Hall v. State Farm Fire & Cas. Co.

• Decision Date: 02 August 1991
• Docket Number: No. 90-1336,90-1336
• Parties: Betty I. Hardy HALL, Plaintiff-Appellant, Cross-Appellee, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellee, Cross-Appellant.
• Court: U.S. Court of Appeals — Fifth Circuit

Page 210

937 F.2d 210

20 Fed.R.Serv.3d 840

Betty I. Hardy HALL, Plaintiff-Appellant, Cross-Appellee, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellee,

Cross-Appellant.

No. 90-1336.

United States Court of Appeals, Fifth Circuit.

Aug. 2, 1991.

Luther C. Fisher, IV, Jim Waide, Tupelo, Miss., for plaintiff-appellant, cross-appellee.

Guy T. Gillespie, III, Holcomb, Dunbar, Connell, Chaffin & Willard, Oxford, Miss., for defendant-appellee, cross-appellant.

Appeals from the United States District Court for the Northern District of Mississippi.

Before GARZA, HIGGINBOTHAM and DAVIS, Circuit Judges.

REYNALDO G. GARZA, Circuit Judge:

Hall appeals the lower court judgment against her contending the trial judge erred in interpreting the pretrial order, erred in interpreting the insurance policy and erred in instructing the jury. State Farm appeals because the lower court did not state reasons for denying costs to the prevailing party, State Farm. Finding no reversible error we overrule Hall's points of error and AFFIRM the lower court on those points. Because reasons are required to be stated when costs are denied to the prevailing party, however, we REMAND the costs issue to the trial judge to state reasons for denying costs, or alternately to grant State Farm's request for costs.

I. BACKGROUND

Plaintiff Betty Hardy Hall brought suit for insurance coverage against defendant State Farm Fire & Casualty Company (State Farm). Hall had a valid State Farm fire insurance policy in effect at the time her house burned, and she was hospitalized when the fire occurred. Insurance proceeds for the fire were claimed by Hall under the State Farm policy. State Farm refused coverage, claiming that either Hall, her husband Wayne or someone else under their direction succeeded in burning down the house to collect the insurance money. State Farm also contended coverage was voided because Hall intentionally did not tell true stories regarding the fire in order to increase her recovery under the policy. State Farm alleged Hall falsely exaggerated the contents of the house which were lost to the fire.

In April 1990, a three-day jury trial was held before a magistrate at both parties' consent. The jury returned a verdict for State Farm. Hall then moved for a judgment notwithstanding the verdict or for a new trial. The trial court denied Hall's motion and entered judgment on the jury verdict. The court further ordered each party to pay its own costs without listing any reasons for this action. Hall was ordered to repay State Farm the advances it had made to her on the policy. Hall appeals the judgment against her, and State Farm cross-appeals on the question of costs.

II. ISSUES

A. The pretrial order

Hall contends the trial court erred in interpreting the pretrial order by not restricting the arson issue at trial to the sole question of whether Betty Hall participated in setting the fire. She claims this is clear from the following statements in the pretrial order: (1) "State Farm contends that whoever set the fire did so with the knowledge, approval and cooperation of Betty Hall" and (2) "whether Betty Hall caused or procured the fire of September 23, 1988." Based on these statements from the pretrial order, the evidence concerning whether husband Wayne set the fire, even without her knowledge, was beyond the scope of the order and should not have been admitted argues Hall.

Once entered, a pretrial order governs the trial. Morris v. Homco Int'l, Inc., 853 F.2d 337, 342 (5th Cir.1988). An issue or theory not even implicitly included in the pretrial order is barred unless the order is later amended "to prevent manifest injustice." Id. at 343 (quoting Fed.R.Civ.P. 16(e)). This court reviews the trial court's interpretation of a pretrial order only for abuse of discretion. Swift v. State Farm Mut. Auto. Ins. Co., 796 F.2d 120 In the case at bar, the trial court found "as a matter of law that if Wayne Hall procured this fire, there is no liability under the contract." The court found this premise was raised in the pretrial order. The trial judge also found "as a matter of law that Wayne Hall is an insured under the contract and if he did procure the fire, it voids the policy." The pretrial order contained the following issues of fact and law:

                122 (5th Cir.1986).  "We are not inclined to disturb the ... [trial] court's interpretation of a stipulation agreed upon by the parties during pretrial proceedings and approved by the court."    Hodges v. United States, 597 F.2d 1014, 1017 (5th Cir.1979) (citation and quotation omitted).  A trial court has great discretion in interpreting a pretrial order.  See, e.g., In re P & E Boat Rentals, Inc., 872 F.2d 642, 654 (5th Cir.1989);  Nichols Constr. Corp. v. Cessna Aircraft Co., 808 F.2d 340, 354 (5th Cir.1985)
                

a. Whether State Farm must prove breach of the policy condition against intentional acts by a preponderance of the evidence, or by clear and convincing evidence.

. . . . .

h. All issues of law implicit in the case and addressed in summary judgment motions.

Defendants motion for summary judgment stated as follows: "1. The insurance policy sued upon contains a condition prohibiting any person insured under the policy from procuring or causing a loss to the property for the purpose of obtaining insurance benefits." The plural form "insureds" was used in defendant's motion for summary judgment, the brief supporting the motion and at least one affidavit in support of the motion. When suit was filed solely by Betty, State Farm negotiated and entered into a written agreement with Wayne, in which the parties acknowledged that he was an "insured" under the policy and agreed to forego his joinder in the suit on the condition he waive any potential claims under the policy. Moreover, in the pretrial order Hall listed witnesses and exhibits which indicated her anticipation that Wayne's culpability would be an issue.

Based on the evidence before us, the trial court correctly found that the pretrial order properly raised and preserved the issue of the intentional acts exclusion, including Wayne's sole guilt as being a basis for voiding the policy. Hall also had sufficient notice State Farm would try to show Wayne was an insured and that he was instrumental in burning down the house. Accordingly, the lower court's interpretation of the pretrial order was not erroneous.

B. Coverage for intentional acts done by Wayne Hall

Hall also contends the trial judge erred by incorrectly interpreting the insurance policy condition on intentional acts to exclude coverage for intentional damage caused by her husband. Interpretation of a written contract is a question of law which this court reviews de novo. The State Farm policy contains the following provisions:

DEFINITIONS

"You" and "your" mean the "named insured" shown in the Declarations. Your spouse is included if a resident of your household.

. . . . .

4. "insured" means you and, if residents of your household:

a. your relatives;

. . . . .

CONDITIONS

. . . . .

14. Intentional Acts. If you or any person insured under this policy causes or procures a loss to property covered under this policy for the purpose of obtaining insurance benefits, then this policy is void and we will not pay you or any other insured for this loss.

Hall asserts the definition of "insured," as used in the intentional acts exclusion is ambiguous because the declarations page listed only Betty I. Hardy as an insured. In addition, Hall argues the language of the typed declarations page should prevail over that of the printed policy provisions. Travelers Ins. Co. v. General Refrigeration & Appliance Co., 218 So.2d 724, 726 (Miss.1976). A contractual ambiguity must exist, however, before using the rules of construction for interpreting ambiguous contracts. Seal v. Seal, 312 So.2d 19, 21 (Miss.1975). The policy before us is not ambiguous. The terms "you" and "insured" are clearly defined to include a resident spouse. Wayne Hall is that resident spouse. Wayne and Betty Hall were married, and Wayne lived in Betty's home. This is undisputed. Furthermore, an insurance contract generally is interpreted "to effect the broad purpose of coverage." Fireman's Fund Ins. Co. v. McDaniel, 187 F.Supp. 614, 618 (N.D.Miss.1960), aff'd, 289 F.2d 926 (5th Cir.1961) (per curiam). Hall's interpretation of the policy would go against this principle by narrowing, rather than broadening, the coverage.

The lower court judge did not err on this point. The State Farm insurance policy unambiguously excluded coverage for damages due to Wayne's intentional acts. Consequently, Hall's complaint with regard to this issue is without merit.

C. The jury instructions

In her last two points, Hall contends the trial court erred in instructing the jury. She complains of the trial court's instructions about the effect and burden of proof for the material misrepresentation defense and about the elements of proof for the arson defense. This court reviews jury instructions "with deference." Treadaway v. Societe Anonyme Louis-Dreyfus, 894 F.2d 161, 167 (5th Cir.1990). "A judgment will be reversed only when the charge as a whole leaves us with substantial and ineradicable doubt whether the jury has been properly guided in its deliberations." Id. at 167-68 (citation and quotation omitted).

1. The "misrepresentations" instruction

Hall claims the material misrepresentation instruction was flawed because it did not include a provision that State Farm show it was "prejudiced" by any misrepresentations. The trial court also erred on this instruction contends Hall by instructing the jury that State Farm only had to prove material misrepresentations by a "preponderance of the evidence" instead of by "clear and convincing evidence." The allegedly erroneous instruction read as follows:

State Farm has also raised the affirmative defense of misrepresentation. Specifically, defendant states that plaintiff made...