Expert Commentary

Trial of the Coverage Case (Part 4)

Part 1 of this series deals with trial by the court versus a jury. Part 2 addresses the company representative and voir dire. Part 3 discusses the opening statement and the use of expert witnesses. This final segment considers the trial theme and values.


Courts and Coverage
December 2011

This final article in the series addresses what is perhaps the most important aspect of a coverage case—the trial theme and values. These are the elements of a case that put the case on the level of the jury and allow the jury to identify with your position.

Demonstrative Aids

Demonstrative aids are a must in a coverage case. The policy provisions cannot be read from the witness stand. They must be enlarged or contained in juror notebooks so the jury can follow along and be able to understand how the policy is constructed. Oftentimes, the language of the policy may have to be diagrammed in such a way that the jury can understand it.

Surveys have shown that jurors are much more visual than they were 50 years ago. The ability to comprehend and understand auditory input has been diminished. Graphics, illustrations, highlighting, etc., are a must, particularly for those Gen X, Gen Y, or Millennial jurors.

Themes and Values

Themes and values are an integral part of every case. In the coverage case, they are a little more difficult to construct and implement. Coverage litigation generally does not present a lot of moral or value judgments. Following are some examples.

Other Coverage Available

One theme that has been used with success is that the insured had other coverage offered that would have covered the loss and chose not to purchase it. This is a very convincing theme. The insured is trying to obtain something they did not pay for and in fact rejected. This is not allowed in other contractual situations and should not be allowed here. It is especially easy to use in voir dire with practical situations that would apply to every juror.

Bad Acts of Insured

In many liability cases, the conduct of the insured may be especially reprehensible (though potentially covered). The theme in these cases is whether this type of conduct should be covered. Do we as society want to encourage this conduct by insuring it?

Inconsistency of Positions

In much of the coverage and bad faith litigation involving liability policies, there is an excellent opportunity to point out how the insured has taken one position before one court or jury and is now taking an entirely different position before the present jury. An excellent example is State Farm Fire & Cas. Co. v. Gandy, 925 S.W.2d 696 (Tex. 1996). This was a case where a stepfather repeatedly molested his stepdaughter. At the trial of the underlying case, the focus was on the reprehensible nature of the conduct and how it should be punished—not only with actual damages but with punitive damages as well.

At the coverage/bad faith trial, the theme was that if there had been a better defense provided, the insured may have escaped liability. It was pointed out at trial and on appeal how the plaintiff was claiming in the underlying case that the conduct was indefensible, yet before the current tribunal she was claiming (as assignee of her stepfather) that a better defense would have resulted in no liability. Either she was molested, or she was not. If she was, then no defense would have made a difference. If she was not, she was entitled to no recovery. The supreme court of Texas noted the inconsistency, and it played a significant part in the decision.

Failure To Respond to Request for Information

Another theme is the failure of the insured to respond to request for information. In these cases, the insurer has repeatedly requested information to evaluate the claim. The insurer eventually gives up and denies the claim. At the coverage trial, the theme is that if the insured wanted to press the claim, he or she should have provided the information. Because the insured did not provide the information, the insurer denied the claim. If the insured had provided information, the claim would have been evaluated and perhaps paid. Because the insured failed to do what was required under the policy, the insurer had no choice but to deny the claim.

Many other themes that have been used are not listed here. However, it is important to note that each theme must be specially crafted to fit the facts and legal issues of each case.

Charge

In a coverage case, one of the most important stages of the case is the charge. However, the charge has importance well before any trial has commenced and any witness has been put on the stand.

Discovery

The charge should be written well in advance of the trial and should be the template for written discovery and depositions. It defines the relevant issues in the case, what evidence will be relevant, and on what issues the party will have to persuade the jury.

Policy Interpretation

The charge will also contain instructions on many issues important to policy interpretation. Issues such as who had a duty will be determined in the charge. The placement of the burden of proof will also be addressed there. If an ambiguity is being submitted to the jury, the manner of resolving the ambiguity will be addressed. Likewise, presumptions that may be created under the law will also be addressed in the charge.

Appeal

Without question, most of the reversals on appeal occur as a result of charge error. This is the mother lode for reversal if the insurer is concerned about a large verdict. It cannot and must not be overlooked. When there is the possibility of a large verdict, counsel for the insurer must affirmatively work to build error into the charge. Counsel must be asking for instructions or questions that he or she does not want the court to give. A successful charge lawyer is one who does not win every argument—but one who wins the important ones even though he or she may lose the unimportant ones.

Conclusion

The issues discussed in this four-part series are not unique. They apply to every coverage case. They apply whether the litigant is the insured, the insurer, or the plaintiff suing as an assignee or judgment creditor. Litigants who pay attention to these rules and follow them will greatly increase their chances of success.


Opinions expressed in Expert Commentary articles are those of the author and are not necessarily held by the author's employer or IRMI. Expert Commentary articles and other IRMI Online content do not purport to provide legal, accounting, or other professional advice or opinion. If such advice is needed, consult with your attorney, accountant, or other qualified adviser.

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