State Farm Mut. Auto. Ins. Co. v. Earl

Decision Date09 June 2015
Docket NumberNo. 36S05–1408–CT–562.,36S05–1408–CT–562.
Citation33 N.E.3d 337
PartiesSTATE FARM MUTUAL AUTOMOBILE INSURANCE COMPANY, Appellant (Defendant below), v. Kimberly S. EARL and the Estate of Jerry Earl, Appellees (Plaintiffs below).
CourtIndiana Supreme Court

Rodney L. Scott, Tricia Kirkby Hofmann, New Albany, IN, Chad M. Smith, Greensburg, IN, Attorneys for Appellant.

Roger L. Pardieck, Karen M. Davis, Seymour, IN, Attorneys for Appellees.

On Petition to Transfer from the Indiana Court of Appeals, No. 36A05–1212–CT–635

, Justice.

After Jerry Earl sustained severe injuries in a motorcycle accident, he and his wife sued State Farm to recover under the uninsured motorist provision included in their policy. We are asked to decide whether the trial court abused its discretion in admitting evidence of their $250,000 coverage limit. Finding it did not, we affirm.

Facts and Procedural History

Jerry was an active man who enjoyed hunting, fishing, and building things. He made a living as a co-owner of a small construction business, using his years of experience in custom excavating and sewer work. In addition to spending his free time with his wife Kimberly and his grandkids, Jerry played in a men's basketball league.

Jerry's life changed dramatically on September 3, 2008. While riding his motorcycle south on I–65 in Scottsburg, a tractor-trailer entered Jerry's lane, forcing him to swerve out of the truck's way and into the median. Jerry was thrown from his bike at 65 miles per hour, resulting in extensive injuries. He sustained a fractured collarbone, a fractured shoulder blade

, and fractures in all ten ribs on his left side, some of them crushed into fragments. He also suffered a pulmonary contusion, collapse of his left lung, laceration of his liver, skin abrasions, and a blood clot in his left leg. Jerry was transported to Indianapolis for treatment, which required “a multi-disciplinary trauma team.” Tr. at 107. According to his family physician, “many people don't survive” what Jerry survived. Tr. at 108. Despite the seriousness of the accident, the driver of the tractor-trailer did not stop and was never identified.

After the accident, the road to recovery was long. Jerry spent two days in the hospital, he had several follow-up visits with his orthopedic surgeon who prescribed heavy pain medications, he continued seeing his family physician in Seymour about his injuries, and he went to five physical therapy sessions, continuing with the exercises at home. It took weeks for Jerry's ribs to heal, and the trauma permanently changed the anatomy of his shoulder joint so that one shoulder drooped lower than the other.

Eventually, in January, Jerry got back to the office to do light work, mostly paperwork, and he got back into a bulldozer in April or May. Still, he could not do excavation work, and he never returned to work full-time. According to Jerry's business partner, the business suffered as a result of Jerry's injuries. Other everyday tasks—whether moving animal feed, driving a car, playing with his grandkids, and even sleeping—were difficult and painful for Jerry. Kimberly reported this pain affected their relationship.

Jerry had a policy with State Farm, which provided uninsured motorist coverage up to $250,000 per person and $500,000 per accident. He made a claim under the policy, and when State Farm refused to pay out the full amount, he sued. Jerry alleged State Farm was “liable under the terms and conditions of the contract for insurance.” App. at 22. Kimberly also brought a claim for loss of consortium.1 While the case was pending, Jerry died of an unrelated illness; Kimberly became the personal representative of his estate and was substituted for him as a plaintiff.

State Farm admitted liability, so the case proceeded to a jury only on the question of damages. Before trial, State Farm moved to exclude any evidence of the coverage limit on the grounds it was irrelevant to damages. The trial court denied that motion. During trial, State Farm's counsel objected both times the limit was mentioned, once during opening statements and once when the insurance contract was offered into evidence. Ultimately, the jury returned a verdict of $175,000 to Jerry's estate and $75,000 to Kimberly, for a total judgment of $250,000—the exact amount of the coverage limit.2

State Farm appealed, arguing the trial court abused its discretion by allowing the $250,000 coverage limit into evidence, and that error unfairly prejudiced State Farm's substantial rights. In a published opinion, a divided panel of our Court of Appeals reversed and remanded. State Farm Mut. Auto. Ins. Co. v. Earl, 3 N.E.3d 1009, 1012 (Ind.Ct.App.2014)

. Judge Baker, writing for the majority, reasoned the coverage limit was irrelevant and therefore inadmissible because neither the existence of the policy nor the amount of coverage was at issue; the only question before the jury was the amount of damages. Id. And he determined, although “it is certainly possible that, considering all of the evidence concerning Jerry's lowered quality of life and Kimberly's loss of his companionship, that the jury believed that the Earls were entitled to the coverage limit or more,” reversal was necessary because [the majority] cannot say that the jury was unaffected by the evidence of the coverage limit.” Id.

Judge Riley dissented, concluding the trial court did not abuse its discretion in admitting the coverage limit in light of two Indiana cases allowing juries to be instructed on such limits where—like here—the insured alleges the insurer breached the terms of their insurance contract. Id. at 1013

(Riley, J., dissenting) (citing Malott v. State Farm Mut. Auto. Ins. Co., 798 N.E.2d 924 (Ind.Ct.App.2003) and Allstate Ins. Co. v. Hammond, 759 N.E.2d 1162 (Ind.Ct.App.2001) ). And, in any event, Judge Riley found State Farm failed to show prejudice given the substantial evidence of Jerry's injuries. Id. at 1013–14.

We granted the Earls' petition to transfer, thereby vacating the opinion below. State Farm Mut. Auto. Ins. Co. v. Earl, 15 N.E.3d 588 (Ind.2014)

(table); Ind. Appellate Rule 58(A).

Standard of Review

We trust issues of admissibility to the sound discretion of our trial judges, and we review their evidentiary rulings for an abuse of discretion. TRW Vehicle Safety Sys., Inc. v. Moore, 936 N.E.2d 201, 218 (Ind.2010)

(“A trial court's evidentiary rulings are presumptively correct.”). Such an abuse occurs where the trial court's decision is against the logic and effect of the facts and circumstances before it. Santelli v. Rahmatullah, 993 N.E.2d 167, 175 (Ind.2013), reh'g denied. Even if we find inadmissible evidence was improperly placed before the jury, however, we only reverse if that error was clearly prejudicial. Morse v. Davis, 965 N.E.2d 148, 155 (Ind.Ct.App.2012), trans. denied, 978 N.E.2d 416 (Ind.2012).

The Trial Court Was Within Its Discretion in Admitting the Coverage Limit.

State Farm, along with amici the Defense Trial Counsel of Indiana and the Insurance Institute of Indiana, ask this Court to adopt a bright-line rule: coverage limits are irrelevant to the determination of tortious damages and are therefore inadmissible. The Earls, along with amicus the Indiana Trial Lawyers Association, ask for the opposite bright-line rule: coverage limits are relevant to the underlying contract claim and therefore “must” be admitted. Pet. Trans. at 5. We decline either side's invitation to take such a rigid approach; instead, we think it more appropriate to rely on our trial courts to exercise their discretion in determining what evidence is probative in the particular case before them. And, on these facts, we find the court was within that discretion.

We note at the outset, it is well settled that evidence of liability insurance is not admissible to show fault, although it may be admitted for other purposes. Ind. Evidence Rule 411

.3 The rationale behind this general rule is two-fold. First, insurance is not logically related to fault. 1 Kenneth S. Broun et al., McCormick on Evidence § 201, at 1120 (7th ed. 2013) ([I]nsurance coverage reveals little about the likelihood that one will act carelessly.”). Second—whether justified or not4we worry the presence or absence of insurance may prejudice the jury. Spaulding v. Harris, 914 N.E.2d 820, 830 (Ind.Ct.App.2009)

(“The primary concern is that jurors will award excessive damages if they know an insurance company will be satisfying the judgment, or nominal damages if they learn the defendant will be paying out of his own pocket”). Both sides agree Rule 411 itself is not applicable in the case before us today. They are, of course, correct: liability here was not contested, and State Farm was properly named as defendant so the jury was well aware the damages would be paid by an insurance company rather than an individual. See

Brown–Day v. Allstate Ins. Co., 915 N.E.2d 548, 552–53 (Ind.Ct.App.2009) (holding Rule 411 does not preclude evidence of insurance where the insurance company is the real party in interest). We do, however, find the rationale behind Rule 411 instructive in considering the admissibility of coverage limits, albeit under our traditional balancing test.

“Evidence is relevant if: (a) it has any tendency to make a fact more or less probable than it would be without the evidence; and (b) the fact is of consequence in determining the action.” Ind. Evidence Rule 401

. This often includes facts that merely fill in helpful background information for the jury, even though they may only be tangentially related to the issues presented. See. e.g.,

McFarland v. State, 271 Ind. 105, 111, 390 N.E.2d 989, 993 (1979). Irrelevant evidence is not admissible. Ind. Evidence Rule 402.

To determine whether evidence concerns a material fact, or a “fact of consequence,” we look to the nature of the case and the issues being litigated, which are usually set out in the pleadings. McCormick on Evidence § 185, at 994

; see also

Simmons v. State, 717 N.E.2d 635,...

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    ...framework.Standard of Review We review the trial court's evidentiary rulings for an abuse of discretion. State Farm Mut. Auto. Ins. Co. v. Earl , 33 N.E.3d 337, 340 (Ind. 2015). But to the extent the evidentiary rulings raise threshold constitutional questions, we apply de novo review. Tipl......
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