U.S. v. Ethridge, No. 90-8655

• Court: United States Courts of Appeals. United States Court of Appeals (11th Circuit)
• Writing for the Court: Before FAY and BIRCH; PER CURIAM
• Citation: 948 F.2d 1215
• Parties: UNITED STATES of America, Plaintiff-Appellee, v. Charlotte Stephens ETHRIDGE, Champ Drew Ethridge, Defendants-Appellants.
• Docket Number: No. 90-8655
• Decision Date: 17 December 1991

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948 F.2d 1215 UNITED STATES of America, Plaintiff-Appellee,
v.
Charlotte Stephens ETHRIDGE, Champ Drew Ethridge,
Defendants-Appellants. No. 90-8655. United States Court of Appeals,
Eleventh Circuit. Dec. 17, 1991.

Joseph H. Gibson, Wunder, Ryan, Cannon & Thelen, Washington, D.C., for defendants-appellants.

John L. Lynch, Asst. U.S. Atty., G.F. Peterman, III, Macon, Ga., for plaintiff-appellee.

Appeals from the United States District Court for the Middle District of Georgia.

Before FAY and BIRCH, Circuit Judges, and KAUFMAN ^*, Senior District Judge.

PER CURIAM:

Charlotte and Champ Ethridge were convicted of mail fraud and conspiracy to commit mail fraud based on their filing of allegedly fraudulent insurance claims. On appeal, they argue that (1) the evidence was insufficient to prove they devised a scheme to defraud the insurance company of money, (2) evidence that the valid portions of the claims exceeded the policy limits

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was improperly excluded, and (3) the Ethridges were not sentenced appropriately under the sentencing guidelines. For the reasons that follow, we REVERSE their convictions and REMAND for a new trial. BACKGROUND

Charlotte Ethridge owned a beauty salon in Macon, Georgia known as Hairistocrat Cutters. The salon was destroyed by fire on February 27, 1987. The cause of the fire was never conclusively determined, although it appeared to be mechanical or electrical in nature. At that time, the business was insured by a policy with the Hanover Insurance Company which provided for $40,000.00 coverage for the contents of the business and loss of income for up to one year.

The day after the fire, Mrs. Ethridge was visited by a claims adjuster for Hanover who instructed her on how to file a claim under the policy. Over the course of the next month, Mrs. Ethridge and her husband, Champ Ethridge, prepared a nine-page inventory of property lost in the fire. Hanover eventually paid Mrs. Ethridge the policy limit of $40,000.00 for property loss and $12,186.24 for loss of earnings for the balance of 1987.

On August 16, 1988, an FBI agent interviewed Mrs. Ethridge concerning the fire. Then on August 24, 1988, the agent executed a search warrant for the Ethridge residence. During that search, the agent found items in the residence that had been listed on the insurance claim inventory.

The Ethridges were indicted by a federal grand jury on September 28, 1989 for one count of conspiracy to commit mail fraud, 18 U.S.C. §§ 371 & 1341 (1988), ¹ and two substantive counts of mail fraud, 18 U.S.C. § 1341 (1988). After a jury trial, the Ethridges were convicted of all charges. This appeal followed.

DISCUSSION

Mail fraud under 18 U.S.C. § 1341 (1988) is the intentional participation in a scheme to defraud another of money or property, and use of the mails in furtherance of that scheme. Pelletier v. Zweifel, 921 F.2d 1465, 1498 (11th Cir.1991), cert. denied, --- U.S. ----, 112 S.Ct. 167, 116 L.Ed.2d 131 (1991); United States v. Downs, 870 F.2d 613, 615 (11th Cir.1989).

In this case, the Ethridges were charged with knowingly falsifying insurance claim forms in order to defraud the insurance company of money. While the government introduced evidence that items were listed on the claim inventory that were not destroyed in the fire, the Ethridges attempted, through cross-examination of Hanover's insurance adjuster, to introduce evidence that the value of the valid, uncontested items on the claim inventory exceeded the policy limit. Although the government apparently conceded that the Ethridges' valid loss exceeded the policy limit, see (R2:19-20), it successfully argued at trial that this evidence was inadmissible. The trial judge essentially ruled that the evidence was not admissible because the Ethridges had not

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presented evidence that Mrs. Ethridge had actually totalled up the claim and found that it exceeded the policy limit. (R3:90-91)

First, the Ethridges, citing McNally v. United States, 483 U.S. 350, 107 S.Ct. 2875, 97 L.Ed.2d 292 (1987), apparently contend that where the value of validly claimed items exceeds the insurance policy limit, the insurance company was merely...