Summary
finding the testimony of an insured's employer was not hearsay because testimony was not offered to prove truth of insured's income in years in question, but rather to demonstrate that statements by employer were made and that insured relied on those statements to answer income questions on application
Summary of this case from Prudential Property Casualty Ins. Co. v. Lillard-RobertsOpinion
Civil No. 99-808 (JRT/FLN)
August 22, 2002
Thomas Bennett Wilson, Gayle Gaumer, Wilson Law Office, Edina, MN, for plaintiff.
Terrance J. Wagener, Krass Monroe, P.A., Bloomington, MN, for defendant.
MEMORANDUM OPINION AND ORDER
This matter is before the Court on defendant's motion for amended findings or alternatively for a new trial pursuant to Rules 52 and 59 of the Federal Rules of Civil Procedure. For the reasons that follow, the motion is denied.
BACKGROUND
Plaintiff commenced this declaratory judgment action after defendant denied plaintiff's claim for benefits under a long-term disability policy issued to plaintiff on February 28, 1993. Plaintiff sought a declaration that the policy between her and defendant was in full force and effect and that defendant breached its duties and obligations under the policy. Plaintiff also sought an award of damages including retroactive benefits under the policy. In response, defendant claimed as an affirmative defense that plaintiff's claims are barred because of fraudulent misrepresentations plaintiff made in connection with her application for the subject policy. Am. Answer at 4 (Eighth Affirmative Defense).
This matter was tried before the Court in January 2001. The sole issue for the Court's determination was whether plaintiff fraudulently misrepresented her drug use or income on the insurance application within the meaning of Minn. Stat. § 62A.04, subd. 2(2). By Order dated October 9, 2001, the Court concluded that defendant had not carried its burden that plaintiff had intentionally misrepresented the answers on the application. Adzick v. UNUM Ins. Co., No. 99-808 (JRT/FLN) (D.Minn. Oct. 9, 2001). Accordingly, the Court declared the policy to be in full force and effect and directed defendant to pay plaintiff all benefits due under the policy for plaintiff's disability from January 23, 1997 to February 26, 1998. Thereafter, defendant timely filed this motion for amended findings or alternatively for a new trial.
DISCUSSION I. Standards of Review
Rule 52(b) permits a court to amend its findings, make additional findings, and amend the judgment. Fed.R.Civ.P. 52(b). The decision to grant a motion to amend the findings is within the discretion of the trial court. West Central Coop. v. United States, 607 F. Supp. 1 3-4 (N.D.Iowa. 1983). The trial court, in the exercise of its discretion, may review and amend its findings and conclusions to correct a manifest error. Clark v. Nix, 578 F. Supp. 1515, 1516 (S.D.Iowa 1984)
Under Rule 59, the Court may grant a motion for a new trial to all or any of the parties on all issues or on particular issues. Fed.R.Civ.P. 59(a). The standard for granting a new trial is whether the verdict is against "the great weight of the evidence." Butler v. French, 83 F.3d 942, 944 (8th Cir. 1996). In evaluating a motion for a new trial pursuant to Rule 59(a), the "key question is whether a new trial should have been granted to avoid a miscarriage of justice." McKnight v. Johnson Controls, Inc., 36 F.3d 1396, 1400 (8th Cir. 1994).
II. Analysis
Defendant first argues that the Court erroneously accepted hearsay testimony to establish a source of plaintiff's income information. Specifically, defendant takes issue with the Court's finding in paragraph 11 of the Findings of Fact and at page 13 of the Conclusions of Law, in which the Court concluded that plaintiff did not know the answers to the income questions on the policy application and therefore relied on her employer, Dr. Michael Perpich, who was present at the time, to answer those questions. Defendant maintains that the Court's finding with respect to Dr. Perpich's statement should be amended because it is based on hearsay.
The Court declines the suggested amendment because the testimony in question is not being offered to prove the truth of the matter asserted. The Federal Rules of Evidence define hearsay as an out of court statement "offered in evidence to prove the truth of the matter asserted." Fed.R.Evid. 801(c). However, "[i]f the significance of an offered statement lies solely in the fact that it was made, no issue is raised as to the truth of anything asserted, and the statement is not hearsay." Advisory Committee Note to Fed.R.Evid. 801(c). In the present case, the testimony in question was not offered to prove that plaintiff did, in fact, make $30,000 in years 1991 and 1992. Rather, the testimony was offered to demonstrate that the statements by Perpich were made and that plaintiff relied on those statements to answer the income questions on the application. Therefore, because the challenged finding was not a manifest error, defendant's request to amend this finding is denied.
In its opposing memorandum, plaintiff also argues that plaintiff's misstatement of her income on the application was not material and therefore cannot be grounds for rescission of the policy. While the Court agrees it is highly questionable that plaintiff's misstatements on the income questions materially affected the risk assumed by defendant, particularly given that plaintiff's actual income was only a few hundred dollars from the minimum income required, the Court did not address this issue in its October 9, 2001 Order because of a representation made at trial that the parties had stipulated beforehand to the materiality of both the income and drug use questions. Order at 8.
Defendant argues next that the Court's findings of fact and conclusions of law concerning plaintiff's income and drug use representations are against the great weight of the evidence. The Court disagrees. In its October 9, 2001 Order, the Court thoroughly explained the reasons why it granted defendant's evidence little weight and why it concluded that defendant had failed to carry its burden that plaintiff knowingly misrepresented these answers on the application.
Defendant also argues that the Court should enlarge its findings concerning whether plaintiff was "currently" using cocaine at the time she completed the application in February 1993. Defendant emphasizes that "current use" of cocaine provides a separate and independent basis for rescission of the policy. To support this claim, defendant again relies on statements contained in various medical records that, according to defendant, establish that plaintiff was using cocaine in February 1993.
The Court denies this portion of defendant's motion for the same reasons it ruled against defendant on the question of whether plaintiff "regularly" used cocaine between 1988 and 1993. There is no evidence from anyone who worked with plaintiff on a daily basis in and around February 1993 to support defendant's contention that plaintiff was "currently" using cocaine. The Court also discounts defendant's reliance on medical records created years after the events in question. As the Court previously explained with respect to whether plaintiff regularly used cocaine, there is no contemporaneous evidence of plaintiff's drug use in February 1993. Accordingly, the Court also denies defendant's motion as to whether plaintiff was currently using cocaine at the time she applied for long-term disability insurance.
ORDER
Based upon the foregoing, the submissions of the parties, the arguments of counsel and the entire file and proceedings herein, IT IS HEREBY ORDERED that defendant's motion for amended findings or in the alternative for a new trial [Docket No. 104] is DENIED.