June 2007 BAD FAITH CASES COURT RULES THAT STATEMENT OF AN UNAVAILABLE INSURANCE REPRESENTATIVE IS ADMISSIBLE BASED ON THE RARELY INVOKED RESIDUAL HEARSAY EXCEPTION (Philadelphia Federal)
The insured alleged breach of contract and bad faith. Two days before a homeowners insurance policy was to be cancelled, the property was damaged by fire. After reporting the fire, an investigation was conducted. The insurer then informed the insured that the policy had been voided more than a month prior to the fire and, as a result, the insurer would not be liable for any claims.
At trial, the insured sought to introduce evidence concerning statements and correspondence made by an insurance representative during the policy application process; while the insurer sought to introduce evidence of a recorded statement of that same representative who handled the policy, which the insured opposed. The representative was unavailable to testify.
The court examined the rarely invoked residual hearsay exception in order to determine whether to admit the recorded statement.
To fall within the residual hearsay exception and be admissible in court, the statement must be trustworthy, material, probative, in the interests of justice, consistent with the purposes of the Rules of Evidence, and accompanied by proper notice. The court held that the recorded statement fell within the residual hearsay exception.
All of the exception’s factors were met, largely because the representative was no longer available for comment and because the insured would present a one-sided version of events unless the statement was admitted. The court sought to ensure fundamental fairness by allowing both parties to present evidence of their interaction with the insurance representative responsible for the policy at issue.
As a result, the court determined that the insurer met its heavy burden and found the statement admissible.
Date of Decision: June 22, 2007.
Wezorek v. Allstate Insurance Company, United States District Court for the Eastern District of Pennsylvania, No. 06-CV-1031, 2007 U.S. Dist. LEXIS 45595, (E.D. Pa. June 22, 2007) (Rice, M. J.)