American Family Mutual Insurance v. Coke

Citations: 413 S.W.3d 362; 2013 Mo. App. LEXIS 1350; 2013 WL 5979513Docket: No. ED 98871

Court: Missouri Court of Appeals; November 11, 2013; Missouri; State Appellate Court

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Pamela Coke and Ward Ferrell (Appellants) appeal a trial court judgment favoring American Family Mutual Insurance Company (AmFam). They claim the court erroneously granted AmFam’s motion to exclude their expert witness's testimony, allowed a specific jury instruction, and denied their motion for judgment notwithstanding the verdict (JNOV). The appeal follows an incident involving their Monaco Beaver Contessa Motor Home (RV) in November 2008, which rolled down an embankment, resulting in a total loss. Appellants filed a Proof of Loss Claim, but AmFam denied coverage, alleging the Appellants voided their policy through concealment and misrepresentation of material facts. In response, Appellants counterclaimed for Breach of Contract and Vexatious Refusal to Pay, but AmFam argued these were barred due to Appellants' material misrepresentations regarding the RV's damage. 

After an initial trial in 2011 that concluded with a directed verdict for AmFam, the case was reversed on appeal, leading to a second trial in 2012. Evidence presented showed the Appellants purchased the RV for $178,000 and made several upgrades. They sought to increase their policy coverage, with varying amounts discussed, but AmFam clarified that they only provide fair market value in the event of a total loss. Appellants faced financial difficulties, including a significant drop in business income and foreclosure on their home after a property value decrease. The incident leading to the claim occurred while Coke was driving the RV in Arizona, where she reported brake issues prior to the accident.

The individual examined the RV's brakes after parking in a turnaround area, leaving the vehicle running with the air-conditioning on. She believed she set the parking brake after shifting the transmission to neutral. However, as she approached the brakes, the RV rolled down an embankment into a ravine. She characterized the event as an accident, stating she did not understand how it occurred. 

David Sonne, an accident reconstruction expert hired by American Family Insurance (AmFam), inspected the RV and concluded that the brakes were functioning properly, indicating the parking brake was likely not engaged, allowing the RV to roll. The transmission was also confirmed to be operational with normal fluid levels, and no recalls were noted. Sonne could not verify whether the RV was in neutral when it rolled. His report stated that there was no evidence of mechanical failure contributing to the incident. 

During cross-examination, Sonne acknowledged he did not physically inspect the RV and had not reviewed the transmission manual from Allison, which included warnings about leaving the RV running. However, he maintained that the absence of a found transmission issue meant further investigation was unnecessary. 

Expert testimonies from Jeff Juetten, a traffic accident consultant, and Tim Dietz, a tow truck driver, supported the view that the braking system had no defects and that the RV must have been in drive without the parking brake engaged to have rolled into the ravine. Despite the evidence, the trial court denied both parties' motions for directed verdicts, resulting in a jury verdict favoring AmFam against the Appellants. The Appellants' subsequent motion for judgment notwithstanding the verdict (JNOV) or a new trial was denied, leading to their appeal, where they raised three issues regarding trial court errors, including the exclusion of an expert witness and jury instruction submissions. The appeal mainly focused on the sufficiency of evidence regarding misrepresentation or concealment of material facts by the Appellants.

Appellants contended that the trial court incorrectly denied their motion for a directed verdict or judgment notwithstanding the verdict (JNOV), arguing that American Family Insurance (AmFam) did not establish a submissible case regarding their claims of concealment or misrepresentation by the Appellants intended to defraud AmFam. The court outlined the standard of review, emphasizing that it assesses whether substantial evidence supports each essential fact for liability, viewing the evidence favorably towards the jury's verdict. The burden of proof in declaratory judgment actions lies with the party seeking recovery under the insurance policy, while the insurer must demonstrate any applicable policy exclusions or forfeiture of coverage. In this case, AmFam acknowledged that the RV was insured and that it would cover losses from a collision, defining "loss" as direct and accidental damage. The policy also stated it would be void if the insured concealed or misrepresented material facts with intent to defraud. AmFam sought a declaratory judgment claiming the damage was not accidental. Thus, Appellants were required to prove their RV loss met the policy's definition. However, the jury found that Appellants did not adequately demonstrate that they experienced a loss covered by the policy, leading to the verdict in favor of AmFam.

Accidental loss is defined as an unintended and unforeseen occurrence, not anticipated in the usual course of events. The jury found insufficient evidence to support Appellants’ claim that the RV rolling into the ravine was an accidental loss. Testimony indicated that the RV's brakes were functioning properly and no mechanical issues were present. The parking area was level, and while one appellant claimed to have engaged the parking brake, it was not on when the RV was recovered. Investigators confirmed the RV could not have rolled unless the transmission was in drive. The jury was justified in disbelieving the appellant's testimony regarding the vehicle's status prior to the incident.

The trial court did not err in denying Appellants' motion for judgment notwithstanding the verdict (JNOV) since they did not provide adequate evidence to prove coverage under their insurance policy. Furthermore, the burden to establish exclusion of coverage lies with the insurer, and AmFam demonstrated sufficient grounds for voiding the policy due to Appellants concealing material facts with intent to defraud. Evidence indicated that Appellants had recently increased their insurance coverage and attempted to secure a guarantee for a high payout upon total loss, which raised suspicion given their financial difficulties and the context of their business losses and property devaluation. Despite Appellants’ claims of investments in the RV, the jury’s findings and credibility assessments were upheld.

The trial court did not err in denying the Appellants’ motion for Judgment Notwithstanding the Verdict (JNOV), as there was sufficient evidence to support the jury's verdict, with no strong evidence indicating that reasonable minds could not differ. The Appellants contended that the court incorrectly granted AmFam's motion in limine to exclude the testimony of their expert witness, Billy Woodring, Jr. Woodring had extensive experience servicing trucks with Allison transmissions but had not inspected the RV in question. He testified about the similarities between the RV and the trucks he serviced, noting instances where the trucks slipped from neutral into drive. However, he could not determine the cause of the issue, and the trial court excluded his opinion on causation due to lack of foundation during cross-examination. In a subsequent trial, AmFam successfully argued to strike Woodring’s testimony again, maintaining that he had not conducted further investigation or inspected the RV since the previous trial. The trial court upheld its prior ruling, reiterating that Woodring lacked the foundation necessary to provide expert opinion on the RV's transmission issues. Appellants’ attempts to introduce Woodring's testimony as a rebuttal witness were also denied.

Review of a trial court's decision regarding the admission or exclusion of expert testimony is generally conducted for an abuse of discretion, as established in relevant case law. Appellants contend that the trial court erred by striking Woodring as an expert witness and by preventing him from testifying as a rebuttal witness. However, the law of the case doctrine prohibits Woodring from offering testimony about the causation of an incident involving an RV due to a prior ruling that found insufficient foundation for such testimony, which the Appellants did not appeal. This doctrine bars not only issues explicitly decided but also those that could have been raised in earlier appeals. The court determined that because Appellants did not present evidence or further investigate to establish a foundation for Woodring’s causation opinion, the trial court's prior ruling remains binding. 

Regarding rebuttal testimony, while parties may introduce evidence to counter their opponent's claims, the court found no abuse of discretion in excluding Woodring's testimony as rebuttal. Rebuttal evidence must specifically address new points raised by the opposing party, and the court did not identify any justification for Woodring's inclusion as a rebuttal witness in this context. Therefore, the court declined to review the admissibility of Woodring's testimony or to apply exceptions to the law of the case doctrine.

Reversal of the trial court's decision on the exclusion of evidence is warranted only if the error resulted in prejudice, meaning the excluded evidence could have changed the trial's outcome. The key issue was whether the RV's departure from the ravine was accidental or intentional, which would void the insurance policy. AmFam's expert, Sonne, indicated no issues with the RV's brakes and a cursory check showed the transmission was fine. Appellants criticized Sonne's investigation, noting he did not personally inspect the RV and relied on hearsay, and sought to call Woodring as a rebuttal witness to challenge Sonne's findings.

Despite the claim of error in excluding Woodring’s testimony, the appellate court found no prejudice as Appellants had already effectively questioned Sonne's report during cross-examination. Woodring’s testimony, which lacked personal knowledge of the RV and the incident, would not have significantly impacted the case. The court noted that the thoroughness of Sonne's report was already introduced to the jury through other means, thus the exclusion did not result in a miscarriage of justice.

Additionally, Woodring did not sufficiently establish his expertise in investigative reporting during either trial, and his general critique of Sonne's report did not provide new, impactful evidence. As for jury instruction No. 7, Appellants argued it was flawed for failing to identify any material fact that was allegedly concealed or misrepresented, and lacked a definition for "material fact."

The court reviewed the jury instructions de novo, determining whether they properly guided the jury. To reverse a verdict based on instructional error, the challenging party must demonstrate that the instruction misled the jury and that prejudice resulted. The court favors the evidence supporting the instruction during its review. Under Rule 70.20, Missouri Approved Instructions (MAI) must be used when applicable, and any necessary modifications should be simple and impartial, avoiding detailed evidentiary facts.

American Family (AmFam) submitted Instruction No. 7, which required a verdict for AmFam if the jury believed the defendants concealed or misrepresented material facts to defraud AmFam, causing prejudice. The appellants objected, arguing the instruction lacked specifics on the alleged misrepresentations and cited speculation rather than evidence. The court overruled this objection, stating that Instruction No. 7 properly adhered to MAI 32.24, which allows for the inclusion of policy language without requiring detailed evidentiary facts.

The court concluded that the trial court did not err in submitting Instruction No. 7, affirming the judgment. The appeal did not involve a previously dismissed defamation counterclaim, and the appellants did not clarify their foreclosure timeline to the jury, despite arguing it occurred years after a relevant incident. The judges concurred with the decision.