Michael v. Cole

• Decision Date: 24 August 1978
• Docket Number: CA-CIV,No. 1,1
• Citation: 122 Ariz. 461,595 P.2d 1006
• Parties: Leo Anthony MICHAEL and Jane Doe Michael, his wife, Appellants, v. Nikki Rae COLE, a single woman, Appellee. 3841.
• Court: Arizona Court of Appeals

Page 1006

595 P.2d 1006

122 Ariz. 461

Leo Anthony MICHAEL and Jane Doe Michael, his wife, Appellants, v. Nikki Rae COLE, a single woman, Appellee.

No. 1 CA-CIV 3841.

Court of Appeals of Arizona, Division 1, Department B.

Aug. 24, 1978.

Rehearing Denied Oct. 2, 1978.

Review Granted Oct. 17, 1978.

O'Connor, Cavanagh, Anderson, Westover, Killingsworth & Beshears by Ralph Hunsaker, P. Michael Whipple, Phoenix, for appellants.

Wolfe & Harris, P. A. by Sidney B. Wolfe, Phoenix, for appellee.

OPINION

SCHROEDER, Judge.

In this personal injury action, appellants appeal from a judgment based upon a jury verdict awarding appellee $8,750.00 in compensatory damages and $5,000.00 in punitive damages. Appellants urge reversal on two grounds: first that the appellee improperly injected appellants' insurance coverage into the litigation, and, second, that the jury was improperly instructed with respect to punitive damages. We find no error and affirm.

The accident from which the litigation arose occurred when a car driven by defendant-appellant, Leo Anthony Michael, rear ended a car driven by plaintiff-appellee, Nikki Rae Cole, on a smooth, straight road. Michael had been drinking several hours before the accident and a breathalyzer test conducted by police showed a .21 blood alcohol reading, well above the .10 level considered presumptive of intoxication. Testimony also revealed that after the accident Michael appeared disheveled and was unable to remember anything about the incident.

The trial court directed a verdict for the appellee on the issues of negligence and liability, and the court's action was not contested by appellants. Thus the only questions which went to the jury related to damages.

The subject of insurance arose twice during the course of the trial. Appellants contend that each episode constituted reversible error.

The first incident occurred on the third day of trial as the jury was filing out of the courtroom for the noon recess. Appellant Michael's wife handed appellants' counsel an envelope, and appellee's counsel approached appellants' counsel and asked in a conversational tone, "(i)s that the policy, Ralph?". The remark was made within a few feet of some members of the jury. However, the record does not show that any jurors heard the remark, or that they understood it to be in reference to a liability insurance policy covering appellants for this accident. Appellants, nevertheless, argue that the lower court should have presumed the remark to have been prejudicial and granted appellants' request for a mistrial.

The second, and more serious mention of insurance came during the cross-examination of appellant Michael. On direct examination, he had testified extensively concerning his financial difficulties, including his limited income, obligations for child support and remarriage. After a lengthy discussion in chambers with counsel for both parties, the trial court ordered that the appellee could, on cross-examination, elicit from Michael the fact that he had insurance to cover a claim for punitive damages. The court, however, refused to permit questioning concerning coverage for compensatory damages. During the actual cross-examination, Michael exhibited some recalcitrance and declined to admit that he had a policy covering punitive damages. He eventually admitted, however, that he did have insurance. ¹

Appellants claim error in that the trial court should not have permitted any cross-examination with respect to insurance. They further argue that, even if the fact of coverage for punitive damages could have been elicited, the examination improperly brought out coverage for compensatory damages.

In contending that the judgment must be reversed because of the mention of insurance coverage, appellants principally rely on traditional Arizona cases typified by Consolidated Motors, Inc. v. Ketcham, 49 Ariz. 295, 66 P.2d 246 (1937). See generally, Dunipace v. Martin, 73 Ariz. 415, 242 P.2d 543 (1952); Northern Arizona Supply Co. v. Stinson, 73 Ariz. 109, 238 P.2d 937 (1951). The Court in Ketcham held that when any evidence is presented to the jury in a negligence action showing that the defendant is covered by liability insurance, a mistrial should be declared. Ketcham, however, no longer represents the law in Arizona.

In Muehlebach v. Mercer Mortuary and Chapel, Inc., 93 Ariz. 60, 378 P.2d 741 (1963), our Supreme Court rejected the traditional rule that any evidence, implication or suggestion of liability insurance in a negligence action constitutes error. The Court recognized that in more sophisticated times, it can no longer be assumed that the jury will ignore issues of liability and "merely decide how much the insurance company should pay." Id. at 62, 378 P.2d at 742. Since Muehlebach, the Arizona rule is that the mere mention of insurance in a negligence action will not constitute grounds for a mistrial; the issue is whether the reference to insurance would "prejudice the fair trial of any party." Davis v. Marquardt, 20 Ariz.App. 372, 374, 513 P.2d 379, 381 (1973). See also Swick v. White, 18 Ariz.App. 519, 520, 504 P.2d 50, 52 (1972). In this determination, the trial court has considerable discretion. Muehlebach, 93 Ariz. at 65, 378 P.2d at 744.

Applying these principles to the insurance incidents challenged by appellants, we must hold that the appellants have not shown any prejudice. The first episode, which consisted solely of a brief reference to a "policy" during a recess, and which may not actually have been heard by the jurors at all, must be considered de minimis.

The second episode involved the very conscious elicitation of evidence concerning insurance on cross-examination of Michael. However, we cannot agree with appellants that the trial court in the context of this case erred in permitting the plaintiff to cross-examine the defendant concerning the existence of a policy covering punitive damages. It is not disputed that he had a policy and that it did cover punitive damages. See Price v. Hartford Accident and Indemnity Co., 108 Ariz. 485, 502 P.2d 522 (1972), holding that punitive damages are covered by a liability insurance policy absent an express exclusion. Punitive damages were obviously a major issue in this trial. The question of insurance coverage was permitted to be raised only after Michael himself, on cross-examination, had painted a gloomy picture of his financial problems in an effort to evoke a sympathetic response from the jury and to avoid a heavy punitive verdict. Had the existence of the coverage not been brought out, the jury might well have been left with the wholly false impression that its verdict would have to be paid by the appellants personally.

Appellants rely upon Odoms v. Traveler's Insurance Co., 339 So.2d 196 (Fla.1976), in which the Court held that the trial court erred in allowing the plaintiff to show the actual policy limits of defendant's insurance policy in connection with a claim for punitive damages. We find that case distinguishable in that its focus is upon excluding the actual policy limits.

In Arizona, the defendants' financial condition is relevant to a claim of punitive damages, and the jury is allowed to consider the wealth or financial status of the wrongdoer. Southern Pacific Transportation Co. v. Lueck, 111 Ariz. 560, 570, 535 P.2d 599, 609 (1975), Cert. denied, 425 U.S. 913, 96 S.Ct. 1510, 47 L.Ed.2d 763 (1976); Kelman v. Bohi, 27 Ariz.App. 24, 550 P.2d 671 (1976). It is also well recognized that the existence of liability insurance may be admissible when it is relevant and competent to prove some fact in issue. Udall, Arizona Law of Evidence § 122, at 265-66 (1960), See...