Opinion ID: 2639205
Heading Depth: 1
Heading Rank: 1

Heading: evidence of boyles's insurance coverage

Text: The opinion concludes that the superior court correctly denied Fleegel's motion to exclude evidence of Boyles's insurance coverage, reasoning that Alaska Evidence Rule 411 did not preclude this evidence because evidence of a defendant's wealth has relevance independent of fault in a punitive damages case: The trial court focused on the relevance of insurance to Boyles's financial condition, a purpose not excluded under Rule 411. Therefore, the trial court did not err in failing to exclude evidence of insurance coverage. [1] But the opinion's analysis overlooks persuasive authority to the contrary and skips two important questions in the chain of admissibility: whether insurance coverage actually is relevant evidence of wealth and, if it is, whether its prejudicial effect outweighs its probative value. While the opinion correctly observes that evidence of the defendant's wealth is normally relevant in a punitive damages case, [2] it neglects to ask if evidence of insurance coverage for punitive damages is relevant evidence of wealth under the specific facts of this case. Here, assuming that Boyles had shown that he was covered for punitive damages, [3] evidence of his coverage would have been irrelevant to prove his wealth. For as the New Mexico Supreme Court recognized, [P]unitive damages liability coverage is not an asset which can be used to measure true punishment and ... therefore, it should not be considered by the jury in assessing a defendant's financial standing. [4] Wisconsin has recently ruled the same way: Although we note that when assessing punitive damages a jury is permitted to know evidence of the wrongdoer's wealth, insurance coverage is not evidence of wealth. [5] And even if evidence of coverage were deemed relevant to the issue of wealth in a punitive damages case, Evidence Rule 403 would preclude its admission if the trial court found that the probative force of that evidence was outweighed by the danger of unfair prejudice, confusion of the issues, or misleading the jury. [6] Here, the trial court never undertook the balancing process prescribed by Rule 403. But it seems to me that the potential prejudicial effect of the disputed evidence far outweighed whatever limited probative value it might have had. As evidenced by a juror's all-too-predictable request to know whether punitive damages [are] direct[ed] to Mr. Boyles or to the insurance company, as well as by the jury's anomalous punitive damages verdict (which found Boyles deserving of punishment but imposed no punitive damages), the trial court's unfortunate decision to allow the jury to learn of Boyles's insurance coverage opened the door to precisely the kind of danger that Rule 403 was designed to prevent: causing confusion and misleading the jury. New Mexico and Wisconsin have both suggested that evidence of coverage would have to be excluded as more prejudicial than probative, even if it were relevant. [7] Texas agrees. [8] And most recently, Idaho has reached the same conclusion. [9] Indeedbarring a narrow exception carved out for a situation not presented hereit appears that no other court addressing this issue has found such evidence admissible. [10] The narrow exception is a curative one: it allows plaintiffs to admit evidence of coverage to rebut a defense that a defendant is impoverished and therefore unable to pay punitive damages. [11] Shane v. Rhines, which today's opinion holds out as its guiding authority, [12] is just such a case: it considered whether evidence of coverage was admissible to rebut the defendant's affirmative claim of poverty. [13] Neither Shane's per curiam plurality nor either of its separate opinions purports to hold that evidence of coverage should be admitted except as actually needed to cure a misleading impression left by affirmative evidence of poverty. And notably, in Schaefer v. Ready , a more recent punitive damages case in which admission of evidence proving a defendant's coverage was sought to cure affirmative evidence of poverty, the Idaho Supreme Court held that the better approach would be to exclude with one stroke both the affirmative defense and the consequent need for rebuttal. [14] Shane and Schaefer, then, both serve to illustrate that necessity plays an indispensable role in Evidence Rule 403's balancing process. Evidence that is arguably relevant but has an obvious potential to cause prejudice should be admitted under the rule only when a realistic, case-by-case assessment reveals an apparent need for its admission that predominates over its potential to confuse, mislead, or unfairly prejudice the jury. In the present case, there was no conceivably legitimate need for evidence of Boyles's insurance coverage. For Boyles's counsel himself injected the fact of coverage; and he did so not to refute evidence that Boyles was unable to afford punitive damages. To the contrary, defense counsel relied on this information to forward a novel theory: that because Boylesthe only truly guilty party could not pay punitive damages, his innocent insurer should not be targeted for punishment in his place. Yet this theory of relevancethe only theory that the disputed evidence of coverage realistically tended to supportis disingenuous and fundamentally subversive to the public interest. Insurance is a regulated industry in Alaska, as it is almost everywhere else in the nation, because the state recognizes a strong public interest in fostering trust in insurers and in protecting consumers who choose to buy coverage. [15] Once insurers contract to pay claims for punitive damages, then, the state has a strong public interest in ensuring that coverage is fairly provided and claims fairly paid. It would be inimical to this public interest if insurers could avoid legal responsibility for contractual obligation by the simple expedient of insisting that they are innocent parties and that their insured drivers should be punished only to the extent of their personal ability to pay. Correspondingly, there is simply no factual basis for arguing that the insurer's liability to pay punitive damages amounts to punishment for the insurer: to an insurer that accepts premiums to cover punitive damages, the obligation to pay an insured driver's punishment is simply a business debt that the company has contracted to pay. In my view, then, there was no legally permissible reason to allow Boyles's counsel to inform the jury that Boyles was insured. Nor can the record sustain a finding of harmless error. Appellate courts have long recognized that evidence of insurance coverage can easily inflame juries; courts have likewise recognized that the risk of prejudice inherent in such evidence poses especially grave dangers in punitive damages cases, [16] where the prejudice can cut either way, acting as a two-edged sword depending on the wealth or poverty of the defendant. [17] And courts have further recognized that this sword of unfair prejudice is no less dangerous when wielded by an insured defendant than when in the hands of an injured plaintiff. [18] Here, Boyles's attorney artfully wielded the sword against Fleegel. After convincing the trial court at the outset of the proceedings to deny Fleegel's motion to exclude evidence of coverage, Boyles's counsel immediately told the jury during voir dire that he had been hired by Boyles's insurer. Fleegel did everything she could to contain the inevitable damage flowing from this revelation: she downplayed the issue, allowed Boyles's attorney no obvious opening to dwell on Boyles's coverage during the trial, and stipulated to an instruction at the end of trial that mirrored the court's pretrial ruling and told the jury no more than defense counsel took pains to tell it at the outset-that Boyles was insured and was represented by a lawyer hired by his insurer. Despite Fleegel's best efforts, defense counsel used Boyles's coverage as the foundation for a successful empty-chair defense: a tactic that emphasized Boyles's absence and poverty and that invited the jury to conclude that his insurer had been unjustly left holding the bag-abandoned by the only truly guilty party. Defense counsel's first words in closing argument reminded the jury that Boyles's insurer was the real party in interest: It's pretty silly to argue that an insurance company likes a hit-and-run driver or a drunk driver. Defense counsel proceeded to emphasize that Boyles would not be deterred by an award of punitive damages, since [h]e doesn't have any assets. And the point was cemented in defense counsel's final words to the jury: [I]t's quite clear that they're not really trying to get money back from Mr. Boyles. He doesn't have any capacity to pay.... [H]e's not the target here. Yet in the eyes of the law Boyles was Fleegel's only targetwhether Boyles had insurance or not. Evidence of his coverageor possible coveragewas both immaterial as a matter of law and irrelevant as a matter of fact. But as illustrated by the jury's question concerning punitive damages and its ensuing verdict, Boyles's strategy nonetheless had its intended effect. Today's opinion nonetheless declines to find error, professing an inability to locate any cases holding that introduction of insurance evidence is reversible error because it is prejudicial to a plaintiff. [19] Yet this absence of precedent is beside the point. [20] A novel tactic whose sole purpose is to prejudice an opponent is hardly proper merely because it has never before been condemned; and the fact that the tactic prejudices a plaintiff rather than a defendant is wholly irrelevant. More to the point is the opinion's refusal to follow well-settled law that allows evidence of coverage to be admitted only when offered by a party seeking to refute an opponent's affirmative claim of inability to pay punitive damages. And more telling still is the opinion's failure to identify any legitimate purpose that evidence of coverage could conceivably serve when offered on behalf of a party like Boyles, who actively asserted that he was too poor to pay punitive damages. On this record, then, it is simply unrealistic to find either an absence of error or harmless error.