Mutual Insurance    *
Company, a Wisconsin Corporation,   *
                                    *
           Appellant.               *
                               ___________

                             Submitted: June 10, 2009
                                Filed: August 14, 2009 (Corrected: 9/24/2009)
                                 ___________

Before MURPHY, ARNOLD, and GRUENDER, Circuit Judges.
                           ___________

ARNOLD, Circuit Judge.

      Timothy Moore bought an unoccupied duplex located in a flood plain from
Walsh County, North Dakota, on condition that it be moved by a date certain, and
American Family Insurance Company insured the property for $50,000. After a fire
destroyed the building about five weeks before the deadline for moving it had expired,
American Family denied Mr. Moore's insurance claim on the ground that the fire was
a result of arson for which Mr. Moore was responsible. Mr. Moore and his wife,
Sylvia Moore, then brought suit against American Family, claiming that it had
breached the insurance contract and had acted in bad faith when it denied Mr. Moore's
claim. A jury found for the Moores on both claims: It awarded them $48,414.97 on
their contract claim, and $1,150,000 in actual damages and $1,150,000 in punitive
damages on their bad faith claim. The district court1 then denied American Family's
post-verdict motion for judgment as a matter of law (JAML), a new trial, or remittitur.

       American Family now appeals, arguing that it was not liable for bad faith as a
matter of law, that the evidence did not support awards for actual damages on the bad
faith claim or for punitive damages, that the district court erred by not declaring a
mistrial for juror misconduct, and that the district court improperly instructed the jury.
We affirm.

                                            I.
       A district court must grant a motion for JAML when "a reasonable jury would
not have a legally sufficient basis to find for a party on that issue." Fed. R. Civ.
P. 50(a). The Moores, at the end of their case on the breach of contract claim, moved
for JAML on the matter of whether American Family had breached the insurance
contract, and the district court denied the motion. American Family maintains that
this ruling is fatal to the Moores' claim of bad faith: North Dakota law provides that
an insurance company is not guilty of bad faith when it denies a claim that is "fairly
debatable." See Hartman v. Estate of Miller, 656 N.W.2d 676, 681 (N.D. 2003).
According to American Family, because the district court held that there was a fact
question about whether the insurer had breached the contract by refusing to pay
Mr. Moore's claim, that claim was necessarily fairly debatable, and thus American
Family could not have acted in bad faith by denying it. We conclude, however, that
American Family failed to preserve for review the contention that it was entitled to
JAML on the bad-faith claim.




      1
        The Honorable Rodney S. Webb, late a United States District Judge for the
District of North Dakota.

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        American Family originally raised this issue and two other matters in an oral
motion for JAML after the plaintiffs submitted their case. The district court denied
the motion, and the insurer orally renewed it at the close of the evidence. See Fed. R.
Civ. P. 50(a). After the jury returned a verdict for the Moores, American Family filed
a post-trial motion under Rule 50(b). The motion stated, in part, that the defendant
was "renew[ing] the motions for JAML that [it] made, raised and asserted during the
trial of this action" but did not specify the grounds for granting JAML. In compliance
with the court's rule requiring that all motions be accompanied by a supporting
memorandum, see N.D. Civ. R. 7.1, American Family filed a forty-page memorandum
that listed over twenty grounds for relief, including one of the grounds raised in its
original Rule 50(a) motion. But nothing in the supporting memorandum indicated that
American Family was renewing its request for judgment as a matter of law on the bad
faith claim.

       In its written order denying the post-trial motion, the district court specifically
addressed, in turn, each ground that American Family raised in its lengthy
memorandum, but the court did not rule on whether the evidence supported the bad
faith claim, most likely because it did not think that it was being asked to. Federal
Rule of Civil Procedure 7(b)(1) requires that all motions "state with particularity the
grounds for seeking [an] order," and we think therefore that American Family did not
effectively make a Rule 50(b) motion on this ground. Where a party fails to make a
Rule 50(b) motion in the district court regarding an issue, there is nothing for the court
of appeals to review, and we thus lack the power to review the matter. See E.E.O.C.
v. Southwestern Bell Tel. Co., 550 F.3d 704, 708 (8th Cir. 2008).

       We note, moreover, that Local Rule 7.1 further provides that "[a] moving
party's failure to serve and file a memorandum in support may be deemed an
admission that the motion is without merit." N.D. Civ. R. 7.1. Similarly, we generally
deem an issue waived if an appellant's brief does not include an argument addressing
that issue, and we have explained that this rule promotes "proper judicial

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administration." See, e.g., Jenkins v. Winter, 540 F.3d 742, 751 (8th Cir. 2008)
(internal quotation marks and citation omitted); see also Fed. R. App. P. 28(a)(9). As
we have already said, American Family did not even assert in its memorandum that
it was entitled to JAML on the bad-faith claim, much less provide an argument
supporting that assertion. We therefore do not believe that the district court, even if
it had the discretion to do so, was obligated to treat the issue as having been raised,
and we therefore do not see how the court could have erred by not entering judgment
for American Family on the Moores' bad faith claim.

                                           II.
       American Family also maintains that the district court erred by giving
Instruction 13, which told the jury that it could consider as evidence of bad faith the
insurer's violations of the North Dakota Prohibited Practices in Insurance Business
Act, see N.D. Cent. Code § 26.1-04-03. We review jury instructions for an abuse of
discretion. See Gill v. Maciejewski, 546 F.3d 557, 563 (8th Cir. 2008). Our review
is limited to a determination of "whether the instructions, taken as a whole and viewed
in the light of the evidence and applicable law, fairly and adequately submitted the
issues in the case to the jury." Id. (internal quotation marks and citations omitted).
Instruction 13 read in pertinent part: "If American Family, who is engaged in the
business of insurance, performed, without just cause and with such frequency as to
indicate a general business practice, one or more of the following unfair practices, you
may consider violation of this law as evidence of bad faith on the part of American
Family." The instruction then went on to rehearse several of the unfair claim
settlement practices listed in § 26.1-04-03, the relevant North Dakota statute.

       For the first time on appeal, American Family challenges Instruction 13 on legal
grounds, contending that an insurer's violation of § 26.1-04-03 is not evidence of bad
faith. We conclude that American Family waived this objection by failing to raise it
during the instruction conference before the case was submitted to the jury. See Fed.
R. Civ. P. 51; Niemiec v. Union Pacific RR. Co., 449 F.3d 854, 857-58 (8th Cir. 2006).

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Parties must make a timely objection to jury instructions, stating "distinctly the matter
objected to and the grounds for the objection," in order to give the district court an
opportunity to correct errors before submission, and, relatedly, to prevent a losing
party from obtaining a new trial by pointing out an error only after receiving an
unfavorable verdict. See Fed. R. Civ. P. 51(c); Horstmyer v. Black & Decker, Inc.,
151 F.3d 765 (8th Cir. 1998). Because American Family did not do so, it waived its
legal objection to the instruction, absent plain error.

       Though we may grant plain error relief when instructional error is plain, affects
a party's substantial rights, and " 'seriously affect[ed] the fairness, integrity, or public
reputation of judicial proceedings,' " Cedar Hill Hardware and Const. Supply, Inc. v.
Insurance Corp. of Hannover, 563 F.3d 329, 351 (8th Cir. 2009) (quoting United
States v. Olano, 507 U.S. 725, 732-36 (1993)), these circumstances are absent here.
At a minimum, we believe that evidence that an insurer's conduct violates a statute
prohibiting unfair settlement practices is relevant to whether the insurer acted in bad
faith. As one commentator has remarked, there is "some logic" to using evidence of
violations of statutes addressing unfair insurance practices in bad faith actions, just as
evidence of violations of safety codes have been used to show negligence. See Lee R.
Russ & Thomas F. Segalla, 14 Couch on Ins. § 204.47 (3d ed.). And American
Family, consistent with this view, raised no objection when the Moores' attorney
elicited expert testimony that a violation of § 26.1-04-03(9) was "evidence of an
insurance company's bad faith" and that American Family had violated particular
provisions of that statute. American Family later asked its own expert whether
American Family had violated the Act. We therefore do not believe that the error, if
any, was plain.

       American Family also maintains that even if the instruction correctly stated the
law, the court erred in giving it because the evidence, at best, supported a finding that
the insurer committed the unfair claim settlement practices listed in the instruction
only as to the Moores. Therefore, American Family argues, the evidence was

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                                             5
insufficient to establish that it engaged in any of the practices with a frequency
indicating a general business practice as the statute and instruction required. See N.D.
Cent. Code 26.1-04-03.9. But American Family's own expert, Duane Ilvedson,
testified that Mr. Moore's file was typical: This is evidence from which a jury could
infer that American Family committed prohibited acts with a frequency indicating a
general business practice because it suggests that the alleged practices committed in
Mr. Moore's case were also committed by American Family in other cases. We
therefore detect no error here. We believe, moreover, that the jury instructions, as a
whole, "fairly and adequately submitted the issues in the case to the jury," and that the
court therefore did not abuse its discretion in giving them. See Gill, 546 F.3d at 563.

                                          III.
       American Family next contends that it was entitled to a new trial because of
juror misconduct. After the case was submitted to the jury, one of the jurors did some
research on the internet and determined what American Family's profits had been in
the past year. The district judge then excused the juror from further participation, but
American Family argues that the judge should instead have declared a mistrial or
should have granted a new trial based on the juror's misbehavior.


       Before the jury reached a verdict, the foreperson sent a note to the district judge
stating that one of the jurors had done research on the earnings of American Family
but had "not relayed his findings to the other jurors." After the court read the note to
counsel, American Family requested a mistrial; the court denied the motion but had
the juror immediately removed from the jury room and dismissed him. After
explaining to counsel that he was going to reprimand the dismissed juror, the district
judge spoke to the juror on the record without counsel present: The juror admitted
that he had researched American Family's profits for the last year, but he repeatedly
assured the court that he had not shared that information with the other jurors. He said
that when he told the other jurors that he had done research, "everyone" disapproved,
and he then put the information out of his mind. The attorneys were provided a

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                                            6
transcript of this proceeding. The court determined that the other jurors had
immediately stopped the juror in question from reciting the specifics of his research
and that they appeared to be following the court's admonitions not to consider
extraneous information. After trial, American Family filed an affidavit of the
foreperson, who said that the dismissed juror had told the other jurors that American
Family "makes huge profits and can afford to pay." The court denied the new trial
motion, concluding that the juror's statement that American Family could afford to pay
did not show prejudice since it was "not likely to be a major revelation" to members
of the jury. We agree.


       "In a civil case, the exposure of jurors to materials not admitted into evidence
mandates a new trial only upon a showing that materials are prejudicial to the
unsuccessful party." Peterson ex rel. Peterson v. General Motors Corp., 904 F.2d
436, 440 (8th Cir. 1990). The district court must consider relevant testimony and
other evidence as to what occurred to determine "whether there is a reasonable
possibility that the communication altered the jury's verdict," and we review the
district court's decision for an abuse of discretion. See Anderson v. Ford Motor Co.,
186 F.3d 918, 920-21 (8th Cir. 1999) (internal quotation marks and citation omitted),
cert. denied, 528 U.S. 1156 (2000).


       American Family would like us to rely on Anderson and hold that a new trial
is necessary, but that case is distinguishable. In Anderson, the district court granted
a new trial after learning that a juror had conducted an out-of-court test of a seat belt
system that the jury then found was defective. The design of the seat belt system was
not common knowledge and was central to the case. In contrast, we think the
misconduct here bordered on the innocuous since people know that insurance
companies can generally afford to pay settlements. See Kehm v. Procter and Gamble
Mf'g Co., 724 F.2d 613, 623 (8th Cir. 1983). And unlike the dismissed juror here, the
offending juror in Anderson, whom the district court found was biased by his "out-of-

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court experiment with regard to a crucial issue," participated fully in reaching the
verdict. Finally, just as we upheld the district court's exercise of its discretion in
Anderson, we do so here: We conclude that the district court did not abuse its
discretion in denying American Family's motion for a mistrial or a new trial based on
juror misconduct.


                                         IV.
       American Family also challenges the damage award of $1,150,000 on the bad
faith claim because it is not supported by the evidence and was excessive. Mr. Moore
claimed damages for uninsurability, economic loss, loss of reputation in the
community, and emotional distress.


       American Family maintains that damages awarded for Mr. Moore's supposed
uninsurability were unsupported by the evidence because the testimony that
Mr. Moore would not be able to get insurance was speculative. American Family,
however, failed to raise this ground in its Rule 50(a) motion and a party cannot raise
a question about the sufficiency of evidence to support a damage award for the first
time in a motion under Rule 50(b). See Day v. Toman, 266 F.3d 831, 837 (8th Cir.
2001). In any event, there was indeed evidence that American Family submitted
information to the Property Insurance Loss Register (PILR), a database to which all
insurance companies report, indicating that Mr. Moore's claim had been denied for
arson and fraud. And there was testimony that once information is submitted to this
database it can never be removed and that insurance companies do not insure
arsonists. Since Mr. Moore was a farmer with multiple vehicles that needed to be
insured in order for him to earn income, a loss of insurance might well cause him
ruinous economic injury. We conclude that this evidence made out a submissible case
on the issue of insurability.




                                         -8-
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       As for economic loss, Mr. Moore testified that he had intended to move the
duplex that he purchased close to the Cavalier Air Force Station where rental housing
is in demand. He asserted that if American Family had lived up to its contractual
obligations, he would have used the insurance proceeds to rebuild the damaged duplex
and that he could have rented it out at a rate of about $1,000 per month. American
Family argues that any loss of rental income could not have resulted from its bad faith
denial of Mr. Moore's claim and therefore this damage claim should not have been
submitted to the jury. Their argument is essentially that Mr. Moore could not recover
loss of rental income because once the claim is paid Mr. Moore would have the ability
to earn the rental income. But this argument ignores the fact that Mr. Moore could
suffer a loss of rental income during the time between the denial of his claim and the
payment of the judgment in his favor. Mr. Moore therefore presented sufficient
evidence to submit the claim for his loss of income.


        American Family also contends that the Moores were not entitled to recover
damages for loss of reputation in the community and emotional distress. According
to the North Dakota Supreme Court, an "insurer's bad faith breach of its duties to an
insured is likely to cause mental anguish" and juries have "wide discretion in
evaluating and awarding ... damages" for such emotional distress. See Ingalls v. Paul
Revere Life Ins. Group, 561 N.W.2d 273, 282-84 (N.D. 1997). Here the Moores
offered testimony that they suffered severe embarrassment and emotional distress
from Mr. Moore being labeled an arsonist, that Mr. Moore was experiencing chest
pain and smoking more, and that he was worrying and losing sleep. Ms. Moore
testified that her family "looked at her differently" and she wondered what other
members of the community thought about her. We think that this was sufficient to
make out a case for emotional distress and loss of reputation.


     American Family's argument that the damage award was excessive also fails.
We look to the law of the forum state in deciding the excessiveness of a verdict. See

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Taylor v. Otter Tail Corp., 484 F.3d 1016, 1019 (8th Cir. 2007). A verdict is
excessive under North Dakota law "when the amount is so unreasonable as to indicate
passion or prejudice on the part of the jury; or the award is so excessive as to be
without support in the evidence; or the verdict is so excessive as to appear clearly
arbitrary, unjust or such as to shock the judicial conscience." Olmstead v. First
Interstate Bank of Fargo, N.A., 449 N.W.2d 804, 807 (N.D. 1989). As we have
already said, there was sufficient evidence to present each of the damage claims and
the jury has wide discretion with respect to at least one aspect of the award. Ingalls,
561 N.W.2d at 283. We discern nothing in the damage award that indicates that
passion or prejudice were at work nor can we conclude that the award is so clearly
arbitrary as to shock the conscience. We therefore conclude that it was not excessive.


                                           V.
        Finally, American Family raises objections to the award of $1,150,000 for
punitive damages. Under North Dakota law, an insurer that violates its duty of good
faith is liable for punitive damages if it is "guilty by clear and convincing evidence of
oppression, fraud, or actual malice." N.D. Cent. Code § 32-03.2-11.1. Section 32-
03.2-11.4 limits punitive damage awards to no more than two times the compensatory
damages, or $250,000, whichever is greater.

      American Family asserts that the question of punitive damages should not have
been submitted to the jury. Although North Dakota law does not permit a plaintiff to
seek punitive damages in an original complaint, the plaintiff may move to amend the
complaint to include such a claim. See N.D. Cent. Code § 32-03.2-11.1. Such a
motion "must allege an applicable legal basis for awarding exemplary damages and
must be accompanied by one or more affidavits or deposition testimony showing the
factual basis for the claim." Id. Then, if the court finds "that there is sufficient
evidence to support a finding by the trier of fact that a preponderance of the evidence
proves oppression, fraud, or actual malice, the court shall grant the moving party


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permission to amend the pleadings to claim exemplary damages." Id. The Moores
moved to amend their complaint and the magistrate judge2 granted the motion based
on depositions that they had submitted in its support. Although American Family
objected to the sufficiency of the evidence on the question of punitive damages in its
Rule 50(a) motion, it did not raise this matter in its Rule 50(b) motion. We therefore
have no power to review the matter. See Southwestern Bell, 550 F.3d at 708.

       American Family also argues that the punitive damage award was so excessive
as to be unconstitutional. "The Due Process Clause of the Fourteenth Amendment
prohibits the imposition of grossly excessive or arbitrary punishments on a tortfeasor."
State Farm Mut. Auto. Ins. Co. v. Campbell, 538 U.S. 408, 416 (2003). Three
considerations are paramount in reviewing due process challenges to a punitive
damage award: the degree of reprehensibility of the defendant's conduct, the ratio of
the punitive damages awarded to the actual harm inflicted on the plaintiff, and the
difference between the punitive damage award and the civil penalties authorized or
imposed in comparable cases. See BMW of North Am. v. Gore, 517 U.S. 559, 574-75
(1996). We have examined each consideration and conclude that the punitive
damages award is not unconstitutional.

       In assessing the reprehensibility of the defendant’s conduct, we consider
whether "the harm caused was physical as opposed to economic; the tortious conduct
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." Campbell, 538 U.S. at 419. The existence of one of
these considerations weighing in favor of the plaintiff may not be sufficient to support




      2
       The Honorable Karen K. Klein, United States Magistrate Judge for the District
of North Dakota.

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a punitive damages award, and the absence of all of them "renders any award suspect."
 Id.

       We conclude that several of these considerations are favorable to the Moores.
We first observe that their injuries were not limited to financial losses. As we have
said, the evidence showed that they suffered emotional distress, and Mr. Moore
suffered from chest pain, was unable to sleep, and began to smoke more because he
was accused of being an arsonist. The Moores presented evidence that American
Family, without first conducting an adequate investigation, not only accused
Mr. Moore of arson, it sent documents that included the accusation to the state
insurance commissioner and reported to the PILR that Mr. Moore's claim was denied
because of arson and fraud. Ms. Moore testified that the "PILR document is a scary
scary thing" because it likely would prevent the Moores from getting insurance,
which, in turn, could affect Mr. Moore's ability to continue his farming business; she
also testified that it frightened her to think that they could have gone to jail but for
their attorney's assistance. The decision to accuse someone of a serious felony such
as arson should not be made lightly, and significant harm to the accused is
foreseeable. We thus conclude that American Family's "tortious conduct" – labeling
Mr. Moore an arsonist based on insufficient grounds – "evinced an indifference to or
disregard of" the Moores' financial, emotional, and physical well-being. See
Campbell, 538 U.S. at 419. With respect to other considerations, we note that
American Family itself offered evidence that the Moores were financially vulnerable
and the insurer was aware of that fact at the time it made the accusation, and American
Family's expert's testimony supports an inference that the insurer's treatment of Mr.
Moore's claim was typical of how it handled similar claims. See id. This record thus
provides evidence of the reprehensibility of American Family's conduct.

      The Supreme Court has stated that "few awards exceeding a single-digit ratio
between punitive and compensatory damages [more than 9 to 1], to a significant
degree, will satisfy due process." Id. at 425. While American Family argues that the

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amount of compensatory damages awarded here was $48,414.97, that is patently
incorrect because the jury awarded the Moores $1,150,000 on his bad faith claim and
it is the finding of liability on that claim, not the contract claim, that underlies the
equal award of punitive damages. Thus the relevant ratio here is one to one and well
within the acceptable range.

      As for civil penalties authorized or imposed in comparable cases, American
Family could face suspension or revocation of its license if it knew or should have
known that it was violating North Dakota's Unfair Insurance Practices Act. See N.D.
Cent. Code § 26.1-04-13.1(b). Suspension or revocation of American Family's
insurance license might well prove much more costly than a punitive damages award
of $1,150,000.

       American Family contends finally that the jury's punitive damage award was
excessive under North Dakota law. It first directs our attention to N.D. Cent. Code
§ 32-03.2-11.5, which contains a list of "principles and factors" that must guide a jury
in its determination of punitive damages and to which any award of such damages
must conform. But these considerations are, for the most part, simply a restatement
of those that the Supreme Court laid out in Gore, 517 U.S. at 574-75; and since we
have already indicated that the punitive award here passes muster under that case, we
necessarily conclude that there was no violation of the North Dakota statute.

       In addition to the statutory principles to which North Dakota law requires
punitive damage awards to conform, the North Dakota Supreme Court has mandated
that such awards not be excessive. "Punitive damages are excessive when the amount
of the award is so great that it indicates passion or prejudice on the part of the jury."
Dewey v. Lutz, 462 N.W.2d 435, 443 (N.D. 1990). Since the award for punitive
damages was equal to the amount awarded on the bad faith claim, it appears to us that
the jury's verdict was not a result of passion or prejudice but represented an effort to
deter future bad faith denials of insurance claims by American Family.

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We therefore conclude that the punitive damage award was not excessive.

Affirmed.
               ______________________________




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