Gibson v. Ky. Farm Bureau Mut. Ins. Co.

• Decision Date: 03 December 2010
• Docket Number: No. 2009-CA-000048-MR.,2009-CA-000048-MR.
• Citation: 328 S.W.3d 195
• Parties: Roy GIBSON and Clinton Bowman, Appellants, v. KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY; Gary Speth, Sr.; and Fabian Gomez Sanchez, Appellees.
• Court: Kentucky Court of Appeals

328 S.W.3d 195

Roy GIBSON and Clinton Bowman, Appellants,

v.KENTUCKY FARM BUREAU MUTUAL INSURANCE COMPANY; Gary Speth, Sr.; and Fabian Gomez Sanchez, Appellees.

No. 2009-CA-000048-MR.

Court of Appeals of Kentucky.

July 9, 2010.

As Modified Dec. 3, 2010.

Robert W. Dyche, III (argued), London, KY, for appellants.

Perry Adanick (argued), Louisville, KY, for appellee Kentucky Farm Bureau Mutual Insurance Company.

No Brief for Gary Speth, Sr. and Fabian Gomez Sanchez.

Before ACREE, COMBS and WINE, Judges.

OPINION

ACREE, Judge:

Appellants Roy Gibson and Clinton Bowman appeal the October 3, 2008 judgment of the Clay Circuit Court entered upon a jury's verdict finding them liable for fraud and ordering them to pay $43,778.53 to Appellee Kentucky Farm Bureau (KFB) and $14,000 to Appellee Gary Speth. For the following reasons we affirm in part, reverse in part, and remand for additional findings.

On June 24, 2005, Gibson and Bowman reported to KFB their 2000 Ford F150 had been stolen approximately three weeks earlier; KFB established the date of the loss as June 1, 2005. At the request of KFB, Gibson and Bowman filed a police report. Because they no longer possessed the vehicle's certificate of title, they also obtained a duplicate title. In accordance with the terms of their KFB insurance policy covering theft of the insured vehicle, Gibson and Bowman soon received a check in the amount of $17,291.50.

In late 2005, an individual named Rogelio Mendez attempted to register the vehicle. He presented the original certificate of title to the clerk; the back of the certificate showed that on March 22, 2005, Gibson and Bowman had executed an assignment of the title to Mendez and their signatures were notarized.¹ However, because the vehicle had been reported stolen, the clerk refused to permit Mendez to register the vehicle in his name. Police seized the truck and returned it to KFB. The insurer sold the truck for approximately $7,200.

Although KFB had recovered the vehicle Gibson and Bowman alleged was stolen, Mendez's title document cast doubt on the story Gibson and Bowman had told. KFB initiated an investigation to verify the representations its insureds had made that resulted in KFB's payment for the truck.

KFB's investigation yielded information that contradicted the representations made by Gibson and Bowman. Investigators learned that Mendez had actually obtained the vehicle from an individual named GarySpeth. Speth believed he had legally acquired the truck from a man named Fabian Sanchez, a friend of Mendez. Sanchez had approached Speth seeking a loan on March 23, 2005, three months earlier than the date Gibson and Bowman had reported the truck stolen. At that time, Sanchez had possession of the truck and the original title that had been signed by Gibson and Bowman and their signatures notarized, but the transferee information was left blank. Believing Sanchez was in lawful possession of the truck, Speth agreed to loan Sanchez $7,000, keeping the truck as collateral. Speth did not attempt to register the title because he expected Sanchez to return and repay the loan with interest.

After Sanchez failed to repay the loan, Mendez expressed interest in purchasing the truck. Speth agreed to sell the truck to Mendez on or about September 23, 2005, and Mendez signed the Assignment of Title as the "Buyer." By the terms of the agreement between Speth and Mendez, payment was due after Mendez registered the truck in his name. As noted, however, Mendez was unable to register the vehicle despite making the attempt in both Kentucky and Indiana. The deal between Speth and Mendez was then off and Speth was never paid.

KFB investigator Daniel Keller was able to reach and interview Sanchez. Sanchez informed Keller that Gibson had sold him the truck in March 2005 and otherwise confirmed the information Speth provided regarding when and why Speth had come into possession of the truck.

Gibson and Bowman maintained that the truck was in their possession until it was stolen on or about June 1, 2005. Gibson claims that on or about that date he was traveling in the truck from Manchester, Kentucky, to Louisville and stopped for gas in Richmond when the truck's starter failed. He stated he left the truck at the home of a friend who promised to have a local shop repair it. He then arranged for other transportation and continued his trip to Louisville. Both Gibson and Bowman deny having signed the title document before a notary or delivering title or possession of the truck to a third person. Gibson explained that he did sign the title document, but that he did so several years before the alleged theft in anticipation of using the truck as collateral on a loan. He never went through with that loan, however.²

Believing it had been defrauded, KFB filed a complaint seeking a declaration of rights to the truck as against Sanchez and Speth and asserting a fraud claim against Gibson and Bowman. Gibson and Bowman were represented in the action by counsel and defended against the fraud claim. Speth appeared pro se with the benefit of some assistance from KFB's counsel. Sanchez was never served and did not appear in the action.

Following trial, a jury determined Gibson and Bowman had defrauded KFB and awarded KFB $43,778.53. The jury also awarded Speth $14,000.³ This appeal followed.

Gibson and Bowman claim the circuit court erred as follows: (1) by failing to strike for cause jurors who were policyholdersof insurance issued by KFB; (2) by admitting hearsay testimony of out-of-court statements made by Sanchez; (3) by awarding KFB costs of investigating and prosecuting the claim; and (4) by awarding damages to Speth in absence of a finding he was defrauded and without proof of his loss. We address those assignments of error in that order.

Jury Selection

"It is elementary that the determination of whether to excuse a prospective juror rests within the sound discretion of the trial judge and ought not to be set aside by a reviewing court unless the error is manifest." Peters v. Commonwealth, 505 S.W.2d 764, 765 (Ky.1974). We review the circuit court's determination with that standard in mind.

Gibson and Bowman claim the circuit court erred by overruling their motion to strike for cause prospective jurors who were also holders of KFB policies. They have also identified statements made by counsel for KFB and a witness, Keller, which they believe served to further bias the KFB policyholders on the jury. KFB does not directly respond to allegations that these statements biased the jury, presumably because Gibson and Bowman made no objection to these statements during trial. We separately address that issue, and the issue of preservation of error, infra. However, KFB does argue that the trial court's refusal to disqualify any of the policyholders was proper absent a showing of any individual juror's actual bias. We agree with KFB.

Kentucky courts have acknowledged juror-policyholders may become biased when those jurors are aware their insurer has an interest in the outcome of a case. Planters Bank & Trust Company of Hopkinsville v. Deason, 532 S.W.2d 16, 18 (Ky.1975). However, in Planters Bank, the Court did not indicate the juror would automatically be disqualified "[e]ven if the possibility of higher rates or lower dividends determined by the loss ratio of the company be considered a sufficient interest upon which to infer bias on the part of a policy holder who serves as a juror[.]" Id.; David J. Marchitelli, Annotation, Prospective Juror's Connection With Insurance Company As Ground For Challenge For Cause, 9 A.L.R.5th 102, § 6[e] (2010) ("The court [in Planters Bank ] reserved the question of whether a juror's assessability or participation in dividends would amount to an interest sufficient to warrant a challenge for cause"). The burden of demonstrating bias remains "upon the party claiming bias or partiality[.]" Polk v. Commonwealth, 574 S.W.2d 335, 337 (Ky.App.1978), citing Watson v. Commonwealth, 433 S.W.2d 884 (Ky.1968). That burden is borne by questioning the suspect juror to reveal whether the juror's interest in the insurance company gives rise to an inference of bias sufficient to justify disqualification for cause.

The argument Gibson and Bowman present is that no KFB policyholder was capable of sitting as an unbiased juror in this case. That is, they argue the policyholders' status alone required striking them for cause. True, by statute, certain persons are subject to challenge for cause merely because of their status. Howell v. Commonwealth, 489 S.W.2d 21, 22-23 (Ky.1972) (Former Kentucky Revised Statute (KRS) 29.025, now KRS 29A.080(2)(b), disqualifies felons from jury service; "a juror in such status is subject to challenge for cause"). However, this panel may not, by creating the bright line test suggested by this argument, take from the province of the trial court the discretion to determine the qualifications of any jurors in the venire not otherwise disqualified by KRS 29A.080(2).

We do not exclude the possibility that one or more jurors in this case may have had such a concern about their relationship with KFB that they might be deemed biased. However, we can only speculate as to the existence of actual bias because Gibson and Bowman simply did not inquire further into the matter during voir dire either with any individual juror or with the venire.⁴ Relevant inquiries could have determined whether any particular juror had a concern that a judgment in the case would affect them personally. In this case, the only information about the juror-policyholders available to the trial court was that the potential for bias existed. Absent further indication from the voir dire that any juror, because of his or her relationship with KFB, was actually biased or would have difficulty fairly deciding the case, we cannot label the trial court's refusal to strike any jurors for cause an abuse of discretion.

Gibson and Bowman also maintain that, in light...