Opinion ID: 1506079
Heading Depth: 1
Heading Rank: 1

Heading: The Raines Testimony

Text: Farm Bureau challenges the admission of the testimony of Mabel Raines regarding her unrelated third-party claim against a Farm Bureau insured. The Raines testimony was that Farm Bureau initially offered her $14,000 to settle her personal injury claim and that the company offered to settle the claim for the $100,000 policy limits only after the case had been presented to the jury. She testified that the jury awarded her more than $200,000. Farm Bureau argues that neither KRE 404(b) nor Kentucky Farm Bureau Mut. Ins. Co. v. Troxell, Ky., 959 S.W.2d 82 (1997), permits the introduction of such testimony. It contests that Raines had a different adjuster and dissimilar litigation. Farm Bureau uses Campbell, supra , as authority that evidence of similar acts ought not to be admitted here. We agree with Johnson that the testimony by Raines was primarily used to rebut the assertion that Farm Bureau's handling was an innocent mistake. She distinguishes Campbell to the effect that it did not involve 404(b), but was a case about the proper scope of punitive damages, and it did not address a third-party claim. Johnson contends that in this case the testimony was used to establish bad faith for the elements of the claim and that this case had the same adjuster. She also notes that Campbell prohibited such evidence for a Utah case, but Utah treats third-party and first-party suits differently, see Cannon v. Travelers Indemnity Co., 994 P.2d 824 (Utah Ct.App.2000), whereas the Kentucky Unfair Claims Settlement Act considers and evaluates the first and third-party claims similarly. We find Johnson's position to be persuasive. The majority opinion's analysis of Troxell is flawed. The majority attempts to ignore the fact that Troxell recognizes that evidence of similar prior litigation involving the insurer and the adjuster was relevant to show the awareness of the insurer of the pattern of unacceptable claim handling methods by the adjuster. Thus, the evidence of that awareness is admissible in a suit by the insured against the insurer for punitive damages for bad faith and unfair claims settlement practices. KRS 411.184(3). KRE 404(b) prohibits the admission of evidence of other crimes, wrongs or acts for the purpose of proving the character of a person or, in this case, a corporation, in order to show action in conformity therewith on particular occasions. The rule provides that such evidence may be admissible if offered for some other purpose such as proof of intent, knowledge or absence of mistake or accident. KRE 404(b)(1). In a bad faith case, it is proper for a jury to consider other insurance claims. Troxell, supra , held that evidence introduced by the plaintiff pertaining to similar litigation and involving a particular adjuster was relevant and admissible in a bad faith trial. This Court noted that the plaintiff's evidence had been offered to prove that Farm Bureau was aware that the adjuster had previously used methods contrary to good-faith claim handling practices and that the insurance company had knowledge of and had acquiesced in the pattern of conduct of its agent. The factual situations presented by Raines and Johnson are similar. The two adjusters, Richard Smith and Terry Lester, served in both cases. Both Raines and Johnson were unmarried middle-aged women who worked in jobs requiring physical labor. Both had similar medical expenses. Farm Bureau employed the same defense attorney in each case and both cases were tried in Lincoln County. Raines and Johnson were initially offered only 14 percent and 16 percent of the actual value of their claim which was in line with what the insurer's training manual instructed. Both women were strained financially by their accidents and the evidence shows that Farm Bureau knew it. In this case, the evidence was relevant and admissible to demonstrate that Farm Bureau was aware of the pattern and conduct of its adjusters to fail to evaluate claims fairly. The evidence was also relevant to show the absence of mistake. Farm Bureau attempted to explain its behavior by admitting that hindsight revealed that it had innocently misevaluated the claim by Johnson. The similar misevaluation evidence was presented to discredit the Farm Bureau claim of hindsight and to support the contention by Johnson that the failure to adjust her claim properly was intentional so as to deceive her. The contested testimony was also relevant to establish the necessary factors to be considered by the jury as to whether punitive damages should be awarded. Certainly, a plaintiff must have evidence to permit submitting a claim for punitive damages. See Wittmer v. Jones, Ky., 864 S.W.2d 885 (1993). In determining the amount of punitive damages, KRS 411.186(2)(c) and (d) provides that a jury should consider certain factors, including both the profitability and the duration of the misconduct. The statute also permits a jury to consider what actions, if any, were undertaken by a defendant to remedy the misconduct. The testimony presented demonstrated other instances of similar behavior that Farm Bureau did not merely inadvertently fail to settle the Johnson claim properly, but that it had done so intentionally, conduct resulting in a highly profitable business incentive. The testimony also shows the duration of the ongoing unfair claims settlement practices. Citing Troxell , Farm Bureau complains that Raines was improperly allowed to testify concerning the amounts of her claim. At an in chambers conference before trial, Farm Bureau objected to Raines's testimony on two specific grounds: 1) That Terry Lester was only slightly involved in Raines' case and 2) Raines' suit did not involve a bad faith claim against Kentucky Farm Bureau. The trial judge correctly overruled the objection and permitted Raines to testify. We agree with the decision of the trial judge to overrule the objection made at trial. The argument now asserted by the insurance company, that Raines should not have been allowed to testify to amounts, is not properly preserved for appellate review because no objection was ever offered at trial on this ground. KRE 103(a). Although decided prior to the adoption of the Kentucky Rules of Evidence, we find support in the case of Nunn v. Slemmons' Adm'r, Ky., 298 Ky. 315, 182 S.W.2d 888 (1944), which indicates that when a witness is competent as to some matters and incompetent as to others, an objection must be made on matters in which she is incompetent. Farm Bureau's objection to the relevance of Raines' testimony on two specific grounds did not relieve it of the obligation to also object to Raines' testimony regarding the amounts. The trial judge did not err in allowing Raines to testify.