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May 28, 1991


The opinion of the court was delivered by: Rambo, District Judge.


Before the court are the motions for a new trial of defendants Russell W. Mutzabaugh and Mary Jane Sprout. Trial was held before this court on March 11, 1991. At trial, defendants had been assigned the burden of proof because the action was for a declaratory judgment by an insurer seeking to exclude defendants from recovering under the insurer's insureds' policy. At the close of defendants' case, this court granted a directed verdict for plaintiff, holding that defendants had not produced sufficient substantive evidence to carry their burden of proof.

Defendants Mutzabaugh and Sprout now contend that the court made several errors of law at trial which necessitate granting defendants' a new trial.


On April 14, 1990 a car driven by defendant Frank Potter, Jr. for reasons unknown crossed the center line of Route 11 near the Cumberland County-Perry County border. Potter's vehicle collided first with a car operated by Pamela Mutzabaugh and then a pickup truck operated by David Christopher Nott. Both were traveling in the opposite direction. As a result of the accident, the passenger in Potter's car, Nicole S. Sprout, and Mutzabaugh sustained fatal injuries, and the other parties sustained various personal and property injuries.

Subsequently, a number of personal injury and property claims were made against plaintiff Allstate. At the time of these events, Allstate maintained an automobile insurance policy in the names of the Bairs. The policy had bodily injury limits of $100,000 per person and $300,000 per occurrence. Allstate also insured Kenneth Bair under a personal umbrella policy with liability limits of $1 million. The claimants against Allstate contended that Potter was a "resident relative" as defined by the policies and was thus covered by them. In June 1990, plaintiff filed this action pursuant to the Declaratory Judgment Act, 28 U.S.C. § 2201, seeking a declaration of its rights and responsibilities under the two insurance policies.*fn1


A court should grant a new trial pursuant to Federal Rule of Civil Procedure 59 if, among other reasons, the court made a prejudicial error of law during the original trial. 11 C. Wright & A. Miller, Federal Practice and Procedure § 2805 at 38 (1973).

Defendants Sprout and Mutzabaugh allege five errors on the part of the court. The court will address these supposed errors in turn.

I. Burden of Proof

At the pretrial conference, the court announced that defendants would bear the burden of proving that Potter was a resident of his parent's household. Obviously, this was a key ruling to the disposition of the action because much of defendants' case consisted of supposed inconsistencies in statements made by Potter's family, inconsistencies which could likely not be used as substantive evidence in proving defendants' allegations as to Potter's residency but which could chip away at the credibility of the witnesses in disproving plaintiff's case.

The court based its ruling on the following reasoning. In Fireman's Fund Insurance Co. v. Videfreeze Corp., 540 F.2d 1171 (3d Cir. 1976), cert. denied 429 U.S. 1053, 97 S.Ct. 767, 50 L.Ed.2d 770 (1977), the Third Circuit Court of Appeals held that the issue of burden of proof is one of substantive, not procedural law, and thus state law governs its disposition under the Erie Railroad doctrine. Here, Pennsylvania's Declaratory Judgment Act, 42 Pa. Cons.Stat.Ann. §§ 7531-7541 (Purdon's 1982), is silent as to the burden of proof in declaratory judgment actions concerning the scope of coverage under an insurance policy. The court could unearth no interpretive case law assessing such a burden.

Fireman's Fund involved a declaratory judgment action brought by an insurer against its insured under the Virgin Islands' Declaratory Judgment Act to determine who was responsible for damage allegedly inflicted on the insured property by an earthquake. Defendant asserted that since the damage was caused by an earthquake, it was covered by its insurance policy with plaintiff, while the plaintiff insurer insisted that the damage was due to other causes.

Like its Pennsylvania counterpart, the Virgin Islands' act does not address the issue of burden of proof. In crafting a burden of proof standard, the Third Circuit relied on a New Hampshire case, Travelers Ins. Co. v. Greenough, 88 N.H. 391, 190 A. 129 (1937), where the New Hampshire Supreme Court "refused to displace the burden of proof of coverage from its normal location on the insured despite the reversed positions of the parties in the action." Fireman's Fund, 540 F.2d at 1175. In Greenough, the Third Circuit noted, the New Hampshire court, quoting Wigmore, also emphasized that the hallmark of burden of proof analysis is flexibility and "`broad reasons of experience and fairness.'"

In addition, the Third Circuit found persuasive the reasoning of the Eighth Circuit in Reliance Life Insurance Co. v. Burgess, 112 F.2d 234 (8th Cir. 1940), cert. denied, 311 U.S. 699, 61 S.Ct. 137, 85 L.Ed. 453 (1940) in concluding that the risk of non-persuasion "rests upon the party who, as determined by the pleadings, asserts the affirmative of an issue and it remains there until termination of the action." Id. at 238.

The Fireman's Fund court identified four factors to aid in assigning the burden of proof in a declaratory judgment action: 1) whether plaintiff objected to assuming the burden of proof; 2) which party asserted the affirmative of the issue; 3) which party would lose in the absence of any evidence on the issue; and 4) what sort of relief is sought. Using these factors, the Fireman's Fund court placed the burden on defendant.

Applying the Fireman's Fund factors to the present case, it appears that defendants here were properly made to bear the burden of proof at trial. First, Allstate, the plaintiff, is the party which first balked at assuming the burden. Second, the crux of defendants' case is the assertion that the driver Potter was living with his parents and thus was an insured under his parents' policy. This is a factual question directly analogous to the factual question in Fireman's Fund where the defendant/insured asserted that the damage done to its property was the result of an earthquake, which was covered under the policy, and not heavy rains, which were not. As the court noted in Fireman's Fund, "the insured is typically charged with proving that his loss was covered under the insurance contract." 540 F.2d at 1171. Thus, defendants appear to be asserting the affirmative of the issue. Third, and closely related to the "affirmative of the issue factor," is that defendants here, in seeking to place Potter within the umbrella of the policy, risk default if they fail to produce any evidence of coverage. This is in line with the reasoning in Fireman's Fund, ...

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