Allstate Ins. Co. v. Swann

• Decision Date: 09 August 1994
• Docket Number: No. 92-6803,92-6803
• Citation: 27 F.3d 1539
• Parties: 40 Fed. R. Evid. Serv. 1483 ALLSTATE INSURANCE COMPANY, Plaintiff-Counterclaim Defendant-Appellant, v. Terry SWANN and Pamela Swann, Defendants-Appellees, Donald L. Rayburn, Defendant-Counterclaim Plaintiff-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1539

27 F.3d 1539

40 Fed. R. Evid. Serv. 1483

ALLSTATE INSURANCE COMPANY, Plaintiff-Counterclaim Defendant-Appellant, v. Terry SWANN and Pamela Swann, Defendants-Appellees, Donald L. Rayburn, Defendant-Counterclaim Plaintiff-Appellee.

No. 92-6803.

United States Court of Appeals, Eleventh Circuit.

Aug. 9, 1994.

Steven F. Casey, Alan T. Rogers and Michael D. Freeman, Balch & Bingham, Birmingham, AL, for appellant.

Charles R. Crowder, Leila Hirayama Watson and David C. Johnson, Johnson & Cory, P.C., Birmingham, AL, for Donald Rayburn.

Thomas B. Hanes, Barnett, Noble, Hanes & Sparks, Birmingham, AL, for Terry and Pam Swann.

Appeal from the United States District Court for the Northern District of Alabama.

Before ANDERSON and BIRCH, Circuit Judges, and CONWAY ^*, District Judge.

CONWAY, District Judge:

Allstate Insurance Company ("Allstate") appeals an adverse judgment following a jury trial concerning whether, and to what extent, Allstate was liable for fire losses under a homeowners insurance policy. For the reasons that follow, we affirm in part and reverse in part.

I. FACTS AND PROCEDURAL HISTORY

Terry and Pamela Swann ("the Swanns") owned a house insured under a homeowners policy issued by Allstate. Donald L. Raburn ("Raburn") was identified in the policy as a mortgagee. In the application for insurance, the Swanns represented that Mr. Swann was in the property management business. In May 1990, a fire destroyed the Swanns' home.

In September 1990, Allstate filed a declaratory judgment action against the Swanns in the United States District Court for the Northern District of Alabama. In its initial complaint, Allstate sought a declaration that it had no liability under the policy for the fire losses because the Swanns set the fire, or caused it to be set, and made material misrepresentations in the insurance application and claim processes. Allstate later amended its complaint to add Raburn as a defendant. In the amended pleading, Allstate alleged that during its claims investigation, Raburn misrepresented to Allstate the extent and validity of his mortgage interest. Allstate sought a declaration that it was not liable to Raburn under the homeowner's policy and that Raburn's mortgage was invalid and unenforceable. Alternatively, Allstate sought a declaration specifying the extent of Raburn's mortgage interest. Thereafter, Raburn counterclaimed against Allstate for breach of the insurance contract.

The case was tried in March 1992. Allstate introduced evidence that the fire was incendiary. Allstate also presented circumstantial evidence of the Swanns' alleged motive for setting the fire. Allstate's evidence linking the Swanns to the fire was likewise circumstantial.

Allstate also introduced evidence that the Swanns misrepresented Mr. Swann's occupation in the insurance application. Mr. Swann testified that during some years, most of his income came from gambling, rather than from real estate. R. 54 at 88. ¹

After Mr. Swann testified, Allstate called one of its homeowners underwriting managers as a witness, for the purpose of establishing that Allstate would not have issued the policy to the Swanns had it known that Mr. Swann earned his living from illegal gambling. On direct examination, Allstate's counsel asked the underwriting manager, John Looby, the following question:

At the time the policy was issued to Terry and Pamela Swann, if the applicant had stated on his application that he derived his income from gambling, would Allstate have issued the policy?

R. 55 at 340. Counsel for the Swanns objected, without stating any grounds, and the district court sustained the objection. After Allstate's counsel explained what Allstate sought to prove through the witness, the district judge stated:

First of all, I take it there's an objection for best evidence. Are these underwriting guidelines written, Mr. Looby?

R. 55 at 340. Mr. Looby responded "yes, sir", whereupon the district judge sustained the objection. Allstate's counsel then remarked that all of the underwriting guidelines were not written, after which the district judge instructed him to ask his next question. Later, out of the presence of the jury, Allstate's counsel proffered that

... Mr. Looby would testify that if Mr. Swann had provided a true statement on his application regarding the source of his income the policy would not have been issued, that their principles prohibit in fact the issuance of policies to people that earn their living in that fashion.

R. 55 at 379-80.

After Allstate rested its case, the district court directed a verdict against Allstate on its misrepresentation claim against the Swanns. The district court likewise directed a verdict in Raburn's favor on the separate misrepresentation claim against him and on Allstate's claim that the mortgage was invalid. Raburn was also granted a directed verdict on his counterclaim for breach of the insurance contract.

The defendants did not present any evidence. After they rested, the case was submitted to the jury. In answers to special interrogatories, the jury stated that neither of the Swanns had willfully burned the home, or caused it to be burned. The jury also determined the pre-fire market value of the house, and the actual cash value of the home's contents which were destroyed by the fire. Finally, the jury determined the amount of money owed by the Swanns to Raburn under the mortgage. The district judge entered a single judgment awarding $377,873.30 to the Swanns and $203,704.92 to Raburn. Allstate filed a motion for new trial, which the district judge denied.

Allstate appeals (1) the district judge's entry of a directed verdict in the Swanns' favor on Allstate's misrepresentation claim, (2) the district judge's jury instruction concerning an insurer's burden of proving arson based on circumstantial evidence, and (3) the district judge's refusal to give Allstate's requested special jury interrogatory concerning its arson claim. We consider only the propriety of an evidentiary ruling underlying Allstate's first issue on appeal, and the separate question of whether Allstate has waived any appeal as to Raburn.

II. DISCUSSION

A. Exclusion of Mr. Looby's Testimony.

We first must determine whether Allstate has waived its right to challenge the district judge's exclusion of Mr. Looby's testimony. Allstate did not list this particular ruling in its statement of the issues in the initial brief. Instead, Allstate phrased the issue as "Whether the lower court erred in directing a verdict on Allstate's misrepresentation claim where the insured misrepresented his occupation on his application for insurance." Allstate's initial brief seems to suggest that there was sufficient evidence, independent of Mr. Looby's testimony, to create a jury issue on Allstate's misrepresentation claim. However, Allstate also extensively discussed the exclusion of Mr. Looby's testimony in its initial brief. Allstate quoted verbatim the question posed to Mr. Looby, the exchange between the district judge and counsel contemporaneous with the court's exclusion of the evidence, and Allstate's proffer of Mr. Looby's anticipated testimony. Although Allstate's initial brief does not contain citations to legal authority pertaining specifically to the evidentiary ruling, the brief at least raises the suggestion that the trial court erred in excluding Mr. Looby's testimony. Moreover, after the Swanns' counsel noted, almost in passing, in the answer brief that Allstate had not attacked the evidentiary ruling, Allstate filed a reply brief that directly challenged and discussed the ruling.

Issues that clearly are not designated in the initial brief ordinarily are considered abandoned. FSLIC v. Haralson, 813 F.2d 370, 373 n. 3 (11th Cir.1987). However, briefs should be read liberally to ascertain the issues raised on appeal. Id.; United States v. Milam, 855 F.2d 739, 743 (11th Cir.1988) (citing Haralson ); Kincade v. General Tire & Rubber Co., 635 F.2d 501, 504 (5th Cir.1981).

Viewed liberally, Allstate's initial brief raised the issue of the propriety of the district judge's exclusion of Mr. Looby's testimony. Allstate preserved the issue of the evidentiary ruling in the lower court, extensively discussed the circumstances of the ruling in its initial brief, and specifically argued the point in its reply brief. Under these circumstances, application of the waiver rule would be unduly harsh.

Having determined that the evidentiary ruling is before us, we next address whether the trial court erred in excluding Mr. Looby's testimony on the basis of the "best evidence rule." Evidentiary rulings are reviewed under an abuse of discretion standard. Sherrin v. Northwestern Nat'l Life Ins. Co., 2 F.3d 373, 377 (11th Cir.1993).

Rule 1002, Federal Rules of Evidence, states

To prove the content of a writing, ... the original writing ... is required, except as otherwise provided in these rules or by Act of Congress.

Though somewhat expanded, Rule 1002 "is otherwise a conventional restatement of the so-called 'best evidence' rule." 5 J. Weinstein & M. Berger, Weinstein's Evidence p 1002, at 1002-3 (1993). Except as provided in Rule 1002, "there is no general rule that proof of a fact will be excluded unless its proponent furnishes the best evidence in his power." Id. Rule 1002 requires production of an original document only when the proponent of the evidence seeks to prove the content of the writing. See United States v. Howard, 953 F.2d 610, 612 & n. 1 (11th Cir.1992); United States v. Tombrello, 666 F.2d 485, 491 (11th Cir.), cert. denied, 456 U.S. 994, 102 S.Ct. 2279, 73 L.Ed.2d 1291 (1982). It does not, however, "require production of a document simply because the document contains facts that are also testified to by a witness." United States v. Finkielstain, 718 F.Supp. 1187, 1192 (S.D.N.Y.1989).

The district court abused its discretion in excluding Mr. Looby's testimony pursuant to the best evidence...