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FOR PUBLICATION

ATTORNEYS FOR APPELLANT: CHARLES T. JENNINGS THOMAS R. HALEY III JEFFREY W. FERRAND Jennings Taylor Wheeler & Haley, P.C. Carmel, Indiana

ATTORNEYS FOR APPELLEE LINDA GOOD: MARK C. GUENIN EMILY C. GUENIN-HODSON Wabash, Indiana ATTORNEY FOR APPELLEE RANDALL GOOD: KEVIN W. MARSHALL Hobart, Indiana

FILED
Dec 31 2009, 10:09 am
of the supreme court, court of appeals and tax court

IN THE COURT OF APPEALS OF INDIANA
ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant-Defendant, vs. LINDA GOOD, Appellee-Plaintiff, and RANDALL GOOD, Appellee-Third Party Defendant. ) ) ) ) ) ) ) ) ) ) ) ) ) ) ) )

CLERK

No. 85A04-0902-CV-89

APPEAL FROM THE WABASH CIRCUIT COURT The Honorable William Menges, Jr., Special Judge Cause No. 85C01-0403-PL-123

December 31, 2009

OPINION - FOR PUBLICATION

VAIDIK, Judge Case Summary We conclude that Indiana trial courts possess the inherent power to sanction parties and attorneys for violating orders in limine and causing mistrials. This power is designed to protect the integrity of the judicial system and to secure compliance with the court`s rules and orders. In order for a trial court to impose sanctions against a party or attorney, the court must find that the party engaged in egregious misconduct that causes a mistrial. We review a trial court`s sanctioning power for an abuse of discretion. Here, the trial court did not abuse its discretion in (1) concluding that Allied Property and Casualty Insurance Company intentionally violated its order in limine when Allied`s own employee referenced a party`s criminal history and (2) awarding over $26,000 in attorneys` fees and expert witness fees to Plaintiff Linda Good and Third Party Defendant Randall Good and jury costs to the county as compensatory damages. We therefore affirm the trial court. Facts and Procedural History1 A fire occurred at Linda and Randall Good`s home at 474 Jackson Street in Wabash, Indiana, on March 16, 2003. The fire damaged the structure as well as the contents inside. Allied had issued a Homeowners Policy to Linda which provided

coverage for the Jackson Street property. Pursuant to the policy, the dwelling was insured up to $329,518, and the personal property was insured up to $247,138. Randall,

We held oral argument in the Court of Appeals` courtroom at the Statehouse on December 10, 2009. We commend the parties on the quality of their presentations.
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as Linda`s spouse, was considered an insured under the terms of the policy. Appellant`s App. p. 4974. In March 2004 Linda filed a complaint against Allied in Wabash Circuit Court alleging that it breached the policy by failing to pay proceeds following the fire and that it breached its duty to act in good faith. Allied asserted affirmative defenses, including the common law arson defense, an application fraud defense, a misrepresentation/fraud defense, and other contract defenses based on the insurance policy`s intentional act and fraud exclusions. Allied also filed a Counterclaim for Declaratory Judgment requesting the trial court to determine that no coverage existed based on the above grounds and a Third Party Complaint against Randall requesting the trial court to determine that no coverage was afforded to Linda due to Randall`s involvement in the intentional setting of the fire. After years of pretrial motions including several motions for summary judgment, the trial court sua sponte issued an oral order bifurcating the trial into Phase I (breach of contract) and Phase II (bad faith). Allied filed a motion to reconsider this ruling, which the court denied. The parties also filed numerous motions in limine. At the October 6, 2008, final pretrial conference, the trial court orally issued orders on some of Linda`s motions in limine. Specifically, the court ordered that Randall`s criminal history was inadmissible during Phase I of the trial, subject to Indiana Evidence Rule 609.2 Id. at

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Evidence Rule 609 provides:

(a) General Rule. For the purpose of attacking the credibility of a witness, evidence that the witness has been convicted of a crime or an attempt of a crime shall be admitted but only if the crime committed or attempted is (1) murder, treason, rape, robbery,

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4262.

Randall`s criminal history includes at least one theft conviction from

approximately thirty years ago. Further, the court ordered that no mention be made of the Goods` prior fires. Id. at 4475-76. The trial began on December 12, 2008, with jury selection. At trial, Allied was represented by attorneys Charles Jennings and Jeffrey Ferrand, Linda was represented by attorneys Mark Guenin and Emily Guenin-Hodson, and Randall was represented by attorney Kevin Marshall. On the third day of trial, Allied witness Arvin Copeland, a fire investigator, responded to a cross-examination question from Mr. Marshall about previous fires he had investigated. He answered that he had investigated a previous fire at the Goods` home in 2000. Mr. Marshall immediately objected because this was in violation of the trial court`s order in limine. In addition, the previous fire at the Goods` home was in 1994, not 2000. The trial court reminded Copeland of the order in limine (of which Mr. Jennings assured the court that Copeland had been informed) and instructed Copeland that he was coming very close to being found in contempt of court. Id. at 4749. The trial court then gave the jury the following curative instruction, Ladies and gentlemen, you are instructed and admonished that there was no house fire at the home of Randall and
kidnapping, burglary, arson, criminal confinement or perjury; or (2) a crime involving dishonesty or false statement. (b) Time Limit. Evidence of a conviction under this rule is not admissible if a period of more than ten years has elapsed since the date of the conviction or, if the conviction resulted in confinement of the witness then the date of the release of the witness from the confinement unless the court determines, in the interests of justice, that the probative value of the conviction supported by specific facts and circumstances substantially outweighs its prejudicial effect. However, evidence of a conviction more than ten years old as calculated herein is not admissible unless the proponent gives to the adverse party sufficient advance written notice of intent to use such evidence to provide the adverse party with a fair opportunity to contest the use of such evidence.

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Linda Good in the year 2000, and that the issue now under consideration is only the fire which occurred on March 16, 2003. Id. at 4761. Allied objected to this instruction and asked for a mistrial, believing that it impugned its witness. The court denied the motion for mistrial. On the morning of the fourth day of trial, Mr. Guenin expressed concern that scheduled witnesses Cheri Frank or Gregory Keel (Mr. Guenin did not know at that point that Allied`s employee Natalie Hornung would be testifying) would testify in violation of the orders in limine by perhaps referencing previous fires or prior convictions. The following colloquy occurred: THE COURT: Okay, that`s obviously the stuff that`s in violation of the Motion in Limine, and if Mr. Keel gets up and starts doing that, that`s probably the end of the trial and [I] will find everybody in contempt and we`ll start over again from the Wabash County Jail. MR. JENNINGS: Your Honor, we have given each witness who has attended and testified, and before they testified, a letter outlining all of your orders. We do not intend to elicit anything about polygraphs or prior fires . ... ***** THE COURT: But I mean in front of the jury, that`s not going to come in and if it`s going to be necessary for you to perhaps consult with your witness a little bit more than just the letter that you sent to avoid the problem we had yesterday, that would be a good idea. MR. JENNINGS: We have consulted with each one before, Your Honor, also. And we will not attempt to elicit anything. We have told them they are not to, if they are pushed by the other side, they are not supposed to answer unless you tell them they can. Id. at 4914. Then, when it became apparent that Keel was not going to appear for trial, Allied tried to introduce his deposition into evidence. Keel`s deposition provided that 5

Randall offered him $3000 to burn down the Jackson Street property. The trial court ruled that Keel`s deposition was inadmissible. Allied`s attorneys then called Natalie Hornung as a witness. Hornung testified on direct examination that in 2003 she was a manager for Allied`s underwriting department and that she reviewed the application that agent Cheri Frank submitted on behalf of Linda. Id. at 47. The following exchange then occurred: Q: Did you learn as part of the investigation of this claim that there were representations made on that application that were not truthful? A: Yes, I did.

Q: And would you tell the jury some of those representations that you believe were not truthful based upon what you were told, and the information you acquired? A: Okay. Some of the representations that I believe were incorrect were regarding the prior cancellations for the Goods and the prior felony convictions as well as

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