## Facts

- Lawrence Sims obtained a life-insurance policy from Great American Life Insurance Company that covered accidental death but excluded non-accidental death, including suicide.
- After attending a golf tournament, Sims became highly intoxicated, returned home, became agitated, and left abruptly in his car.
- Clara Sims called 911, reporting concern that her husband might hurt himself.
- Sims died later that evening when his car left a rural road and crashed.
- Great American investigated and denied the claim under the policy’s non-accidental (suicide) exclusion.
- Clara Sims sued for breach of contract and insurer bad faith, seeking compensatory and punitive damages.
- In a federal diversity jury trial, the jury found the death accidental and awarded roughly $1.4 million in compensatory and punitive damages.
- The district court excluded certain evidence about the crash and Sims’s state of mind based on the view that Oklahoma policy would bar it in state court.

## Issues

1. In a federal diversity case, may a district court exclude evidence otherwise admissible under the Federal Rules of Evidence solely because state law or policy would exclude it in state court?
2. Was the evidence sufficient to support verdicts for insurer bad faith and punitive damages under Oklahoma law?

## Decision

- The Tenth Circuit held that the Federal Rules of Evidence govern admissibility in federal diversity trials; Erie does not permit state evidentiary policy to displace the Federal Rules.
- The court stated that state substantive policy can still be considered within the Federal Rules’ framework (including relevance and unfair-prejudice analysis).
- The court affirmed the contract judgment awarding policy benefits based on the jury’s accidental-death finding.
- The court reversed the denial of judgment as a matter of law on bad faith and punitive damages and directed entry of judgment for the insurer on those claims.

## Legal Principles

- In diversity cases, federal procedural law applies; the Federal Rules of Evidence control admissibility unless invalid under the Constitution or the Rules Enabling Act.
- Erie does not independently determine evidentiary admissibility under the Federal Rules, but state substantive policies may be weighed when applying Rules such as 401–403.
- Under Oklahoma law, an insurer is not liable for bad faith merely because it denies coverage and later loses; the insured must show an unreasonable denial without a legitimate basis or conduct amounting to reckless disregard.
- Punitive damages require heightened culpability and cannot stand where the underlying bad-faith tort claim fails as a matter of law.

## Conclusion

The court reaffirmed that federal evidentiary rules govern admissibility in diversity trials, with state substantive policy considered only through the Federal Rules’ standards, and it left intact the insured’s contract recovery while eliminating bad-faith and punitive-damages liability due to insufficient evidence of unreasonable or reckless claims handling.


Sims v. Great Am. Life Ins. Co., 469 F.3d 870 (10th Cir. 2006)