By John J. Pappas
This is one of a series of articles under the by line "Butler Pappas on Bad Faith" originally published in Mealey's Litigation Report: Insurance Bad Faith, Vol. 20, #8 (August, 2006).
[Editor's Note: John J. Pappas is Of Counsel with the law firm of Butler Pappas Weihmuller Katz Craig LLP with offices in Miami, Mobile, Tallahassee, and Tampa. He is an experienced trial and appellate lawyer in the firm's Coverage and Extra-contractual Departments. This commentary, other than the quoted material, are the author's opinion; not his law firm's, and not Mealey's Publications'. Copyright © 2006 by the author. Responses are welcome.]
It is difficult to be a good Judge. Not only must a Judge be an expert in every field of law that comes before her, but she must also be impartial and without prejudice, or at least, not allow her biases to affect her judicial conduct. It is a difficult job where even the best have their moments revealing that human nature is difficult to suppress.
* * *
At the close of a pre-trial conference in federal court in northwest Alabama, I packed my legal bag to leave. The elderly federal court Judge purred to the plaintiff's local counsel.
"Ya know D-a-avid, I did see an insur-r-r-rance company win a a-r-rson case once."
"Oh, Judge, is th-a-at r-i-i-ight. When was th-a-a-at?"
"Can't remember – it was so l-o-o-ong ag-o-o."
I turned from the door to see both men beaming at me with big ole smiles. "Thanks, for the hospitality gentlemen," I said. "See you both next week."
* * *
Then there was a hearing in federal court in South Florida. The occasion was oral argument on cross motions for summary judgment filed by the insurance company and the Insured/Plaintiff. Plaintiff's counsel took the lectern first but, before he uttered a word, the third article Judge set the tone.
"Sir, isn't this a simple case? Isn't the insurance company using some fine-print loophole buried in the policy to avoid paying your client for storm damage?"
"Yes, sir."
"I've lived in South Florida for fifty years. I've been through many storms and many insurance claims. I'm talking about my own. This is just an insurance company trying to keep from paying a legitimate claim. Isn't it?"
"Yes, sir."
"Didn't your client pay a premium?"
"Yes, sir, for many years."
"And for all those years, did your client ever make a claim against this insurance company?"
"No, sir."
"And now that your client has suffered these extreme storm damages, the insurance company doesn't even want to pay – is that right?"
"Yes, your Honor. And, frankly, it might be more appropriate for the court to ask Mr. Pappas these questions. Then, if I need to say anything else, I can return to the lectern."
"Yes, that's a good idea. Mr. Pappas please take the lectern. You know, I was here for Hurricane Andrew and I remember Hurricane Georges. These were not minor weather events. I, personally, had severe damage to my house, especially from Andrew. Mr. Pappas, isn't this just a situation where your client, an insurance company, has raked in insurance premiums for years and, now that there is a big claim, it's simply looking for a way out of paying?"
"No, sir."
"Excuse me."
"No, sir, it is not."
"Oh. Okay. Both Motions for Summary Judgment are denied."
* * *
Another time, there was the trial of a fraudulent theft claim in a Florida State court. After three grueling days in which all defense objections were denied, we called our first witness – the Plaintiff/Insured. Forty minutes into the testimony, the Judge dismissed the jury for an early lunch, stood up and ordered all counsel and parties into his chambers.
Before we could sit down, the Judge glowered at the Insured. "Sir, I have been telling Mr. Pappas and his client for more than a year now that if they don't settle this case, they are going to buy themselves a big judgment against them. This is what I have been telling them. But now, after hearing only a half hour of your testimony, I am compelled to change my assessment of this case." The Judge, pausing briefly, then continued, "I must say, your testimony is horrendous." Then, with an angry gaze toward opposing counsel, "Hasn't anyone coached you on how to testify?" He again paused, obviously contemplating how far he was willing to go. "When you keep on responding to Mr. Pappas' questions with, 'I don't know,' 'I don't remember,' it gives the appearance as if you are lying, or at least hiding something. If you don't start doing better while you are on the stand, you are in a lot of trouble." Then the judge looked down at the table, took a deep breath, as if reevaluating his behavior, attempting to gain control over himself, and closed with, "Well, maybe I have already said too much. We'll reconvene at 1:30 with the continuation of the examination of the Plaintiff by Mr. Pappas."
"Thank you, Your Honor," I said, as he avoided my eyes.
* * *
It was an old large Federal courtroom with pews and benches of deep cherry. It was abuzz with lawyers awaiting their turn before the Bench. The first case called was mine. "Mr. Pappas," bellowed the Judge, "you are claiming, on behalf of your client, the attorney-client privilege in the deposition taken of you in this matter, albeit an unusual event to depose opposing counsel. On twenty-six occasions you, on behalf of your client, asserted the attorney-client-privilege and refused to answer the question."
"Yes, sir."
"Well, the argument is that you orchestrated this entire claim denial and you were acting as an adjuster throughout this entire matter and therefore the client is not entitled to the protection afforded by the attorney-client privilege."
"Yes, this is their argument."
"Well, for instance, one of the questions posed to you is, what did you tell your client concerning potential denial of the insurance claim."
"Yes, Your Honor."
"The other side contends that this is not protected by the attorney-client privilege."
"Yes, that is their argument."
"Well, what did you tell your client about the potential denial of the insurance claim?"
I could feel the crowd of attorneys behind me starting to stir with sadistic delight. "Well, Your Honor, I can't tell you because my client asserts the attorney-client privilege on that matter."
"Well, be that as it may, Mr. Pappas, I am a federal judge, I am sitting in the federal courtroom on a federal bench, and I hereby order you to tell me what you told your client concerning the potential denial of this insurance claim."
I took a deep breath, once again feeling the eyes of my colleagues of the bar piercing through my back with smug smiles, as I subconsciously felt toward the depth of my pants pocket for my cell phone. Not being a criminal attorney, I vaguely recalled that I may get at least one phone call.
"Well, Your Honor –"
"Mr. Pappas," the Judge almost yelled, "just answer my question. What did you tell your client concerning the potential denial of this insurance claim?"
"I am sorry, Your Honor, but I cannot comply with your order. My client has asked that I assert its right to the attorney-client privilege and not divulge such communications."
The Judge leaned back in his black robe, surveyed the entire courtroom over my shoulders as he broadly smiled and stated softly, "Well, I guess Mr. Pappas actually believes such communications are protected by the attorney-client privilege – and I am inclined to agree with him," as the entire courtroom gave way to repressed laughter.
* * *
Recently, after eight days of evidence, I found myself discussing jury charges with a Federal Judge who had the privilege of sitting on the bench for over twenty years.
"Your Honor. The verdict form you have created fails to have any of our coverage defenses on it."
"I know."
"But Judge –"
"Mr. Pappas. You can argue to the jury whatever you want, but this verdict form is the one that I am going to give."
"But Judge, what good is it to argue that there's no coverage if the jury is given a verdict form on which they cannot return a verdict stating there is no coverage."
"That's your problem, not mine –"
"But Judge –"
"No, 'but Judges.' No further argument on this point. Anything else?"
"Yes, sir. You have denied our jury charge on instructing the jury on the law of agency and principal. In this case, the evidence is undisputed that the Plaintiff was the principal and others, including her husband and her lawyers, conducted themselves as her agents and that their conduct is imputable, based upon the rule of agency, to her – the Plaintiff."
"Yes, Mr. Pappas. I am not giving that instruction."
"But Judge – the evidence is that the Plaintiff authorized her husband and others to act on her behalf in this claim and this is an instruction on the law of agency that is applicable to the facts of this trial –"
"Mr. Pappas – you may argue this in closing – but I have ruled – end of discussion. Anything else?"
"Yes, sir. You have denied our request for jury charges explaining that as a matter of law certain provisions of the policy are relevant and valid provisions, the applicability of which the jury must determine based upon the evidence –"
"That's correct. I never instruct a jury on the provisions of a contract. You may argue this, but I will deny all such instructions – anything else?"
"Yes, sir. How much time will you allow us for closing argument?"
"Oh, I think ten minutes per side is more than enough."
* * *
Once in State Court, I was before a very nice Judge. "Mr. Pappas," she said. "I understand that your client disagrees with the insurance claim submitted by the insured. I understand that your client paid the insured over $400,000 for this claim and they haven't spent any of that money to make any other repairs to date. I understand that the insured is claiming an additional $4 million to which, apparently, to date they cannot support or justify. I understand that the insured promised under oath to provide the persons and experts to testify at an Examination Under Oath who would be able to explain in support that $4 million claim but instead filed suit against your client. And, I understand that the insured has spent two years in jail for a previous insurance fraud, also resulting from a property insurance claim. However, where's the insurance fraud? Isn't this just your client suffering from 'sticker-shock'?"
* * *
"Members of the jury," said the Federal trial judge, "unfortunately, I have to take a few minutes to talk privately to the attorneys in this matter. We are going to take a brief recess. It won't be too long. Marshall James, would you please escort the jury into the jury room."
"Your Honor, the jury is secured in the jury room."
"Mr. Pappas, take the lectern. Mr. Pappas," the Judge growled, "do you mean to tell me that your client is entitled to have its 'cake and eat it?'"
"Your Honor, the case of –"
"Mr. Pappas," hollered the powerful federal judge, now flushed with anger, "just answer my question. Yes or no. It is your position that your client is entitled to have 'its cake and eat it.' I don't want to hear any other word from you other than a 'yes' or a 'no.'"
Realizing that my choices were limited and my answer was not going to be well received, I sturdied myself with a deep breath, looked up at the motto above the judge's head that read, "Truth is What We Seek," and wondered, but, nevertheless responded, "Yes."
Immediately the athletic jurist jumped up, stormed off the bench and into his chambers at which time the Marshall approached me and said, "Mr. Pappas, do you know what he is doing?"
"Not exactly."
"Well, you see, he's a very good man and he knows he has an uncontrollable temper. So right now he is walking, almost running around his desk trying to calm himself down. I thought you just would like to know."
"Thanks." Then I heard a loud whisper from the back of the courtroom. It was the first and only time that my father ever saw me in trial. He was standing by the door, as if he was ready to bolt. I walked over to him and smiled as he said, "John, does he have the power to put you in jail?"
"Yes."
"Oh."
"Why, do you ask?"
"Well, if he has the power to put you in jail, I think you are going to jail."
"Thanks, Dad," at which time the Judge returned to the courtroom.
"Mr. Pappas, please step up to the lectern. Mr. Pappas, I have read the case law you have provided me on this issue." Then, as he gave an apologetic glance toward opposing counsel, he said, "To my astonishment, apparently your client is entitled to have its 'cake and eat it.'" I turned to see Dad beaming with pride – or, at least, relief.
* * *
Once in a State Court case where my client's major defense was insurance fraud, after the Insured-Plaintiff closed its case-in-chief that took five days to present, we called as our first witness, the ex-employee of the Plaintiff's-Insured's closely held corporation who had previously testified in its behalf at the Examination Under Oath (approximately 150 pages), on behalf of the Plaintiff/Insured/Corporation in response to a (b)(6) deposition during the litigation (approximately 175 pages), and after he became an ex-employee of the insured corporation in a videotaped deposition (approximately 125 pages).
"Objection, Your Honor," shouted opposing counsel. "We renew our Motion in Limine to preclude any testimony from this individual being presented to this jury either live on the stand, or by way of reading the transcript or playing the video and audio of the Examination Under Oath and Depositions."
"Yes. I understand. I have read your memo in support of such a motion. I am going to grant that motion."
My head turned quicker than Linda Blair's. "But, Your Honor. Respectfully, what is the basis for such a ruling? What are your findings of fact in support of precluding the testimony of this man?"
"Mr. Pappas, I find him legally incompetent to testify."
"But Your Honor, he is a 42-year-old man who is a licensed electrician, who makes $80,000 a year and who has sole custody of his 8 year-old daughter. There is no finding by any doctor, psychiatrist, or psychologist or even contention that he does not have the intellectual capacity to be legally competent to testify."
"He is a perjurer, Mr. Pappas."
"Excuse me, Your Honor?"
"It is well documented that in this matter he has perjured himself in his testimony at Examination Under Oath and in subsequent depositions at least sixteen different times. Therefore, I find him legally incompetent to testify in this matter."
"But, Your Honor, that is one of the reasons stated by my client in its denial of this insurance claim. My client has always contended in the claim and subsequent litigation that one of the major reasons why the claim was denied was because this gentleman, acting in behalf of the Plaintiff intentionally misrepresented material facts concerning the loss and claim. That is he lied. That is he committed perjury. We agree that he is a perjurer but this does not preclude him from testifying. It certainly does not make him legally incompetent to testify."
"In my Court, it does, Mr. Pappas. Your client cannot call him to the stand and cannot read or play back any of his testimony; however, to the extent he made statements to others that are otherwise admissible, that were not while he was under oath, I will allow such statements to come into evidence."
"Excuse me. The hundreds and hundreds pages of this man's testimony while under oath you are ruling are not admissible but the statements he made while not under oath, you are ruling are admissible."
"You now understand my ruling Mr. Pappas."
* * *
Then there was the Federal Court case in which I thought a witness should not be allowed to testify.
"Your Honor, we renew our Motion in Limine to preclude this gentleman from testifying. He has no expertise in any matter relevant to this case therefore, we ask that his testimony be precluded, at least to the extent it is supposedly expert opinion testimony."
"Mr. Pappas, your Motion in Limine is denied. Plaintiff call your witness."
Plaintiff's counsel proceeded to call his witness, "qualified" him as an expert on the topic of appraisal and appraisal procedures over my objections, elicited numerous 'expert' opinions about the appraisal process and the appropriate procedure for the appraisal process. I then began my cross-examination.
"Mr. Midas, you have just rendered numerous opinions about the appraisal process and the appropriate appraisal procedure in this state, correct?"
"Yes, sir."
"Well, are you a lawyer?"
"No."
"Are you familiar with the law of this state that dictates what is the appropriate process and procedure for appraisal –"
"Objection, Your Honor –"
"Sustained."
"Excuse me, Your Honor."
"Mr. Pappas, the objection is sustained, move on."
"Okay. Sir, are you familiar with the laws that govern appraisal and appraisal procedure in Florida?"
"Mr. Pappas. I have sustained the objection. I told you to move on. Move on. No more questions of this witness concerning appraisal, appraisal process, or appraisal procedure."
"But Judge, that was what his testimony was all about, over my objections."
"Mr. Pappas, you are on the verge of being held in contempt of court. No more questions of this appraisal expert from you on the topic of appraisal – do you understand?"
"I think I do. Given the testimony of this witness, and your order concerning my continuing questioning of this witness, I believe I have no choice but to say I have no more questions."
"Apparently you do understand."
* * *
About ten years ago I was trying a $50 million dollar business interruption claim in Federal Court in West Palm Beach. It was a non-jury bench trial. After the third day of trial the white-haired and polite Federal Judge interrupted one of my cross-examinations.
"Mr. Pappas. Excuse me."
"Yes, Your Honor."
"The past three days you have been using the term 'B.I.'"
"Yes, sir."
"You mean 'bodily injury,' correct?"
"No sir, 'B.I.' means 'Business Interruption.'"
"Oh," the good judge said making a note, as my client squirmed in disbelief.
* * *
Although now such vignettes seem humorous, I can assure you at the time, no one was chuckling. America's civil justice system is far from perfect – in fact it has many problems – some fundamental. Whatever the system, it cannot be better than the persons charged with the duty to protect its integrity. Otherwise, whenever a society, especially a free democratic society begins to doubt the "justice" of its civil justice system, the corrosion of that society's norms and values cannot be far behind. As Joel Levin eloquently stated in his disappointingly accurate article, "Tort Talk:"
Central to conversation, communication, and knowledge in civilized life is the concept of truth, a concept that allows us to make sense of each other by assuming we are communicating based on justified true beliefs. There have always been in law generally, and tort law in particular; countervailing values to truth – justice, privilege, governmental restraint, and the utility and functioning of the adversary system – to be weighed.
Recently, however, the entire notion of honest communication, often indifferent to or contemptuous of truth, has declined and been rendered nearly incoherent. The causes are numerous – a politicized bench and bar; a warrior ideology, incompetence regarding fundamental statistical and scientific concepts, and an advocacy agenda out of control, to name a few – but the consequences of wandering in a wilderness indifferent to truth are unexpectedly profound. The result is a system in free fall, both in terms of its integrity and its irrelevance to greater social and economic realities.[FN1]
Sadly, my experiences confirm that our civil justice system is presently lost in such a "wilderness."
Footnote
FN1. 40, Tort Trial & Ins. Prac. L.J., No. 4, p. 1019 (Summer 2005).