Leo v. Alfa Mut. Ins. Co.

Decision Date28 March 2016
Docket NumberCase No.: 1:13-CV-1826-VEH
PartiesROCCO J. LEO, in his Capacity as Trustee for the Bankruptcy Estate of Ashley Murphree, Plaintiff, v. ALFA MUTUAL INSURANCE COMPANY, et al., Defendants.
CourtU.S. District Court — Northern District of Alabama

This case was originally filed on October 2, 2013, by the plaintiff, Rocco J. Leo (hereinafter referred to as "the plaintiff" or "Leo"), the Trustee for the Bankruptcy Estate of Ashley Murphree (hereinafter referred to as "Ashley" or "Murphree"). (Doc. 1). At the time Leo filed the case, Murphree was alive. She has since died. The Second Amended Complaint (doc. 96) was filed on June 26, 2015, and names as defendants Alfa Mutual Insurance Company ("Alfa"), Rebecca A. Walker ("Walker"), and Stephanie Wagner ("Wagner"). Alfa is Murphree's former automobile liability insurance carrier, and Walker and Wagner are her former attorneys.

Leo's complaint first seeks to void, as a fraudulent transfer under the bankruptcy code, a document in which Murphree promised not to sue these defendants. (Count One). Against Alfa, Leo alleges "Negligent/Wanton Failure to Investigate and Settle" (Count Two), "Bad Faith Failure to Investigate and Settle" (Count Three), "Suppression" (Count Four), and "Conspiracy" (Count Five). Against Walker and Wagner, Leo alleges a claim under Ala. Code § 6-5-570, et seq., for "Legal Service Liability" (Counts Six and Seven). All counts pertain to an underlying lawsuit (the "Underlying Action") filed against Murphree by Willow Jo Cameron ("Cameron"). Leo's claims arise out of the defendants' handling of the Underlying Action, and, after an excess verdict was returned against Murphree in that case, the defendants obtaining her signature on a Covenant Not To Sue them in retrun for Alfa's agreement to pay for an attorney to prepare bankruptcy papers for Murphree, who wanted to file for bankruptcy because of that excess judgment.

On January 27, 2016, this court granted Wagner's uncontested motion for summary judgment, and dismissed Count Seven, and Wagner, from this case. (Doc. 138). Accordingly, as to pleadings filed jointly by Walker and Wagner before Wagner was dismissed, the court will simply refer to them as filed by Walker. Further, the court will from time to time collectively refer hereinafter to Alfa and Walker as "the defendants."

The case now comes before the court on the motions for summary judgment filed by the sole remaining defendants, Alfa (doc. 103) and Walker (doc. 105). Also before the court are the motions to strike filed by Walker (doc. 125) and Alfa (docs. 128, 129, 131). All motions have been responded to and are under submission. For the reasonsstated herein, document 129 will be DENIED. The remaining motions to strike will each be GRANTED in part and DENIED in part as noted. Finally, the motions for summary judgment will each be GRANTED in part and DENIED in part as noted.

A. Standard

It has long been the law in this circuit that, when deciding a motion for summary judgment, a district court may not consider evidence which could not be reduced to an admissible form at trial. See Macuba v. Deboer, 193 F.3d 1316, 1323 (11th Cir. 1999). But, until 2010, Rule 56 lacked a formal procedure to challenge such inadmissible evidence. In 2010, the advisory committee added Rule 56(c)(2), which provides:

A party may object that the material cited to support or dispute a fact cannot be presented in a form that would be admissible in evidence.

FED. R. CIV. P. 56(c)(2). Although the parties have styled their motions as motions to strike, the motions are, in substance, a challenge to the admissibility of evidence. Therefore, the court will treat the motions as objections under Rule 56(c)(2).

The advisory committee's note to Rule 56(c)(2) provides that:

[An] objection [under Rule 56(c)(2)] functions much as an objection at trial. . . . The burden is on the proponent to show that the material is admissible as presented or to explain the admissible form that is anticipated.

FED. R. CIV. P. 56 advisory committee's note to 2010 amendments (emphasis added).

B. Analysis

As the court has noted, Ashley Murphree died after this lawsuit was filed. Michelle Burgess ("Burgess") is Murphree's mother. In the absence of direct evidence from Murphree herself, Leo is relying on Burgess's declaration, at summary judgment, solely to establish Murphree's mental anguish damages. (See doc. 122 at 37-39; doc. 123 at 27-29). Accordingly, the court's analysis focuses on Burgess's statements offered for that limited purpose.

The defendants attack only portions of paragraphs 5, 7, 8, 9, and 10 of Burgess's declaration, as more specifically set out below. The court will examine each paragraph attacked, in turn, in light of the specific objections thereto.

1. Paragraph 5

The defendants argue that the following portions of paragraph 5 are inadmissible hearsay, subject to no exceptions:

- "It was evident to me, based upon . . . the communications I was able to have with her around that period of time, that Ashley was very much agitated and stressed by the entire process, especially since it was happening during the same time she was dealing with other difficult issues."
- "This was evident to me based upon Ashley's statement[.]"
- "By way of example[,] Ashley . . . expressed stress about the issue of whether she would have to be brought before the judge and jury in clothing she was issued in the SAP program."2

(Doc. 122-4 at 3-4).

Rule 801(c) of the Federal Rules of Evidence provides that the term "hearsay" means a statement that: "(1) the declarant does not make while testifying at the current trial or hearing; and (2) a party offers in evidence to prove the truth of the matter asserted in the statement." FED. R. EVID. 801(c). Although the plaintiff does not expressly argue that these statements are not hearsay, he does dispute it implicitly by stating that "any hearsay that may be contained in paragraph 5 falls within the state-of-mind exception [to the rule against hearsay]." (Doc. 132 at 4).3

Rule 803(3) of the Federal Rules of Evidence provides:

The following are not excluded by the rule against hearsay, regardless of whether the declarant is available as a witness: . . .
(3) Then-Existing Mental, Emotional, or Physical Condition. A statement of the declarant's then-existing state of mind (such as motive, intent, or plan) or emotional, sensory, or physical condition (such as mental feeling, pain, or bodily health), but not including a statement of memory or belief to prove the fact remembered or believed unless it relates to the validity or terms of the declarant's will.

FED. R. EVID. 803(3). The plaintiff states that "[i]f Murphree's nonverbal and verbal conduct is considered hearsay,4 then it clearly falls within the state-of-mind exception of Rule 803 because it goes to her then-existing mental condition." (Doc. 132 at 4).

The Eleventh Circuit has specifically held that the types of statements offered by Burgess in her affidavit cannot come in under Rule 803(3). The court has stated:

"[T]he state-of-mind exception does not permit the witness to relate any of the declarant's statements as to why he held the particular state of mind, or what he might have believed that would have induced the state of mind." Consistent with that position, we have explained that the purpose of the exclusion from Rule 803(3) admissibility is "to narrowly limit those admissible statements to declarations of condition-'I'm scared'-and not belief-'I'm scared because [someone] threatened me.'"

United States v. Samaniego, 345 F.3d 1280, 1282 (11th Cir. 2003) (quoting United States v. Cohen, 631 F.2d 1223, 1225 (5th Cir.1980)) (footnotes omitted). Accordingly, the statement in paragraph 5 that Murphree was "agitated and stressed" falls within the exception, but not the portion of that sentence which states: "by the entire process." This portion of this sentence will be stricken. Similarly, the statement that Murphree was "stress[ed]" falls within the exception, but not that the stress was "about the issue of whether she would have to be brought before the judge and jury in clothing she was issued in the SAP program."5 This latter portion of this sentence will bestricken.

The statement "[t]his was evident to me based upon Ashley's statement," is on a different footing. It does not state "why" Murphree was agitated or stressed. Instead, it lays a foundation for how Burgess would have personal knowledge of Murphree's agitation or stress. It will not be stricken.

The defendants next assert that, despite surviving the hearsay challenge. Burgess's remaining statement that Murphree was "agitated" and "stressed," and similar such statements, should also be struck under Rule 602 of the Federal Rules of Evidence, which provides: "A witness may testify to a matter only if evidence is introduced sufficient to support a finding that the witness has personal knowledge of the matter. Evidence to prove personal knowledge may consist of the witness's own testimony." FED. R. EVID. 602. In this case, Burgess's declaration establishes that Burgess had personal knowledge of Murphree's emotional state. The statements in paragraph 5 that Murphree was "agitated" and "stressed" are limited in time by another statement in that same paragraph that Murphree "was dealing with a very emotionally difficult time in her life during much of the Cameron matter. Especially leading up to and including the trial of the case." (Doc. 122-4 at 3). Burgess states that she was very familiar withMurphree's personality, mood, and attitude, and that her observations are based on: 1) being in Murphree's presence "during trial and the communications I was able to have with her around that period of time" (doc. 122-4 at 3); and 2) observation of "her expressions, appearance, tone of voice, and mannerisms ...

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