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