Opinion ID: 757280
Heading Depth: 2
Heading Rank: 1

Heading: References to Liability Insurance

Text: 8 We first address whether the district judge erred in permitting the jury to hear references to the insurer and about the existence of liability insurance coverage, and in referring to Planet Insurance Company in his instructions in light of 47 O.S.1991 § 169 which permits naming a motor carrier's insurer and suing it directly. 6 9 Prior to trial, defendants filed a motion in limine seeking to exclude reference to defendant, Planet Insurance, as well as to the existence of insurance coverage on the grounds of relevance and prejudice. I Aplt.App. at 13-22. The district court, in a written order, denied that part of defendants' motion seeking to withhold the name of the insurance company and the existence of liability insurance coverage. Citing Oklahoma precedent, the district judge reasoned that since an insurance company is directly liable under § 169, 7 the general rule against references to liability insurance does not apply. I Aplt.App. at 186-89. 8 10 Reference to defendant Planet Insurance was made on several occasions during trial: (1) when the case first came on for trial, the district judge announced the case number and identified all parties by name, including Planet Insurance, I Tr. at 3; (2) during voir dire of the jury panel, the district judge asked members of the panel whether any of them, or any of their close friends or relatives had ever been employed by the Planet Insurance Company also known as Reliance Insurance Company, id. at 9; (3) during plaintiffs' counsel's voir dire of the jury panel, plaintiffs' counsel inquired, 11 One thing I want to ask. There is--Mr. Alexander is not here, the representative from Planet Insurance is not here. Are you going to hold that against my client that they didn't show up? I don't know what it shows to you, it might show that they have confidence. I don't know. But are you going to attribute anything to the fact that they didn't show up here today against my client? 12 All right. 13 (Id. at 28); (4) during plaintiffs' counsel's opening statement he said that Annette 14 remembers seeing a couple of sets of car lights, and that's all she remembers. She doesn't remember anything else because what she didn't know was, just minutes before, while she was dropping the kids off, Mr. Billy Alexander had driven a Builders Transport, insured by the Defendant Planet Insurance, into this southern entrance. 15 Id. at 50; and (5) over defendants' objection, the name of Planet Insurance Company a/k/a Reliance National Indemnity Company as a defendant appeared in the case caption on the title page of the jury instructions as well as on the verdict forms, and a copy of the instructions was given to the jury for purposes of deliberations. I Aplt.App. at 197; Response Brief of Appellees, Ex. 1. However, no mention was made either of Planet Insurance or liability coverage in the district court's substantive instructions on the law. I Aplt.App. at 198-237. 16 Defendants strenuously argue that prejudicial error occurred when the district judge permitted the references to the existence of liability insurance and Planet Insurance Company's presence as a defendant. Brief in Chief of Appellants at 13-27; Reply Brief of Appellants at 3-17. Defendants say that federal procedural law applies in this diversity case, citing Gilbert v. Cosco, Inc., 989 F.2d 399, 402 n. 2 (10th Cir.1993) (When our jurisdiction is based upon diversity, we apply state substantive law and federal procedural law. See Hanna v. Plumer, 380 U.S. 460, 471-74, 85 S.Ct. 1136, 14 L.Ed.2d 8 (1965).). Defendants contend that exclusion of evidence of insurance and of the presence of Planet as a defendant was mandated by Fed.R.Evid. 403 (evidence may be excluded if its probative value is substantially outweighed by the danger of unfair prejudice, confusion of the issues, etc.), under which balancing was critical and which rule the judge did not apply, and that such evidence should have been excluded pursuant to Rule 403 and Federal Rules of Evidence 411 (evidence that person was or was not insured not admissible on issue whether the person acted negligently or otherwise wrongfully), 401 (relevant evidence means evidence having tendency to make existence of fact of consequence more probable or less probable), and 402 (evidence which is not relevant is not admissible). Brief in Chief of Appellants at 20, 23-24; Reply Brief of Appellants at 4. 17 Defendants argue that the judge erred by applying an absolute or per se interpretation of Section 169 as justifying its refusal to engage in the balancing required by Rule 403. Brief in Chief of Appellants at 23 (emphasis added). Further, defendants maintain that the judge never balanced probative value with prejudicial effect as to the individual defendant Alexander even though the insurance evidence had no probative value and the insurance carrier stipulated it would be bound by the verdict. Id. at 26. 18 We are not persuaded by the arguments and precedents relied on by defendants. We agree that federal procedural law applies in this diversity litigation. Here, however, it is outweighed by state substantive law which must be respected. The carrier, Builders Transport, was required by Oklahoma law, 47 O.S.1991 § 169, to file a liability policy with the Corporation Commission. The direct action was authorized by state substantive law and joinder of the carrier's insurer in the personal injury action is proper. And joinder of the motor carrier and its insurer being proper in this case, the general rule against references to liability insurance does not apply. Be-Mac Transport Co. v. Lairmore, 191 Okla. 249, 129 P.2d 192, 194, 196 (1942). In construing § 169, the Oklahoma Court has observed that Oklahoma law creates direct liability of the insurance company to the injured person because the insurer 'is liable for the injuries resulting from the operations of the motor carrier, not by reason of its bond [or policy], but by reason of the statute.'  Daigle v. Hamilton, 782 P.2d 1379, 1381 (Okla.1989) (citing Jacobsen v. Howard, 164 Okla. 88, 23 P.2d 185, 187 (1933)). 19 Defendants rely on Tidmore v. Fullman, 646 P.2d 1278 (Okla.1982), in support of their argument that the district court erred in failing to prevent references to Planet Insurance and the fact of liability coverage from the jury. In Tidmore, the plaintiff chose to join an uninsured motorist and the plaintiff's insurance company as defendants to litigate all issues in one action. Id. at 1280-81. The plaintiff sought to advise the jury of the name of the underinsured defendant's insurer and the terms of the defendant's policy, as well as the name of the plaintiff's insurer and the terms of that policy. Id. at 1282. However, the underinsured defendant's insurer was not a party to the action and there was no right of the plaintiff to maintain a suit against the underinsured defendant's insurer. Id. The Oklahoma Supreme Court held that although plaintiff's insurer was a proper party, evidence as to the names of both insurers and the terms of their respective policies should be withheld from the jury. Id. at 1283. In Tidmore, the Court reasoned that where the fact of liability insurance coverage is brought before the jury unnecessarily or forcefully where liability insurance coverage is not legislatively mandated and where the insurer has no direct liability to the claimant, such jury revelations are, as a matter of law, prejudicial, and if the insured is or might have been harmed thereby, reversible error. Id. at 1281. However, an insurer under a compulsory insurance policy may be joined as a defendant with the insured in an action by an injured third person, generally, on the theory that under statutes requiring and controlling compulsory insurance, a direct or joint right is created in favor of the injured person against both the insured and the insurer. Id. 20 Thus, Tidmore is not inconsistent with the trial judge's actions here. Unlike Tidmore, in which liability insurance was not expressly mandated by the legislature and in which the plaintiff was suing his own insurance carrier, id. at 1281-82, liability insurance coverage was legislatively mandated here by § 169 and Annette properly joined Builders Transport's insurer, Planet Insurance, as a defendant. 9 21 One of the clearest pronouncements of Oklahoma law on this issue is found in Okla. Trans. Co. v. Claiborn, 434 P.2d 299, 303 (Okla.1967): 22 The Legislature, by authorizing the joinder as party defendants a motor carrier and its insurance carrier, in effect determined that when the liability insurance policy or bond is filed and the certificate of convenience or necessity is issued, no prejudice results from such joinder. Stated in another way, the Legislature by authorizing the joinder of the insurance carrier, has in effect determined that knowledge of insurance liability is not prejudicial to the right of the motor carrier or to its insurance carrier. 23 In his order denying defendants' motion for a new trial or for remittitur, the district judge explained his reasoning, stating that 24 the mere identification of Planet Insurance Company a/k/a Reliance National Indemnity Company as a Defendant in the case, in and of itself, does not constitute reversible error. Despite Defendants' arguments to the contrary, the identification of Planet Insurance Company was not prejudicial under the facts and circumstances of this case. In the Court's view, Defendant did receive a fair trial of the issues. The Court notes that the jurors were never advised of the insurance policy limits. 25 II Aplt.App. at 385. 26 We are not persuaded by defendants' arguments based on the federal procedural rules which we have noted, Fed.R.Evid. 401, 402, 403 and 411. Rule 411 contains a general prohibition against admission of evidence concerning liability insurance, with exceptions that are not relevant here. The general rule is that 27 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. 28 The admissibility of evidence in diversity cases in federal court is generally governed by federal law. Romine v. Parman, 831 F.2d 944 (10th Cir.1987). Nevertheless, it is well recognized that Congress did not intend the procedural rules to preempt the so-called substantive state rules of evidence, such as the parol evidence rule, the collateral source rule, or the statute of frauds; although the application of these rules will affect the admissibility of some evidence, they in reality serve substantive state policies regulating private transactions. McInnis v. A.M.F., Inc., 765 F.2d 240, 245 (1st Cir.1985); 19 Wright, Miller & Cooper, Federal Practice and Procedure § 4512 at 422-24. We have expressed the view that in a diversity action, when there is a conflict between Fed.R.Evid. 407 excluding evidence of subsequent remedial measures, except where offered for specified limited purposes, and a contrary state rule repudiating the rule of exclusion, the state rule controls; the question of exclusion of subsequent remedial measures is a matter of state policy. Moe v. Avions Marcel Dassault-Breguet Aviation, 727 F.2d 917, 932 (10th Cir.1984). 29 We are convinced likewise that here state policy expressed in the Oklahoma statute and interpretations of it by the Oklahoma Supreme Court is involved. Section 169 has been recognized as creating a right to a joint action by an injured party against a motor carrier and its insurer, Be-Mac Transport Co. v. Lairmore, 129 P.2d at 194, and in such actions the general rule against references to liability insurance does not apply. Id. at 196. We hold that the judge's actions permitting and making references to Planet Insurance were not reversible error but were in conformity with the state's policy permitting the plaintiffs to proceed as they did. 10