Cook v. Auto Club Ins. Ass'n

• Decision Date: 05 July 1996
• Docket Number: Docket Nos. 174750 and 176864
• Citation: 217 Mich.App. 414,552 N.W.2d 661
• Parties: Charles F. COOK and Frances T. Cook, Plaintiffs-Appellees, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant. (On Remand) (Two Cases)
• Court: Court of Appeal of Michigan — District of US

Page 661

552 N.W.2d 661

217 Mich.App. 414

Charles F. COOK and Frances T. Cook, Plaintiffs-Appellees, v. AUTO CLUB INSURANCE ASSOCIATION, Defendant-Appellant. (On

Remand) (Two Cases)

Docket Nos. 174750 and 176864.

Court of Appeals of Michigan.

Submitted Feb. 7, 1996, at Detroit.

Decided July 5, 1996, at 9:05 a.m.

Released for Publication Sept. 4, 1996.

UAW-Chrysler Legal Services Plan by Lawrence A. Williams and Barbara G. Robb, Warren, for plaintiffs.

Hanlon, Becker, Lanctot, McCutcheon, Schoolmaster, Taylor & Hom by Thomas J. Dombrowski, Bloomfield Hills, and, Detroit, (John A. Lydick, of counsel), for defendant.

Before O'CONNELL, P.J., and REILLY and D.E. SHELTON, ^* JJ.

ON REMAND

O'CONNELL, Presiding Judge.

This action for breach of an insurance contract originated in the district court. In Docket No. 176864, defendant appeals the circuit court's affirmance of the judgment on jury verdict entered in the district court. A panel of this Court originally denied defendant's application for leave to appeal, but pursuant to Supreme Court order, we now consider defendant's appeal pursuant to MCR 7.302(F)(1) as on leave granted. 445 Mich. 936, 521 N.W.2d 606 (1994). In Docket No. 174750, defendant appeals by leave granted the circuit court's affirmance of the order of the district court taxing costs pursuant to MCR 2.403(O) against defendant.

We have consolidated these appeals to facilitate our review. In Docket No. 176864, we reverse the circuit court's affirmance of the judgment of the district court and remand for a new trial. In Docket No. 174750, we vacate the order of the district court taxing costs and the circuit court's affirmance of that order.

I

Plaintiff Charles Cook purchased a used Ford Tempo for his daughter, plaintiff Frances Cook. Plaintiffs insured the automobile with defendant. The automobile insurance policy covered, among other things, theft and arson.

Approximately nine months later, the Tempo was found burned beyond repair under suspicious circumstances. Plaintiffs reported the loss to defendant, claiming that the automobile had been stolen and destroyed. Defendant refused to pay the claim, contending that plaintiffs had attempted to commit insurance fraud. Defendant, however, did not pursue the criminal prosecution of plaintiffs, and plaintiffs were never prosecuted.

Plaintiffs brought this action for breach of an insurance contract against defendant in the district court. Before trial, defendant moved in limine to exclude all mention of the fact that plaintiffs were not charged with any crime in connection with the destruction of the Tempo. The district court denied the motion. During trial, plaintiffs' counsel elicited from an employee of defendant testimony that defendant had declined to pursue criminal prosecution in the matter, the damaging effect of which was mitigated to some extent by the witness' disclosure that defendant, as a rule, did not pursue criminal prosecution. Plaintiffs' counsel referred to defendant's inaction during closing argument, asking the jury: "[W]hy wasn't there an insurance fraud claimed? That bugs the heck out of me. I don't know how you guys feel about it."

The jury was persuaded that plaintiffs had committed no fraud and awarded them just over $3,500. Defendant appealed as of right to the circuit court, which affirmed. This Court initially denied defendant's application for leave to appeal, but upon the Supreme Court's order, we now consider defendant's appeal as on leave granted.

II

Defendant contends that the district court committed error requiring reversal in denying defendant's motion to exclude evidence that plaintiffs had not faced criminal prosecution. Our review of the case law indicates that defendant is correct.

This issue appears to be one of first impression in Michigan, though our courts have dealt with similar issues. For example, this Court has previously held that an insured's arson conviction may be used to bar the insured's recovery in a suit to determine insurance coverage. Ramon v. Farm Bureau Ins. Co., 184 Mich.App. 54, 59-60, 457 N.W.2d 90 (1990). We must now consider the converse, whether an insured's acquittal, or the absence of criminal prosecution altogether, may be used by the insured as a sword in a similar suit.

Without exception, all the courts that have considered this issue have concluded that evidence of acquittal or lack of prosecution is not admissible in an insured's suit against the insurer. See, e.g., Kelly's Auto Parts, No. 1, Inc. v. Boughton, 809 F.2d 1247, 1251-1253 (C.A.6, 1987); American Home Assurance Co. v. Sunshine Supermarket, Inc., 753 F.2d 321, 325 (C.A. 3, 1985); Galbraith v. Hartford Fire Ins. Co., 464 F.2d 225, 227 (C.A.3, 1972); Rabon v. Great Southwest Fire Ins. Co., 818 F.2d 306, 309 (C.A.4, 1987); Weathers v. American Family Mutual Ins. Co., 793 F.Supp. 1002, 1015 (D.Kan.1992); Krueger v. State Farm Fire & Casualty Co., 510 N.W.2d 204, 210-211 (Minn.App., 1993); Dawson v. Miller, 594 So.2d 970, 972 (La.App., 1992). The rationale underlying this unanimity of opinion does not vary. First, evidence of acquittal or the lack of prosecution is highly prejudicial because it goes to the principal issue before the jury. Krueger, supra. Second, though highly prejudicial, "such evidence has little or no probative value, because of the different burdens of proof. The difference is between preponderance of the evidence in civil cases and proof beyond a reasonable doubt in criminal cases." Dawson, supra. Finally, with respect to lack of prosecution only,

a prosecutor's decision to nolle prosse may take into account many factors irrelevant in a civil suit, such as the higher standard of proof required for criminal conviction. In any event, a prosecutor's opinion whether the insured started the fire is inadmissible since it is based on knowledge outside his personal experience. [Rabon, supra.]

We find the reasoning of the cases cited above to be persuasive and adopt it as our own.

In the present case, plaintiffs faced no criminal prosecution with respect to the destruction of the Tempo. Defendant's motion to exclude evidence of this was denied. Plaintiffs' counsel proceeded to elicit damaging testimony from an employee of defendant that defendant had declined to seek prosecution of plaintiffs, and also used this information to good effect during closing argument. The prejudice is evident. For the reasons set forth in the preceding paragraphs, this prejudice outweighed any probative value of the evidence. See MRE 403. Therefore, we conclude that the district court abused its discretion in denying defendant's motion in limine.

The only remaining question in this context is whether the court's...