Jack Williams v. Farmers Insurance Company, Inc.

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February 18, 2004


[NO. CIV-2000-51-4]




John Mauzy Pittman, Judge

This case arises out of a lawsuit filed by appellant alleging breach of an insurance contract and bad-faith failure to settle against his insurer, appellee Farmers. Appellant's claim was for damages sustained by himself and his friend when their vehicles collided on a country road and caught fire, resulting in the total destruction of both. After a verdict for appellee was entered in a jury trial, appellant brought this appeal.

On appeal, appellant argues that there were two evidentiary errors that require reversal. First, he asserts that allowing evidence of prior fire losses by appellant and his friend was erroneous because the probative value of the evidence was outweighed by the potential for unfair prejudice. Second, he argues that the trial court erred in permitting an expert witness to testify regarding the contents of a report upon which he relied to form his opinion that the fire was intentionally set. Because the first argument is without merit and the second argument is barred by prior stipulation, we affirm.

With regard to appellant's argument that the probative value of evidence of prior fire losses was outweighed by the potential for unfair prejudice, we note that a trial court's ruling on the relevancy of evidence will not be reversed absent an abuse of discretion. National Bank of Commerce v. Quirk, 323 Ark. 769, 918 S.W.2d 138 (1996). The weighing of probative value and prejudice is left to the trial court's sound discretion and will not be reversed absent a showing of manifest abuse. Id.; see J. E. Merit Constructors, Inc. v. Cooper, 345 Ark. 136, 44 S.W.3d 336 (2001).

In the present case, appellant sued appellee for bad faith refusal to settle the claim. An insurance company commits the tort of bad faith when it affirmatively engages in dishonest, malicious, or oppressive conduct in order to avoid a just obligation to its insured, and does so with a state of mind characterized by hatred, ill will, or a spirit of revenge. Columbia National Insurance Co. v. Freeman, 347 Ark. 423, 64 S.W.3d 720 (2002). As such, appellee's state of mind in deciding to deny the claim is highly relevant. The record shows that appellant obtained appellee's internal documentation regarding the procedure to be followed in settlement of claims and introduced portions of it into evidence to show appellee had not complied with its own policies in deciding to deny appellant's claim. Appellee, in turn, introduced evidence to show that there were numerous "red flags" concerning this case that required investigation under their internal settlement guidelines. One such "red flag" was evidence that appellant and his friend had sustained numerous fire losses that were compensated by insurance, and that there were instances where they were mutually involved in such losses. We think that this evidence was highly probative to the question of Farmers' good faith and, while undoubtedly prejudicial to appellant, it is not unfairly so, especially since appellant opened the door to this inquiry by introducing evidence of alleged instances where Farmers had not followed its own guidelines. On this record, we cannot say that the trial court manifestly abused its discretion in allowing evidence of other fire losses.

Appellant's argument that the trial court erred in permitting an expert witness to testify regarding the contents of a report was waived by appellant. Prior to trial, the report in question was the subject of a motion in limine by appellant, who argued that it should not be introduced unless the person who prepared it was available to testify at trial. At a pretrial conference, appellee's attorney argued that an expert is permitted to rely upon and discuss matters which he considered in arriving at his opinion, even if such matters constituted hearsay. Appellee's attorney further stated that, if the court ruled against him on this issue, he would try to have the person who prepared the report available for trial. At this point, appellant's attorney announced that he had no problem with the expert testifying concerning the contents of the report, so long as the report itself was not introduced at trial.

At trial, however, although the report itself was not introduced, appellant's attorney again objected to the expert's testimony concerning the contents of the report. The trial court properly overruled this objection. Appellant was clearly barred by his prior stipulation from objecting on this ground. See General Agents Insurance Co. v. St. Paul Insurance Co., 22 Ark. App. 46, 732 S.W.2d 868 (1987); National Association for the Advancement of Colored People, Inc. v. State, 229 Ark. 840, 319 S.W.2d 33 (1958).

Finally, we note that appellant's abstract was flagrantly deficient in that, while he abstracted material that was generally favorable to his own case, he did not abstract portions of the record containing unfavorable material, including much of the material upon which we have relied in arriving at our decision. However, because appellee provided us with a supplemental abstract sufficient to allow us to consider the arguments on appeal, we are not required to order appellant to file a substituted brief at his own expense pursuant to Ark. Sup. Ct. R. 4-2(a)(9)(b)(3).


Neal and Vaught, JJ., agree.