EvidenceProf Blog

Editor: Colin Miller
Univ. of South Carolina School of Law

Monday, November 9, 2009

We've Got Insurance: Court Awards New Trial After Husband Tells Wife-Juror About Insurance Information Excluded At Trial

A coal buyer sues the defendants, alleging that they had fraudulently induced it to make advance payments totaling $3.2 million to a coal seller for coal that was never received. At trial trial, and outside the presence of the jury, defense counsel seeks the court's permission to cross-examine a witness about an email exchange that referenced the plaintiff's insurance claim for the missing coal. The court denies permission, finding that the e-mail exchange is irrelevant and unduly prejudicial to the plaintiff. The problem is that a juror's husband is in court during this exchange and later tells his juror-wife about the plaintiff's insurance policy and the debate surrounding the exhibit. The juror-wife subsequently tells the other jurors "I can tell you this now so you won't feel so guilty, that it's possible that [the plaintiff] had an insurance policy." The jury thereafter returns a verdict for the defendants. If the plaintiff learns about the husband's comments after the verdict is entered, can it have the wife impeach the jury's verdict and obtain a new trial? According to a recent opinion by the United States District Court for the Western District of Virginia, the answer is "yes."

The facts in XCoal Energy & Resources LP v. Smith, 2009 WL 3482219 (W.D.Va. 2009), were as listed above, and the court found that the wife could testify pursuant to Federal Rule of Evidence 606(b), which states in relevant part that

Upon an inquiry into the validity of a verdict or indictment, a juror may not testify as to any matter or statement occurring during the course of the jury's deliberations or to the effect of anything upon that or any other juror's mind or emotions as influencing the juror to assent to or dissent from the verdict or indictment or concerning the juror's mental processes in connection therewith. But a juror may testify about (1) whether extraneous prejudicial information was improperly brought to the jury's attention, (2) whether any outside influence was improperly brought to bear upon any juror, or (3) whether there was a mistake in entering the verdict onto the verdict form.

According to the court, the wife, Katherine Broadwater could testify consistent with this Rule because the Rule allows jurors to testify "as to content of the unauthorized communication, when they learned of the extraneous information, and how the information was introduced to the jury." This left the question of whether the extraneous information was sufficiently prejudicial to warrant a new trial.

According to the court, it was. The court noted that

Broadwater told jurors that her husband learned about the insurance policy after the court had excused the jury from the courtroom. Broadwater made a direct communication to the jury of information that the jury was clearly not supposed to hear. Further, Broadwater's out of-court statements prejudiced the plaintiff because the court could not offer limiting instructions to lessen any possible harm.

Broadwater's disclosure was a second-hand statement containing incomplete knowledge. This statement prejudiced the plaintiff because it supplied jurors with only a portion of the facts. If the issue of the plaintiff's insurance had arisen during trial, the court would have presented the entire picture to jurors by instructing the jury that the plaintiff's insurance claim was unsuccessful. Here, the content of Broadwater's disclosure created the exact scenario the plaintiff sought to avoid. Jurors learned about the insurance policy, but they had no idea that the plaintiff's insurance claim had been unsuccessful.  

Moreover, the court found that

The content of Broadwater's statement also harmed the plaintiff because of the subject matter involved-a party's insurance coverage. Typically in tort litigation, a defendant is harmed by knowledge or speculation about insurance coverage, since the jury may think that the insurance company, and not the individual defendant, will pay any damages awarded. To prevent juries from considering this prejudicial information, courts generally prohibit the admission of evidence merely used to inform the jury that the defendant has insurance coverage. For example, Virginia's Supreme Court has strictly enforced its rule that intentional comments about a defendant's insurance coverage, “made to inform the jury that a defendant is insured against the accident constitutes reversible error.”

In this case, it is the plaintiff, not the defendant, who carried insurance. But the principal reason for curtailing the intentional comments about insurance is the same as in other tort cases-insurance is irrelevant to the question of liability and the jury's consideration of insurance could improperly influence the jury's ultimate conclusion. Here, the jury learned that the plaintiff had insurance and, even worse, several jurors incorrectly thought that the insurance company had reimbursed the plaintiff's for the damages suffered. It is reasonable to assume that the disclosure about plaintiff's insurance coverage improperly colored the jury's deliberations and may have led some jurors to think the plaintiff did not need to collect monetary damages.

Finally, the court noted that

Broadwater's statement and the jury's discussion about insurance were brief, and it is argued that this rebuts the assertion that the extraneous information prejudiced the plaintiff. But the prejudicial effect of the disclosure was magnified because this is a close case. The jury was presented with starkly conflicting evidence concerning the alleged fraud. Accordingly, the improper information concerning insurance, no matter how brief, may very well have tipped the balance, at least for some of the jurors.

The court thus ordered a new trial, and, based upon the above facts, that seems to be the only correct conclusion that it could have reached.



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