Linda Lange v. Penn Mutual Life Insurance Company

A jury returned a verdict in favor of Linda Lange for $200,000 on her breach of contract claim against Penn Mutual Life Insurance Company. Penn Mutual had refused to pay Lange insurance proceeds from a policy of life insurance on the life of her former husband. The jury also awarded Lange $85,000 on her bad faith claim against Penn Mutual and $327,000 in punitive damages. In post trial proceedings, the district court awarded Lange attorney fees of $149,208.75. This award included an upward adjustment of 1.5 times the “lodestar” fee amount.

Penn Mutual appeals the jury’s bad faith and punitive damage awards, and the court’s award of attorney fees. We have jurisdiction under 28 U.S.C. § 1291 . We affirm the award of damages for bad faith, reverse the punitive damage award, and reduce the attorney fee award to the lodestar amount of $99,472.50.

I

FACTS

In 1984, while Linda Lange was a resident of Arizona, she applied for and received a policy of life insurance issued by Penn Mutual on the life of her former husband, Dr. Michael Hogan. The policy provided that if Dr. Hogan died as a result of suicide within one year of the date the policy was issued, benefits would be limited to…