United States Court of Appeals

For the Seventh Circuit

Chicago, Illinois 60604

Argued November 26, 2012

Decided August 15, 2013

Before

ILANA DIAMOND ROVNER, Circuit Judge                                 

ANN CLAIRE WILLIAMS, Circuit Judge

JOHN DANIEL TINDER, Circuit Judge

   

No. 12‐1520

KATHY HORVATH,

Plaintiff‐Appellant,

v.

WEST BEND MUTUAL INSURANCE

CO.,

Defendant‐Appellee.                 

Appeal from the United States District

Court for the Northern District of Indiana,

South Bend Division.

No. 3:10‐cv‐00180‐CAN

Christopher A. Nuechterlein,

Magistrate Judge.

O R D E R

After her home in South Bend, Indiana, burned down in February 2009, Kathy

Horvath filed a claim in excess of $1.6 million with her insurer, West Bend Mutual

Insurance Company (“West Bend”), for the house and its contents.  West Bend denied the

claim after determining that the fire was the result of arson: although Horvath was out of

town at the time of the conflagration, West Bend asserted that the fire had been set with her

consent or authority; it also asserted, inter alia, that Horvath had made material misrepre‐

sentations regarding the nature and extent of her damages.  Horvath sued West Bend for

breach of the insurance contract in state court, and West Bend removed the case to federal

court on the basis of diversity of citizenship.   The case was tried to a jury in 2012; a

magistrate judge presided overthe trial with the parties’ consent.  Horvath, of course, was

NONPRECEDENTIAL DISPOSITION

To be cited only in accordance with

Fed. R. App. P. 32.1
No. 12‐1520 Page 2

a key witness at the trial.  The jury delivered a general verdict in West Bend’s favor and

awarded Horvath nothing.  Horvath appeals, arguing that the magistrate judge erred in

admitting into evidence proof that Horvath had been convicted of embezzlement in 1991

(and sentenced in early 1992), more than 20 years before the trial took place.  See Fed. R.

Evid. 609(b).

Rule 609(a)(2) allows into evidence for purposes of impeachment a witness’s prior

conviction for a crime involving dishonesty; but the rule sets up different presumptions as

to admissibility depending on whether the conviction is less or more than 10 years old.  If

the conviction is no more than 10 years old, and the crime of conviction had an element of

dishonest or false statement, Rule 609(a)(2) renders proof of such a conviction admissible

(indeed, commands the admission) without requiring the court to balance its probative

worth against its potential for prejudice. Barber v. City of Chicago, 2013 WL 3957736, at *11

(7th Cir. Aug. 2, 2013) (citing United States v. Wilson, 985 F.2d 348, 351 (7th Cir. 1993)).  By

contrast, Rule 609(b) allows into evidence a witness’s prior conviction “only if . . . its

probative value, supported by specific facts and circumstances, substantially outweighs its

prejudicial effect.”  The language of Rule 609(b) thus “weighs probative value against

prejudice in a way that is dramatically skewed in favor of excluding the conviction

evidence; the evidence is inadmissible unless probative value ‘substantially outweighs’

prejudice.”  28 Charles Alan Wright & Victor J. Gold, Federal Practice & Proc.: Evidence

§ 6136, at 290 (2012); see also 3 Christopher B. Mueller & Laird C. Kirkpatrick, Federal

Evidence § 6:53 at 401, 404 (3d ed. 2007).

Our review of the decision to admit Horvath’s prior conviction is for abuse of

discretion, e.g., United States v. Smith, 131 F.3d 685, 687 (7th Cir. 1997), and in West Bend’s

view, because the district court considered each of the five (non‐exclusive) factors we

identified as relevant to the admission of a prior conviction under Rule 609 in United States

v. Mahone, 537 F.2d 922, 929 (7th Cir. 1976) (citing Gordon v. United States, 383 F.2d 936, 940

(D.C. Cir. 1967) (Burger, J.)), and properly weighed the probative value of the prior

conviction against its potential for prejudice, its decision to admit evidence of the

conviction cannot amountto a reversible abuse of discretion,see United States v.Redditt, 381

F.3d 597, 601 (7th Cir. 2004).  We agree that the court gave the issue thorough consideration

and did discuss each of the Mahone factors.  There is one problem with the court’s analysis

that is immediately apparent, however.  Embezzlement, as the parties agree, is an offense

similar to the act at issue here—arson committed with an eye to fraudulently collecting on

an insurance policy—in that both involve deceitful conduct.  The district court, like West

Bend, considered similarity to be a positive rather than a negative factor vis‐à‐vis the

admissibility of the conviction.  R. 139 at 20‐21; R. 140 at 19‐20; West Bend Br. 24.  It is
No. 12‐1520 Page 3

clearly a factor weighing against admission, however: “When the prior conviction and the

charged act are of a similar nature, the danger [of unfair prejudice] increases.  The jury is

more likely to misuse the evidence for purposes otherthan impeachment, that is, to regard

the prior conviction as evidence of a propensity to commit crime or of guilt, despite

instructions to the contrary.”  United States v. Shapiro, 565 F.2d 479, 481 (7th Cir. 1977)

(citing, inter alia, United States v. Harding, 525 F.2d 84, 89‐90 (7th Cir. 1975) (Stevens, J.)); see

also United States v. Hernandez, 106 F.3d 737, 740 (7th Cir. 1997); United States v. Causey, 9

F.3d 1341, 1344‐45 (7th Cir. 1993); United States v. Rein, 848 F.2d 777, 783 (7th Cir. 1988);

United States v. Fountain, 642 F.2d 1083, 1091 (7th Cir. 1981); Gordon, 383 F.2d at 940; Spicer

v. Liberty Mut. Ins. Co., 2007 WL 2363369, at *2 (S.D. Ind. Aug. 15, 2007) (Hamilton, J.).  

Assuming, without deciding, that the district court’s error as to the similarity factor

—which was a legal error—so tainted the court’s overall application of the multi‐factor

Mahoneframework, and the balancing of probative value versus prejudice, as to renderthe

decision to admit the conviction an abuse of discretion, see Moffitt v. Ill. State Bd. of Educ.,

236 F.3d 868, 873 (7th Cir. 2001), we must still consider whether the error affected

Horvath’s substantial rights.  See Fed. R. Civ. P. 61.  It did not.  

First, as West Bend points out, Horvath’s prior conviction was disclosed but not

given undue attention at trial.  Out of a trial transcript that totaled more than 400 pages,

Horvath’s counsel spent roughly one page of the trial transcript fronting the basic facts

regarding the conviction, R. 143 at 5‐6, and West Bend spent another two pages asking her

about the conviction on cross‐examination, R. 143 at 107‐09.   We see no sign that the

conviction took on any prominence at the trial; Horvath herself professed an inability to

recall any of the details regarding the offense (R. 143 at 5).  As evidence that Horvath

lacked credibility as a witness, other facts took on much more prominence than her

conviction did.

Second, and more importantly, even from the cold record, it is clear that Horvath

was a poor witness whose credibility was virtually nil by the time she left the stand. As

there was no direct evidence of Horvath’s involvement in the arson (that the fire was

intentionally set was uncontested), and Horvath had little or no objective, documentary

proof supporting her claimed losses, her believability as a witness was central to the jury’s

assessment of her claim against West Bend. To say that her credibility was undermined is

to understate the point substantially.   We cite the following as an anything‐but‐exhaustive

list of examples:  
No. 12‐1520 Page 4

1.  When asked to acknowledge some fact, including in particular her own prior

statements, Horvath had a tendency to respond, non‐commitally, “If that’s what

you’re telling me.” The transcript is rife with variations on that answer.  

2.    Horvath claimed ignorance of, or an inability to recall, facts which were

important and that one would expect a witness to remember. For example, although

she testified she had only been sued once in her fifteen‐year career as a realtor, she

claimed to know nothing about the basis for that suit, which resulted in a default

judgment in excess of $25,000 (and findings of fact in support of that judgment that

were adverse to her) and a lien against her property.    “I honestly don’t know

because I never showed up in court,” she explained.  R. 143 at 95.  Similarly, under

questioning from her own attorney about her conviction for embezzlement, she

claimednotto recall how she hadembezzled money from her employer(a bank) nor

how much she had embezzled (more than $57,000), despite her certainty that she

had “paid back every last cent.”  R. 143 at 6; see also id. at 108.  

3.  Horvath had filed a bankruptcy petition in August 2007, some 18 months prior

to the fire, in which she had valued her house at only $400,000 and her personal

property at $1,700 (R. 143 at 93); by contrast, she claimed in the wake of herfire that

her house was worth over $1.1 million and that the contents were worth more than

$400,000.1

  At trial, she put the blame squarely on her bankruptcy attorney for the

much lower numbers in the bankruptcy petition, testifying that her counsel made

those numbers up when she was unable to supply him with accurate information,

and that she did not see those figures before he filed the bankruptcy petition,

“because I never signed anything.” R. 143 at 161; see also id. at 230‐31.2  In fact,

Horvath had signed the bankruptcy petition electronically (she then claimed she

hadgiventhat authorization whenshe initially met with her counsel, without seeing

a schedule of her assets). R. 143 at 218, 229‐30.  She also testified at trial that she had

withdrawn the bankruptcy petition because she discovered it contained false

information about the value of her assets (R. 143 at 94, 161); but previously she had

testified that she withdrew it upon receipt of a substantial sales commission (R. 143

1 A number of line items on the list of contents she submitted to West Bend by themselves exceeded

the $1,700 total on her bankruptcy petition. See, e.g., R. 143 at 163, 167. And whereas the bankruptcy petition

indicated that she owned no jewelry, for example, the insurance claim listed a number of jewelry items worth

substantial amounts of money – including a Gucci watch valued at $5390, for example. See R. 143 at 168‐69.

2 It is, to say the least, surprising, than an experienced real estate saleswoman would have such

difficulty supplying her attorney with accurate information about the value of her home, if not its contents.
No. 12‐1520 Page 5

at 271‐72).  For his part, the bankruptcy trustee, in seeking to dismiss the case, had

cited Horvath’s failure to cooperate with her attorney in providing relevant

information as a reason why the petition should not proceed. R. 48 at 2 ¶ 5; 143 at

171‐72.

4.  At herJune 2011 deposition, Horvath testified that she had filed her 2008 income

tax return and that it was true and accurate. R. 143 at 149.  Her attorney subse‐

quently produced a copy of that return to West Bend in July 2011.  The return was

dated April 15, 2009. R. 143 at 149.  At trial, however, Horvath testified that she had

not, in fact, filed that return as of April 2009 or even as of the time her deposition

was taken in 2011. R. 143 at 176‐77.  Moreover, although she subsequently made

other corrections to her deposition testimony upon review of the transcript, she had

not corrected hertestimony on that point. R. 143 at 179.  She acknowledged that she

had given a copy of the return to her attorney for production to West Bend without

telling him that the return had not been filed.  She at one point claimed, incredibly,

that she had put an April 2009 date on the return because she thought that is what

West Bend wanted her to do!  R. 143 at 232.  She then, on prompting by her counsel,

corrected herself to say that she used that date in an effort to avoid a penalty for a

late return. R. 143 at 233‐34.  

5.  Horvath contradicted herself on a number of important points which bore on her

possible complicity in the arson.  For example, at trial, she denied being treated for

depression at the time of the fire, but previously had acknowledged that she was.

R. 143 at 132‐33.  At trial she admitted that there may have been some gasoline in

the basement of the home at the time of the fire; previously she had denied that

possibilty.  R. 143 at 188‐89. And, at trial, she indicated that her neighbors would not

necessarily have heard her security alarm going off if someone broke into the house

on the night of the fire; but on a prior occasion, she expressed confidence that they

would have heard the alarm.  R. 143 at 186‐88.

6.  During discovery, when asked to identify banks holding her business accounts,

she had identified at least two banks which advised that they had no record of such

an account, and had failed to name one bank which held her business escrow

account. R. 143 at 138‐39, 152‐53.  

Even Horvath must have realized how little credibility she had left once these and

countless other blots on her trustworthiness had been laid bare before the jury.  Near the

end of a methodical and relentless examination by West Bend’s attorney, when her prior
No. 12‐1520 Page 6

statement as to a particular item on her insurance claim was held up to once again

contradict hertestimony in court, an exasperated Horvath declared to counsel, “You’re an

evil man.”  R. 143 at 200.  

In short, we do not believe that the admission of Horvath’s conviction, even if it was

erroneous, affected Horvath’s substantial rights.  There is no significant chance that the

error affected the jury’s verdict, see, e.g., Barber, 2013 WL 3957736, at *12, given the many

other blemishes on her credibility.    The judgment in favor of West Bend is therefore

AFFIRMED. The parties shall bear their own costs of appeal.