U.S. v. Earles

• Decision Date: 18 June 1997
• Docket Number: No. 96-1246,96-1246
• Citation: 113 F.3d 796
• Parties: 47 Fed. R. Evid. Serv. 317 UNITED STATES of America, Appellant, v. Donald Lee EARLES and Catherine Papajohn, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

Page 796

113 F.3d 796

47 Fed. R. Evid. Serv. 317

UNITED STATES of America, Appellant, v. Donald Lee EARLES and Catherine Papajohn, Appellees.

No. 96-1246.

United States Court of Appeals,

Eighth Circuit.

Submitted Jan. 16, 1997.

Decided May 8, 1997.

Rehearings and Suggestions for Rehearings En Banc Denied

June 18, 1997.

Michael Mills Hobart, argued, Sioux City, IA, for appellant.

Stanley E. Munger, argued, Sioux City, IA (Jay Denne, on the brief), for appellees.

Before RICHARD S. ARNOLD, Chief Judge, ROSS, and BEAM, Circuit Judges.

BEAM, Circuit Judge.

The government appeals the district court's judgment of acquittal in favor of defendants Donald Lee Earles and Catherine Papajohn. We reverse.

I. BACKGROUND

On October 24, 1991, a grand jury indicted Donald Lee Earles (Earles) and Catherine Papajohn (Papajohn) for their roles in the burning of the Countryside IGA in Sloan, Iowa. Count One of the indictment charged Earles with maliciously damaging and destroying the grocery store and Papajohn with aiding and abetting that destruction. The indictment further charged Earles and Papajohn with: (1) devising a scheme to defraud St. Paul Fire and Marine Insurance Company (St. Paul) (Counts Two and Three); (2) laundering the proceeds received from the mail fraud (Count Four); and (3) conspiring to commit an offense against the laws of the United States, i.e., mail fraud and money laundering (Count Five). The indictment also sought the forfeiture of approximately $188,665.00, the amount received as proceeds of the defendants' allegedly unlawful activities.

Prior to the indictment, Earles's son Donald Scott Earles (Donnie) testified before the grand jury three times. ¹ During Donnie's first grand jury appearance, he stated that he did not know who burned the Countryside IGA, but that he would not put it past his father and Papajohn to do such a thing. At his second grand jury appearance, Donnie admitted to knowing more facts about the burning of the IGA and testified to those facts in great detail. At his third appearance, Donnie stated that he would not comment further on the fire or testify against his father or Papajohn, his father's girlfriend.

The testimony Donnie gave during his second grand jury appearance can be summarized as follows. Earles told Donnie on the day of the fire that he planned to burn the IGA, had unsuccessfully attempted to do so the night before, and would try again that night. Earles explained that he and Papajohn had stockpiled lighter fluid in the store in preparation for the fire. On the night of the fire, Donnie was very nervous for his father and hung around the store until his father made him leave. After leaving the store, Donnie parked his car at Papajohn's residence and walked back to the IGA. At one point in the evening, Donnie remembers waving to a local police officer who was patrolling the area. Earles told Donnie that he and Papajohn wanted to be rid of the IGA and needed the money from the insurance to pay off their debts and start over again. After the fire, Earles told Donnie that he had barely been able to get out of the store because the lighter fluid ignited so quickly.

Earles and Papajohn filed numerous pretrial motions. The district court granted Papajohn's motion for severance and her case proceeded to trial. At that trial, Donnie refused to testify and stated that he was asserting his privilege against self-incrimination. Despite the government's grant of use immunity for his testimony and the district court's explanation that such immunity rendered his claim of Fifth Amendment immunity unavailing, Donnie continued to refuse to testify at trial, explaining that he did not want to testify against his father or Papajohn. The district court held Donnie in contempt and jailed him for his failure to testify. After granting a continuance, the district court explained that a mistrial would be granted if Papajohn agreed to be tried together with Earles. Papajohn agreed and the district court declared a mistrial.

At the subsequent joint trial of Earles and Papajohn, Donnie again refused to testify, in spite of the intervening jail time and another grant of immunity. The district court declared Donnie an unavailable witness and allowed the government to read to the jury redacted portions from all three of the transcripts of Donnie's grand jury testimony, over defendants' objection.

In addition to Donnie's testimony, a local deputy sheriff testified that he had observed Earles and Donnie entering and exiting the IGA and a nearby building around 1:00 a.m. on the night of the fire. Because the officer was suspicious of the late night activity, he drove by the store again later that night. At that time, he followed the men's vehicle to Papajohn's residence where they entered through the garage. Still later that same morning, the officer received the call regarding the fire at the IGA.

The government also presented evidence that the fire investigators had concluded that arson was the cause of the fire. The investigators agreed that the fire was incendiary in origin and that a flammable liquid had been used as an accelerant. In addition, the government presented evidence that Papajohn had been experiencing financial difficulty and was behind in her payments to creditors and vendors, including six months behind in payments on a secured note for the IGA inventory. Further evidence showed that Papajohn processed her proof of loss with St. Paul through the mail. Papajohn, in return, was sent checks from St. Paul totaling $188,665.00 in settlement of her claim.

The jury convicted Earles of one count of arson, two counts of aiding and abetting the crime of mail fraud, and one count of conspiracy. Papajohn was convicted of one count of aiding and abetting arson, two counts of mail fraud, and one count of conspiracy. After trial, defendants moved for a judgment of acquittal or, in the alternative, a new trial. They contended that the district court erred in allowing Donnie's grand jury testimony into evidence and that the government's evidence, without the grand jury testimony, was insufficient to support the convictions. The district court agreed and entered a judgment of acquittal. It denied defendants' alternative motions for a new trial. The government appeals, arguing that the grand jury testimony was properly admitted and, if not, that the defendants should be retried.

II. DISCUSSION

A. Admission of Grand Jury Testimony

As indicated, after Donnie refused to testify, the government offered portions of Donnie's grand jury testimony into evidence. The defendants objected, arguing that such testimony was inadmissible hearsay. The district court first determined that Donnie was an unavailable witness due to his continuing refusal to testify despite court orders to do so. Fed.R.Evid. 804(a)(2). The district court then determined that although Donnie's grand jury testimony was not admissible under the former testimony exception to the hearsay rule, because it was not subject to cross examination, Federal Rule of Evidence 804(b)(1); United States v. Salerno, 505 U.S. 317, 321-22, 112 S.Ct. 2503, 2506-07, 120 L.Ed.2d 255 (1992), it was admissible under the residual hearsay exception, Federal Rule of Evidence 804(b)(5). The district court later determined that the admission of the grand jury testimony was error. We find, however, that Donnie's testimony was admissible under Rule 804(b)(5).

Rule 804(b)(5), considered the residual or "catch-all" exception to the hearsay rule, provides in relevant part:

A statement not specifically covered by any of the foregoing exceptions but having equivalent circumstantial guarantees of trustworthiness, [is admissible] if the court determines that (A) the statement is offered as evidence of a material fact; (B) the statement is more probative on the point for which it is offered than any other evidence which the proponent can procure through reasonable efforts; and (C) the general purposes of these rules and the interests of justice will best be served by admission of the statement into evidence.

Fed.R.Evid. 804(b)(5) (emphasis added). The district court held that Donnie's grand jury testimony, as former testimony, was "specifically covered" by another exception to the hearsay rule, namely section 804(b)(1) and was, therefore, inadmissible under the catch-all exception. United States v. Earles, No. CR 91-4016-DEO, order at 11 (N.D.Ia., Dec. 29, 1995) (citing United States v. Vigoa, 656 F.Supp. 1499, 1504 (D.N.J.1987), aff'd without opinion, 857 F.2d 1467 (3d Cir.1988)). In so holding, the district court committed reversible error.

The meaning of the catch-all's "specifically covered" language has caused considerable debate. See, e.g., McKethan v. United States, 439 U.S. 936, 99 S.Ct. 333, 58 L.Ed.2d 333 (1978) (Justices Stewart and Marshall dissenting from the Court's denial of writs of certiorari and contending that the Court should resolve the circuit split on this issue). However, the majority of circuit courts have held that the phrase "specifically covered" means only that if a statement is admissible under one of the prior exceptions, such prior subsection should be relied upon instead of subsection (b)(5). If, on the other hand, the statement is inadmissible under the other exceptions, these courts allow the testimony to be considered for admission under Rule 804(b)(5). United States v. Marchini, 797 F.2d 759, 763 (9th Cir.1986) (compiling cases); see United States v. Deeb, 13 F.3d 1532, 1536-37 (11th Cir.1994); United States v. Clarke, 2 F.3d 81, 84 (4th Cir.1993); United States v. Guinan, 836 F.2d 350, 354 (7th Cir.1988).

This court has previously validated the use of grand jury testimony under Rule 804(b)(5), although without discussing the meaning of the rule's "specifically covered" language. United States v. Carlson, 547 F.2d 1346, 1355 (8th Cir.1976). In that case, we affirmed the district court's use of Rule 804(b)(5) to...