A trial judge’s decision to exclude any mention of a woman’s insurance policy or State Farm as a defendant in an auto accident was recently reversed by Maryland’s Court of Special Appeals. The circuit court abused its discretion in excluding evidence of underinsured motorist (UIM) coverage from the jury, the appeals court said. The trial court’s decision was not an evidentiary one that constituted mere harmless error, but rather one of basic trial procedure that led to the jury not knowing which party State Farm’s attorney represented at trial.
Dionne and Darryl Davis sued Tania Martinez for negligently causing an automobile accident after a vehicle operated by Martinez collided with the Davises’ automobile in January 2008. Mrs. Davis said she suffered bodily injuries and other damages. The Davises alleged a loss of consortium. At the time of the accident, Martinez was insured by USAA Insurance Company with a liability limit of $20,000. The Davises were insured by State Farm and carried $50,000 in UIM coverage.
Martinez offered the $20,000 policy limits of her liability insurance policy but the Davises’ UIM carrier, State Farm Mutual Automobile Insurance Company, rejected the offer in order to preserve its subrogation rights. The Davises also asked State Farm to provide the difference between the limits of their UIM policy ($50,000) and Martinez’s settlement offer ($20,000). The Davises later amended their complaint to include a count against State Farm for breach of contract and/or statutory duty for failure to pay underinsured motorist insurance benefits. State Farm then filed a cross claim against Martinez.
Before trial, Martinez asked the court to exclude any reference to her insurance policy or to State Farm as a defendant. The trial court agreed. State Farm’s attorney was at the trial but identified himself as “another lawyer in the case.” The jury found that Martinez was not negligent by way of a special verdict. The Davises appealed.
The Davises argued on appeal that the trial court should not have granted Martinez’s motion to hide the existence of State Farm from the jury. The Davises said that in cases where the insurance carrier is a party to the litigation, the existence of insurance cannot be kept from the jury. They argued that a 2004 court case,King v State Farm, plainly states that the public policy interest in openly identifying all of the parties is overwhelming and outweighs any risk that one of the defendants will suffer a higher damages award. In King, the court held that the trial court abused its discretion when it hid the existence of a UIM carrier from the jury.
In response, State Farm argued that the case supports disclosing the identity of a UIM carrier only in a breach of contract case against a UIM carrier alone. State Farm contended that Maryland appellate courts have consistently held that it is improper to inject any suggestion that an individual defendant is covered by insurance in the trial of a personal injury case.
“We disagree with State Farm,” the court said, explaining that the insurer’s argument lacked merit. State Farm argued that King is distinguishable because there was no co-defendant whose liability was still at issue; the trial court properly disclosed the existence of State Farm because it posed no risk of prejudice at trial. And, the court said, State Farm had not made an argument based on privacy, social stigma or threat of physical harm – the typical factors relied upon in making an argument not to disclose a trial participant. Instead, State Farm argued that Martinez might be subject to a higher judgment by the jury if the insurance with State Farm were revealed. In making this argument, the court said State Farm disregarded its declaration in King that the risk of adverse economic consequences to a party is insufficient justification for hiding the identity of a party at trial.
State Farm also urged the court to affirm the circuit court’s ruling by attempting to distinguish the case from another lawsuit, Farley v. Allstate. State Farm argued that Farley is different because the tort liability had already been settled; the primary issue was whether the contract was admissible into evidence. Farley involved a breach of contract action against an automobile insurer for non-payment of UIM benefits. At issue in Farley was whether the amount of UIM benefits available under the contract should have been permitted into evidence at trial. The Court of Appeals upheld the trial court’s decision to exclude the contract on the grounds that it would be more prejudicial than probative.
“We disagree,” the court once again responded. A party’s tort liability is not determinative of whether the presence of a UIM carrier should be disclosed to a jury at trial. Here, the jury was led to speculate as to the true identity of State Farm’s counsel, the court observed. The jury was also unaware of the relationship between the defense’s medical expert – who was State Farm’s witness – and State Farm, which might have gone to the expert’s credibility, the court noted.
The trial court made a mistake in granting Martinez’s motion as it violated the clearly established principle that the jury should be made aware of the precise identity of a UIM carrier if it is a party at trial, the court said. As a result, the appeals court reversed the trial court and sent the case back to that court for legal proceedings in line with its decision.
The case is Dionne Davis and others v. Tania Martinez and others.
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