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Univ. of South Carolina School of Law

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Monday, July 16, 2012

Uninsured: Supreme Court Of Iowa Finds State Of Mind Exception Doesn't Apply To Statements Of Memory Concerning Life Insurance Change

Like its federal counterpartIowa Rule of Evidence 5.803(3) provides an exception to the rule against hearsay for

A statement of the declarant’s then existing state of mind, emotion, sensation, or physical condition (such as intent, plan, motive, design, mental feeling, pain, and bodily health), but not including a statement of memory or belief to prove the fact remembered or believed unless it relates to the execution, revocation, identification, or terms of declarant’s will.

So, this "state of mind" hearsay exception only applies to a statement of memory or belief if it "relates to the execution, revocation, identification, or terms of declarant’s will." But what about a statement related to the designation of a beneficiary of a life insurance policy? That was the question addressed by the Supreme Court of Iowa in its recent opinion in Pitts v. Farm Bureau Life Ins. Co., 2012 WL 2604622 (Iowa 2012).

In Pitts

Pursuant to a stipulation and order entered in 1989, Thomas Pitts (Tom) became responsible for child support payments for the benefit of his daughter, Jamie Pitts, born April 28, 1987. As part of his support obligation, Tom was required to maintain $35,000 of life insurance payable to his daughter for as long as his child support obligation continued. Unless the child was still in high school, or pursuing further postsecondary education, this support obligation would end in April of 2005....

According to [Tom's wife] Michele, shortly after Tom's support obligation ended in April 2005, Tom asked [his insurance agent Donald] Schiffer to change the beneficiary designation on the life insurance policy so that his daughter would no longer be the primary beneficiary of the first $35,000 of insurance proceeds

After Tom passed away, the first $35,000 of insurance proceeds were paid to his daughter, prompting Michele to bring an action against Schiffer and the life insurance company. After the district court found for the defendants, Michele appealed.

One of the grounds for her appeal was that the district court erred by precluding her from testifying regarding statements that Tom allegedly made to her about having changed his life insurance beneficiary. According to the Supreme Court of Iowa,

Michele acknowledges that Tom's statement does not relate to the terms of a will. However, she argues that it does relate to the designation of a beneficiary of a life insurance policy and that the scope of rule 5.803(3) should be extended to include statements like Tom's. See Primerica Life Ins. Co. v. Watson, 207 S.W.3d 443, 447–48 (Ark.2004) (applying the exception to statements relating to the declarant's statements regarding his beliefs about the beneficiary of a life insurance policy). In Primerica, the court noted that out of court statements of a declarant's belief are not admissible under the exception found in rule 803(3). Id. at 447–48. However, under Arkansas law, "provisions in life insurance contracts with reference to beneficiaries or changes in beneficiaries are in the nature of a last will and testament and, therefore, 'are construed in accordance with the rules applicable to the construction of wills.'" Id. at 448 (quoting Am. Found. Life Ins. Co. v. Wampler, 497 S.W.2d 656, 658 (Ark.1973)). The court thus found the declarant's statements of belief about the terms of his life insurance policy admissible under the exception to the hearsay rule. Id.

Because Iowa law is different from Arkansas law in this regard, the court found that rule 5.803(3) did not similarly allow for the admission of Tom's alleged statements to Michele. Instead, the Iows Supremes found that

This interpretation runs counter to the express language of rule 5.803(3), which, by its terms, only admits "a statement of memory or belief to prove the fact remembered or believed [if] it relates to the execution, revocation, identification or terms of declarant's will." When the language of the rule is clear, we need not search for meaning beyond the words used. We therefore decline to adopt Arkansas's expanded interpretation of its version of rule 5.803(3)

-CM

http://lawprofessors.typepad.com/evidenceprof/2012/07/8033-pitts-v-farm-bureau-life-ins-co-nw2d-2012-wl-2604622iowa2012.html

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