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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UNITED STATES DISTRICT COURT

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FOR THE DISTRICT OF IDAHO

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UNITED HERITAGE PROPERTY AND
CASUALTY COMPANY, an Idaho
corporation,

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NO. CIV. 1:10-456 WBS
MEMORANDUM AND ORDER RE:
MOTION IN LIMINE

Plaintiff,
v.
FARMERS ALLIANCE MUTUAL
INSURANCE COMPANY, a foreign
corporation,
Defendant.
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Plaintiff United Heritage Property and Casualty Company

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(“United Heritage”) brought this action against defendant Farmers

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Alliance Mutual Insurance Company (“FAMI”), arising out of FAMI’s

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refusal to accept United Heritage’s tender of an insurance-

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related suit (the “Zarate case”) on behalf of its insured,

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Rentmaster of Rexburg (“Rentmaster”).

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is FAMI’s motion in limine to exclude evidence of or any

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reference to damages claimed by plaintiff.
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Presently before the court

(Docket No. 88.)

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Plaintiff seeks to introduce evidence at trial

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concerning damages in the form of policy limits paid by plaintiff

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on behalf of Rentmaster in the underlying Zarate case.

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argues that evidence relating to plaintiff’s policy coverage of

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Rentmaster is inappropriate because plaintiff has been reimbursed

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for such payments by its own reinsurer.

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moves to prevent plaintiff from offering this evidence pursuant

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to Federal Rule of Evidence 402.

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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.

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Fed. R. Evid. 402.

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money paid by plaintiff to settle the underlying Zarate case is

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not relevant because plaintiff has been compensated for the

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payments, meaning that the evidence is not relevant in

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calculating damages.

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plaintiff for the payments would result in a “windfall” for

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plaintiff.

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Pl.’s Damages at 3 (Docket No. 88-1).)

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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

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Rentmaster’s excess insurance carrier, has the ability to assert

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claims for breach of duty to defend and breach of duty to

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indemnify, via equitable subrogation, against defendant,

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Rentmaster’s primary insurance carrier.

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at 18:9-19:7 (Docket No. 71.))

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in this motion in limine, therefore, is whether plaintiff’s

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reinsurance policy affects plaintiff’s ability to assert its

(Sept. 22, 2011, Order

The only issue before the court

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damages claim.

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Defendant presents evidence regarding plaintiff’s

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reinsurance policy to prove that plaintiff is not required to

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reimburse its reinsurer for any money that it receives in the

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present case.

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only requires plaintiff to reimburse its insurer for salvage

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rights and that “there is no mention of reimbursement for

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subrogation rights.”

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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

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plaintiff does not have to reimburse its reinsurer, awarding it

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damages based on its payments to settle the Zarate case would

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result in a windfall for plaintiff.

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The court has reviewed the reinsurance policy and

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concludes that defendant’s interpretation of the policy is

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mistaken.

The relevant portion of the reinsurance policy states:

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Article VIII -- Salvage and Subrogation

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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.

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(High Aff. Ex. A at 6 (Docket No. 88-2).)

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does not specifically state in a single sentence that subrogation

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claims must be credited back to the reinsurer, the article read

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as a whole strongly suggests such a conclusion.

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specifically addresses subrogation, the policy clearly requires

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plaintiff “to enforce . . . subrogation” rights and “to prosecute
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Although the policy

The article

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all claims arising out of such rights,” and the policy’s

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definition of “salvage” encompasses any “reimbursement obtained

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or recovery made by the Company.”

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purpose in requiring plaintiff to enforce its subrogation rights

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if the proceeds from such rights were not required to be credited

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back to the reinsurer.

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contract therefore suggests that awarding plaintiff damages for

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any violations of defendant’s right would not result in a

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windfall for plaintiff because at least a portion of the monies

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(Id.)

There would be no

The plain language of the reinsurance

would be credited to plaintiff’s reinsurer.

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Defendant fails to provide authority, and this court is

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unable to find any, suggesting that an excess carrier’s

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reinsurance policy functions to prevent it from pursuing

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subrogation against the primary insurer.

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plaintiff’s reinsurance policy does not change the nature of

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Rentmaster’s assignment of its claims to plaintiff.

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of adopting such a policy would be to provide a windfall to

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primary insurers that breach their duties in circumstances in

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which the excess insurer has the foresight to carry its own

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insurance.

The existence of

The result

Even if plaintiff’s damages evidence is relevant,

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defendant contends that it should be excluded pursuant to Federal

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Rule of Evidence 403.

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relevant, evidence may be excluded if the probative value is

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substantially outweighed by the danger of unfair prejudice,

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confusion of the issues, or misleading the jury. . . .”

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Evid. 403.

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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

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was an out of pocket expense for plaintiff.

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Mot. In Limine Regarding Proof of Pl.’s Damages at 4.)

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discussed above, which insurer actually made the payments is

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irrelevant for the purposes of the jury trial because plaintiff’s

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reinsurance policy requires it to pursue subrogation in the

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present action.

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unlikely to result in unfair prejudice or the jury being confused

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or mislead.

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(Mem. in Support of
As

The presentation of such evidence is therefore

IT IS THEREFORE ORDERED that defendant’s motion in

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limine regarding proof of plaintiff’s damages be, and the same

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hereby is, DENIED.

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DATED:

February 27, 2012

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