Mention of Insurance Not Always Prejudicial
People involved in tort suits seeking damages from a defendant are prohibited from mentioning the existence of insurance to protect the defendant from damages that might not be granted if the jury thought he needed to pay the verdict or protect the plaintiff from a too small verdict because they thought the defendant would have to pay the judgment from his own assets. Courts almost always prevent such testimony.
In Salami v. Von Maur, Inc., Slip Copy, Court of Appeals of Iowa, 2016 WL 530253 (Feb. 10, 2016) Idorenyin Salami, the plaintiff, appealed from the district court’s denial of her motion for mistrial, contending defense counsel improperly injected the topic of liability insurance into the proceedings and the district court’s belated curative instruction was not a sufficient remedy.
Background Facts and Proceedings
Salami brought a race discrimination claim against her employer, Von Maur, and her supervisor, Sara Whitlock. During voir dire, a potential juror, Mr. Reynolds, stated that he was in the insurance business and that his firm handled employee benefit insurance for Von Maur. Mr. Reynolds noted that his company did not provide “employee practice liability” coverage for Von Maur, but he viewed the situation as a conflict of interest. Mr. Reynolds was excused from jury service.
Another potential juror, Mr. Rudd, explained that his company had been involved in an age discrimination lawsuit. According to Mr. Rudd, his company had “employment practice insurance.” He continued, “That the thing was settled for far less than what I would consider a nominal amount of money because there was no basis to the darn thing at all. And had we not had the insurance, I’m convinced to this day it would have never proceeded.” Salami’s counsel asked Mr. Rudd whether it would be “difficult for you to find against Von Maur because you may kind of consider yourself in the same boat as them.” He responded, “That’s a possibility.” Salami’s counsel continued questioning prospective jurors.
The parties continued with jury selection. Salami’s counsel ultimately struck Mr. Rudd.
After jury selection was completed, Salami’s counsel moved for a mistrial based on defense counsel’s statement regarding insurance. The court issued a ruling denying the motion for mistrial. While recognizing the general rule that evidence of insurance coverage is inadmissible, the court’s ruling cited several Iowa cases stating that the mention of insurance does not necessarily entitle a party to a mistrial. Rather, the moving party must show prejudice, and the district court found Salami had not shown prejudice. The court noted the jury would not be concerned with Von Maur’s ability to pay a judgment.
Salami’s counsel did not propose an immediate curative instruction, stating a curative instruction would be inadequate and would unnecessarily “bring the jury back” to the mention of insurance.
Following a six-day jury trial, Salami did request an instruction concerning insurance. The district court informed the jury in Instruction 21: “In deciding whether or not Defendants are liable in determining what amounts, if any, to award in damages, you must not consider whether or not Defendants have insurance that might pay all or part of your verdict. Whether or not a party has liability insurance has no relevance.”
The jury returned a verdict in favor of Von Maur and Whitlock.
Salami filed a motion for new trial, arguing that the district court abused its discretion in not ordering a mistrial based on defense counsel’s mention of insurance during voir dire. The district court denied the motion for a new trial, because there was no question that defense counsel could have avoided the situation that gave rise to the mistrial. His questioning of the jury occurred in the middle of the afternoon after the insurance question first arose before the lunch break. If he had concerns with the statements made by Mr. Reynolds and Mr. Rudd regarding insurance, he had ample opportunity to raise it with the court to determine the best means to resolve the concerns. Plaintiff requested a curative instruction that was adopted as modified by the court. The jury found in favor of defendants on liability, so there is no issue in which a low damage award supported the plaintiff’s claim of prejudice.
Much of the Salami’s appellate argument is premised upon Iowa Rule of Evidence 5.411, which states, “Evidence that a person was or was not insured against liability is not admissible upon the issue of whether the person acted negligently or otherwise wrongfully.”
The court has recognized three reasons for inadmissibility of evidence of the existence of insurance. First, the evidence is ordinarily irrelevant to any issue in the case. Second, it tends to influence jurors to bring in a verdict against a defendant on insufficient evidence. Third, it causes jurors to bring in a larger verdict than they would if they believed the defendant would be required to pay it. These reasons show that the jury is to decide a case as if the defendant were not insured.
Salami argues we must presume she was prejudiced by Von Maur’s counsel’s statements of a lack of insurance during jury selection, and thus the district court abused its discretion in denying her motion for new trial. The law gives extremely broad, though not unlimited, discretion to a trial court on motions for mistrial and new trial.
The general definition of “evidence,” which is a standard jury instruction and which was given to the jury in this case that evidence is testimony in person or by deposition; exhibits received by the court; stipulations which are agreements between the attorneys; and any other matter admitted (e.g. answers to interrogatories, matters which judicial notice was taken, and etc.). Evidence may be direct or circumstantial. The weight to be given any evidence is for the jury to decide.
The following are not evidence, statements, arguments, questions and comments by the lawyers; objections and rulings on objections; any testimony the judge tells the jury to disregard; and anything you saw or heard about this case outside the courtroom.
Counsel’s statements about insurance during voir dire are not evidence and the jury was so instructed.
The topic of insurance coverage is generally irrelevant. The reasons for excluding evidence of the existence of liability insurance include the knowledge of a defendant’s liability insurance may influence jurors to bring in a verdict against a defendant on insufficient evidence and may cause jurors to bring in a larger verdict than they would if they believed the defendant would be required to pay it.
The jury heard only what it was to assume-that the defendants were not insured. The jury did not award any damages to the plaintiff, which negates the concern that knowledge of insurance or lack thereof affected the amount of damages. If the jury, or even one juror, determined there was no liability because Van Maur had no insurance to cover any damages, the court would have to conclude the jury or juror clearly failed to follow the jury instructions. The rule is that before a new trial will be granted for misconduct in argument it must appear prejudice resulted or a different result could have been probable but for such misconduct.
Salami has not established prejudice resulted. The subject was discussed only briefly during jury selection. The prospective juror involved in the discussion was struck by Salami. The jury was instructed the attorney’s statements were not evidence and they “must not consider whether or not” insurance existed in reaching their verdict.
The trial court did not abuse its discretion in denying the motions for mistrial and new trial.
If the mention of insurance during voir dire had any effect on the trial Salami would have won and obtained a judgment against the defendant. I have served on a jury and must admit I remember nothing about the questions asked of others on voir dire because those statements were not evidence and the jurors I served with and the jurors in Ms. Salami’s case, were instructed that they were only to consider the evidence, not extraneous comments.
Barry Zalma, Esq., CFE, practiced law in California for more than 43 years as an insurance coverage and claims handling lawyer. He now limits his practice to service as an insurance consultant and expert witness specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes.
He founded Zalma Insurance Consultants in 2001 and serves as its only consultant.
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