American Home Assur. Co. v. Sunshine Supermarket, Inc.

• Citation: 753 F.2d 321
• Decision Date: 01 February 1985
• Docket Number: No. 84-3021,84-3021
• Parties: , 53 USLW 2406, 19 Fed. R. Evid. Serv. 374 AMERICAN HOME ASSURANCE COMPANY, Appellant, v. SUNSHINE SUPERMARKET, INC., Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (3rd Circuit)

Page 321

753 F.2d 321

76 A.L.R.Fed. 605, 53 USLW 2406, 19

Fed. R. Evid. Serv. 374

AMERICAN HOME ASSURANCE COMPANY, Appellant, v. SUNSHINE SUPERMARKET, INC., Appellee.

No. 84-3021.

United States Court of Appeals, Third Circuit.

Argued Dec. 6, 1984.

Decided Feb. 1, 1985.

R. Eric Moore, Christiansted, St. Croix, V.I., James L. Carroll [argued], Watkins & Eager, Jackson, Miss., for appellant.

Edward J. Ocean [argued], Christiansted, St. Croix, V.I., Yamil Galib Frangie, San German, P.R., for appellee.

Before SEITZ, GIBBONS and SLOVITER, Circuit Judges.

OPINION OF THE COURT

SEITZ, Circuit Judge.

The American Home Assurance Company ("American Home") appeals from a judgment entered after a jury trial. American Home brought this declaratory judgment action for a declaration that it was not liable under the policy issued to Sunshine Supermarket, Inc. ("Sunshine"). Sunshine counterclaimed under the policy for its losses and for damages due to American Home's refusal to pay in a timely manner. This court has jurisdiction pursuant to 28 U.S.C. Sec. 1291 (1983).

I.

Based on the testimony, the jury could have found the following facts. Sunshine is a close corporation with ten shareholders, most of whom are also officers or employees of the corporation. It owned the Sunshine Supermarket in the Virgin Islands which was extensively damaged by fire on the night of February 19, 1981. The store closed at 8:00 PM that night. The last group of people to leave the store on the night of the fire were eight shareholder-employees who left together shortly before or about 9:00 PM. The fire was reported to the Virgin Islands fire department at 9:10 PM.

American Home had issued to Sunshine a policy of insurance that would insure Sunshine against losses to its business and property by reason of fire. An investigator hired by American Home reported that the fire had been deliberately set, and this opinion was corroborated by the opinions of fire officials in the Virgin Islands. American Home refused to pay Sunshine for the damages suffered and brought this action for a declaratory judgment that it was not liable under the policy.

At trial, American Home advanced two grounds for its refusal to pay under the policy. First, it contended that Sunshine deliberately caused the fire to be set. Arson by the insured would relieve American Home of its contractual obligation to indemnify. Second, it contended that Sunshine's shareholder-employees wilfully made materially false statements to American Home during its investigation of the fire and that Sunshine fraudulently exaggerated its proof of loss claim. Fraud or false swearing by the insured is a ground, independent of arson, for voiding a policy of insurance. Sunshine counterclaimed for its losses under the policy, for damages due to American Home's delay in paying the fire claim and for punitive damages.

At the close of the evidence, the district court refused to submit to the jury American Home's defense of misrepresentation by the shareholder-employees and Sunshine's claim for punitive damages. The jury, upon submission of the remainder of the issues by special interrogatories, found in favor of Sunshine and against American Home. A judgment thereupon was entered and American Home appealed.

II. The Arson Defense

American Home argues that the district court made several errors with respect to the arson defense that require a new trial. First, American Home contends that the district court improperly admitted evidence that no criminal prosecution for arson had been instituted in connection with the fire at the Sunshine Supermarket. Second, it claims that the district court failed to instruct the jury properly on the burden of persuasion required to prove arson. Third, it questions the propriety of the district court's comments tending to support the credibility of Sunshine's expert witness.

A. Admission of the Evidence of Non-Prosecution

As a threshold matter, Sunshine contends that American Home may not raise this issue on appeal because American Home's counsel failed to object at trial to the introduction of the evidence. Fed.R.Evid. 103(a).

Prior to the trial, American Home filed a motion in limine to prevent the introduction of the evidence of non-prosecution for arson. The district court ruled that the evidence could be admitted if American Home introduced evidence that Virgin Islands fire officials believed that the fire was deliberately set. During trial, American Home presented such opinions by the fire officials and Sunshine responded by showing, without contemporaneous objection, that no prosecution had been instituted.

The initial question before this court is whether a denial of a motion in limine is sufficient to preserve for purposes of appeal the specific issue raised in the motion. Federal Rule of Evidence 103(a) requires that a timely objection be made in order to preserve an issue for appeal. Rule 103(a), however, must be read in conjunction with Federal Rule of Civil Procedure 46 which states that formal exceptions are unnecessary. Cf. Bowley v. Stotler, 751 F.2d 641 (3d Cir.1985) (reading Fed.R.Civ.P. 51 with Rule 46). Both Rule 103(a) and Rule 46 have as their underlying objective that potential trial problems be brought to the attention of the trial court and a timely opportunity be given to rule on such issues. See Fed.R.Evid. 103 advisory committee note; 5A J. Moore & J. Lucas, Moore's Federal Practice p 46.02 (2d ed. 1984). Thus, the test is whether an objection at trial would have been more in the nature of a formal exception or in the nature of a timely objection calling the court's attention to a matter it need consider.

The other courts of appeals that have considered this issue are divided. The Ninth Circuit apparently holds that an objection at trial is unnecessary, and the Fifth Circuit differs by requiring an objection at trial. Rojas v. Richardson, 703 F.2d 186, opinion set aside for other reasons on rehearing, 713 F.2d 116 (5th Cir.1983). Compare Collins v. Wayne Corp., 621 F.2d 777 (5th Cir.1980) with Sheehy v. Southern Pac. Trans. Co., 631 F.2d 649 (9th Cir.1980). See also 1 J. Weinstein and M. Berger, Weinstein's Evidence p 103 (1982). The Fifth Circuit's view is predicated on the theory that a motion in limine presents a largely hypothetical question and that a trial court is in a better position to rule on an evidentiary issue in light of a specific trial situation. Collins, 621 F.2d at 784. In certain situations, a trial court should defer ruling on an evidentiary issue if the nature or relevance of the evidence is unclear before trial. However, if an issue is fully briefed and the trial court is able to make a definitive ruling, then the motion in limine provides a useful tool for eliminating unnecessary trial interruptions. See In re Japanese Electronic Products Antitrust Litigation, 723 F.2d 238, 260 (3d Cir.1983) (approving of the use of motion in limine ).

Here, counsel for American Home filed a written pretrial motion requesting that the evidence of non-prosecution be ruled inadmissible. The motion set forth reasons, including case citations, in support of the request. The trial court held a hearing at which it considered the arguments of counsel and made a definitive oral ruling with no suggestion that it would reconsider the matter at trial. Under these circumstances, requiring an objection when the evidence was introduced at trial would have been in the nature of a formal exception and, thus, unnecessary under Rule 46.

Having passed the threshold question, we must now consider the merits of the ruling. We note that the opinions by the fire officials were clearly admissible. There was testimony that showed that they were experienced and knowledgable in the investigation of fires and that their opinions were based on personal observation. See Fed.R.Evid. 701. Further, it is not contended that they were not qualified to testify as expert witnesses. Fed.R.Evid. 702 & 703.

By ruling that if this clearly admissible evidence were offered then Sunshine could present evidence of non-prosecution, the district court linked the two propositions. The question is then whether this linkage was permissible. This court held in Galbraith v. Hartford Fire Insurance Company, 464 F.2d 225 (3d Cir.1972), that evidence of non-prosecution for arson was inadmissible in a civil action to disprove arson. Although that case was decided under New Jersey law and not the Federal Rules of Evidence, the basic evidentiary principles and reasoning of that case are applicable here. The evidence of non-prosecution is of very limited probative value in showing that there was no arson because of the higher burden of persuasion in a criminal case. Cf. E. Cleary, McCormick on Evidence 895 (3d ed. 1984). Further, prosecutorial discretion may take into account many other factors not relevant in a civil suit. At best, the evidence of non-prosecution is evidence of an opinion by the prosecutor. The opinion of a layperson, as the prosecutor was in this case, however, is inadmissible if it based on knowledge outside the individual's personal experience. Fed.R.Evid. 602, 701. Galbraith, 464 F.2d at 226-28; Mineo v. Eureka Security Fire and Marine Ins. Co., 182 Pa.Super. 75, 125 A.2d 612, 616 (1956) (evidence of nolle prosequi inadmissible).

The inadmissibility of evidence of non-prosecution also comports with the general rule that evidence of an acquittal in a criminal arson case is inadmissible in a civil arson case. Williams v. Cambridge Mut. Fire Ins. Co., 230 F.2d 293 (5th Cir.1956) (Miss. law); Wheat v. Continental Casualty Co., 652 S.W.2d 345 (Tenn.1983); Greenberg v. Aetna Ins. Co., 427 Pa. 511, 235 A.2d 576 (Pa.1967), cert. denied, 392 U.S. 907, 88 S.Ct. 2063, 20 L.Ed.2d 1366 (1968).

The district court, however, apparently admitted the evidence of non-prosecution to rebut the testimony of the fire officials. There are limited occasions when otherwise...