Academic journal article Defense Counsel Journal

Evidentiary Issues in Coverage and First-Party Bad Faith Cases

Academic journal article Defense Counsel Journal

Evidentiary Issues in Coverage and First-Party Bad Faith Cases

Article excerpt

Keeping alert to plaintiffs' strategy and tactics in presenting evidence is essential if defense counsel hope to reach a favorable resolution

Questions of the admissibility of evidence in actions against insurers involving coverage and bad faith are of extreme importance to defense counsel because they set the structure of the case and determine what is used by the trier of law and fact to reach conclusions as to both coverage and bad faith.

Coverage involves interpretation of the insurance policy - a contract. While special rules apply to its interpretation, those rules usually result in much narrower evidentiary rulings than in bad faith cases, which involve broader issues relating to the conduct of the insurer. While some courts will go outside the contract and hear parole evidence in determining issues relating to coverage,(1) it is more likely that evidence other than that relating to contract formation and policy issuance will be heard in the bad faith case.

From defense counsel's perspective, it is critical that plaintiffs' attempts to expand the evidentiary issues be anticipated so that proper objections and motions can be made to prevent the admission of evidence beyond the issues, or, should such evidence be admitted, to make an appellate record. This article presents an overview of a number of issues that arise frequently during coverage and first-party bad faith cases.

Strategy and Procedural Decisions

A. Bifurcation of Issues

In considering evidentiary issues, two important aspects of these cases should be noted. First, the plaintiff's offers of evidence may be affected by how the case is tried. If the case is bifurcated so that any coverage issues are tried first before issues relating to the bad faith claim, the evidence in the first phase will be more likely circumscribed than in the second phase. Thus, the procedural structure of the case will affect not only what is admitted but when it is heard. Evidence relating to the conduct of the company is more likely to be heard in a second phase than the first.

Second, as to more expanded categories of evidence on the bad faith issues, defense counsel more often than not will challenge the foundation for admissibility of this evidence, particularly as to subjects other than those directly involved in the claim at hand. While in the usual case the first phase will involve issues for the court, and a jury may not even be present, the evidence presented should be limited in order to ensure that the record focuses only on questions of coverage and is not cluttered with evidence relating to claims handling and issues relating to the company's claims conduct.

B. Raising Evidentiary Issues: Motion or


1. Issues Must Be Monitored

Because first-party bad faith cases involve issues aside from the handling of a specific claim, the evidence the plaintiff offers must be monitored carefully. Defense counsel cannot afford to be bashful about protecting the record or cutting off attempts to widen the scope of the case with highly prejudicial evidence of questionable relevance.

There are four approaches in these situations: (1) motions in limine in anticipation of an offer of challenged evidence; (2) requests for hearings out of the presence of the jury when it appears that the plaintiff's counsel is about to inquire into the evidence that is to be challenged (if granted, this forces the plaintiff's counsel to present foundational evidence or to make an offer of proof as to the foundational requirements for admissibility); (3) objections or motions to strike made at the time attempts are made to elicit this evidence; and (4) requests for instructions to limit the use of any admitted evidence.

2. Foundational Hearings

Hearings under Rule 402 of the Federal Rules of Evidence or its state counterparts to determine admissibility should be requested on important issues to determine if the foundational facts have been laid. …

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