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Gaillard v. Jim's Water Service, Inc.: EVIDENCE - no abuse admitting evidence of plaintiff's changes in tax returns; probative of untruthfulness

United States Court of Appeals
No. 07-3160
David Gaillard, *
Plaintiff Appellant, *
* Appeal from the United States
v. * District Court for the District
* of South Dakota.
Jim's Water Service, Inc., a Wyoming *
corporation; Howard Hoyt, an *
individual, *
Defendants Appellees. *
Submitted: May 12, 2008
Filed: August 1, 2008
Before LOKEN, Chief Judge, BYE and COLLOTON, Circuit Judges.
BYE, Circuit Judge.
David Gaillard was struck and injured by a vehicle driven by Howard Hoyt and
owned by Jim's Water Service, Inc. (JWS) while he attempted to repair a parked
motorcycle on the shoulder of I-90 near Sturgis, South Dakota. He sued Hoyt and
JWS (collectively, "Defendants") for negligence, claiming brain injury, chronic pain
from leg injury, and loss of income. The first trial resulted in a mistrial because the
jury verdict was not unanimous. The second trial resulted in a verdict for Defendants.
1The Honorable Karen E. Schreier, Chief United States District Judge for the
District of South Dakota.
On appeal, Gaillard argues the district court1 erred in instructing the jury on the
legal excuse doctrine, contributory negligence and assumption of risk. He also argues
the district court erred by denying his motion in limine to exclude evidence of his tax
returns because the evidence was irrelevant, unfairly prejudicial and inflamed the jury.
We affirm.
I. Background
Gaillard is a pastry chef from France who became a U.S. citizen and Las Vegas
resident in 1988. In 2002, he rode his motorcycle to Sturgis, South Dakota, for the
famous rally. On August 19, he and his friend Larry Swain parked on the shoulder of
I-90 and attempted to fix Swain's headlight. Gaillard parked his motorcycle at an
angle to make it more visible to oncoming traffic; he did not turn on his lights or
flashers. A little less than thirty minutes after the 8:08 p.m. sunset, Howard Hoyt
driving a vehicle and trailer owned by JWS struck and injured Gaillard.
Hoyt, a Wyoming resident who had never driven through Sturgis before,
noticed traffic getting heavy as he came into the city. A large orange warning sign,
operated by a generator, stood on the side of the highway just prior to where the
accident occurred. The sign warned drivers approaching Sturgis to check their speed
because of heavy traffic ahead. (Trial Tr. at 167). Hoyt testified he did not see this
sign. (Id. at 152).
Other facts regarding the details of the accident are disputed. Gaillard contends
he was legally parked in the emergency lane for the purpose of repairing the headlight
on his friend's motorcycle. Gaillard argues Hoyt's negligence created the emergency
situation that caused him to swerve onto the shoulder because he did not appropriately
slow down his vehicle when he noticed the traffic ahead. Gaillard cites testimony
from Kelly Trenary, who was riding his motorcycle behind Hoyt's truck, that while
other cars were slowing down around him, Hoyt did not slow down. Trenary testified,
"It appeared to me that he didn't recognize that hazard ahead of him and was not
slowing down." (Id. at 169). He further testified he believed Hoyt attempted to enter
into the passing lane instead of slowing down, was unable to change lanes because of
the traffic, and then tried to stop, losing control and swerving onto the shoulder. (Id.
at 171-72). He also testified he saw the motorcycles on the shoulder after he crested
the hill, approximately a quarter of a mile away. (Id. at 170).
Defendants argue Hoyt did appropriately slow his vehicle down to 60 mph
when signs announced the speed limit was reduced from 75 to 65 mph. Hoyt claims
he noticed traffic was backed up but, because no brake lights were visible, he knew
the cars were moving. He applied his brakes "a little bit." Suddenly, the traffic ahead
stopped and he was faced with an emergency, which Defendants claim was not of his
own making. Defendants argue Hoyt could not see Gaillard on the shoulder because
it was approximately thirty minutes after sunset and Gaillard's motorcycle did not
have its lights on. Rather than crash into the traffic in front of him, Hoyt chose to
swerve onto the shoulder. Defendants argue: (1) Hoyt was not negligent; (2) he was
legally excused by the emergency; (3) Gaillard assumed the risk by stopping on the
shoulder of an interstate highway at dusk; and (4) he was contributorily negligent by
failing to turn on his hazard lights or headlights.
Defendants also presented evidence at trial suggesting Gaillard exaggerated his
injuries, falsified income tax returns and otherwise fabricated his lost income to inflate
his damages. After the accident and to inflate his lost income claim he filed
supplemental tax returns, which claimed additional income of as much as 0,000
per year for the previous few years derived from an alleged catering business he
owned. The evidence at trial showed during the same years he was supposedly
earning about 0,000, but declaring only around ,000 per year, he failed to pay
the IRS a debt of ,000. The evidence also showed he was fraudulently receiving
unemployment compensation for the two years before the accident, claiming to be
unemployed while he in fact worked for a pest control business and allegedly made
8,000 a year as a self-employed caterer. Even Gaillard's expert on lost earnings
stated he could not rely on Gaillard's tax returns because he could not "trust them" and
they might be "pure fiction."
Gaillard produced these supplemental tax returns in the course of discovery, and
he used them in the first trial to support his lost income claim. Before the second trial,
however, he moved to exclude the tax returns as more prejudicial than probative. The
district court found the evidence was prejudicial, but not more so than it was
probative. The court found the evidence he attempted to perpetrate fraud on the
United States was relevant to his character for truthfulness as a witness under Rule
608(b) and was admissible to impeach his credibility as well as the credibility of his
economic expert.
II. The Jury Instructions
Gaillard argues the district court should not have instructed the jury on
contributory negligence, assumption of risk, and the legal excuse doctrine.
A. The Standard of Review
We review a district court's decision to give particular instructions for abuse of
discretion. Burry v. Eustis Plumbing & Heating, Inc., 243 F.3d 432, 434 (8th Cir.
2001). "We consider whether the jury instructions, taken as a whole and viewed in
light of the evidence and applicable law, fairly and adequately submitted the issues in
the case to the jury. Because many errors are harmless, we will not reverse the
judgment unless the alleged error was prejudicial." Id. (internal citations omitted).
B. Contributory Negligence
"Contributory negligence is conduct for which plaintiff is responsible,
amounting to a breach of duty which the law imposes upon persons to protect
themselves from injury, and which, concurring and cooperating with actionable
negligence for which defendant is responsible, contributes to the injury complained
of as a proximate cause." Freeman v. Berg, 482 N.W.2d 32, 34 (S.D. 1992) (citation
omitted). Under the contributory negligence doctrine, a negligent defendant is not
liable if the contributing negligent actions of the plaintiff are more than slight in
comparison with the negligence of the defendant. Questions of negligence,
contributory negligence and assumption of risk are questions for the jury so long as
there is evidence to support the issues. Nelson v. Nelson Cattle Co., 513 N.W.2d 900,
903 (S.D. 1994).
In South Dakota, an unexcused violation of a safety statute constitutes
contributory negligence per se if such violation is the proximate cause of the injury
to the person for whose protection the statute was enacted. Alley v. Siepman, 214
N.W.2d 7, 9 (S.D. 1974). By statute, a vehicle parked along the side of the highway
must display or activate its headlights and taillights during the period from one-half
hour after sunset to one-half hour before sunrise and also must use such lighting at any
other time when there is not sufficient light to render clearly discernible any person
on the highway at a distance of 200 feet ahead. S.D. CODIFIED LAWS 32-17-4, 32-
Defendants presented evidence showing Gaillard may have violated SDCL 32-
17-4 and SDCL 32-17-27 when he did not activate the headlight and taillight of his
motorcycle prior to the accident. While the accident occurred just before the thirty
minutes before sunset, it was a fact question whether there was sufficient light.
Defendants were therefore entitled to a contributory negligence per se instruction.
C. Assumption of Risk
To prove assumption of risk, a defendant must show "1) that the plaintiff had
actual or constructive knowledge of the existence of the specific risk involved; 2) that
the plaintiff appreciated the risk's character; and 3) that the plaintiff voluntarily
accepted the risk, having had the time, knowledge, and experience to make an
intelligent choice." Carpenter v. City of Belle Fourche, 609 N.W.2d 751, 764 (S.D.
2000) (quoting S.D. Pattern Jury Instruction 13-01). The difference between
assumption of risk and contributory negligence is "between risks which were in fact
known to the plaintiff, or so obvious that he must be taken to have known of them,
and risks which he merely might have discovered by the exercise of ordinary care."
Bartlett v. Gregg, 92 N.W.2d 654, 658 (S.D. 1958).
Defendants presented evidence that Gaillard had actual or constructive
knowledge of the dangers associated with parking on the side of the interstate at dusk
without his lights on, appreciated the character of the risk, and chose to accept the risk
rather than driving up to the nearest exit to repair Swain's headlight. Defendants were
therefore entitled to an assumption of risk instruction.
D. The Legal Excuse Doctrine
Under the legal excuse doctrine, a defendant can be exonerated from liability
for per se negligence if he proves by a preponderance of evidence he had a legal
excuse. Meyer v. Johnson, 254 N.W.2d 107, 111 (S.D. 1977). One possible excuse
is "an emergency not of the driver's own making by reason of which the driver fails
to observe the statute." Albers v. Ottenbacher, 116 N.W.2d 529, 531 (S.D. 1962). "If
the legal excuse is an emergency, then the party must prove (1) that an emergency
existed, (2) that he was not engaged in prior conduct which caused or contributed to
the emergency, and (3) that he was unable to comply with the statute because of the
emergency." Meyer, 254 N.W.2d at 111.
2The sudden emergency doctrine is an expansion of the reasonably prudent
person standard of care. Meyer v. Johnson, 254 N.W.2d at 110.
This instruction should be given only if the evidence is sufficient to
support a finding (1) that the party invoking the doctrine was in fact
confronted by a sudden and unexpected danger, (2) that the dangerous
situation was not brought about by the party's own negligence, (3) that
at least two courses of action were available to the party after the
"A trial court is to present only those instructions which are supported by
competent evidence in the record." Dartt v. Berghorst, 484 N.W.2d 891, 895 n.5 (S.D.
1992). A legal excuse instruction is inappropriate if the record, viewed in the light
most favorable to the defendant, contains insufficient evidence to conclude the
defendant did not cause or contribute to the emergency. See id. at 895-96. In Dartt,
the court explained the foreseeability of the emergency is an important factor in
determining whether a defendant should get an instruction for legal excuse due to
emergency, and emphasized "[e]vidence of due care does not furnish an excuse or
justification." Id. at 896.
At the second trial, the court inserted a legal excuse instruction within its
negligence per se instruction, jury instruction number six. Gaillard objected to the
inclusion of the elements for legal excuse based on the authority of Dartt. Gaillard
argued the legal excuse instruction was inappropriate because, by failing to drive the
vehicle at the appropriate rate of speed for traffic conditions, Hoyt was engaged in
prior conduct which caused or contributed to the emergency. Defendants argued
because the court was instructing the jury that violating a safety statute was negligence
per se, it should also instruct them there is an exception to liability for a legal excuse,
including emergencies.
The district court maintained it would retain the legal excuse instruction within
the negligence instruction, but would not give the sudden emergency instruction
Defendants had requested.2 It relied on Meyer, in which the Supreme Court of
dangerous situation was perceived, and (4) that the choice of the course
of action taken after confrontation was a choice which would have been
taken by a reasonably prudent person under similar circumstances, even
though it may later develop that some other choice would have been
Id. at 110-11 (internal citations omitted). Under the sudden emergency doctrine, if a
defendant chooses the course of action a reasonably prudent person would have taken
under similar circumstances, he or she is not negligent.
South Dakota held the legal excuse instruction should have been given instead of the
sudden emergency instruction because there was no evidence the defendant chose
between two courses of action. See Meyer, 254 N.W.2d at 111. Here, the district
court reasoned that in an ordinary negligence action the jury is adequately instructed
on the ultimate issues by instructions on negligence, contributory negligence, burden
of proof and proximate cause, Trial Tr. at 435-36, and further instruction on sudden
emergency was unnecessary and "would improperly emphasize the defendant's
position." Id. at 437; see Carpenter, 609 N.W.2d at 764 (refusing to give a sudden
emergency instruction because the jury was adequately instructed on the issues and
the instruction "would have served only to improperly emphasize the defendants'
position."). The court noted:
There's no evidence here of sudden unexpected presence of ice, a tire
blowout, brake malfunction, or other mechanical failure. In their brief
the defendants argue that traffic suddenly stopped, but the defendant
admitted when he testified, and all the other witnesses that testified,
talked about the fact that the traffic was very heavy and backed up, and
the defendant admitted during this trial that he'd been warned while in
Rapid City the traffic was heavy and he'd been warned about Sturgis.
The defendant's testimony in this trial hasn't shown that he was
confronted by a sudden and unexpected danger that was not brought
about by his own negligence. In light of the Court's instructions on
contributory negligence and assumption of the risk, I find that to give a
further instruction on the sudden emergency doctrine would improperly
emphasize the defendant's position, so I am going to refuse defendant's
proposed instructions 9 and 18.
(Id. at 436-37) (emphasis added).
Gaillard contends the district court found there was no evidence Hoyt was
confronted by a sudden and unexpected danger not brought about by his own
negligence. He argues it was, therefore, improper for the court to instruct the jury as
to legal excuse because legal excuse requires the defendant be confronted by an
emergency not of his own making. Gaillard misunderstands the import of the district
court's comments.
The court refused the sudden emergency instruction because it felt the
instruction should not be given along with a contributory negligence instruction and
might "improperly emphasize the defendant's position" not because the court had
determined Defendants were negligent as a matter of law. While we cannot explain
the district court's puzzling choice of words when it ruled on the sudden emergency
instruction, it was only a comment not a legal conclusion regarding Defendants'
negligence. As the district court later wrote,
Evidence was presented at trial that could allow a reasonable jury to find
the accident that resulted in injury to Gaillard was not the result of
negligence. Hoyt testified that he slowed down when he neared the
Sturgis exit, but nonetheless was unable to bring his vehicle to a stop in
time to avoid the traffic backed up in front of him. Further, Hoyt
testified that traffic was proceeding at a normal rate of speed until just
before the accident when it slowed down near the Sturgis exit. This
evidence could support a jury finding that Hoyt was not negligent.
08/13/07 Order Denying Motion for New Trial, at 15-16.
Our independent review of the evidence leads us to conclude there was
sufficient evidence to support either conclusion, i.e. Hoyt was negligent or he was
legally excused by virtue of an emergency. Since it was question of fact, it was proper
to instruct the jury that per se negligence can be legally excused by an emergency.
III. The Tax Returns
Gaillard argues the district court abused its discretion when it admitted evidence
of his supplemental tax returns, which he filed after the accident.
A. Standard of Review
The district court's decision to allow evidence of Gaillard's tax returns to be
admitted and utilized at trial is reviewed for abuse of discretion. Harris v. Chand, 506
F.3d 1135, 1139 (8th Cir. 2007). We will not reverse absent a showing that the ruling
had a substantial influence on the jury's verdict. Id.
B. Analysis
After the accident, Gaillard filed supplemental tax returns changing his reported
income to a higher figure. Defendants used the returns to impeach the credibility of
Gaillard and his expert witness. Gaillard argues because his expert did not rely on the
returns when estimating his future income loss, the returns were not relevant. He
further argues, under Federal Rule of Evidence 403, any probative value was
substantially outweighed by the prejudicial effect. See Fed. R. Evid. 403. He
contends Defendants used the information to improperly incite the jury into punishing
him for being a liar and a cheat.
We find Gaillard's tax returns highly relevant to the defense of this case. First,
past income as established by tax returns is highly relevant to a loss of income claim.
Second, the tax returns were probative of his character for untruthfulness and thus
relevant to keeping any damage award to a reasonable and fair level. See Fed R.
Evid. 608(b). The returns were offered to attack the credibility of his testimony
regarding loss of income and the extent and severity of his injuries. They were also
relevant to impeach the credibility of Gaillard's economic expert, who testified he
typically relies upon an individual's income tax return as the most reliable source of
wage verification, yet ignored Gaillard's untrustworthy returns.
The district court properly found when Gaillard presented evidence to suggest
he suffered a loss of income, he opened the door for Defendants to produce evidence
to contradict his claims. See Halladay v. Verschoor, 381 F.2d 100, 113 (8th Cir.
1967) (income tax returns may be treated as a prior inconsistent statement and may
be used to impeach witness as to amount of loss). It matters not that Gaillard's expert
did not rely on the returns. The district court properly found the tax returns were
admissible as impeachment evidence under Rule 608(b), which allows the "court in
its discretion to allow cross examination of witnesses regarding specific instances of
a witness's own conduct if the past experiences are probative of a character of
untruthfulness." (5/14/2007 Order Denying Motion To Exclude Tax Returns, at 2
(citing United States v. Beal, 430 F.3d 950, 956 (8th Cir. 2005); Fed. R. Evid. 608(b)).
IV. Conclusion
For the foregoing reasons, we affirm the district court.


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