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Nature of Suit Code: 110
Nature of Suit: Insurance
Cause of Action: 

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FILED 

UNITED STATES COURT OF APPEALS 

FOR THE TENTH CIRCUIT 

United States Court of Appeals 

Tenth Circnit 

JAN 2 71989 

SARA YAGER, as mother and next friend 

of SHANNON YAGER, an infant, 

Plaintiff-Appellant, 

v. 

PRUDENTIAL INSURANCE COMPANY OF 

AMERICA, a corporation, 

Defendant-Appellee. 

ROBERT L. HOECKER 

> Clerk 

) 

) 

) 

) 

) No. 86-2203 

) (D.C. No. 85-1775-A) 

) (W.D. Okla.) 

) 

) 

) 

ORDER AND JUDGMENT 

Before MOORE, BRORBY, and EBEL, Circuit Judges. 

After examining the briefs and appellate record, this panel 

has determined unanimously that oral argument would not materially 

assist the determination of this appeal. See Fed. R. App. P. 

34(a); 10th Cir. R. 34.1.9. 

submitted without oral argument. 

The cause is therefore ordered 

Plaintiff appeals from a jury verdict entered in favor of 

defendant in this diversity action. 

In her complaint, plaintiff alleged that Shannon Yager, her 

minor daughter, was covered under an insurance policy issued by 

defendant and that defendant had wrongfully refused to pay on a 

claim made on behalf of Shannon. Plaintiff also alleged that 

defendant breached its duty to deal fairly and in good faith with 

Appellate Case: 86-2203 Document: 01019962391 Date Filed: 01/27/1989 Page: 1 
her in eight respects including by rejecting her application for 

insurance after learning of the pending claim. 

The evidence showed that on March 9, 1982, plaintiff applied 

for employee benefit insurance coverage with defendant and paid 

the first month's premium. Plaintiff was the president of an oil 

field equipment rental company and her husband was the 

vice-president. They were the only employees of the company. 

On March 22, 1982, defendant rejected plaintiff's application 

based on an internal policy change effective March 1, 1982. 

Pursuant to that change, defendant chose not to issue employee 

benefit coverage to companies consisting of only two employees 

both of whom lived in the same residence. Because defendant's 

agent was unaware of the policy change at the time she accepted 

plaintiff's application, she asked that it be reconsidered. On 

March 29, 1982, defendant agreed to reconsider the application and 

plaintiff was asked to provide payroll records, social security 

and income tax withholding records, and tax returns in order to 

demonstrate that the company was an ongoing legitimate business. 

On March 30, 1982, Shannon Yager's right thumb was severed in 

an accident. Defendant was notified of the claim the next day. 

On May 7, 1982, defendant notified plaintiff that it had rejected 

plaintiff's application because the requested records had not been 

submitted. 

On appeal, plaintiff argues that the district court erred in 

refusing to submit her tort claim to the jury. This claim was 

dismissed because it was barred by a two-year statute of 

limitations. We find plaintiff's arguments without merit. 

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Appellate Case: 86-2203 Document: 01019962391 Date Filed: 01/27/1989 Page: 2 
Defendant's statute of limitation defense was not waived for 

failing to state it in an answer, because plaintiff's tort theory 

was developed during the trial. The minority saving statute does 

not apply to this plaintiff suing on her own behalf. The saving 

statute of Okla. Stat. tit. 12, § 100 is also inapplicable because 

the plaintiff failed to include in the record any evidence of the 

commencement and disposition of the earlier state case. 

Plaintiff argues that defendant was negligent because it 

unreasonably delayed in determining whether to accept or reject 

her application. This court's review of a jury verdict in a civil 

diversity action is "limited to the inquiry as to whether the 

record contains substantial evidence to support the jury's . 

conclusion, viewing the evidence in the light most favorable to 

the prevailing party." Cannon Oil & Gas Well Serv., Inc. v. 

Evertsen, 836 F.2d 1252, 1255 (10th Cir. 1987)(quoting Kitchens v. 

Bryan County Nat'l Bank, 825 F.2d 248, 251 (10th Cir. 1987)). 

The evidence shows that twenty-one days elapsed between the 

date of the application and Shannon Yager's injury. Defendant had 

both rejected plaintiff's application and agreed to reconsider 

that decision prior to the date of the injury. Defendant again 

rejected the application because plaintiff failed to produce the 

necessary records to enable it to accept the application. 

Defendant's expert testified that the handling of the application 

was reasonable. Plaintiff's expert offered no opinion as to 

whether defendant acted reasonably regarding the length of time 

involved before defendant made its final decision. We hold that 

there was substantial evidence to support the jury's verdict. 

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Appellate Case: 86-2203 Document: 01019962391 Date Filed: 01/27/1989 Page: 3 
Plaintiff argues that the court erred in not submitting to 

the jury her claim that defendant had failed to act fairly and in 

good faith. The Oklahoma Supreme Court held that an insurer has 

"an implied duty to deal fairly and to act in good faith with its 

insured." Christian v. American Horne Assurance Co., 577 P.2d 899, 

904 (Okla. 1977). This implied duty arises from the contractual 

relationship between the insurer and the insured. Id.; Scivally 

v. Time Ins. Co., 724 F.2d 101 (10th Cir. 1983); Allstate Ins. Co. 

v. Amick, 680 P.2d 362 (Okla. 1984). Here no insurance contract 

was issued, hence no duty to an insured arose. The district court 

properly refused to submit this claim to the jury. 

Plaintiff also argues that the trial court erred in limiting 

her damages to the amount of medical benefits available under the 

policy. An erroneous instruction is not cause for reversal unless 

it is shown to have probably misguided the jury; otherwise it is 

harmless. Missouri-Kansas-Texas R.R. v. Hayes, 445 P.2d 249, 254 

(Okla. 1968)(citing to St. Louis-San Francisco Ry. Co. v. Withers, 

270 P.2d 341, 346 (Okla. 1954)). Since the jury failed to find 

for plaintiff, any error was harmless. 

Plaintiff argues that the trial court erred in the jury 

instructions. "The trial court's instructions are adequate if, 

taken as a whole, they sufficiently advised the jury of the 

parties' contentions and the law applicable thereto." May v. 

Interstate Moving & Storage Co., 739 F.2d 521, 524 (10th Cir. 

1984)(citing Commercial Iron & Metal Co. v. Bache Halsey Stuart, 

Inc., 581 F.2d 246, 250 (10th Cir. 1978), cert. denied, 440 U.S. 

914 (1979)). Jury instructions must provide the jury with ''ample 

4 

Appellate Case: 86-2203 Document: 01019962391 Date Filed: 01/27/1989 Page: 4 
understanding of the issues and the standards applicable." Big 

Horn Coal Co. v. Commonwealth Edison Co., 852 F.2d 1259, 1271 

(10th Cir. 1988)(citing Ramsey v. Culpepper, 738 F.2d 1092, 1098 

( 10th Cir. 1984)). "An error in jury instructions will mandate 

reversal of a judgment only if the error is determined to have 

been prejudicial, based on a review of the record as a whole." 

Durflinger v. Artiles, 727 F.2d 888, 895 (10th Cir. 1984)(quoting 

Wellington v. Daniels, 717 F.2d 932, 938 (4th Cir. 1983)). The 

jury instructions were not included in the record on 

However, plaintiff's objections to the instructions 

persuade us that the jury was not properly advised. 

appeal. 

do not 

Plaintiff argues that the court erred because the jury was 

instructed that an insurer has no obligation to accept an 

application for insurance and not that an insurer has a duty to 

act upon an application within a reasonable time. The court 

corrected any potential error with a sua sponte supplemental 

instruction containing the additional legal standard. See Land v. 

Roper Corp., 531 F.2d 445, 451 (10th Cir. 1976). 

Finally, plaintiff argues that the trial court erred in 

admitting evidence of plaintiff's 1977 felony conviction for 

taking money under false pretenses and in allowing 

cross-examination on her 1982 tax returns. "Trial judges are 

granted great discretion in supervising the fact-finding process 

and their decisions to admit or exclude evidence 'will not be 

reversed by this court absent a clear abuse of discretion."' Big 

Horn Coal Co. v. Commonwealth Edison Co., 852 F.2d at 1266 

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Appellate Case: 86-2203 Document: 01019962391 Date Filed: 01/27/1989 Page: 5 
(quoting Weir v. Federal Ins. Co., 811 F.2d 1387, 1396 (10th Cir. 

1987)). 

The evidence of plaintiff's felony conviction was admitted 

for impeachment purposes. See Fed. R. Evid. 609. Plaintiff's 

credibility was at issue because she testified that she was never 

informed by defendant's agent of the need for additional records. 

The agent testified that she had made several such requests, but 

the records were never provided. 

The jury has the exclusive duty of assessing the credibility 

of witnesses, determining the weight to be given testimony, and 

reaching the ultimate conclusions of fact. Rasmussen Drilling, 

Inc. v. Kerr-McGee Nuclear Corp., 571 F.2d 1144, 1149 (10th Cir.), 

cert. denied, 439 U.S. 862 (1978). The court properly limited the 

use of the felony conviction solely for impeachment purposes. 

Cross-examination on plaintiff's 1982 tax returns was also 

proper. Plaintiff introduced the returns as part of her case in 

chief. Defendant's cross-examination was directed towards showing 

that the tax returns had been improperly prepared. The fact that 

t he cross examination revealed information prejudicial to 

plaintiff is no basis to refuse to allow cross-examination . 

The judgment of the United States District Court for the 

Western District of Oklahoma is AFFIRMED. 

The mandate shall issue forthwith. 

ENTERED FOR THE COURT 

PER CURIAM 

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