7 N.E.3d 300
Ind. Ct. App.2014Background
- Dec. 28, 2009 collision: Cheryl O’Mailia (passenger) injured; she and husband James were insured by GEICO with $600,000 UIM coverage; Cheryl sued for damages and James for loss of consortium.
- About one week before trial GEICO attorneys located publicly available Florida disciplinary/criminal information about James (arrest, nolo contendere plea, license probation and fines).
- GEICO did not disclose that information to the O’Mailias; during cross-examination GEICO asked James about the July 20, 2009 arrest; bench conference followed and the court limited questioning to impeachment under Evidence Rule 609(a).
- Jury returned a verdict for Cheryl (reduced post-trial); O’Mailias moved for a new trial and sought attorneys’ fees, alleging GEICO’s non‑disclosure and trial conduct amounted to misconduct/bad faith.
- Trial court denied the new trial but found GEICO litigated in bad faith by intentionally withholding the Florida information (citing Ind. Prof. Cond. R. 8.4 and I.C. § 34‑52‑1‑1(b)(3)) and awarded $15,568.22 in fees; GEICO appealed.
- Court of Appeals reversed the fee award, holding GEICO had no duty under the Trial Rules or Evidence Rules to disclose the public information and its decision not to disclose was strategic but not bad faith. The O’Mailias’ request for appellate fees was denied.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether defense counsel’s failure to disclose publicly available Florida disciplinary/criminal information violated duties of professional conduct and supported sanctions | Non‑disclosure was unprofessional, prejudicial to administration of justice and tantamount to trial by ambush (violated Rule 8.4 and justified relief). | No duty to disclose under Indiana Trial Rules or Evidence Rules; research showed disclosure not required; strategic non‑disclosure permissible. | Court of Appeals: no automatic duty to disclose; non‑disclosure, though discourteous, was not dishonest or in bad faith. Reversed fee award. |
| Whether GEICO’s on‑the‑record question about the arrest warranted a bad‑faith finding | The question (and subsequent explanation) showed improper substantive use and intent to ambush. | Question was intended for impeachment under Evidence Rule 609(a) (and also argued substantively); counsel reasonably believed evidence admissible. | Trial court found asking the question was poor judgment but not bad faith; appellate court did not disturb that conclusion. |
| Whether invoking Rule 8.4(d) creates a duty to disclose information beyond discovery rules | Non‑disclosure breaches Rule 8.4(d) and professional courtesy obligations; courts may sanction misconduct even if Trial Rules were technically followed. | Interpreting Rule 8.4 to create an automatic disclosure duty conflicts with explicit discovery rules (e.g., Rule 26) and creates uncertainty; counsel may act to protect client interests. | Court of Appeals: Rule 8.4(d) does not impose an independent disclosure obligation that converts justified strategic non‑disclosure into bad faith. |
| Whether appellate fees under Appellate Rule 66(E) should be awarded | GEICO’s appeal was in bad faith and frivolous, so appellate fees are appropriate. | Appeal challenged the fee award; GEICO’s position was supported by rules and precedent (not frivolous). | Denied: because court reversed the bad‑faith finding, appellate fees were not warranted. |
Key Cases Cited
- Dunno v. Rasmussen, 980 N.E.2d 846 (Ind. Ct. App. 2012) (defines bad faith standard for attorney‑fee awards under the General Recovery Rule)
- Auto‑Owners Ins. Co. v. C & J Real Estate, Inc., 996 N.E.2d 803 (Ind. Ct. App. 2013) (bad‑faith standard requires more than negligence or poor judgment)
- Oxendine v. Public Service Co., 423 N.E.2d 612 (Ind. Ct. App. 1980) (bad faith implies furtive design or ill will)
- Smith v. Johnston, 711 N.E.2d 1259 (Ind. 1999) (an attorney’s notice obligations can arise from knowledge of opposing counsel’s involvement; failure to give notice may be prejudicial to administration of justice)
- Outback Steakhouse of Fla., Inc. v. Markley, 856 N.E.2d 65 (Ind. 2006) (failure to disclose and supplement discovery that materially misled the jury can constitute misconduct under Rule 60(B)(3))
- Allstate Ins. Co. v. Watson, 747 N.E.2d 545 (Ind. 2001) (examines conduct prejudicial to administration of justice in post‑settlement/default contexts)
- Sears, Roebuck & Co. v. Soja, 932 N.E.2d 245 (Ind. Ct. App. 2010) (distinguishes required notice duties in default contexts)
- Flynn v. Edmonds, 602 N.E.2d 880 (Ill. App. Ct. 1992) (discusses counsel’s obligations regarding disclosure of fraud on the tribunal and limits on forcing pretrial disclosure of potentially impeaching information)