Opinion ID: 2602361
Heading Depth: 3
Heading Rank: 2

Heading: Admissibility of the Indemnity Agreement

Text: ¶ 89 In 1989, Allstate entered an agreement with Richard Wiley in which, among other things, it agreed to indemnify Richard Wiley for any judgment against him as a result of his actions as a director of Northstar. This agreement was later amended to include indemnification of Wiley Rein for any losses it incurred as a result of this particular lawsuit. Plaintiffs attempted to proffer the amended indemnity agreement into evidence at trial. In response, defendants moved to exclude the evidence, arguing it was barred by rules 411 and 403 of the Utah Rules of Evidence. The trial court disagreed with defendants and ruled that the amended indemnity agreement was admissible; however, the trial court stated that reference to such information may not be used to demonstrate the parties acted negligently or otherwise wrongfully, but rather to demonstrate control, bias, prejudice, etc. ¶ 90 On appeal, plaintiffs contend the trial court erred in limiting the purposes for which the indemnity agreement could be used at trial. Specifically, plaintiffs argue the trial court erred in ruling that the indemnity agreements were subject to rule 411 of the Utah Rules of Evidence. Rule 411 provides as follows: Evidence that a person was or was not insured against liability is not admissible upon the issue whether the person acted negligently or otherwise wrongfully. This rule does not require the exclusion of evidence of insurance against liability when offered for another purpose, such as proof of agency, ownership, or control, or bias or prejudice of a witness. Utah R. Evid. 411. In fact, the trial court specifically stated that rule 411 was inapplicable, and neither party, on appeal, argues this was incorrect. Nevertheless, as the plaintiffs correctly point out, the court did rely on the language and principles of rule 411 in limiting the purposes for which the evidence of the amended indemnity agreement was admissible. ¶ 91 Although the trial court did not specifically state that its ruling was based on rule 403, the record clearly implies that this was the case. On appeal, our review of a trial court's rule 403 rulings is limited to a determination of whether the trial court exceeded its permitted discretion. See State v. Nelson-Waggoner, 2000 UT 59, ¶ 28, 6 P.3d 1120. Accordingly, the issue now before us is whether the trial court exceeded its permitted discretion in ruling the indemnity agreements were admissible only for certain purposes. ¶ 92 Rule 403 provides, Although relevant, evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury, or by considerations of undue delay, waste of time, or needless presentation of cumulative evidence. Utah R. Evid. 403. In this case, the amended indemnity agreement was probative of defendants' biases and prejudices in dealing with plaintiffs. It suggests defendants' bias to act on behalf of other clients at plaintiffs' expense. However, this very fact serves to make the agreement prejudicial, as well. In weighing these competing interests, the trial court opted for a middle ground, allowing the evidence to be admitted, but only for limited purposes. We believe the trial court's determination to use the principles of rule 411 in tempering the admissibility of the agreements under rule 403 was within its permitted discretion.