Petition for Writ of Certiorari — Polk v. Dixie Insurance

; (,) Supreme Court, U.S,

90 -2 40 *~ FILED

we | wo

k JOSEPH F. SPANGOL,

NO. 3 CLERK

In The

Supreme Court of the United States

OCTOBER TERM, 1990

JAMES L. POLK AND MATTIE B. POLK,

Petitioners

VERSUS

DIXIE INSURANCE COMPANY,

Respondent

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JIM WAIDE

ATTORNEY AT LAW

111 SOUTH BROADWAY

POST OFFICE BOX 1357

TUPELO, MS 38802

601/842-7324

Attorney for Petitioners

i

QUESTIONS PRESENTED

1. Whether the rule of Batson v. Kentucky, 476 U. S. 79, 106

S. Ct. 1712, 90 L. Ed. 2d 69 (1986) applies to civil cases between

private parties.

2. Whether the United States Constitution prohibits a private

party from exercising peremptory challenges based upon race.

3. Whether governmental action is present when private par-

ties exercise their peremptory challenges to excuse black jurors

because of their race.

4. Whether a civil litigant, in United States District Court, may

utilize peremptory challenges to challenge all black jurors without

stating any non-racial reason.

ii

TABLE OF CONTENTS

PAGE

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Argument

THE WRIT SHOULD BE GRANTED, SINCE THE

FIFTH CIRCUIT‘S DECISION IS CONTRARY TO THE

HOLDINGS OF OTHER CIRCUITS; SINCE THE FIFTH

CIRCUIT'S HOLDING IS INCONSISTENT WITH

BATSON V. KENTUCKY, 476 U. S. 79, 106 S. CT.

1712, 90 L. ED. 2d 69; AND SINCE THE FIFTH CIR-

CUIT’S RULING IS INCONSISTENT WITH VARIOUS

PRECEDENTS OF THIS COURT DELINEATING THE

MEANING OF FOURTEENTH AND FIFTH AMEND

oy ile ey tS. ene err ore

PTS PRs s ves occ acnven eeau swans a eweenaeeenees 14

iii

TABLE OF AUTHORITIES

CASES PAGE

Adickes v. S. H. Kress & Co., 398 U. S. 144,

26 L. Ed. 2d 142, 90 S. Ct. 1598 1970.............. 10

Batson v. Kentucky, 476 U. S. 79, 106

Re KR eee ee,

Blum v. Yaretsky, 457 U. S. 991 (1982).............000., 10

Bolling v. Sharpe, 347 U. S. 497, 74

fee ee ee 2

Burton v. Wilmington Parking Authority,

365 U. S. 715, 81 S. Ct. 856, 6 L.

eS GNU hash Oakes ee oec es ceeee 9, 10

City of Miami v. Cornett, 463 So. 2 d 399

Se) eee WVER TSH eee ceccrereas 6, 7

Edmondson v. Leesville Concrete Co., Inc.,

as Me ON EE, EWU. ccc cer cc ccc cescccens 5, 6

Flagg Bros. v. Brooks, 346 U. S. 149 (1978)............. 10

Fludd v. Dykes, 863 F. 2d 822 (11th Cir. 1989)............ 6

Holley v. J & S Weeping Co., 192 Cal. Rep.

eee cakes keacereerescenener 7

Jackson v. Metropolitan Edison Co., 419 U. S.

ec La Sad swe aSevcessseccceoves 10

Lugar v. Edmonson Oil Co., Inc., 457 U. §. 922, 102

S. Ct. 2744, 73 L. Ed. 2 d 482 (1982)........ 3,9, &

Reynolds v. City of Little Rock, 893

Eo cccscccseesoccscessccece 6

Terry v. Adams, 345 U. S. 461, 73 S. Ct. 809,

EN ans bone eney ee neecocensod 9, 10

CONSTITUTION INVOLVED

Fourteenth Amendment, United States Constituion...... Passim

Fifth Amendment, United State Constitution........... Passim

]

IN THE

SUPREME COURT OF THE UNITED STATES

JAMES L. POLK and MATTIE B. POLK,

Petitioners

VERSUS

DIXIE INSURANCE COMPANY,

Respondent

PETITION FOR WRIT OF CERTIORARI

TO THE UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

OPINION BELOW

The Opinion of the United States Court of Appeals for the Fifth

Circuit is reported at__ F. 2d_____ (Sth Cir. 1990). It is attached

as an Appendix.

JURISDICTION

This Court has jurisdiction to review the decision of the United

States Court of Appeals for the Fifth Circuit entered on April 11,

1990. This Court has jurisdiction to review by Writ of Certiorari

under 28 USC Sec. 1254.

CONSTITUTIONAL PROVISION INVOLVED

The constitutional provision involved is United States Consti-

tution Amendment Five, which says:

‘*No person shall be...deprived cf life, liberty or property

without due process of law....’”

2

This Constitutional provision incorporates the requirement that

black citizens be afforded the ‘‘equal protection of the laws’’.

Bolling v. Sharpe, 347 U. S. 497, 74 S. Ct. 693, 98 L. Ed. 884

(1954).

STATEMENT OF THE CASE

Black Plaintiffs, James L. Polk and Mattie B. Polk, filed suit

in the Circuit Court of Marshall County, Mississippi alleging that

the Defendant, Dixie Insurance Company, issued an insurance policy

on James L. Polk’s 1981 Cadillac and refused payment when the

automobile burned. R. 8-10.

Alleging diversity of citizenship, the Defendant removed the

case to the United States District Court for the Northern District

of Mississippi. R. 1-4. This removal had the effect of greatly

diminishing the prospects of having any blacks on a jury, since Mar-

shall County, Mississippi is predominantly black, while the venue

site of the United States District Court for the Northern District of

Mississippi at Oxford is overwhelmingly white.

Defendant, Dixie Insurance Company, answered the suit claim-

ing that James Polk had intentionally burned his own automobile.

R. 44-58.

Voir dire examination for the trial was had on August 29, 1988.

T, 1-42.

During the voir dire examination, the attorney for Dixie In-

surance Company exercised peremptory challenges on the only two

3

(2) black jurors, leaving the black Plaintiffs with an all white jury.

The following occurred:

‘*MR. WAIDE (counsel for Polks): Excuse me. Before we

read the jury list, I have a Motion I would like to put in

the record based on the challenges that the defense counsel

exercised.

THE COURT: You understand that the government is not

involved in this case?

MR. WAIDE: Yes, sir, Ido, Your Honor, but nevertheless,

there is — well let me just state my Motion for the record

if I might Your Honor.

The Plaintiff moves the Court to require defense to state

some reason in the record for her exercising peremptory

challenges on the only black jurors that were tendered to

her, and we would show to the Court that there are black

Plaintiffs in this case and all the representatives at the

defense table are white. There were only two blacks

tendered to the Defendants, of which they challenged both,

and one of these blacks is actually employed by an insurance

company.

We believe that that constitutes exercising the challenges

on grounds of race, and although this is not a criminal case,

the black people on the jury panel have a right to be con-

sidered on an impartial basis for jury duty, and we have

standing to raise that issue and we believe that they should

be required to not exercise on blacks or to indicate some

non-racial motive for exercising those challenges.

THE COURT: All right, that Motion will be denied, the

government not being involved in this case.”’

R. 30-31.

. An all white jury was seated, after which evidence was receiv-

ed presenting a direct conflict as to whether the Polks were entitled

to the policy proceeds. James Polk testified that the insured

automobile was destroyed by fire, when he went to sleep at the wheel

during the early morning hours of July 30, 1986. The car accident-

4

ally ran off the highway, crashed and burned. T. 96. Polk swore

the automobile was worth more than its insured value, and that he

would never have intentionally burned it. T. 80-85.

On the other hand, the Defendant insurance company presented

testimony by a volunteer fire chief, T. 164, and their arson expert,

T. 183-186, that in their opinion, the car was deliberately burned.

The insurance company also presented evidence that Polk had

purchased another automobile shortly before the accident and that

Polk had been laid off from work a short time before the accident.

T. 50. From this, it was the insurance company’s contention that

Polk had deliberatly burned the car and had lied when he said the

burning was an accident.

The all white jury resolved the factual issues in the insurance

company’s favor. T. 300, R. 490. The District Coui: entered final

judgment in favor of the insurance company on the verdict, R. 491.

Plaintiffs appealed to the United States Court of Appeals for the Fifth

Circuit. Their appeal alleged error in the following respect:

““By refusing to require Defendant insurance company to

State some non-racial reason for excluding black persons

from the black Plaintiffs’ jury, the Court denied Plaintiffs

equal protection of the law as guaranteed by United States

Constitution Amendment 5.”’

Appelants’ Fifth Circuit Brief, pp. 20.

Various other errors were assigned which are not pertinent to

this Petition. Appellants’ Brief, pp. 24-32.

5

On April 11, 1990, the United States Court of Appeals for the

Fifth Circuit affirmed. The Court gave only perfunctory attention

to Plaintiffs’ claim that they were the victims of a denial of equal

protection in the selection of the jury, finding that its en banc deci-

sion in Edmondson v. Leesville Concrete Co., Inc., 895 F. 2d 218

(Sth Cir. 1990) compelled a ruling against the Polks on this point.

The Fifth Circuit gave a detailed treatment to other assignments of

error presented by the Palks, and rejected them.

ARGUMENT

THE WRIT SHOUD BE GRANTED, SINCE THE FIFTH

CIRCUIT’S DECISION IS CONTRARY TO THE

HOLDINGS OF OTHER CIRCUITS: SINCE THE FIFTH

CIRCUIT’S HOLDING IS INCONSISTENT WITH

BATSON V. KENTUCKY, 476 U. S. 79, 106 S. CT.

1712, 90 L. ED. 2d 69; AND SINCE THE FIFTH CIR-

CUIT’S RULING IS INCONSISTENT WITH VARIOUS

PRECEDENTS OF THIS COURT DELINEATING THE

MEANING OF FOURTEENTH AND FIFTH AMEND-

MENT “‘STATE ACTION”.

This case presented a classic issue of fact. On the one hand,

the black Plaintiffs swore that there had been an automobile acci-

dent in which insured automobile was totally destroyed by fire. On

the other hand, the Defendant insurance company produced expert

testimony that the fire was incendiary in origin.

The Plaintiffs were not permitted to put this issue of fact before

a jury of their peers. Instead, the Defendant insurance company was

permitted to exclude Plaintiffs’ fellow black persons from the jury.

The Defendant insurance company even exercised a peremptory

challenge on a black person who was employed by an insurance

6

company! The insurance company, thus, sought to take advantage

of whatever racial bias might exist in the jury pool, in order to have

its version of events accepted. This tactic worked, and Dixie In-

surance Company obtained a verdict in its favor.

The United States Court of Appeals for the Fifth Circuit per-

mitted this result to stand because of its en banc decision in

Edmondson v. Leesville Concrete Co., Inc., 895 F. 2d 218 (5th

Cir. 1990). Edmondson held that ‘‘state action’’ is not present when

a private party exercises peremptory challenges. Therefore, the Fifth

Circuit ruled that Batson v. Kentucky, 476 U. S. 79, 106 S. Ct. 1712,

90 L, Ed, 2d 69 (1986), which prohibits exercise of peremptory

challenges for racial reasons in a criminal case, is inapplicable. This

ruling conflicts with the holdings of the United States Court of Ap-

peals for the Eleventh Circuit in Fludd v. Dykes, 863 F. 2d 822

(11th Cir. 1989), which held that the principles of Batson ‘‘are

equally applicable in the civil context’’. The decision also conflicts

with the decision of the United States Court of Appeals for the Eighth

Circuit in Reynolds v. City of Little Rock, 893 F. 2d 1004 (8th Cir.

1989), which held that the equal protection clause ofthe Fourteenth

Amendment does not *‘contain any latent distinction between criminal

and civil process’’. Further the Fifth Circuit’s interpretation con-

flicts with the interpretation given Batson by state, appellant courts of

Florida, City of Miami v. Cornett, 463 So. 2d 399 (FL App. 1985)

; 7

and California, Holley v. J. & S Weeping Co., 192 Cal. Rep.74

(1983).

The Fifth Circuit’s reasoning is that the exclusion of the black

jurors is not due to any action by a “‘government actor’’, but is ac-

tion by a private individual (the attorney for the insurance company);

thus, the Constitution provides no remedy. While the Fifth Circuit

was correct in holding that ‘‘state action’’ is a condition for the

applicability of the Fifth and Fourteenth Amendments, this Court’s

most analogous precedents indicate such state action was present.

The leading decision is Lugar v. Edmondson Oil Co., Inc., 457 U. S.

922, 102 S. Ct. 2744, 73 L. Ed. 2d 482 (1982). Lugar establishes the

broad principle that the Fourteenth and Fifth Amendments only apply

to actions which may be ‘‘fairly attributable to the state’’. Lugar

set forth a two (2) part test for making this determination:

‘First the deprivation must be caused by the exercise of

some right or privilege created by the state or by a rule of

conduct imposed by the state or by a person for whom the

State is responsibie.’’

457 U. S. at 937.

This first part of Lugar was conceded by the Fifth Circuit to

be present, since the exercise of peremptory challenges is certainly

an exercise of a ‘‘right or privilege created by the state’’. Indeed,

the right to exercise peremptory challenges is granted by statute,

28 USC Sec. 1870.

The second part of the Lugar test requires that the party charged

with the deprivation be a ‘‘state actor’’. Lugar held:

8

‘*Second, the party charged with the deprivation must be

a person who may fairly be said to be a state actor. This

may be because he is a state official, because he has acted

together with or has obtained significant aid from state

officials, or because his conduct is otherwise chargeable

to the state....”’

457 U. S. at 937.

The Fifth Circuit held this ‘‘state actor’’ requirement to be

absent, on the theory that a private attorney can never be a state

actor. However, this holding is a misapplication of Lugar.

Lugar held the ‘‘state action’’ requirement present on facts very

similar to these. In Lugar, under a state statute, a private creditor had

the right to obtain property without prior due process hearing, by

filing an ex parte affidavit. Upon the filing of the petition, a court

clerk was required by law to issue the writ of attachment commanding

the seizure of the property.

Notwithstanding that the clerk had no discretion to refuse to

issue the writ once the private creditor asked for it, this Court held

the ‘‘state action’’ requirement was met by this ‘‘joint action’’ bet-

ween the clerk and the private creditor. This is precisely like the

present case. While the District Judge, like the court clerk in Lugar,

may have no discretion to refuse to excuse a juror who is challeng-

ed by a private party; nevertheless, the judge participates jointly with

the private party in excusing the jurors. It is the judge who orders

the black jurors from the courtroom, and will have them jailed if

they refuse to go. It is the judge who then enters a judgment based

9

on the verdict of an all white jury from which the blacks had been

excused. Thus, there is joint action in the same sense as in Lugar.

In Burton v. Wilmington Parking Authority, 365 U. S. 715, 81

S. Ct. 856, 6 L. Ed. 2d 45 (1961), the state leased a building to

a private lessee. The private lessee refused service to a black patron.

This Court rejected the contention that the Fourteenth Amendment

provided no remedy, finding the requisite ‘‘state action’. This Court

said that the state had:

**([E]lected to place its power, property and prestige behind

the admitted discrimination. ”’

365 U. S. at 725.

Here, the government has placed its ‘“‘power, property and

prestige” behind the admitted discrimination in the private party’s

exercise of peremptory challenges. The ‘‘power’’ of the judge is

behind the exercise of the challenges, since it is the Judge who ex-

cuses the black jurors, and then enters a judgment on a verdict

based entirely on the verdict of white persons. The “‘property’’ of

the government is behind the alleged discrimination, since, as in

Burton, the government provides the property (the courthouse) where

the discrimination occurs. The ‘‘prestige’’ of the government is

behind the discrimination because it is the judge, who, sitting beside

an American flag, and with the Marshals of the United States at his

side, directs the exit of the black jurors. :

In Terry v. Adams, 345 U. S. 461, 73 S. Ct. 809, 97 L. Ed 1152

(1953), the Jaybird Party, a private political party, excluded blacks

10

from voting on the party’s nominees. Persons nominated by the

Jaybird Party were then placed on the ballots for governmental

offices. This Court held the actions of the Jaybird party were ‘‘state

action’’ since they were ‘‘an integral part, indeed the only effective

part, of the election process’. 345 U. S. at 469. In Terry, a private

party was able to determine identity of those persons who held public

office, since the private party dictated this, through its private

nominating procedure. In this case, a private party is able to deter-

mine what persons hold the public office of trial jurors, since the

private party dictates this through peremptory challenges. Just as

the nomination process in Terry, was an “‘integral part’’ of the elec-

tion process, the jury selection process is an ‘‘integral part’’ of the

trial.

In Adickes v. S. H. Kress & Co., 398 U. S. 144, 26 L. Ed. 2d

142, 90S. Ct. 1598 (1970) a white person who ate lunch with black

'In determining state action, the Court has utilized the ‘‘symbiotic relation-

ship’’ test, Burton v. Wilmington Parking Authority, 365 U. S. 715 (1961), the

“‘public function’ test, Jackson v. Metropolitan Edison Co., 419 U. S. 345 (1974),

and the *‘nexus between the state and challenged activity’ test, Blum v. Yaretsky

457 U. S. 991 (1982, Flagg Bros. v. Brooks, 346 U. S. 149 (1978). Adickes

applied the ‘‘joint participation’ test which is most applicable here.

1]

persons, was arrested upon leaving the store. She sued the private

store owner. The District Court granted summary judgment for the

Defendant, claiming an absence of any state action. This Court

reversed, holding the Defendants’ evidentiary materials failed to

negate the possibility of an ‘‘understanding between store employees

and of police’’ that the Plaintiff would be arrested. Such an

‘“‘understanding’’ between state officials and a private party, this

Court held, would support the state action requirement. This is like

the present case. Without an *‘understanding”’ by the District Judge

that the persons named by the insurance company could be excused

from the jury, the peremptory challenges excusing the black per-

sons could not be exercised. The insurance company is permitted

to eliminate blacks from the jury only because there is an understand-

ing between the private attorney and the trial judge, the ‘‘understan-

ding’’ mandated by statute or court rule.

The above precedents can not be squared with the Fifth Cir-

cuit’s over-refined distinction between a criminal trial and a civil

trial. The Fifth Circuit thought it significant that the actual decision

maker is a non-state party, the lawyer for the private party. But the

inescapable, practical fact is that it is the power of the government

that enforces the private party’s decision. Assume, for example, that

the two (2) black jurors had observed that the black Plaintiff was

being left only with white persons to serve on his jury. Assume they

12 -

objected. Who, then, would order them dragged from the court-

room. Unfortunately, under the law as the Fifth Circuit announced

it, the federal judge would be compelled to so order. Perhaps he

would even explain that the law permits exercise of peremptory

challenges based on race.

In this very case, when the black Plaintiff objected to having

blacks removed from his jury, the federal judge gave his stamp of

approval to the procedure by overruling the objection. When the

judge overruled Plaintiff's objection, and sustained the challenges

of the private party, was not this the joint hand of the government,

just as surely as the joint hand of the government was involved in

issuing the unconstitutional writ in Lugar?

In short, the majesty and power of the government lurks im-

plicitly within the exclusion of jurors, whether done in a criminal

or civil trial. The distinction drawn by the Fifth Circuit is artificial

and unperceived by the black citizens who are subjected to it. The

Writ should be granted, and the decision of the Fifth Circuit Court

of Appeals reversed.

Respectfully Submitted,

JIM WAIDE

ATTORNEY AT LAW

P. O. Box 1357

TUPELO, MS 38802

601/842-7324

13

CERTIFICATE OF SERVICE

I, Jim Waide, attorney for Petitioners, do hereby certify that

I have this day mailed, postage prepaid; of

the above and foregoing to the following:

Honorable Suzanne Saunders

P. O. Box 16295

Jackson, MS 39236

This the ee day of pot _ 1990.

ie 3

Q\' Ne

A UW

JIM WAIDE

4

APPENDIX

IN THE

UNITED STATES COURT OF APPEALS

FOR THE FIFTH CIRCUIT

JAMES L. POLK AND MATTIE B. POLK,

Plaintiffs-A ppellants

V.

DIXIE INSURANCE COMPANY,

Defendant-A ppellee

No. 88-4737

Summary Calendar.

April 11, 1990

Appeal from the United States District Court for the Northern

District of Mississippi.

Before POLITZ, GARWOOD, and JOLLY, Circuit Judges.

GARWOOD, Circuit Judge:

This is a Mississippi law diversity suit brought in January 1987

by plaintiffs-appellants James L. Polk (Polk) and Mattie B. Polk

against defendant-appellee Dixie Insurance Company (Dixie), the

insurer of Polk’s 1981 Cadillac Seville which was totally destroyed

in a July 31, 1986 fire, for insurance policy proceeds due for the

loss of the car and for punitive damages for bad faith denial of the

claim. Dixie defended on the grounds of arson. The district court

granted Dixie’s motion for summary judgment on the punitive

damages claim, and the policy claim was thereafter tried to a jury

which returned a verdict for Dixie. The district court then rendered

judgment for Dixie on the verdict, aud this appeal by plaintiffs

followed.

15

[1] Plaintiffs raise three claims of error. They first contend that the

district court erred in refusing their timely motion that Dixie’s

counsel be required to “indicate some non-racial motive for exer-

cising”’ two peremptory challenges “on the only black jurors that

were tendered to her,” as the plaintiffs were black “and all the

representatives at the defense table are white.”

Before Dixie’s counsel responded, the district court ruled that

the “motion will be denied, the Government not being involved in

this case. Plaintiffs rely on Batson v. Kentucky, 476 U.S. 79, 106

S.Ct. 1712, 90 L.Ed.2d 69 (1986). However in Edmonson v. Leesville

Concrete Co., Inc. , 895 F.2d 218 (Sth Cir.1990), this Court, en banc,

held that Batson does not apply to a civil suit solely between private

parties. Consequently, we reject plaintiffs’ first claim of error.

The second claim is that the district court erred in permitting

certain testimony by Dixie’s witness Embrey, the independent in-

surance agent through whom Polk procured the Dixie policy in ques-

tion in August 1985. The complained of testimony, which came on

the second day of trial, was that on July 21, 1986—some ten days

before the Cadillac burned—Embrey had written Polk advising him

that the policy was due for renewal on August 9, 1986 and that the

premium for the renewal policy would be $435 higher than that for

the current policy; that Polk called Embrey two or three days after

the letter was sent and “he was upset about it because of how much

increase it was” and could not understand why it was “that much

higher” since he had not had any claim or accident or tickets in

the past year; and that Embrey explained to him that this was the

result of a new rating system being used by Dixie and he “had a

high rated car,’ was twenty-five years old and single, and had two

or three speeding or driving with suspended license violations charg-

ed against him and “so he was in a high rated class.”

[2] The sole basis for objection to this testimony was that it

tended to show an arson motive on Polk’s part not disclosed in Dix-

ie’s answer, filed some seven months before trial and never updated,

to one of plaintiffs’ interrogatories. The interrogatory and answer

in question were as follows:

ene tected

16

“State the complete factual basis of your claim that Plaintiff

intentionally burned his own automobile.”

and

‘“.. . James L. Polk, owner and insured of the burned

automobile, had the opportunity to burn his own automobile as per

his testimony and statements, he had the motive based upon the

fact that he was out of work and behind on his car payment and

there was an incendiary act as revealed by three fire experts.”

At a hearing on this objection out of the jury’s presence, counsel

for Dixie advised the court that she did not know of Embrey’s an-

ticipated testimony in this respect until the previous day. She had

subpoenaed Embrey—who was listed as a Dixie “fact” witness (but

without other indication of the subject matter of his testimony) on

the pretrial order filed some seven months before trial—to testify

in respect to Polk’s claim that when he purchased the Dixie policy

he did so with the understnding that it covered his medical expenses

(expenses of the kind which he claimed to have incurred when he

allegedly jumped out of the Cadillac when it, according to him,

went off the road and burned up on July 31). Embrey corroborated

Dixie’s counsel’s assertions in this respect, testifying that he did

not tell her or Dixie of the above-mentioned premium matter until

the day before, although he had previously talked with her about

Polk’s claim concerning the nature of the coverage provided by the

policy and whether it included medical expenses.

[3] The district court clearly credited this explanation, and

refused to exclude the testimony. Review of its ruling is under an

abuse of discretion standard. See Murphy v. Magnolia Electric Power

Ass'n, 639 F.2d 232, 234 (Sth Cir.1981) (‘‘the district judge enjoys

considerable discretion”); Bunch v. United States, 680 F.2d 1271,

1280 (9th Cir.1982) (‘“‘left to the sound discretion of the trial judge,”

reversible in instances of “a gross abuse of discretion’’), We are

unable to find any such abuse here. See O—Donnell y. Georgia

Osteopathic Hospital, Inc. , 748 F.2d 1543, 1547-49 (1th Cir.1934).

17

In the first place, the duty to update interrogatory answers exists

only when it is learned that the original answer is no longer true

and the failure to amend amounts in substance to a knowing con-

cealment. /d. at 1548; Bunch, 680 F.2d at 1282. Here the district

court found, on adequate evidence, that that was not the case.

Moreover, we normally do not reverse for unfair surprise unless

“a completely new issue is suddenly raised or a previously uniden-

tified expert witness is suddenly called.’ F & S Offshore Inc. v.

K. O. Steel Castings, Inc., 662 F.2d 1104, 1108 (Sth Cir.1981).

Assuming, arguendo, that the same rational should apply to a crucial

fact witness, nevertheless Embrey was listed as a fact witness and

the issue of financial motivation had clearly been raised. Further,

the usual remedy for surprise is to request a continuance. See

O'Donnell, 748 F.2d at 1549. Here, however, not only was there

no request for a continuance, there was not even any claim—certainly

no express or unmistakably implied claim—of surprise below.

We are unable to say that the district court abused its discre-

tion in allowing the challenged testimony.

[4] Plaintiff's third and final claim of error is that the district

court erroneously granted summary judgment against plaintiffs on

their punitive damages claim. Plaintiffs concede that “the insurance

company’s expensive experts no doubt afforded evidence that the

fire was incendiary” and “[tJhere is also no doubt the insured [Polk]

had the ‘opportunity’ ”’ to start the fire, but contend that there was

no summary judgment showing that Dixie “prior to denying the

claims” had “any evidence of motive,” because its only then evidence

of motive was “‘the fact that the insured had been laid off from work,

and was behind one car payment.” It is argued that this evidence

was insufficient to show motive because the insured likely could

have gotten as much by selling the car as by burning it and collec-

ting the insurance.

Plaintiffs’ argument in this connection is made in what can only

be characterized as a bizarre context. Plaintiffs do not challenge

the jury’s verdict that no recovery is due on the insurance policy,

a finding that in the context of this case necessarily implies that

18

Polk intentionally burned the Cadillac. Although Mississippi law

is not clear on the point, it would seem most unusual—to say the

least— to authorize recovery of punitive damages for the denial of

a claim which was not due or owing and which the plaintiff had

no right to have paid. It is true that in several opinions, the Mississip-

pi Supreme Court has stated that the question of punitive damages

turns on assessment of the insurance company’s conduct in light

of the information available to it when acting on the claim. See,

e.g., State Farm Fire and Cas. Co. v. Simpson, 477 So.2d 242, 252

(Miss.1985). Nevertheless, this seems designed to prevent and award

of punitve damages even though later events prove the insurance

company’s denial of claim to have been mistaken, so long as it did

not act in bad faith or with gross negligence at the time or times

it denied the claim. That Mississippi law does not contemplate

punitive damages for denial of an invalid claim is reflected in

statements in several Mississippi Supreme Court opinions which

clearly assume the validity of the claim. Thus, in Progressive

Casuality Ins. Co. v. Keys, 317 So.2d 396 (Miss.i975), the court

indicated that ‘“‘[pJunitive damages are not recoverable for the

breach of a contract, unless such breach is attended by intentional

wrong, insult, abuse or such gross negligence as to consist of an

independent fact.” Jd. at 398 (emphasis added). Plainly, a breach

of contract is contemplated. Similarly, in Standard Life Ins. Co.

v. Veal, 354 So.2d 239 (Miss.1977), the court, in justifying the

availability of punitive damages in insurance company bad faith

refusal to pay cases, speaks time and again of the refusal to pay

‘‘a legitimate claim.” Id. at 248 (emphasis added). We doubt that

in speaking of “legitimate” claims, the court was including those

which were invalid and not owing. Veal also speaks of the need for

punitive damages to be available so that insurance companies will

not force “an inadequate settlement or avoid payment entirely.” Jd.

Surely, however, the punitive damages rule is not intended to pressure

settlement or payment of invalid claims, which simply prejudices

the insurance buying public generally even apart from its evident

injustice otherwise. Further, in Blue Cross & Blue Shield of Miss.

v. Campbell, 466 So.2d 833, 843 & n. 4 (Miss. 1984), the court

stated that in nearly all cases where the claiment was not entitled

to a directed verdict on the issue of policy liability, the in-

19

surance company would be entitled to a directed verdict on bad faith

refusal, and that in the rare case where the insurance company was

not entitled, it would be proper to submit the “issue of liability

{under the policy] to the jury first, and ifthe jury finds for the plain-

tiff, then submit{] the issue of punitive damages based on bad faith.”

Id. at n. 4 (emphasis added). This plainly implies that in no case

may the plaintiff recover bad faith refusal punitive damages if it

is determined that the denied claim was invalid and not owing.

Even if we assumed that Mississsippi would go so far as to

allow punitve damages for the bad faith handling of an invalid claim

in some instances—for example, if the claim were made reasonably

and in good faith and the insurer’s egregious conduct harmed the

claimant in some way distinct from the damage which would result

from merely denying the claim—we simply cannot bring ourselves

to conclude that she would go still further and allow punitive

damages to one whose invalid claim was denied at a time when there

was no arguable reason for denial but which was later established

to be false and fraudulent. Such a rule, we must presume, would

shock the conscience of even the most enthusiastic advocate of awar-

ding punitive damages against insurers. Hence, the unchallenged

verdict here on the policy claim concludes the punitive damages

issue.

[5-8] In any event, the district court’s summary judgment rul-

ing was clearly correct, considered on its own. While arson as a

policy defense must be proved by the insurer by clear and convinc-

ing evidence, McGory v. Allstate Ins. Co., 527 So.2d 632

(Miss.1988), the plaintiff has the burden of proof on bad faith refusal

and lack of an arguable basis for denial. See Blue Cross, 466 So.2d

at 844 (“[T]he plaintiff has a heavy burden to demonstrate to the

trial court that there was no reasonably arguable basis for the in-

surance carrier to deny the claim. Unless he so demonstrates, the

trial court as a matter of law is under a duty to remove any punitive

damages claims....””). The plaintiff's burden in this respect likewise

exists at the summary judgment stage where the insurance com-

pany presents an adequate prima facie showing of a reasonable

arguable basis for denial so as to preclude punitive damages. See

|

20

American Manufacturers Mutual Liability Ins. Co. v. Cupstid, 673

F.Supp. 186, 188 (S.D.Miss. 1987). While, at least in a circumstan-

tial evidence case, the policy defense of arson requires a showing

of motive as well as of incendiary origin and opportunity, McGory,

it is by no means clear that in order to have an arguable reason

to deny a claim the insurance company must then be able to prove

that it is invalid, as opposed to having a good reason to believe that

it is. In any event, there was concededly an adequate summary judg-

ment showing of incendiary origin and opportunity—indeed, Polk

was the only one on the scene—and at least a colorable showing

of motive, Polk’s having been laid ofi work and being three weeks’

late with a $300 payment on the car. The insurance company could

infer that there was a financial incentive for Polk to burn the car

and collect the insurance rather than risk the note’s being called

while he tried to sell it at a decent price. Even if this inference were

quite weak, the insurance company nevertheless had an arguable

reason to deny. The evidence of incendiary origin was rather strong,

and the circumstances of the event were such that if the fire were

incendiary Polk was in all likelihood the culprit. This conclusion

would be strongly reinforced by the contradictory stories Polk told

about the events in question, another factor relied on by Dixie in

its denial and by the district court in its summary judgment ruling.

Also, Polk had a few months previously bought another, less ex-

pensive, car on which payments were being made.

We note that in Sutton v. Northern Ins. Co. of New York, 681

F.Supp. 1221 (S.D. Miss.1988), a summary judgment for the in-

surance company on the punitive damages issue was granted on the

basis that suspected arson formed an arguable basis for claim denial,

notwithstanding that “the evidence of-financial difficulty was not

particularly compelling.” /d. at 1223. Sutton further observes that

“motive is not always an indispensable element in an arson defense,”

as, for example, “‘the arson defense could be established if it were

shown that only the insured could have had access to the premises

at the time of the fire.” Jd. at 1224 n. 4. Here, while Polk was not

shown to be the only person who could have had access, the cir-

cumstances strongly suggest that if the fire was incendiary, it was

set by Polk (or at his direction). Moreover, as noted, he gave con-

21

flicting statements about the event. In McGory, the court held that

the insurance company could get to the jury on its arson defense

to the policy claim, even though the plaintiffs had “‘all but airtight

alibis” and “‘[iJn one sense Allstate’s [the insurer’s] proof on the

opportunity issue fails as a matter of law,” because “‘Allstate’s proof

of on incendiarism and notice is quite substantial and has a force

we find it difficult to ignore.” Id. , 527 So.2d at 636-37. Here, where

we are dealing with the arguable basis question (not the ultimate

merits of the policy defense itself, as in McGory), the evidence of

incendiarism and opportunity known to Dixie was “quite substan-

tial” and, considered in light of the other evidence then known to

Dixie, principally Polk’s inconsistent statements, sufficed to over-

come any weakness in the then known motive evidence and to con-

stitute a reasonable arguable basis for denial as a matter of law.

For these reasons, we reject plaintiffs’ complaint concerning

the district court’s summary judgment rejection of the punitive

damages claim.

Having rejected each of plaintiffs three claims of error, the

district court’s judgment is accordingly.

AFFIRMED.

SPR oa + Me