United Heritage Property and Casualty Company v. Farmers Alliance Mutual Insurance

Filing 105

MEMORANDUM AND ORDER denying 88 Motion in Limine. Signed by Judge William B. Shubb. (caused to be mailed to non Registered Participants at the addresses listed on the Notice of Electronic Filing (NEF) by dks)

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1 2 3 4 5 6 7 8 UNITED STATES DISTRICT COURT 9 FOR THE DISTRICT OF IDAHO 10 ----oo0oo---- 11 12 13 UNITED HERITAGE PROPERTY AND CASUALTY COMPANY, an Idaho corporation, 14 15 16 17 18 NO. CIV. 1:10-456 WBS MEMORANDUM AND ORDER RE: MOTION IN LIMINE Plaintiff, v. FARMERS ALLIANCE MUTUAL INSURANCE COMPANY, a foreign corporation, Defendant. / 19 ----oo0oo---20 21 Plaintiff United Heritage Property and Casualty Company 22 (“United Heritage”) brought this action against defendant Farmers 23 Alliance Mutual Insurance Company (“FAMI”), arising out of FAMI’s 24 refusal to accept United Heritage’s tender of an insurance- 25 related suit (the “Zarate case”) on behalf of its insured, 26 Rentmaster of Rexburg (“Rentmaster”). 27 is FAMI’s motion in limine to exclude evidence of or any 28 reference to damages claimed by plaintiff. 1 Presently before the court (Docket No. 88.) 1 Plaintiff seeks to introduce evidence at trial 2 concerning damages in the form of policy limits paid by plaintiff 3 on behalf of Rentmaster in the underlying Zarate case. 4 argues that evidence relating to plaintiff’s policy coverage of 5 Rentmaster is inappropriate because plaintiff has been reimbursed 6 for such payments by its own reinsurer. 7 moves to prevent plaintiff from offering this evidence pursuant 8 to Federal Rule of Evidence 402. 9 10 11 12 Defendant Defendant therefore Federal Rule of Evidence 402 states that: All relevant evidence is admissible except as otherwise provided by the Constitution of the United States, by act of Congress, by these rules or other rules prescribed by the Supreme Court pursuant to statutory authority. Evidence which is not relevant is not admissible. 13 Fed. R. Evid. 402. 14 money paid by plaintiff to settle the underlying Zarate case is 15 not relevant because plaintiff has been compensated for the 16 payments, meaning that the evidence is not relevant in 17 calculating damages. 18 plaintiff for the payments would result in a “windfall” for 19 plaintiff. 20 Pl.’s Damages at 3 (Docket No. 88-1).) 21 Defendant argues that evidence regarding Defendant further argues that compensating (Mem. in Supp. of Mot. In Limine Regarding Proof of The court has previously held that plaintiff, as 22 Rentmaster’s excess insurance carrier, has the ability to assert 23 claims for breach of duty to defend and breach of duty to 24 indemnify, via equitable subrogation, against defendant, 25 Rentmaster’s primary insurance carrier. 26 at 18:9-19:7 (Docket No. 71.)) 27 in this motion in limine, therefore, is whether plaintiff’s 28 reinsurance policy affects plaintiff’s ability to assert its (Sept. 22, 2011, Order The only issue before the court 2 1 damages claim. 2 Defendant presents evidence regarding plaintiff’s 3 reinsurance policy to prove that plaintiff is not required to 4 reimburse its reinsurer for any money that it receives in the 5 present case. 6 only requires plaintiff to reimburse its insurer for salvage 7 rights and that “there is no mention of reimbursement for 8 subrogation rights.” 9 Proof of Pl.’s Damages at 4.) Defendant specifically contends that the policy (Mem. in Supp. of Mot. In Limine Regarding Defendant argues that because 10 plaintiff does not have to reimburse its reinsurer, awarding it 11 damages based on its payments to settle the Zarate case would 12 result in a windfall for plaintiff. 13 The court has reviewed the reinsurance policy and 14 concludes that defendant’s interpretation of the policy is 15 mistaken. The relevant portion of the reinsurance policy states: 16 Article VIII -- Salvage and Subrogation 17 The Reinsurer shall be credited with salvage (i.e. reimbursement obtained or recovery made by the Company, less the actual cost, excluding salaries of officials and employees of the Company and sums paid to attorneys as retainer, of obtaining such reimbursement or making such recovery) on account of claims settlements involving reinsurance hereunder. . . . The Company hereby agrees to enforce its rights to salvage or subrogation relating to any loss, a part of which loss was sustained by the Reinsurer, and to prosecute all claims arising out of such rights. 18 19 20 21 22 23 (High Aff. Ex. A at 6 (Docket No. 88-2).) 24 does not specifically state in a single sentence that subrogation 25 claims must be credited back to the reinsurer, the article read 26 as a whole strongly suggests such a conclusion. 27 specifically addresses subrogation, the policy clearly requires 28 plaintiff “to enforce . . . subrogation” rights and “to prosecute 3 Although the policy The article 1 all claims arising out of such rights,” and the policy’s 2 definition of “salvage” encompasses any “reimbursement obtained 3 or recovery made by the Company.” 4 purpose in requiring plaintiff to enforce its subrogation rights 5 if the proceeds from such rights were not required to be credited 6 back to the reinsurer. 7 contract therefore suggests that awarding plaintiff damages for 8 any violations of defendant’s right would not result in a 9 windfall for plaintiff because at least a portion of the monies 10 (Id.) There would be no The plain language of the reinsurance would be credited to plaintiff’s reinsurer. 11 Defendant fails to provide authority, and this court is 12 unable to find any, suggesting that an excess carrier’s 13 reinsurance policy functions to prevent it from pursuing 14 subrogation against the primary insurer. 15 plaintiff’s reinsurance policy does not change the nature of 16 Rentmaster’s assignment of its claims to plaintiff. 17 of adopting such a policy would be to provide a windfall to 18 primary insurers that breach their duties in circumstances in 19 which the excess insurer has the foresight to carry its own 20 insurance. The existence of The result Even if plaintiff’s damages evidence is relevant, 21 22 defendant contends that it should be excluded pursuant to Federal 23 Rule of Evidence 403. 24 relevant, evidence may be excluded if the probative value is 25 substantially outweighed by the danger of unfair prejudice, 26 confusion of the issues, or misleading the jury. . . .” 27 Evid. 403. 28 mislead and confuse the jury to think that the settlement payment Rule 403 provides that, “although Fed. R. Defendant argues that the damages evidence would 4 1 was an out of pocket expense for plaintiff. 2 Mot. In Limine Regarding Proof of Pl.’s Damages at 4.) 3 discussed above, which insurer actually made the payments is 4 irrelevant for the purposes of the jury trial because plaintiff’s 5 reinsurance policy requires it to pursue subrogation in the 6 present action. 7 unlikely to result in unfair prejudice or the jury being confused 8 or mislead. 9 (Mem. in Support of As The presentation of such evidence is therefore IT IS THEREFORE ORDERED that defendant’s motion in 10 limine regarding proof of plaintiff’s damages be, and the same 11 hereby is, DENIED. 12 DATED: February 27, 2012 13 14 15 16 17 18 19 20 21 22 23 24 25 26 27 28 5

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