1

The Honorable Mary Ann Medler, Chief United States Magistrate Judge for

the Eastern District of Missouri, presiding by consent of the parties pursuant to 28

U.S.C. § 636(c).

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

________________

No. 10-1851

________________

Safety National Casualty

Corporation,

Appellee,

v.

Austin Resolutions, Inc., 

Appellant.

*

*

*

*

*

*

*

*

*

*

Appeal from the United States

District Court for the 

Eastern District of Missouri.

_______________

Submitted: January 12, 2011

 Filed: April 12, 2011

________________

Before COLLOTON, GRUENDER, and SHEPHERD, Circuit Judges.

________________

GRUENDER, Circuit Judge.

Austin Resolutions, Inc. (“Austin”) appeals the decision of the district court1

denying its motion for a new trial after a jury rendered a verdict in favor of plaintiff

Safety National Casualty Corporation (“Safety National”) on claims arising from a

business dispute between the parties. For the reasons discussed below, we affirm.
-2-

I. BACKGROUND 

Safety National is in the business of providing excess workers’ compensation

insurance to self-insured companies. One such insured, Dyer Nursing Home, faced

a workers’ compensation claim from an employee who had been riding in a car

involved in an automobile accident while en route to an off-site training session.

According to information received by Safety National, the employee had incurred a

series of related medical bills totaling $361,745 at Regional Medical Center in

Memphis, Tennessee. Safety National desired to negotiate a discount in the amount

of that bill.

Austin is in the business of negotiating with medical providers to reduce such

high-dollar medical bills. In March 2005, Safety National contracted with Austin to

negotiate such a reduction of the employee’s medical bills with Regional Medical

Center. Per the terms of the parties’ oral agreement, Austin was to be paid 25 percent

of the difference between the listed charges, which Safety National believed to be

$361,745, and the reduced amount negotiated by Austin.

To the parties’ surprise, when Austin contacted Regional Medical Center about

the bill, Regional Medical Center reported a balance due of only $2,317. The parties

did not know how the balance had been reduced. At Safety National’s request, Austin

obtained a signed written agreement from Regional Medical Center stating that, in

exchange for Austin’s payment of that outstanding balance, Regional Medical Center

would not seek payment of any additional amounts from the employee. Safety

National then requested that Austin obtain an amendment to that written agreement

adding that Regional Medical Center also would not seek payment of any additional

amounts from Dyer Nursing Home. Austin obtained a signed amended agreement.

Safety National hoped that this agreement, which the parties call a “lien waiver,”

would protect it from reimbursement claims from any third parties who had paid down

the original $361,745 balance. In May 2005, Austin submitted an invoice to Safety

National showing a “negotiated discount” of $359,428, and a resulting 25 percent fee
-3-

of $89,857. Austin sent a copy of the invoice again in February 2006. Safety

National did not pay the invoice.

On June 1, 2006, Safety National learned that State Farm, the insurer of the

driver of the car in which the employee had been injured, had obtained a judgment

ordering Dyer Nursing Home to reimburse $66,667 that State Farm had paid on the

employee’s Regional Medical Center bills. See Hubble v. Dyer Nursing Home, 188

S.W.3d 525, 531 n.3, 537 (Tenn. 2006). The order also noted that the nursing home,

and by implication its excess insurer Safety National, would be responsible for all

other medical expenses incurred by the employee. Id. at 537. Safety National asked

Austin to render an opinion as to whether the “lien waiver” obtained by Austin would

shield it from reimbursement claims from parties other than State Farm. Austin

responded on June 5 by resubmitting the $89,857.21 invoice to Safety National and

threatening to contact Regional Medical Center to rescind the “lien waiver” if the

invoice was not paid by June 9. Stephen Peacock, the claims analyst for Safety

National, claimed that the parties long had recognized the inaccuracy of the invoiced

amount, e-mailing Arden Tabor, President of Austin, that “you and I talked on several

occasions that we need to know the amount of the original Regional [Medical Center]

bill and why or how it was reduced so [Austin’s] fee could be determined.” Peacock

objected to Austin treating the “lien waiver” as a “hostage” to collect on the original

invoice. However, after Austin agreed to subtract the $66,667 reimbursement to State

Farm from the invoiced “negotiated discount,” Safety National paid a 25 percent fee

of $73,190.

In June 2007, after unsuccessfully asserting the “lien waiver” as a defense,

Safety National was ordered by a Tennessee court to reimburse another third party,

the employee’s private medical insurer, for $146,511 that it had paid on the

employee’s Regional Medical Center bills. Safety National asked Austin to deduct

this amount from the invoiced “negotiated discount” and refund 25 percent of this

amount from the $73,190 fee. Austin refused, and in May 2008 Safety National filed

suit in state court in Missouri, alleging breach of contract, breach of the implied
2

The petition established an amount in controversy exceeding $75,000 because

it sought as damages not only the $73,190 fee paid, but also expenses incurred by

Safety National as a result of the Tennessee litigation due to allegedly false

representations about the effectiveness of the lien waiver.

-4-

covenant of good faith and fair dealing, money had and received, and fraudulent and

negligent misrepresentation. Austin removed the suit to the federal district court for

the Eastern District of Missouri, asserting diversity jurisdiction.2

 

At trial, Safety National’s theory of the case was that Austin did not negotiate

any discount on the $361,745 owed to Regional Medical Center, but rather that it

simply discovered that the balance already had been reduced to $2,317 through

unknown means. Because the parties’ contract called for Austin to receive 25 percent

of the discount Austin negotiated, Safety National contended that Austin had earned

no fee. Austin, on the other hand, requested a jury instruction allowing the jury to find

that Safety National “accepted” Austin’s “cost containment services” as performed in

accordance with the parties’ agreement. The district court denied Austin’s instruction

as legally inaccurate and unsupported by the evidence. The jury found for Safety

National on all five counts and awarded a return of the entire fee paid, $73,190. The

district court denied Austin’s motions for judgment as a matter of law and for a new

trial. Austin appeals only the denial of its motion for new trial, arguing that the

district court erred by refusing Austin’s proposed jury instruction and by admitting

into evidence a letter that referred to the June 2007 Tennessee court order, without the

order itself being attached.

II. DISCUSSION

Austin first contends that the district court erred by denying its motion for a

new trial based on the denial of a requested jury instruction. We review the rejection
-5-

of a proposed jury instruction for abuse of discretion. Friedman & Friedman, Ltd. v.

Tim McCandless, Inc., 606 F.3d 494, 499 (8th Cir. 2010). The “failure to give a

proposed instruction must result in prejudice to the requesting party before a new trial

will be ordered.” Cox v. Dubuque Bank & Trust Co., 163 F.3d 492, 497 (8th Cir.

1998). “A party is entitled to a jury instruction on its theory of the case if the

instruction is both legally accurate and supported by the evidence.” See Friedman &

Friedman, 606 F.3d at 499. Because our jurisdiction is based upon diversity of

citizenship, state law governs the substance of the jury instructions. Id. The parties

agree that Missouri law applies.

On appeal, Austin argues that the legal basis for its proposed instruction is that

payment of an invoice may be sufficient to prove one party’s acceptance of another

party’s performance under a contract. Austin notes that after it reported to Safety

National that the balance due was only $2,317, Safety National asked Austin for the

separate service of obtaining the “lien waiver” purporting to release the insured

nursing home from any further liability on the employee’s bills. Austin contends that

Safety National’s eventual payment of $73,190 was compensation for Austin’s

services in obtaining the “lien waiver,” rather than for negotiation of a discount.

Austin’s theory presupposes that the parties modified their original contract or

created a secondary contract to substitute a duty to obtain a “lien waiver” for Austin’s

original duty to negotiate a discount. Unfortunately for Austin, neither the proposed

instruction nor any of the instructions given to the jury addresses the existence or

terms of this alleged modified or secondary agreement. The entirety of Austin’s

proposed instruction reads: “Your verdict must be for Defendant if you believe that

Plaintiff accepted Defendant’s cost containment services which were performed in

accordance with the agreement between Plaintiff and Defendant.” Yet, Austin did not

object to the only instruction that defined an “agreement” for the jury, which

instruction stated that Austin’s duty was solely “to negotiate the amount of medical

bills owed to Regional Medical Center on [the employee’s] account . . . and to charge

a fee based upon 25% of the amount that the defendant saved the plaintiff by reducing
3

Austin also cited Missouri Approved Instruction (“MAI”) 32.14, entitled

“Payment for Services Furnished Decedent,” to the district court as legal authority for

its proposed instruction. Austin does not explain how payment for services furnished

to Safety National is analogous to payment for services furnished to a decedent.

-6-

the amount owed.” Because the proposed instruction purports to address acceptance

of some “lien waiver” service agreement that was never defined for the jury, it is not

legally accurate under Missouri law. See Centerre Bank of Kan. City, Nat’l Ass’n v.

Angle, 976 S.W.2d 608, 617 (Mo. Ct. App. 1998) (finding reversible error in a jury

instruction that “did not specify whether the agreement which was allegedly violated

was the corporate agreement, the partnership agreement, or yet some other agreement

between the parties”). 

Austin contends that the proposed instruction adequately applies the rule of

Woolfolk v. Jack Kennedy Chevrolet Co., 296 S.W.2d 511, 514 (Mo. Ct. App. 1956),

that a plaintiff’s demonstrated acceptance of a defendant’s performance, as rendered,

defeats the plaintiff’s claim of breach.3

 Woolfolk, however, highlights the legal

inaccuracy of Austin’s proposed instruction. Before the Woolfolk court reached the

rule relied upon by Austin, the court stated that “[a]t the outset we must determine

whether a contract came into existence” and then determined the terms of that contract

based on a purchase order, invoice, and chattel mortgage. Id. Here, in contrast, the

proposed instruction does not require the jury to find that the alleged modified or

secondary agreement came into existence and gives the jury no hint as to what the

relevant terms of such an agreement would have been. 

 Moreover, even if Austin had submitted a legally accurate proposed instruction

befitting its theory, it would not have been supported by the evidence adduced at trial.

Austin points to no evidence that the $73,190 fee paid by Safety National was based

on anything other than 25 percent of the alleged discount negotiated by Austin, as set

forth in the parties’ original agreement. The invoice Austin repeatedly submitted to

Safety National contained the heading “Negotiated Discount,” listed a “Discount” of
4

To the extent, if any, that obtaining the “lien waiver” was a valuable service

not encompassed within the parties’ original agreement, Austin may have been

entitled to payment of some reasonable amount for that service under a theory of

quantum meruit. Austin did not present that theory at trial, however, and the proposed

instruction does not present the elements of a quantum meruit claim, nor does there

appear to be any evidence that the reasonable value of the additional service was

remotely close to $73,190. See Olathe Millwork Co. v. Dulin, 189 S.W.3d 199, 206

(Mo. Ct. App. 2006).

-7-

$359,428, and stated a “Resolution Fee” of exactly 25 percent of the listed

“Discount.” Peacock testified that throughout the dispute, he understood that Austin’s

fee demand was based completely on the amount of the “negotiated discount.”

Furthermore, after Safety National’s insured was ordered to reimburse State Farm for

an additional $66,667 of the Regional Medical Center bill, Austin reduced the fee by

exactly 25 percent of that amount. This hardly comports with the theory that the fee

was charged for the discrete, separate service of obtaining the “lien waiver” in the first

place. See Centerre Bank, 976 S.W.2d at 617.4

 

Because Austin’s proposed instruction does not accurately state the applicable

law and is not supported by the evidence at trial, the district court did not abuse its

discretion in denying the proposed instruction. See Friedman & Friedman, 606 F.3d

at 499. 

Austin next claims that a new trial is warranted based on the admission into

evidence, over Austin’s hearsay objection, of a letter from Peacock of Safety National

to Tabor of Austin. A district court’s rulings on admissibility of evidence are entitled

to great deference, and we will reverse only if the district court has committed a clear

abuse of discretion. Paul v. Farmland Indus., Inc., 37 F.3d 1274, 1277 (8th Cir.

1994). “Moreover, a jury’s verdict will not be disturbed absent a showing that the

evidence was so prejudicial as to require a new trial which would be likely to produce

a different result.” Id.
5

These findings were required by Instruction No. 14, the verdict director for the

breach of contract claim:

[Y]our verdict must be for the plaintiff if you believe:

First, the plaintiff and the defendant entered into an agreement whereby

the defendant agreed to negotiate the amount of medical bills owed to

Regional Medical Center on [the employee’s] account in an effort to

-8-

The letter referred to the Tennessee court order finding the “lien waiver”

ineffective and awarding $146,511 reimbursement from Safety National to the

employee’s private medical insurer. Although the letter indicates that a copy of the

court order is attached, the letter was admitted into evidence without the order. In the

letter, Peacock asked for a partial refund of the fee in the amount of 25 percent of the

$146,511 now owed to the private medical insurer. Austin contends that the letter was

prejudicial hearsay because it conveyed Peacock’s out-of-court characterization of the

court order to the jury, without affording an opportunity for the jury to review the

order and reach its own conclusions. 

We agree with the district court that the letter was not hearsay because it was

admitted to show Peacock’s state of mind at the time, not for the truth of its

characterization of the Tennessee court order. See Am. Eagle Ins. Co. v. Thompson,

85 F.3d 327, 332 (8th Cir. 1996). In particular, the letter was admitted to demonstrate

Peacock’s understanding at that time that the fee charged by Austin had been based

on 25 percent of the alleged negotiated discount. Therefore, there was no clear abuse

of discretion in admitting the letter.

Even had the letter constituted hearsay, Austin cannot show that the exclusion

of the letter would have affected the jury’s determinative findings: the parties’

agreement provided a fee to Austin based on the savings it negotiated, Austin did not

negotiate any savings on the employee’s medical bills, and thus Austin earned no fee

under the terms of the parties’ agreement.5

 While Austin argues that unfair prejudice
reduce the amount owed and to charge a fee based upon 25% of the

amount that the defendant saved the plaintiff by reducing the amount

owed to Regional Medical Center on the account and the plaintiff agreed

to pay a fee of 25% of the amount that the defendant saved, and

Second, the plaintiff performed its agreement, and

Third, the defendant failed to perform its agreement, and 

Fourth, the plaintiff was thereby damaged.

-9-

arose from the revelation in the letter that another court had found the “lien waiver”

procured by Austin to be ineffective, the “lien waiver” was at best tangential to the

terms of the agreement on which the jury based its verdict. As discussed above, the

“lien waiver” was not mentioned in any jury instruction. Furthermore, Austin made

no attempt to exclude other evidence referring to the same court order. A subsequent

letter from Austin to Safety National that referred to that same court order was

admitted without objection, and Peacock testified at trial as to his contemporaneous

understanding of that court order and the effectiveness of the “lien waiver,” again

without objection. See Johnson v. Richardson, 701 F.2d 753, 756 (8th Cir. 1983)

(finding no reversible error in the admission of alleged hearsay on “an extremely

tangential issue” which was “addressed in full” by other evidence). In short, there is

no showing that the letter, even if hearsay, was “so prejudicial as to require a new trial

which would be likely to produce a different result.” Paul, 37 F.3d at 1277. 

III. CONCLUSION

For the foregoing reasons, we affirm the district court’s judgment denying

Austin’s motion for new trial.

_____________________________