There is no formbook of jury instructions for complex insurance-coverage disputes, and even were there such a tome at best it would be a point of departure and not the destination. Complex insurance coverage disputes are marked by factual uncertainty, difficult legal terrain, and close parsing of issues. One mistake that lead counsel often makes in my view is not to personally take ownership of the jury instructions and instead delegates their preparation to the junior member of the team. Ultimately, it is the jury instructions that determine the case – and the appeal. Thus, it should be the responsibility of lead trial counsel to be intimately familiar with the drafting, submission, and argument over instructions to the jurors.
When we prepare instructions for jurors, we try to focus on making issues understandable to jurors by breaking down issues into understandable bites. Further, we typically will structure the instructions as a recipe: a logical step-by-step decision tree leading to a (correct) result. There is no profit in trying to trick the jury or the judge into giving the wrong or misleading instructions, for that simply invites error (and retrial – and thus further delay in the policyholder’s receiving recovery). So while there is always the temptation to structure the instructions to place the jury’s thumb on the scale, experienced counsel will demur.
This holds true for both instructions that are submitted to juries and those that are not. For cases that are tried, the instructions are “the thing.” (Hamlet, II, ii, 633) Evidentiary errors are often shielded by the court’s discretion and fights over the admission of evidence – which we surely pursue – often seem to tread over the line of trial and appellate court patience. See R&B Auto Center, Inc. v. Farmers Group, Inc. (Cal. Ct. App. June 9, 2006). Evidentiary rulings can reflect the substantive law, and thus motions in limine can be a proper vehicle for elucidating the legal issues in a case. But it is the jury instructions that form the actual basis for the trial-court judgment, and just as lead counsel focuses on his or her opening statement and closing argument, so too should the jury instructions be the subject of high-level attention.
One reason that this does not occur is that the preparation of jury instructions is tedious. One needs not only to draft the recipe for proper decision but also the supporting authority as to why the instruction is proper. Where true substantive issues are involved, we try to frame issues discretely for the court to decide and support our legal position with what I term “brieflets.” A brieflet is the supporting essay found below the instruction that supports its being offered. A brieflet can be as much as a several page essay replete with case discussions both within the jurisdiction and from across the nation. Often I find that the law in a state needs to be clarified or granulated, so we will argue for the extension or refinement of existing law in our instruction and supporting brieflet. If we don’t do this, then we may not be able to argue on appeal that the law should be one way or another. Appellate courts correct errors, and if we as the trial lawyers do not give the trial court the “opportunity” to commit error there is nothing for the appeals court to do when we complain about a misguided result.
Of course, this all can annoy the trial judge, yet as lawyers we need to take into account the needs of the trial court but also the need to preserve our record. Unfortunately, since instructions really are “the thing,” trial judges should devote their attention to the fine details of the instructions. All too often, however, I find that trial judges are not pleased by being invited to chew into a case and struggle with instructions.
Let me give an example by listing the titles for the instructions we proposed in a recent case in Arizona:
Preliminary (i.e., before commencement of the trial) Instructions
Nature of the case
Outline of the Trial
Duty of Jurors
Weighing Conflicting Testimony
Rulings of the Court
Credibility of Witnesses
No Trial Transcript for the Jurors; Taking Notes
Questions by Jurors
Bench Conferences and Recesses
Final Jury Instructions
Duty of Jurors
Instructions Are to Be Considered as a Whole
What Is Evidence
What Is Not Evidence
Direct and Circumstantial Evidence
Rulings of the Court
Credibility of Witnesses
Depositions as Substantive Evidence
Prior Inconsistent Statements
Weighing Conflicting Testimony
Evidence Admitted for Limited Purpose
Stipulations of Fact
Admissions of Party Opponent
Charts and Summaries in Evidence
Charts and Summaries Not Received in Evidence
Burden of Proof (Preponderance of the Evidence)
Breach of the Policy
Breach of [Separate Claims Handling] Agreement
Terms of a Contract
Breach of Contract – Duty to Defend
Damages for Breach of Contract
Duty of Good Faith and Fair Dealing
Breach of Good Faith and Fair Dealing Damages
Communications Between Court and Jury During Deliberations
Chance Verdict Prohibited
Excused Alternate Jurors
Conclusion and Verdict
Many of these instructions are really multiple instructions with discrete subparts and issues. Some of the accompanying brieflets are several pages long as we try to support why we are drilling down so much and articulating matters as we do.
As an example, one key can be the burden of proof on issues, and the ping-pong between what satisfies the policyholder’s prima facie case and how the carrier then has the ability to overcome that proof. If we take defense costs, for instance, then the policyholder’s offering of invoices satisfies its prima facie case as to the incurrence of damages and their presumptive reasonableness; the insurer then has the opportunity under Hadley v. Baxendale to show that the particular costs constitute unforeseeable damages or that some portion of the costs incurred are wholly attributable to an excluded head of loss (for which the insurer bears the burden of proof). Accordingly, we need to structure our introduction of evidence in a fashion that is mindful of our satisfying the elements of our prima facie case such that without more a verdict in our favor could be properly supported and defended on appeal.
It is necessary in the jury instructions, however, to set forth that we have satisfied our burden of proof by introducing the invoices, so that the jury can award us these damages; the jury then can consider whether the carrier has carried its burden of showing that the costs are not recoverable. But it is error to conflate this all to instruct the jury that the policyholder is entitled to its reasonable costs of defense. The policyholder in fact is entitled to all costs of defense it incurred, except to the extent the carrier has a legal basis not to pay under the policy or according to the standards governing recovering damages at trial for breach of contract. So a relatively straightforward bottom line – the reasonable costs of defense – ends up with a multipart decision tree that incorporates the nature of the proof and the shifting burden of proofs between the policyholder and its insurer.
On the other side of the equation, diligent counsel needs to look carefully at the instructions proposed by the other side. Accordingly, when the insurer submits its set of instructions, it is crucial that the policyholder set forth specific objections to those instructions where appropriate. And those objections can be either or both substantive (as a matter of insurance law) or based on the standards for properly articulating instructions for a jury. In terms of substance, once again we will submit a brieflet on why the carrier’s substantive articulation of the rule of law is in error. This is a crucial brieflet because if the court does submit the carrier’s proposed instruction our grounds for appeal principally will be that the court erroneously rejected the legal position we articulated (thus necessitating that we in fact articulate the grounds and arguments).
Among the general types of objections that one can make are these (again taken from our recent Arizona case), one can object to an instruction to the extent:
1. They are misleading or confusing. See Life Investors Ins. Co. of Am. v. Horizon Res. Bethany, Ltd., 182 Ariz. 529, 532, 898 P.2d 478, 481 (Ct. App. 1995) (holding a jury instruction should not mislead the jury).
2. They incorrectly charge the jury. See Valley Nat’l Bank v. Witter, 58 Ariz. 491, 121 P.2d 414 (1942) (holding that a jury should not be instructed through an instruction that only partially states the applicable law); State v. Bass, 198 Ariz. 571, 576-77, 12 P.3d 796, 801-02 (2000) (holding jury instructions must not misstate the applicable law, and must not mislead or confuse).
3. They do not inform the jury of the applicable law in understandable terms. See Barrett v. Samaritan Health Services, Inc., 153 Ariz. 138, 143, 735 P.2d 460, 465 (Ct. App. 1987).
4. We already provided a corresponding instruction that contains clearer and more understandable terms. See Noland v. Wootan, 102 Ariz. 192, 194, 427 P.2d 143, 145 (1967) (“The purpose of jury instruction[s] is to inform the jury of the applicable law in terms they can readily understand. It is therefore inappropriate to employ words in jury instructions which are susceptible to more than one definition, one of which does not properly expound the law of the case to the jury.”).
5. They misstate the law. See State v. Bass, 198 Ariz. 571, 576-77, 12 P.3d 796, 801-02 (2000) (holding jury instructions must not misstate the applicable law); State v. Hussain, 189 Ariz. 336, 337, 942 P.2d 1168, 1169 (Ct. App. 1997) (holding no err in refusing to give a jury instruction that is an incorrect statement of the law); Nichols v. Baker, 101 Ariz. 151, 416 P.2d 584 (1966).
6. They are not predicated upon the facts of the case. See State v. Hussain, 189 Ariz. 336, 337, 942 P.2d 1168, 1169 (Ct. App. 1997) (holding no err in refusing to give a jury instruction that does not fit the facts of the case); State v. Williams, 120 Ariz. 600, 601-2, 587 P.2d 1177, 1178-79 (1978) (holding that an instruction is misleading if it is not predicated on some theory of the case which may be found in the evidence).
7. They will not be supported by evidence admitted at trial. See State v. Williams, 120 Ariz. 600, 601-2, 587 P.2d 1177, 1178-79 (1978) (holding that an instruction is misleading if it is not predicated on some theory of the case which may be found in the evidence); State v. Allen, 400 P.2d 589, 529, 1 Ariz. App. 161, 164 (1965) (holding that “an instruction must be based not on a theory but upon something which is backed by some substantial evidence introduced in the case”).
8. They allow jury speculation on issues. See Brierley v. Anaconda Co., 111 Ariz. 8, 12, 522 P.2d 1085, 1088-89 (1974) (holding “it is reversible error to instruct on a theory which is not supported by the facts since the court thereby invites the jury to speculate as to possible non-existent circumstances”).
9. They do not address claims raised in the insured’s pleadings. See Porterie v. Peters, 111 Ariz. 452, 455, 532 P.2d 514, 517 (1975) (holding that the correctness of instructions given in a case must be determined in the light of the issues “raised by the pleadings”).
10. They assume facts properly determined by the jury. See State v. Patterson, 4 Ariz. App. 265, 267, 419 P.2d 395, 397 (1966) (stating that the jury should be properly instructed and be left to determine the facts).
11. They indicate any breach of duty by the insured or indicate there is a triable issue on any alleged breach by the insured, where the insured denies there is a basis for submitting such issues to the jury. See Sparks v. Republic Nat’l Life Ins. Co., 133 Ariz. 529, 539, 647 P.2d 1127, 1137 (1982) (“error to instruct the jury on a legal theory which is not supported by the evidence”).
See generally Walbolt and Alonso, Jury Instructions: A Road Map for Trial Counsel, 30 Litigation 29 (Winter 2004).
Most objections, however, are not general like the foregoing but rather go to quite detailed objections of articulation – the instruction unfairly embraces the proffering party’s theory of the case – or that they misstate the details of the law. A recent Tennessee Supreme Court decision addresses appellate review of instructions on substantive grounds. Johnson v. Tennessee Farmers Mut. Ins. Co., (Tenn. Aug. 28, 2006).
The key question there was third-party bad faith, that is, a claim that the insurer unreasonably failed to settle a liability case against the insured resulting in a judgment against the insured in excess of policy limits that could have been avoided had the earlier settlement offer been accepted. The Tennessee Supreme Court on review held that “Where a special instruction that has been requested is a correct statement of the law, is not included in the general charge, and is supported by the evidence introduced at trial, the trial court could give the instruction’ [but] [r]eversal of a judgment is appropriate . . . only when the improper denial of a request for a special jury instruction has prejudiced the rights of the requesting party.” Slip op. at 4.
In Johnson, the carrier argued that it was error for the court not to submit four instructions to the jury, all going to different ways of articulating that bad faith requires some sort of malevolence above and beyond negligent conduct. For example, the insurer argued that the trial court erred in refusing to submit the following instruction:
“Bad faith embraces more than bad judgment or negligence and it imports a dishonest purpose, moral obliquity, conscious wrongdoing, breach of a known duty through some ulterior motive or ill will partaking of the nature of fraud, and it embraces an actual intent to mislead or deceive another.”
The Tennessee Supreme Court affirmed the trial court’s correct decision not to give this instruction holding that the proposed instruction did not accurately state the law. Slip op. at 6. Cf. Rawlings v. Apodaca, 151 Ariz. 149, 160, 726 P.2d 565, 576 (1986) (For first-party bad faith, the insurer need only “form that intention without reasonable or fairly debatable grounds. [A]n ‘evil mind’ is not required.”).
Trial counsel is required to know the details of the law and what the facts will support; trial counsel must think about how the evidence will go in and how the evidence meshes with the instructions; counsel must understand what the instructions will be and develop the case and introduction of evidence to match the instructions; and counsel must be able to object on all proper bases to the other side’s proposed instructions, both as a matter of substantive law and as a matter of poor or inappropriate articulation. All this is tedious, especially when trial counsel wants to focus on the more glamorous (or stressful) tasks of examining and cross-examining witnesses and making the opening statement and closing argument. But it is not enough to plan on winning at trial; one must be able to sustain that victory on appeal. (Or unhappily, one must be able to turn around an adverse trial verdict on appeal by pointing out that the judgment was due to an error in the instructions and what the jury was erroneously asked to decide.)
Preparing jury instructions in a complex coverage case requires considerable effort in terms of legal research and fine drafting. Standard, formbook instructions do not exist or frankly are inartfully articulated, even as to the most basic instruction on what is a preponderance of evidence or a prior inconsistent statement. (But a useful exception is the new plain-English instructions from California. ) Counsel has a duty not only to the client but also to help the lay people on the jury actually understand what they are being asked to decide. The last thing one wants is an unhappy, confused jury. The instructions really are “the thing” – and as such are the responsibility of lead counsel to get right and to shape as much as the order of witnesses and the development of the evidence at trial.