The Honorable David D. Noce, United States Magistrate Judge 1

for the Eastern District of Missouri, tried the case by consent of

the parties under 28 U.S.C. § 636(c)(3).

___________

No. 96-1082

___________

Ronald Gidden, *

*

Plaintiff-Appellant, *

* Appeal from the United States

v. * District Court for the

* Eastern District of Missouri.

State Farm Fire & Casualty *

Company, * [UNPUBLISHED]

*

Defendant-Appellee. *

___________

 Submitted: September 11, 1996

 Filed: October 11, 1996

___________

Before MAGILL, FLOYD R. GIBSON, and LAY, Circuit Judges.

___________

PER CURIAM.

Ron Gidden initiated this action to recover on his homeowners

insurance policy, issued by State Farm Fire & Casualty Company ("State

Farm"), when State Farm refused to compensate Gidden after a July 1993 fire

destroyed his home. State Farm filed a counterclaim seeking a money

judgment against Gidden for the balance due on two promissory notes

assigned to State Farm.

A jury returned a verdict in favor of State Farm both as to Gidden's

claims and State Farm's counterclaim. The court entered judgment in State 1

Farm's favor pursuant to the jury verdict and denied Gidden's subsequent

new trial motion. Gidden appeals,
-2-

challenging certain jury instructions and special interrogatories, and the

court's allowance of the hearsay testimony of Michael Walton. We affirm.

FACTS

Before 1990, various fires occurred on the property of Ron Gidden,

including a June 1989 arson fire that destroyed Gidden's house. After

rebuilding, Gidden had applied for but was denied homeowners insurance by

several companies. One insurance company noted the 1989 arson fire as the

reason it rejected Gidden's insurance application. Gidden then applied to

State Farm for insurance, but did not disclose the 1989 fire in his

application. State Farm insured Gidden's home. 

 In 1991 or 1992 Gidden brought an insurance claim under the policy

for storm damage to his home. State Farm paid the claim. 

In February 1993, Ron Gidden's brother, Rick Gidden, along with

Rick's family, moved into Ron's home. In July 1993, fire destroyed Ron's

home once again. At the time of the 1993 fire, nine people were living in

the house; including, among others, Ron and his brother Rick's family.

Rick also kept his pet parrot in the house.

State Farm refused to cover the loss. Ron sued in state court and

State Farm timely removed the action to federal district court. It claimed

no duty to pay on the policy because (1) the fire was intentionally set by

or at the direction of Ron, (2) an insured misrepresented or concealed

material facts after the fire, and (3) Ron made material misrepresentations

when he applied for the
 State Farm also filed a counterclaim seeking a judgment

2

against Ron for the balance due on two promissory notes and deeds

of trust assigned to State Farm by two of Ron’s creditors.

 The evidence showed that all nine occupants were away from

3

the house the night of the 1993 fire. Rick and his wife were

camping the weekend of the fire, and had taken their pet parrot

with them. Rick testified that the parrot would not eat if left in

the house, but the jury learned that Rick had recently left the

bird alone in the house over the three-day 4th of July weekend.

Ron sent his two daughters to his former wife's house for the

weekend. Packed in their suitcases were keepsakes, including photo

albums and their mother's death certificate. The jury learned that

Ron later asked his former wife not to disclose that she had seen

these items in the suitcases. Evidence was also adduced that after

the fire one of Ron's former wives entered a shed behind the house

and found a box, previously kept in the house, containing titles,

insurance papers, birth certificates and school papers. 

-3-

policy. 

2

At trial, the jury heard undisputed evidence that the 1993 fire

resulted from arson. The jury also learned of the prior fires on the

property, including the June 1989 arson fire that destroyed Ron's house but

which Ron had failed to disclose to State Farm. The jury heard evidence

that Ron had received $108,500 on his insurance claim following the 1989

fire, rebuilt the new house for $61,000, and then claimed a $267,000 loss

after the 1993 fire. State Farm also presented evidence that Ron acquired

a second mortgage on the house seven months before the 1993 fire, and that

Ron's monthly household income was $2400 at the time of the fire while his

monthly expenses were over $3700. State Farm established that it would

have rejected Ron's application had Ron properly reported the June 1989

arson fire. 

3

Evidence was also adduced that Rick and Ron had lived together

several times as adults; that Rick helped Ron pay for the property; that

Rick and his family had been living in the house for over a five-month

period before the fire; that Rick and his wife were unemployed when they

moved in; that Ron told the fire marshal that
 Instruction No. 9 defines "resident of plaintiff's household" 4

as 

one of the persons who live together as a family with the

plaintiff in a closely knit group, whether or not related

by blood, where the members of the group deal with each

other informally and direct their attention and energies

to achieving common goals and interests, and who intends

to remain a member of plaintiff's household for an

indefinite period of time . . . . A number of people can

live together in one location and be members of separate

households, and not of the same household, if their lives

are substantially independent of one another or if their

common abode is intended to be only a temporary

arrangement.

 An error is "plain" where it is obvious or otherwise

5

seriously affects the fairness, integrity or public reputation of

the judicial proceedings, or where the error almost surely affected

the outcome of the case. Champagne v. United States, 40 F.3d 946,

947 (8th Cir. 1994).

-4-

Rick's daughter was a permanent resident; that Rick's name had been on the

property previously; and that Rick repeatedly referred to the property as

"theirs." Rick also claimed he owned the trailer behind the house and

considered the occupants his tenants.

INSTRUCTIONS

Ron argues that Instruction No. 9 was not supported by the evidence

and improperly defined "resident." We note at the outset that while Ron 4

objected to Instruction No. 9 as not supported by substantial evidence, he

did not otherwise object to the substance of the instruction and did not

provide an alternative. Trial Tr., vol. IV, at 6-8. Where a party does

not distinctly object to an instruction pursuant to Rule 51 of the Federal

Rules of Civil Procedure, we review only for plain error. See Kostelec

5

v. State Farm Fire & Casualty Co., 64 F.3d 1220, 1226-27 (8th Cir. 1995);

Norton v. Carmark, Inc., 20 F.3d 330, 335-36 (8th Cir. 1994). 

The facts presented at trial support a finding that Rick was
-5-

a "resident" of Ron's household as defined by the instruction. The policy

defines "insured" as a "resident" but does not define "resident." The

question of residence is a question of fact. Countryside Casualty Co. v.

McCormick, 722 S.W.2d 655, 658 (Mo. Ct. App. 1987). Under Missouri law,

the district court properly submitted the issue of Rick's residency to the

jury. See id. at 658-59 (finding child was "resident" of her father's home

where she visited regularly, had her own wardrobe, personal belongings and

bedroom, and where they dealt with each other informally). We find the

district court did not err in giving Instruction No. 9.

Ron also challenges Jury Instruction No. 10. That instruction lists

State Farm's affirmative defenses, including Ron's intentional concealment

of material information upon applying to State Farm for insurance. At

trial, Ron objected to the instruction only on the basis that State Farm

failed to present evidence to support it, and he offered no alternative

instruction. Trial Tr., vol. IV, at 8-10. Ron now contends the

instruction was erroneous because State Farm previously paid a loss to Ron

for storm damage and because the policy did not incorporate the

application. 

Given Ron's failure to preserve the issue now raised on appeal and

the absence of any outcome-determinative error or error seriously affecting

the fairness of the trial, Ron's argument fails. See Champagne v. United

States, 40 F.3d 946, 947 (8th Cir. 1994) (plain error standard).

Ron also contests Instruction No. 11. Instruction No. 11 advises

that Ron cannot recover if State Farm proved that Ron, in applying to State

Farm for insurance, intentionally concealed a coverable loss within three

years prior to the application, without which concealment State Farm would

not have issued the policy to Ron. While Ron does not dispute that State

Farm proved his application misrepresentation was false and material, he

maintains
 Ron’s reliance on Depalma v. Bates County Mutual Ins., No.

6

51293 (Mo. Ct. App. Mar. 19, 1996), as precluding denial of

coverage to an innocent co-insured where another insured commits

arson, is misplaced. The Depalma court considered whether an

innocent spouse may recover for a loss to property owned by the

couple as tenants by the entirety where the property is

intentionally destroyed by the other spouse and where the property

is insured jointly. Here, the jury’s finding established that the

actions of both Ron and Rick justified State Farm’s denial of

coverage. Depalma is inapposite.

-6-

that the instruction is erroneous as it fails to contain every element of

fraud. We reject this contention.

The policy here explicitly declares that State Farm "insure[s] [Ron

Gidden] on the basis [his] statements are true." (emphasis added). The

policy then expressly notes Ron's implicit representation: "that during the

three years preceding the time of your application for this insurance . .

. you and the members of your household have not had any insured losses,

whether paid or not, that would have been covered under the terms of this

or a similar policy." Because the policy is expressly conditioned on the

truth of Ron's application representations, State Farm needed to prove only

that Ron's representations were false and material. Continental Casualty

Co. v. Maxwell, 799 S.W.2d 882, 887-88 (Mo. Ct. App. 1990). The court did

not err for failure to include every element of fraud.

INTERROGATORIES

Ron argues that the jury's answer to Interrogatory 3, finding that

neither Ron or Rick intentionally caused the fire, was inconsistent with

its ultimate verdict in favor of State Farm. This argument lacks merit.

Here, the jury's findings are wholly consistent. To determine which party

would prevail required a finding as to each of State Farm's alternative

affirmative defenses. Contrary to Ron's assertion, a finding that State

Farm did not prove Ron or Rick caused the fire does not preclude a finding

that Rick was an insured or that Rick and Ron provided false material

information to State Farm after the fire. 

6
-7-

HEARSAY

Rick was unavailable for trial. The district court permitted hearsay

evidence offered by Michael Walton, who formerly worked with Rick. Walton

testified that while he delivered a mobile home to Rick in 1987, Rick said

to him, "I had a previous house that I made look like an electrical fire

and . . . the insurance money I collected off that house is how I am able

to buy this house."

The district court permitted the hearsay testimony of Michael Walton

after determining the testimony constituted a statement against Rick's

penal interest under Rule 804(b)(3) of the Federal Rules of Evidence. Ron

argues that the district court committed reversible error by admitting the

hearsay testimony. 

In United States v. Riley, 657 F.2d 1377 (8th Cir. 1981), we adopted

a three-prong test a movant must satisfy to overcome a hearsay objection

and admit testimony as against a penal interest: the movant must show that

(1) the declarant is unavailable as a witness, (2) the statement must so

far tend to subject the declarant to criminal liability that a reasonable

person in the declarant's position would not have made the statement unless

he or she believed it to be true, and (3) corroborating circumstances

clearly indicate the trustworthiness of the statement. Id. at 1382-83. 

Here, Walton testified that Rick admitted he previously

intentionally set a fire and disguised it as an accidental electrical fire

to collect under an insurance policy. State Farm points to no

corroborating circumstance clearly indicating the
-8-

trustworthiness of Walton's statement. Indeed, Walton is embroiled in a

lawsuit against Rick in which Walton would benefit by a determination that

Rick is an arsonist. Instead of corroborating, the circumstantial context

directly contradicts the trustworthiness of Walton's testimony, and State

Farm points to no circumstance tending to support the statement. State

Farm fails to meet the third prong of the test.

However, notwithstanding that Walton's hearsay testimony tends to

show Rick set the fire, the jury found State Farm did not prove Rick set

the fire. Nor did the jury find that Ron set the fire. Rule 103(a) of the

Federal Rules of Evidence provides, "Error may not be predicated upon a

ruling which admits or excludes evidence unless a substantial right of the

party is affected." The challenged evidentiary ruling fails to undermine

the jury's determination that Ron concealed material information when he

applied for insurance. It also is irrelevant to the jury's finding that

Ron and Rick provided false information to State Farm after the fire.

Therefore, admission of the hearsay testimony, even if erroneous, did not

affect a substantial right of Ron and provides no basis for reversal. 

In conclusion, we affirm the district court's judgment as to the

denial of Gidden's claim and the money judgment entered as to State Farm's

counterclaim.

JUDGMENT AFFIRMED.

A true copy.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.