Plаintiff-appellee Dow Chemical Corporation (“Dow”) prevailed in the United States District Court for the District of Kansas on its claim against defendant-appellants Weevil-Cide Company and Research Products Company (collectively “Research Products” 1 ) for equitable subrogation, and on its claim against defendant-appellant Hartford Accident and Indemnity Company (“Hartford”) for tortious interference with a prospective contractual relation. We reverse both judgments.
BACKGROUND
For many years, Research Products marketed a grain fumigant containing carbon tetrachloride and carbon disulfide known as Weevil-Cide, which was manufactured for it by Dow. R.Vol. Ill at 132; R.Vol. V at 424-25. Dow also produced and distributed its own brands of carbon tetrachloride-carbon disulfide fumigant. R.Vol. Ill at 96.
Robert Kauther and Ardell Nordrum were exposed to carbon tetrachloride-carbon disulfide fumigants when they worked at a Wisconsin grain elevator. R.Vol. V at 536-37; R.Vol. VI at 720. Both came to suffer severe neurological disorders which forced them to retire. R.Vol. IV at 287-88. In October 1978, Kauther and Nordrum each filed suit against Dow and Research Products alleging inadequate warnings about the effects of exposure to Weevil-Cide.
Research Products’ insurer, Hartford, assumed its defense and retained Harry Sau-thoff, with whom Hartford had a longstanding relationship. R.Vol. IV аt 272-77. Soon after discovery began, Sauthoff advised Hartford that the plaintiffs had a strong case, and that the best course would be for Research Products and Dow to contribute equally to a settlement. See Addendum to Brief of Appellee at Tab 8, p. 5. As discovery progressed, Sauthoff emphatically advised Hartford to settle rather than go to trial. See id. at Tab 9, p. 5, at Tab 12, p. 6.
When the settlement negotiations began, however, Hartford directed Sauthoff not to participate, purportedly because of uncertainty as to whether or not Hartford had a policy in effect when Kauther and Nord-rum were harmed. Dow contends that this coverage question was a sham designed to make Dow pay the entire settlement. In any event, Dow settled with Kauther and Nordrum in April 1984 for more than four million dollars, R.Vol. IV at 347; R.Vol. V at 450-51, which Kauther and Nordrum’s attorney considered sufficient to cover the claims against both Dow and Research Products, R.Vol. V at 504, 507. While the settlement was “with Dow Chemical Company, but not with the Research Products or Weevil-Cide defendants,” Addendum to Brief of Appellee at Tab 25, p. 2, the suits were dismissed as to both Dow and Research Products. Stipulation and Order for Dismissal, May 2, 1984, Addendum to Brief of Appellee at Tab 17, p. 4.
In April 1985, Dow sued Research Products for equitable subrogation of the amount paid to the grain workers. The complaint was amended tо allege that Hartford tortiously interfered with Dow’s prospective economic advantage when it instructed Sauthoff not to settle. The jury awarded Dow $2,334 million on its subrogation claim, and seven hundred seventy-eight thousand dollars in actual damages and $2.25 million in punitive damages on the tortious interference claim.
DISCUSSION
I. EQUITABLE SUBROGATION
A. Statute of Limitations
A federal court hearing a diversity action applies the statute of limitations
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which would be applied by a court of the forum state,
Kitchens v. Bryan County Nat’l Bank,
The trial court analogized subrogation to contribution and equitable indemnification, and held that Dow’s complaint was timely because the claim did not accrue until the payment was made. Memorandum and Order, Dec. 1, 1987, R.Vol. I at Tаb 122, pp. 7-8; Memorandum and Order, June 2, 1988, R.Vol. II at Tab 184, pp. 8-9. Unlike these causes of action, however, the claim of a subrogation plaintiff, or subro-gee, “is not a separate cause of action from the right held by the subrogor,”
Wilmot v. Racine County,
Because the subrogee’s rights against the subrogation defendant are only as great as the subrogor’s rights against that defendant, an equitable subrogation claim must be brought within the time the subrogor would have been required to bring its claim. In effect, then, the subro-gation cause of action arises at the same time, and is governed by the same statute of limitаtions, as the underlying claim.
See, e.g., Fidelity & Deposit Co. v. Smith,
Research Products, which was entitled to assert “such defenses as were available against the subrogors,”
Employers Ins. Co. v. Sheedy,
Under Wisconsin law, a tort claim arises when “the plaintiff discovers, or in the exercise of reasonable diligence should have discovered, not only the fact of injury but also that the injury was prоbably caused by defendant’s conduct or product.”
Borello v. United States Oil Co.,
130
*485
Wis.2d 397,
Ardell Nordrum testified to the following conversation he hаd with his family physician no later than 1972:
“A_ I did realize [Weevil-Cide] was dangerous because ... when my hands sleep feeling [sic] ... I took the contents on the side of that pail up to him, and ... I showed him that card and I said what does that stuff do to a person’s body. And he turned around to a little desk there about four inches wide, ten inches long and puttered a little bit and he turned around, where did you use that stuff. I said we put it in the grain to kill weevils. And he says well, don’t ever breathe it.”
R.Vol. VI at 712-13.
In addition, two of Research Products’ medical experts testified that carbon disul-fide poisoning would have been diagnosable by a reasonably competent physician before October 1975. R.Vol. VI at 667-68; R.Vol. VII at 844-45.
Dow presented evidence that the condition was not discoverable before October 1975. For example, the twelve local doctors who examined the grain workers could not diagnose their illness. R.Vol. V at 470. The first doctоr to identify carbon disulfide as the cause was a specialist from the University of Wisconsin who examined Kauther and Nordrum in 1978. R.Vol. IV at 352.
The trial court did not see “any evidence to support” Research Products’ proposed instruction on the issue. R.Vol. VII at 1017. We disagree. The jury reasonably could have concluded that carbon disulfide poisoning was (depending upon the weight given Nordrum’s testimony) or should have been (if Research Products' experts were believed) identified as the cause of Kauther and Nordrum’s ailments before October 1975.
On remand, both the timeliness of Kauther and Nordrum’s actions and the timeliness of Dow’s action will be at issue. The two questions are related, but not necessarily identical. If Kauther and Nordrum’s claims were time barred, then Dow’s claim also was time barred, because Dow stands in the position of the grain workers and the running of the statute of limitations would permanently еxtinguish the claims against Research Products.
See In re Estate of Fessler,
B. Release or Assignment
When it settled the underlying action, Dow did not obtain any release or assignment of the grain workers’ claims against Research Products. For this reason, Research Products contends that Dow merely settled the claims against itself, and did not acquire any subrogation rights.
Equitable subrogation “ ‘dependfs] upon no contract or privity.’ ”
3
Kennedy-Ingalls Corp. v. Meissner,
C. Lack of Fault
Research Products argues that the judgment against it must be reversed because a subrogation plaintiff must show that it was free from fault for the underlying claim, and that Dow failed to do so. This issue was not preserved for appeal, however, because Research Products did not raise it until its motion for judgment notwithstanding the verdict. Only questions raised in a prior motion for directed verdict may be pursued in a motion for judgment notwithstanding the verdict.
Karns v. Emerson Elec. Co.,
Research Products argues that it could not have raised the issue in its directed verdict motion because Dow at that time sought both subrogation and contribution. Thе contention is that, because Dow would not have had to show a lack of fault in order to collect on its contribution claim, the issue did not exist until the contribution claim was dropped. We reject this argument. While the issue was not as important until Dow dropped the contribution claim, nothing ever prevented Research Products from seeking a directed verdict on the subrogation claim on this ground.
See Eli Lilly & Co. v. Home Ins. Co.,
Because the issue was not properly raised below, this court shall not consider it.
Farmers Ins. Co. v. Hubbard,
D. Evidentiary Rulings
Research Products challenges the decisions of the trial court to exclude certain evidence and to admit other evidence without a limiting instruction. Only for an abuse of discretion will we disturb a trial court’s determination that proffered evidence was or was not relevant, or that its probative value did or did not outweigh its prejudicial effect.
Durflinger v. Artiles,
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The first issue is the exclusion of evidence offеred to show that Kauther and Nordrum were exposed not only to Weevil-Cide, but also to carbon tetrachloride-carbon disulfide fumigants marketed by Dow. The court denied the proffer on the grounds that Research Products had made no effort to establish a causal connection between Dow fumigants and Kauther and Nordrum’s conditions, but instead had argued that Kauther and Nordrum were not suffering from carbon disulfide poisoning at all. Memorandum and Ordеr, June 2, 1988, R.Vol. II at Tab 184, p. 18. The fact of the matter, however, is that the proffered evidence was Research Products’ effort to establish such a causal connection. Even though the contentions were contradictory, Research Products should have been allowed to argue both that the grain workers did not have carbon disulfide poisoning and that if they did have it, Dow products were to blame.
See Brownlow v. Aman,
The jury had to decide how much of the sеttlement should have been paid by Research Products. 5 Without complete evidence of both parties’ possible responsibility for the harm to the grain workers, however, determining Research Products’ fair share of the settlement would be difficult, if not impossible. The amount by which Research Products was unjustly enriched was a function of the amount of damage it caused, and the amount of damage Research Products caused could not be determined effectively without reference to how much, if any, of the damage was caused by Dow instead. 6 Exclusion of this evidence was an abuse of discretion.
The trial court also excluded two internal Dow memoranda. One of the documents discusses carbon tetrachloride-carbon disul-fide fumigants, but the subject of the report is the risk posed by carbon tetrachloride. Carbon disulfide is mentioned only in passing.
See
Addendum to Brief of Appellants at Tab 24. We agree with the trial court’s determination that this memorandum was irrelevant becausе it concerns a chemical other than the one at issue.
See, e.g., Hale v. Firestone Tire & Rubber Co.,
The other document is a 1982 report on the question of whether or not Dow should withdraw from the liquid grain fumigant market. The trial court gave two reasons for excluding this memorandum: that it relates to subsequent remedial measures, Memorandum and Order, June 2, 1988, R.Vol. II at Tab 184, p. 19, and that it was more prejudicial than probative, R.Vol. V at 456.
The memorandum should not have been excluded as evidence of subsequent remedial measures.
See
Fed.R.Evid. 407. There is nothing remedial about the report’s recommendation that Dow remain in the grain fumigant business without conducting any further medical research. “Remedial measures are those actions taken to remedy any flаws or failures.”
Rocky Mountain Helicopters, Inc. v. Bell Helicopters Textron,
Nor should the document have been excluded for insufficient relevancy. Research Products sought to introduce it only as evidence that the settlement Dow reached was unreasonably high. Some of the language in the report (e.g., “we should continue to milk the grain fumigants business,” Addеndum to Brief of Appellants at Tab 25, p. 2) might have tarnished Dow before the jury, but that would not have been “unfair,” Fed.R.Evid. 403. Research Products’ argument is that Dow’s fear of the effect on a jury of this report, were it used in the Kauther and Nordrum litigation, was one reason why Dow was so anxious to avoid a trial that it paid an exorbitant settlement. The reasonableness of the settlement is relevant to the question of how much of it should have been paid by Research Products.
This document was excluded from the
Nigh
trial, but only because it did not relate to Dow’s fault. The court in that case noted that the report might well have been relevant in determining how much Dow would have had to pay in punitive damages, had it been found liable.
Nigh v. Dow Chemical Co.,
An important part of Dow’s evidence in this case consisted of litigation reports sent to Hartford by Harry Sau-thoff, the attorney Hartford retained to reprеsent Research Products in the Kauther and Nordrum litigation. These letters contained Sauthoff’s opinions regarding Research Products’ liability and chances for success if the claims went to trial. Research Products requested that admissibility of the Sauthoff letters be limited to the tortious interference claim only, but the trial court admitted them as to both the tortious interference claim and the subro-gation claim. The trial court considered the lеtters relevant to the subrogation claim because they were evidence of “both the state of Weevil-Cide’s defense at the time of settlement, which was shortly before trial, and the issue of whether Weevil-Cide was actually negligent.” Memorandum Opinion and Order, June 2, 1988, R.Vol. II at Tab 184, p. 20. The court also rejected the argument that even if the letters were relevant, their probative value was outweighed by their prejudicial effect. R.Vol. VII at 1014-15.
Clearly, the letters were logically relevant. They were perhaps the best evidence of how much Research Products could have expected to lose if the Kauther and Nord-rum actions went to trial, which is evidence of the extent to which Research Products was unjustly enriched when Dow settled those actions. Nor can it be said that the trial court abused its discretion because the letters’ probative value was substantially outweighed by the danger of unfair prejudice.
See
Fed.R.Evid. 403. “The exclusion of relevant evidence under Rule 403 is ‘an extraordinary remedy to be used sparingly.’ ”
K-B Trucking Co. v. Riss Int’l Corp.,
II. INTERFERENCE WITH A PROSPECTIVE CONTRACTUAL RELATION
An obvious element of the tort of intentional interference with a prospective contractual relation
7
is a relation with
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which the defendant has interfered. It is well-established that the relation must be one to which the defendant is an outsider,
see, e.g., Ellis v. City of Valdez,
Dow neither pleaded nor proved the existence of any prospective relation between Dow and anyone other than Hartford. The testimony of the president of Research Products that his company would not have contributed to the settlement, R.Vol. VII at 989, went uncontradicted. Clearly, Dow expected any contribution to come directly from Hartford. 9 In fact, Dow’s complaint in this action does not allege any interference by Hartford between Dow and Research Products; instead, it charges Hartford with disrupting “the arrangement previously reached by Dow and The Hartford’s representatives.” R.Vol. I at Tab 85, p. 14 (emphasis added).
Generally, an insured defendant and its insurer have a common, interrelated interest in defending and/or settling the suit. 1A R. Long,
The Law of Liability Insurance
§ 5A.01, at 5A-8 (1989); A. Windt,
Insurance Claims and Disputes
§ 4.18, at 171 (2d ed. 1988);
cf. Gonzalez v. City of Franklin,
As it happens, Hartford was not a named defendant in the Kauther and Nordrum actions against Dow and Research Products. This is not important to the present case, though, because nothing would have occurred any differently had Hartford been named: Hartford “conducted] the defense, employed] its own attorney[], decide[d] if and when to settle, and [was] in full control of the entire litigation.”
Kirchen v. Orth,
Hartford, not Research Products, was Dow’s only prospective source of contribution to the settlement. Hartford cannot be held liable for interfering with its own prospective contractual relation, so the judgment against it must be reversed.
*490 CONCLUSION
The verdict against Research Products cannot stand because of the misapplication of thе statute of limitations, the failure of the trial court to instruct the jury on the timeliness vel non of Kauther and Nord-rum’s claims, and the exclusion of certain evidence. The decision against Hartford is deficient because Hartford did not interfere with any prospective contractual relation.
The judgment against Research Products is REVERSED and REMANDED for further proceedings consistent with this opinion. The judgment against Hartford is REVERSED.
Notes
. Research Products Company acquired Wеevil-Cide Company in 1967. Addendum to Brief of Appellants at Tab 1. Because some of the events underlying this litigation occurred before 1967, they involved Weevil-Cide Company rather than Research Products. This distinction is not important to either party’s liability, though, so it will be disregarded herein.
. We express no opinion on these questions.
. It may be contrasted with conventional subro-gation, which "arise[s] by contract of the parties.”
Cunningham v. Metropolitan Life Ins. Co.,
. As this case is being remanded for other reasons, the question of whether оr not Research Products may raise this issue upon remand will arise. In
Ramey Constr. Co. v. Apache Tribe,
A related question is whether or not, upon remand, Dow should be permitted to reinstate its claims against Research Products for contribution and indemnification. Dow’s original complaint sought subrogation, contribution, and indemnification, but (aрparently as a result of the trial court’s legal conclusions regarding subrogation) the latter two claims were dropped. Unlike the subrogation claim, these claims are not before us. Therefore, we express no opinion on their availability upon remand.
. The jury was instructed, in part, as follows:
"[Y]ou should find, as damages against Weevil-Cide/Research, what amount of the settlement paid by Dow that, in equity and good conscience, should have been paid by Weevil-Cide/Research.
In your deliberations on Dow's subrogation claim, you may consider, among other things, ... the degree of fault of all persons or entities involved in the occurrence."
Instructions to the Jury, R.Vol. II at Tab 169, p. 10.
. This evidence was relevant even if Dow did not have to prove a lack of fault. Even if a showing of Dow’s blameworthiness would not have resulted in a judgment against Dow, it would have allowed the jury to reduce the amount of its verdict against Research Products.
. The tort in question has been called business interference, intentional interference with a prospective contractual relation, intentional interference with business advantage, and intentional interference with a prospective economic advantage. While the different labels all describe the exact same tort,
PPX Enterp., Inc. v. Audiofidelity Enterp., Inc.,
. To interfere is “to enter into or take part in the concerns of others." Webster's Third New International Dictionary 1178 (1981) (emphasis added).
. Dow’s counsel admitted as much at trial. R.Vol. VII at 1009.
