Pacheco v. Safeco Ins. Co. of America

• Decision Date: 21 July 1989
• Docket Number: No. 16993,16993
• Citation: 780 P.2d 116,116 Idaho 794
• Parties: Wilford PACHECO, Plaintiff-Appellant, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant-Respondent.
• Court: Idaho Supreme Court

Page 116

780 P.2d 116

116 Idaho 794

Wilford PACHECO, Plaintiff-Appellant, v. SAFECO INSURANCE COMPANY OF AMERICA, Defendant-Respondent.

No. 16993.

Supreme Court of Idaho.

July 21, 1989.

Rehearing Denied Oct. 18, 1989.

Webb, Burton, Carlson, Pedersen & Webb, Twin Falls, and John B. Kugler Law Offices, Pocatello, for plaintiff-appellant. John B. Kugler and Lloyd J. Webb argued.

Wood, Stephens & Telford, Idaho Falls, for defendant-respondent. Alan C. Stephens argued.

HUNTLEY, Justice.

Pacheco filed suit against Safeco for bad faith denial of his claim for fire insurance proceeds. Safeco defended, contending that Pacheco was responsible for intentionally setting the fire. The jury found for Safeco. Pacheco filed a motion for judgment notwithstanding the verdict, which was denied by the court. Pacheco appeals on evidentiary and other grounds.

On January 2, 1986, at approximately 3:45 a.m. an arson fire caused over $200,000 worth of damage to Wilford Benito Pacheco's dental office in American Falls, Idaho. On the day before the fire, Pacheco closed his office and removed several boxes Pacheco's truck was seen across the street from his dental office at about 1:30 or 2:00 a.m. on January 2, 1986. As noted, the fire occurred at 3:45 a.m. The authorities determined that the fire was caused by an arsonist who poured accelerant through a hole which had been cut from Pacheco's side of the building through the adjoining wall of the next door business offices. Gasoline and diesel fuel were found on the premises and gas cans matching the description of gas cans owned by Pacheco were found at the fire scene. After the fire, Pacheco filed an insurance claim with his fire insurance carrier, Safeco, which denied coverage.

[116 Idaho 797] of supplies and at least two paintings and took them home where he stored them in his family room. Pacheco treated a patient at his office that night and was in his office until 9:00 p.m.

Pacheco filed a complaint for recovery under the policy, for the loss, for other damages (including a bad faith refusal to insure, emotional distress and defamation), for attorney fees and for punitive damages. Safeco answered denying Pacheco's claims and raised the following affirmative defenses: since Pacheco had intentionally set the fire, Safeco had no contractual obligation to pay; or, in the alternative, public policy would estop Pacheco from obtaining payment under the circumstances. On January 5, 1987, the court granted Safeco's motion for summary judgment on Pacheco's claims for punitive damages and emotional distress. On February 13, 1987, the court granted Safeco's motion for summary judgment on Pacheco's claim for defamation but refused to grant summary judgment on the bad faith claim stating that White v. Unigard Mut. Ins. Co., 112 Idaho 94, 730 P.2d 1014 (1986) was applicable and based on that opinion it would consider Pacheco's claim of bad faith to be an issue for trial even though it would not amend its judgment dismissing punitive damages. The court noted that the threshold level of proof was somewhat less for bad faith than for punitive damages.

At trial, Pacheco presented testimony that his insurance coverage of $189,000 was less than the loss he sustained in the fire. A witness for Pacheco testified that Pacheco would not have set the fire himself because he had hanging in his office a painting of a fawn drinking from a stream that was given to him by a dying patient. That "sentimental painting" showed up in evidence in a photograph taken by police of the items discovered in the basement of Pacheco's house a few days after the fire.

Safeco presented testimony that Pacheco had been in financial straits prior to the fire. Safeco also presented evidence that the day after the fire Pacheco went to IB & T in American Falls and paid two delinquent IB & T loans with a check dated December 29th, but which had a numerical sequence number that followed the numbering on checks he had written on December 31, 1985.

John Olmsted, "senior investigator" for the Idaho Investigative Service Bureau, was the primary witness testifying in support of Safeco's defense that Pacheco set the fire. Over Pacheco's objection, the trial court permitted Olmsted to testify about his investigation of the fire and opinions he reached during that investigation. Ultimately, the court permitted Olmsted to testify that he considered the "chief suspects" in the arson investigation to be Pacheco and his wife. Pacheco moved for a mistrial and the trial court denied his motion. Olmsted then testified that it would be his duty to charge a person with arson if he believed that he had an adequate case against that person. At the time of the trial no one had been arrested or charged with any crime in connection with the fire. Safeco was also permitted to introduce evidence that Pacheco had sustained a fire loss in 1982. This evidence was received over strenuous objection.

After the parties presented their evidence, Pacheco requested that the trial court instruct the jury that each of the elements of Safeco's defense must be proven by clear and convincing evidence. The trial court did not adopt this requested instruction but instead instructed the jury that they need only find the elements of Pacheco also submitted two proposed instructions relating to circumstantial evidence. One instruction would have suggested to the jury that circumstantial evidence must be something more than that which casts a suspicion on the plaintiff. The other instruction would have suggested that Pacheco could not be found culpable if the circumstantial evidence was equally susceptible of the opposite conclusion. Ultimately, the court refused both proposals and instead used the standard IDJI instruction on the differences between direct and circumstantial evidence. The jury found for Safeco. Pacheco appeals claiming that the court erred in admitting the criminal investigator's testimony, evidence of the criminal investigation, evidence of a previous fire and Pacheco's financial status. Pacheco also alleges reversible error in the standard of proof utilized, jury instructions and juror misconduct.

[116 Idaho 798] Safeco's defense by a preponderance of the evidence.

I. Admission of The Criminal Investigator's Testimony

Pacheco first claims that the trial court erred in allowing the criminal investigator to testify as to the identity of his prime suspects and as to his opinion that Pacheco set the fires. He argues that this testimony was irrelevant and highly prejudicial in that it created an improper implication of criminal guilt to permeate a civil trial (State v. Owens, 101 Idaho 632, 639, 619 P.2d 787, 794, (1980)); it was incompetent (Fowler-Barham Ford v. Indiana Lumbermens Mutual, 45 N.C.App. 625, 263 S.E.2d 825, 828-29 (1980); and that it permitted a witness to give a legal conclusion. Pacheco also argues that it was inappropriate for the trial court to permit the investigator to refer to a search warrant issued against Pacheco's residence in the course of the criminal investigation concerning the fire, arguing that the fact that Pacheco never was actually arrested did not lessen the impact of this improperly admitted evidence. Prior to addressing the issues raised by Pacheco, we discuss the standard of appellate review.

Pacheco is required to show more than error; he must show prejudicial error. Otherwise, any error below will be presumed harmless. Viehweg v. Thompson, 103 Idaho 265, 269, 647 P.2d 311, 315 (Ct.App.1982). Prejudice will not be presumed on appeal. See Boise Dodge Inc. v. Clark, 92 Idaho 902, 909, 453 P.2d 551, 558 (1969). Where the issue is the admission of improper evidence, such admission will be considered harmless if there is other competent evidence to the same effect upon which a jury could reach the same result. Idaho First National Bank v. Wells, 100 Idaho 256, 262, 596 P.2d 429, 435 (1979).

Here there was ample circumstantial and testimonial evidence, other than the criminal investigator's testimony, that had the same effect and could have led the jury to the same result. This evidence includes: (1) The hole in Pacheco's wall through which the accelerant was poured; (2) Pacheco's financial situation; (3) the discovery of his gas cans across the street from the smoldering remains of his office; (4) Pacheco's closing of his office the day before the fire; (5) Pacheco's removal of various valuable and sentimental items from his office the day before the fire; and, (6) the pre-dated check tendered after the fire.

In addition to there being no prejudicial error, admission of the investigator's testimony also complied with the requirements of Idaho Rules of Evidence 702, 703, 704 and 705 in that he carefully described the evidence relied upon when he stated his opinion as to the cause of the fire.

Furthermore, Olmsted's testimony was critical to the issue of whether Safeco acted in bad faith. The law defining "bad faith," in cases such as this was established in White v. Unigard Mut. Ins. Co., 112 Idaho 94, 730 P.2d 1014 (1986) which was decided about one-and-a-half months before the trial began. Therefore, when the case was tried, Safeco had to assume that the rule stated in White pertained. That rule is ... the mere failing to immediately settle what later proves to be a valid claim does not of itself establish 'bad faith.' ... [t]he insured must show the insurer 'intentionally and unreasonably denies or delays payment....' (Citation omitted). An insurer does not act in bad faith when it challenges the validity of a 'fairly debatable' claim, or when its delay results from honest mistakes. (Citations omitted).

112 Idaho at 100, 730 P.2d at 1020.

Safeco's counsel foresaw the potential conflict that could arise by having to present evidence necessary to the issue of who set the fire and evidence necessary to the question of bad faith or punitive damages in the same trial. Therefore, on October 2, 1986,...