Preview:

REPORTED IN THE COURT OF SPECIAL APPEALS OF MARYLAND No. 02384 SEPTEMBER TERM, 2002 _____________________________

STATE FARM FIRE & CASUALTY CO. v. DAMON ALFONZO CARTER

______________________________ Hollander, Salmon, Barbera, JJ. ______________________________

Opinion by Hollander, J. ______________________________ Filed: December 29, 2003

This case is rooted in a contractual dispute between Damon A. Carter, appellee and cross-appellant, and his automobile insurer, State Farm Fire & Casualty Company ("State Farm"), appellant and cross-appellee. Although State Farm insured Carter's motor vehicle for theft, it refused to pay Carter's claim of loss arising from the alleged theft of his automobile, because it considered the claim bogus. That decision prompted Carter to file suit against A jury in the Circuit Court for

State Farm for breach of contract.

Baltimore County found in favor of Carter, awarding him damages of $22,749.18. At issue here is the ruling of the trial court allowing Carter to testify that criminal charges were brought against him with regard to his alleged loss, but that the charges were dismissed or "nolle prossed." On appeal, State Farm asks:

Whether the trial court committed reversible error in permitting the Appellee to introduce evidence regarding his nolle pros. on criminal charges stemming from the same occurrence underlying the present civil suit and/or abused its discretion by denying Appellant's request for mistrial and subsequent Motion for New Trial. In his cross-appeal, Carter poses one issue: Whether the trial court erred in declining to award costs, expenses, and attorney fees, and in holding that State Farm's defense was made with substantial justification, as State Farm never established a reason, in good faith, for denying cross-appellant's claim. For the reasons stated below, we shall reverse and remand. FACTUAL SUMMARY1 Appellee claimed that he purchased a 1993 BMW 325i on August
1

In view of the issues, we need not include a detailed summary of the parties' conflicting evidence pertaining to the legitimacy of appellee's insurance claim.

27, 1998, for the sum of $14,000.

He obtained a policy of On November 17, 1998, He

insurance for the vehicle from State Farm.

Carter notified State Farm that the vehicle had been stolen. also reported the theft to the police.

According to Carter, the

vehicle was stolen from the rear of his place of employment and was never recovered. Several concerns surfaced during State Farm's investigation of appellee's claim. As a result, State Farm referred the claim to By letter of July 7, 1999, from Farm denied Carter's claim.

its Special Investigative Unit. Paul Holland to appellee,

State

Holland advised Carter that the investigation "revealed that no accidental loss has occurred as defined under ... this policy"; there were "material misrepresentations and concealments made by

[appellee] following the loss," and appellee had refused "to cooperate with appellant," as required by the policy. In the meantime, in March 1999, Carter was arrested and charged, inter alia, with insurance fraud in connection with the alleged theft of his vehicle. for Carter's criminal trial, On December 6, 1999, the date set the prosecutor entered a nolle

prosequi ("nol pros") as to the criminal charges. Thereafter, in September 2000, Carter sued State Farm for breach of contract.2 State Farm asserted affirmative defenses in

support of its denial of Carter's claim, consistent with the Carter initially filed suit in the District Court for Baltimore County, but the case was removed to the Circuit Court for Baltimore County after appellant prayed a jury trial. 2
2

contentions advanced by Holland in his letter of July 7, 1999. At the outset of the jury trial in October 2002, State Farm moved in limine to bar evidence of the criminal prosecution of appellee and the subsequent nol pros. State Farm argued that

appellee should not be permitted to suggest to the jury that, because the State declined to prosecute him, this established that he did not engage in any wrongdoing with regard to his insurance claim. In effect, the court denied the motion, stating that it

would "wait and see." Carter was called as the first witness at trial. An employee

since 1984 of Michael Jacobs Audio Visual Electronics in Baltimore City, Carter testified that he purchased the BMW from Jacobs for the sum of $14,000. Carter recalled that he borrowed the money

from his mother and sister, and paid cash for the vehicle. According to Carter, on the night of November 16, 1998, he left the BMW in the alley behind his place of employment, because he planned to install upgraded sound speakers the following day. The next morning, Carter discovered that the car was gone. reported the theft to the police. He

In addition, he notified State

Farm that the vehicle had been stolen. During Carter's direct examination, Carter's attorney

questioned him about an interview conducted by James Reichlin, a claims specialist in State Farm's Special Investigative Unit. following testimony is in issue: [APPELLEE'S ATTORNEY]: So [Mr. Reichlin] said that you were going to be charged with insurance fraud and that 3 The

the police were on their way? [APPELLEE]: Yes, he did. [APPELLEE'S ATTORNEY]: Do you know who called the police? [APPELLEE]: No, I don't. [APPELLEE'S ATTORNEY]: Did there come a time when you, in fact, were charged? [APPELLEE]: Yes, I was. [APPELLEE'S ATTORNEY]: And were you charged in Baltimore City? [APPELLEE]: Yes, I was. [APPELLEE'S ATTORNEY]: And was there a disposition of this matter? [APPELLEE]: Yes, there was. [APPELLANT'S ATTORNEY]: Objection. [THE COURT]: Overruled. [APPELLEE'S ATTORNEY]: Was there a disposition for this matter set? [APPELLEE]: Yes, there was. [APPELLEE'S ATTORNEY]: And what happened? [APPELLANT'S ATTORNEY]: Objection. [THE COURT]: Overruled. [APPELLEE]: I went to court for it and got a nol process [sic]. [APPELLEE'S ATTORNEY]: Case was dismissed? [APPELLEE]: Case was dismissed. [APPELLEE'S ATTORNEY]: No further questions, Your Honor. * * * [COUNSEL FOR STATE FARM]: Yes, Your Honor. 4 May we

approach quickly? [THE COURT]: Yes. (Bench conference on the record.) [COUNSEL FOR STATE FARM]: Your Honor, for the record, at this point I would move for a mistrial based on the motion in limine that I filed, indicating that the testimony that [appellee's attorney] just elicited which he actually said, I think earlier, that he didn't intend to elicit is inadmissible under the cases and is attempting to mislead the jury as to the wrong standard of proof and the fact that a nol pros

Download State Farm v. Carter.pdf

Maryland Law