§ 12:78 Motion to exclude evidence not contained in the file at time of denial

[Insert caption]

MOTION IN LIMINE TO EXCLUDE EVIDENCE NOT CONTAINED IN THE FILE AT THE

TIME OF DENIAL

TO: ALL PARTIES AND THEIR RESPECTIVE ATTORNEYS OF RECORD:

PLEASE TAKE NOTICE THAT plaintiff hereby moves this Court for an order
instructing defendant insurer and its counsel not to refer to, interrogate concerning, comment
on or attempt to suggest to the jury that the denial of insurance coverage under the terms of
defendant's insurance policy was based on any information other than what was in the claim
file at the time of denial.

This motion is based upon the grounds that this evidence would be irrelevant to the issues
in this case and that an insurer has a statutory duty to investigate a claim before issuing its
denial.

This motion is made under the provisions of Evidence Code Sections 352 and 350, and is
based on the supporting Memorandum of Points and Authorities, the pleadings and papers on
file in this action, and upon such of the argument and evidence as may be presented prior to or
at the hearing of this matter.

Dated [ ]

MEMORANDUM OF POINTS AND AUTHORITIES

1.
PRELIMINARY STATEMENT

Defendant Insurance Company generated and produced to plaintiff a claim file that
commenced in approximately August 1994 until it was closed on or about July 28, 1997.
The claim file indicates plaintiff's claim was denied on or about July 21, 1997.

The essence of this motion is to prohibit defendant Insurance Company from

introducing evidence of reasons for denial of plaintiff's claim other than those in the file as
of July 21, 1997. The court should not allow the introduction of any subsequently obtained
evidence by defendant that is offered for the purpose of justifying the denial of plaintiff's
claim.

Plaintiff expects defendant will try to offer a number of other, subsequently-discovered

grounds for denying the claim, such as other reasons in the insurance policy, or other
reasons manufactured by lawyers that they will then seek to have their experts corroborate.
The law plainly forbids any “Monday-morning” quarterbacking such as this.

2.
THIS COURT MAY EXCLUDE PREJUDICIAL EVIDENCE IN ADVANCE OF TRIAL BY
WAY OF AN IN LIMINE MOTION
 The Court has the inherent power to grant a motion in limine to exclude “any kind of
evidence which could be objected to at trial, either as irrelevant or subject to discretionary
exclusion as unduly prejudicial.” Clemens v. American Warranty Corp., 193 Cal. App. 3d
444, 451, 238 Cal. Rptr. 339 (2d Dist. 1987); Peat, Marwick, Mitchell & Co. v. Superior
Court, 200 Cal. App. 3d 272, 288, 245 Cal. Rptr. 873 (1st Dist. 1988).

Evidence Code Section 352 allows the court to exclude evidence where there is a
substantial danger that the probative value will be outweighed by the danger of undue
prejudice. See People v. Cardenas, 31 Cal. 3d 897, 904, 184 Cal. Rptr. 165, 647 P.2d 569
(1982).

Evidence Code Section 402 allows the court to hear and determine the question of the
admissibility of evidence outside the presence or hearing of the jury. See Mize v. Atchison,
T. & S. F. Ry. Co., 46 Cal. App. 3d 436, 448, 120 Cal. Rptr. 787 (2d Dist. 1975).

3.
ANY REFERENCES TO REASONS OTHER THAN THOSE OBTAINED IN THE FILE AT
THE TIME OF DENIAL ARE IRRELEVANT AND SHOULD BE EXCLUDED

Evidence Code Section 350 states that “(n)o evidence is admissible except relevant
evidence.” Relevant evidence is defined by Evidence Code Section 210 as “having any
tendency in reason to prove or disprove any disputed fact that is of consequence to the
determination of the action.” See People v. Kelly, 1 Cal. 4th 495, 523, 3 Cal. Rptr. 2d 677,
822 P.2d 385 (1992). The court has no discretion to admit irrelevant evidence. People v.
Keating, 118 Cal. App. 3d 172, 179-80, 173 Cal. Rptr. 286 (1st Dist. 1981).

The evidence upon which defendant relied at the time of denial is the key criteria
regarding the reasonableness of the defendant Insurance Company's decision to decline
payment of plaintiff's claim. Reasonableness should be measured as of the time the
decision was made. The only evidence that has any bearing on an insurance company's
obligation to be reasonable would be the facts the insurance company had at the time it
decided insured's claim. Wetherbee v. United Ins. Co. of America, 18 Cal. App. 3d 266,
270, 95 Cal. Rptr. 678 (1st Dist. 1971). It stands to reason, therefore, that any investigation
of the claim, which took place after defendant denied plaintiff's claim, must be excluded as
irrelevant.

In Mullen v. Glens Falls Ins. Co., 73 Cal. App. 3d 163, 173, 140 Cal. Rptr. 605 (5th
Dist. 1977) (rejected by, Yap v. Industrial Indemnity Co., 1993 WL 309598 (Cal. App. 1st
Dist. 1993)), the court refused to allow an insurer to use the “hindsight test” to support a
denial of coverage. The Mullen court said:

The inquiry narrows to whether an insurance company can, without having all
of the facts before it, refuse to defend an insured in a lawsuit brought against
the insured, if at the time the company denies the defense, it is aware of some
facts indicating potential liability under the policy . . . .

We believe that public policy alone mandates a negative answer to the

question; otherwise an insurance carrier could refuse to defend its insured on
the slightest provocation and then resort to hindsight for the justification.
Furthermore, a contrary holding would force the insured to finance his own
investigation and the defense of the lawsuit, and then to seek reimbursement in
a second lawsuit against the insurance company.
 Id. at 173.

In Austero v. National Cas. Co., 84 Cal. App. 3d 1, 32, 148 Cal. Rptr. 653 (4th Dist.
1978) (disapproved of by, Egan v. Mutual of Omaha Ins. Co., 24 Cal. 3d 809, 169 Cal.
Rptr. 691, 620 P.2d 141 (1979)) and (rejected by, McCormick v. Sentinel Life Ins. Co.,
153 Cal. App. 3d 1030, 200 Cal. Rptr. 732 (2d Dist. 1984)), the court ruled:

In evaluating the evidence to see if there was any unreasonable conduct by the
Company, it is essential that no hindsight tests be applied. The reasonable or
unreasonable action by the Company must be measured as of the time it was
confronted with the factual situation to which it was called upon to respond.

There are good, solid reasons why the law prevents insurers from using evidence
developed after-the-fact, including an insurer's duty to investigate, to communicate, and to
provide coverage.

4.
DUTY TO INVESTIGATE CANNOT BE SUBSUMED BY AFTER-ACQUIRED EVIDENCE

The defendant Insurance Company's duty to investigate is of paramount importance. An

insurance company has a duty to fully investigate any potential of coverage for a claim.
Egan v. Mutual of Omaha Ins. Co., 24 Cal. 3d 809, 817, 169 Cal. Rptr. 691, 620 P.2d 141
(1979). Further, the Insurance Code has mandated that an investigation be prompt.
Insurance Code §790.03(h)(3). Lastly, an insurance company is prohibited from focusing
its investigation on just those facts that would justify denial of the claim. Mariscal v. Old
Republic Life Ins. Co., 42 Cal. App. 4th 1617, 1623, 50 Cal. Rptr. 2d 224 (2d Dist. 1996),
as modified, (Mar. 28, 1996) and as modified, (Mar. 29, 1996).

In view of the great importance of the duty to investigate before an insurance company
denies a claim, it would be contrary to law as well as unjust to allow the defendant to
introduce evidence obtained after its denial of coverage in order to justify the wrongful
reasons for the denial.

Clearly, if an insurance company could deny a claim without thoroughly investigating

the claim and then defend a subsequent lawsuit on grounds, which it develops during
discovery for trial, the insurance company's incentive to fulfill its duty to investigate would
be significantly diminished, it not demolished.

In this case, defendant denied plaintiff's claim many years ago. It did so strictly on the
basis that the claim was “late,” based upon the information that was contained in the claim
file at that time. However, over the last several years, defendant may have concocted new
justifications supporting denial of the claim. In fact, it has raised many affirmative defenses
suggesting such “justifications.”

According to the legal authorities discussed above, and others on which they, in turn,
rely, the only evidence, which the defendant may introduce to support its denial, has to be
the evidence that it had in its claim file at the time it made the decision to deny Plaintiff's
claim.

5.
CONCLUSION
 For the forgoing reasons, plaintiffs ask the court for an order admonishing all parties,
their counsel, and their witnesses, not to attempt to introduce evidence in any form and not
to suggest, comment directly or indirectly upon, or refer to the following:

1. Any reason for defendant's denial of plaintiff's claim, other than the sole reason
that defendant based its denial, which was that the claim was “late”;

2. Any facts regarding a possible basis for denial of the plaintiff's claim, other than
those that the insurer had in its claim file at the time the claim was denied;

3. Any expert opinion as to the propriety of the defendant's denial of plaintiff's claim,
which opinion is based on anything other than the facts which were in the claim file at
the time that the claim was denied;

4. The results of any post-denial discovery or investigation in any way related to the
basis for the denial of the claim other than the facts that were in the claim file of the
defendant at the time the denial took place.

DATED: [ ]

By: _______________

[name of counsel]

Attorneys for PLAINTIFF,

[name of plaintiff]