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State Farm Insurance v. Warth

Court of Appeals of Iowa

September 26, 2018

STATE FARM INSURANCE, Plaintiff-Appellee,
v.
CHRISTINE WARTH, as parent of Z.W. and Z.W., a minor child, Defendants-Appellants.

          Appeal from the Iowa District Court for Des Moines County, Shawn R. Showers, Judge.

         An automobile owner whose minor son crashed into a horse trailer appeals the award of property damages to the insurance company that paid claims to its customer who owned the trailer.

          Randy J. Wilharber and Clarissa A. Bierstedt of Peddicord, Wharton, LLP, West Des Moines, for appellant.

          Jeremy L. Merrill of Lubinus Law Firm, PLLC, Des Moines, for appellee.

          Considered by Vaitheswaran, P.J., and Potterfield and Tabor, JJ.

          TABOR, JUDGE.

         Christine Warth gave her minor son permission to drive her Ford Taurus in June 2014. He failed to yield at an intersection on Highway 34 in Burlington and crashed into a horse trailer owned by Sally Prickett and insured by State Farm Insurance (State Farm). In this appeal, Warth challenges the district court's award of $12, 373 in damages to State Farm. She alleges the district court improperly admitted several exhibits relied upon to establish the amount of damages to the trailer. Because the exhibits contained inadmissible hearsay and did not fit within the business-records or residual exceptions cited by the district court, we reverse the damage award and remand for further proceedings.

         I. Facts and Prior Proceedings

         On June 7, 2014, Alana McNutt was driving a Dodge Truck and pulling a horse trailer owned by her mother-in-law, Sally Prickett, when the collision occurred. Prickett had purchased an insurance policy from State Farm to cover the trailer. In December 2015, State Farm, as Prickett's subrogee, filed a petition seeking $16, 406 in damages from Warth. In June 2017, Warth conceded liability for the accident, leaving the amount of damages as the remaining issue for trial.

         At a bench trial in July 2017, plaintiff State Farm called adjuster Lisa Stichter as its only witness. Through Sticher's testimony, State Farm offered two exhibits. Exhibit 1 was an invoice addressed to Prickett from Sam's Body Shop for $2, 792 for towing and storage from June 7 to September 22, 2014. Exhibit 2 was an invoice dated July 29, 2014, addressed to Prickett from 4-Star Trailers, Inc. (4-Star), showing an "Estimate Only" of $12, 373 for parts and labor. The district court admitted these exhibits over Warth's hearsay and lack-of-foundation objections.

         State Farm also presented testimony from Prickett by deposition. Prickett, a veterinarian, testified she designed the four-horse trailer and had it custom made with special features such as a dressing room. Prickett testified although the trailer was built twenty years earlier, it was in "pristine condition" before the collision. Through Prickett's deposition testimony, State Farm offered four additional exhibits.[1] Exhibit 3 included photographs of the damaged trailer. Exhibit 4 was a copy of a cashier's check from Prickett to Sam's Body Shop. Exhibit 5 was a letter dated June 26, 2014, from Ted Nitzel of Central States Trailers (Central States) providing a pre-accident valuation for the 1995 trailer. Exhibit 6 was a letter dated September 19, 2014 from Prickett's attorney to State Farm agreeing to settle her claim for the trailer with State Farm for the sum of $15, 903.

         On August 9, 2017, the district court entered a trial order on damages, concluding State Farm was "entitled to damages in the amount of $12, 373.03 for repair for the trailer." The court decided the remaining amount sought by State Farm was "not reasonable and not supported by the evidence." Warth filed a motion for a directed verdict and a motion to vacate the damage award. The district court reaffirmed its order on damages. The court also noted it was "firmly convinced the Defendant's hearsay objections are subject to the business records exception under Iowa Rule of Evidence 5.803(6) and the residual hearsay exception based on the exhibits' circumstantial guarantees of trustworthiness under Iowa Rules of Evidence [5.807]." Warth now appeals.

         II. Scope and Standards of Review

         We generally review decisions admitting evidence for an abuse of discretion. State v. Paredes, 775 N.W.2d 554, 560 (Iowa 2009). But we review hearsay rulings for legal error. Id. This standard of review extends to determining whether statements fall within an exception to the general prohibition on hearsay evidence. Id. If we find evidence improperly admitted in this nonconstitutional context, we employ a harmless-error analysis. See State v. Sullivan, 679 N.W.2d 19, 29 (Iowa 2004).

         III. Analysis

Warth contends the district court improperly admitted four exhibits:
Exhibit 1: An invoice directed to Prickett from Sam's Body Shop showing the cost of towing and storage from June 7 to September 22, 2014 totaled $2792.
Exhibit 2: An invoice from [4-Star] estimating the expected cost of parts and labor[2] to fix the horse trailer at $12, 373 ...

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