Anderson

MEMORANDUM *

Allstate Insurance Company appeals the district court’s judgment, entered after a jury trial, in favor of Thomas Anderson in Anderson’s diversity action for breach of the implied covenant of good faith and fair dealing arising from Allstate’s insurance of Anderson’s residence. 1 The jury found that Allstate acted maliciously and oppressively in not fully compensating for repairs, particularly including elimination of mold, after a water pipe broke in Anderson’s home. The jury awarded Anderson compensatory damages of $484,853.96 and punitive damages of $18 million. The district court reduced the punitive damages award to five times the compensatory damages. Allstate appeals both awards, and Anderson cross-appeals the district court’s reduction of punitive damages. We affirm the compensatory award and reverse the punitive damages award.

Factual Background

Plaintiff Thomas Anderson purchased an Allstate Deluxe Homeowners Policy in June 1996. The policy covered water damage from freezing, with an exclusion of coverage for freezing damage if the house was unoccupied and the owner failed to take reasonable care to maintain heat.

*757 Sometime in January 1997, a pipe in…