                             In the
 United States Court of Appeals
               For the Seventh Circuit
                         ____________

No. 02-1342
VANESSE FORT, individually and
as personal representative of the
ESTATE OF ERIC K. FORT, Deceased,
                                               Plaintiff-Appellee,
                                v.

C.W. KELLER TRUCKING, INC.,
                                           Defendant-Appellant.
                         ____________
        Appeal from the United States District Court for the
        Northern District of Indiana, South Bend Division.
       No. 300:CV 228—Robert L. Miller, Jr., Chief Judge.
                         ____________
   ARGUED SEPTEMBER 10, 2002 —DECIDED JUNE 5, 2003
                   ____________


  Before COFFEY, ROVNER, and WILLIAMS, Circuit Judges.
   WILLIAMS, Circuit Judge. Vanesse Fort sued C.W. Kel-
ler Trucking, Inc. for the wrongful death of her husband,
Eric Fort. Before trial, the plaintiff received $2.25 million
under the terms of a loan receipt agreement with Ryder
Integrated Logistics, Inc. At trial the jury awarded Vanesse
Fort approximately $1 million. Keller asked the district
court to setoff the jury award by the $2.25 million. The
district court rejected that request and on appeal, Keller
asserts that setoff is warranted because the $2.25 mil-
lion advanced is not a loan. Specifically, Keller argues that
2                                               No. 02-1342

Fort and Ryder never intended full repayment of the loan,
and in any case the jury award was too small to allow
for full repayment. Because we find that the parties
intended full repayment such that the money advanced
was truly a loan, and because money received under loan
receipt agreements is generally not subject to setoff, we
affirm the district court’s ruling. Keller also raises
claims relating to the admissibility of the loan receipt
agreement, the sufficiency of the evidence, and improper
jury instructions, which we also reject.


                    I. BACKGROUND
  In 1999, C.W. Keller Trucking, Inc. was approved by
Toyota Motor Corporation to haul parts to Toyota’s Ken-
tucky plant as a subcontractor for Ryder Integrated Logis-
tics, Inc. Keller earned approximately $1.00 per mile
and retained control over the trucks used to haul parts.
Additionally, Ryder had an owner-operator agreement
with E.C. Trucking, Inc., under which E.C. Trucking pro-
vided drivers and leased three tractors to Ryder, and in
exchange received about $.85 cents per mile to haul Toyota
parts to the same Kentucky plant as Keller.
  That same year, E.C. Trucking entered into an assets
purchase agreement with Keller, acquiring Keller’s stock
and trucks, as well as Keller’s permits, licenses, and
certificates necessary for the trucks’ operation. E.C. Truck-
ing also obtained Keller’s Interstate Common Carrier (ICC)
authority and Canadian counterpart, in addition to Kel-
ler’s subcontractor agreement with Ryder. Following this
transaction, E.C. Trucking operated its trucks using
Keller’s placards and ICC authority, and was legally
entitled to use the name “E.C. Trucking d/b/a C.W. Keller
Trucking.”
  On March 15, 2000, Eric Fort died after his car was hit
by a truck driven by Jacob Nance. Although Nance had
No. 02-1342                                                3

been assigned to a truck with Keller’s placards and ICC
authority, it broke down the day before the accident, and
Nance used a truck with Ryder’s placards and ICC au-
thority. Ryder asserts that use of this truck was unautho-
rized.
  Vanesse Fort (Eric Fort’s widow) sued Ryder, Nance, E.C.
Trucking, and Keller for wrongful death. Fort then entered
into a loan receipt agreement with Ryder releasing all
defendants except Keller. Under this agreement, Fort
received $2.25 million, but promised to pay Ryder one-third
of the money recovered from Keller or Keller’s insurer up
to a maximum of $2.25 million.
  Fort’s suit against Keller went to trial. The only issues
in dispute were whether Keller was legally responsible
for Nance’s negligence and if so, how much money the
plaintiff should receive. A Ryder representative testified
that even though Nance used a truck owned by Ryder,
Keller was responsible for the trip as Ryder’s subcontrac-
tor. Keller argued that it was not in business at the time
of the accident, and was therefore not Nance’s employer.
Also, Keller objected to the court’s refusal to admit evi-
dence of the loan receipt agreement to establish that
Brad Scroggins, a Ryder employee, was biased against
Keller. At the close of evidence, the court instructed the
jury regarding the difference between Keller and E.C.
Trucking’s liability. The jury found Keller liable for Fort’s
death and awarded Fort’s estate slightly over $1 million.
  Following the jury verdict, Keller filed a motion for set-
off, arguing that as a matter of law the jury award should
be offset by the amount that Fort retained from the loan
receipt agreement. The district court determined that
Keller was not entitled to a setoff and denied the motion.
Keller appeals this ruling, and also contests the district
court’s refusal to introduce the loan receipt agreement
into evidence, the sufficiency of the evidence establishing
4                                                 No. 02-1342

that Keller was in business at the time of the accident,
and the jury instructions regarding the laws governing
separate corporate entities.


                       II. ANALYSIS
A. Setoff from the Loan Receipt Agreement
  Indiana courts1 encourage the use of loan receipt agree-
ments, see, e.g., Scott County v. Vaughn, 704 N.E.2d 1029,
1032 (Ind. Ct. App. 1998), and define such agreements
as follows:
    A loan receipt agreement, in its simplest form,
    provides that one with potential liability to a
    claimant will advance funds in the form of a
    non-interest loan to the claimant in order that the
    claim may be prosecuted against another who is
    also potentially liable for the claim. In return for
    the funds advanced, the claimant agrees that he
    will not sue or will not seek to enforce a judgment
    against the lender and will repay the loan accord-
    ing to some formula based upon the claimant’s re-
    covery against the other party. Such an agreement,
    then, serves to limit the liability of one against
    whom a claim might be pressed and, at the same
    time, gives the claimant an immediate ‘bird in
    hand’ instead of forcing him to await but possible
    recovery following protracted litigation.
Burkett v. Crulo Trucking Co., 355 N.E.2d 253, 258 (Ind.
Ct. App. 1976); see also American Transp. Co. v. Cent.
Ind. Ry. Co., 264 N.E.2d 64, 67 (Ind. 1970).



1
  The parties agree that Indiana law governs the setoff issue in
this diversity case.
No. 02-1342                                                     5

  It is against this backdrop that Keller contests the dis-
trict court’s denial of its motion for setoff. Specifically,
Keller points out that under the terms of the agreement
at issue, Fort received $2.25 million from Ryder, but had
to pay back one-third of the amount of any jury award.
The jury award was slightly over $1 million thus requir-
ing Fort to repay Ryder approximately $347,377. Keller
reasons that the approximately $1.9 million left over
($347,377 subtracted from $2.25 million) should be used
to offset Keller’s $1 million jury award to Fort (thus
reducing Keller’s payment to zero) because this amount
will never have to be repaid. We are unpersuaded by this
argument.
  Despite Keller’s contentions to the contrary, under
Indiana law, whether setoff is warranted generally does
not depend on whether all funds advanced under the
terms of the loan receipt agreement were repaid. Rather, a
setoff entitlement hinges on whether the contract at
issue can properly be construed as a loan receipt agree-
ment in the first place; if so, no setoff is allowed. See
American Transp. Co., 264 N.E.2d at 67; Sanders v.
Cole Mun. Fin., 489 N.E.2d 117, 120 (Ind. Ct. App. 1986)
(“If the agreement is found to be a loan receipt agreement,
the funds received by the plaintiff are not to be credited
against a subsequent judgment.”); Barker v. Cole, 396
N.E.2d 964, 971 (Ind. Ct. App. 1980).2



2
  In contrast, under other settlement agreements such as cov-
enants not to sue, the claimant is neither required nor expected
to repay the funds provided. Therefore, these funds (which are
made in partial satisfaction of a judgment) usually must be
credited against subsequent awards to prevent double recovery.
See Sanders v. Cole Mun. Fin., 489 N.E.2d 117, 120 (Ind. Ct. App.
1986); Barker v. Cole, 396 N.E.2d 964, 970 (Ind. Ct. App. 1979);
but see R.L. McCoy, Inc. v. Jack, 772 N.E.2d 987, 990 (Ind. 2002).
6                                              No. 02-1342

  We thus examine whether Fort and Ryder entered into
a loan receipt agreement, “look[ing] to the express terms
of the agreement to determine the intent of the parties as
to the true nature of the agreement.” Barker, 396 N.E.2d
at 971; see also Sanders, 489 N.E.2d at 120 (“In determin-
ing the correct characterization of the agreement, the in-
tention of the parties to the transaction is relevant. How-
ever, once the type of transaction is identified, the effect
is established by law.”) (citation omitted). The agree-
ment states in part that:
    Ryder will advance to the Estate [$2.25 million] all
    of which will be repayable without interest only in
    the event and to the extent that the Estate recovers
    from Keller or its insurer by trial or settlement;
    and in that event Thirty-three and a third percent
    (33 1/3%) of all monies received by the Estate shall
    be repaid to Ryder until the full amount is repaid.
This type of contract, which contemplates full repayment,
is clearly a loan receipt agreement. The fact that repay-
ment is based on a formula (one-third of the jury award
rather than dollar-for-dollar repayment) does not make
it any less so. Burkett, 355 N.E.2d at 258 (noting that
loan receipt agreements involve “repay[ment of] the loan
according to some formula based upon the claimant’s
recovery against the other party”) (emphasis added); see,
e.g., Bymaster v. Bankers Nat’l Life Ins. Co., 480 N.E.2d
273, 280 (Ind. Ct. App. 1985) (contract construed as loan
receipt agreement even though repayment of a $10,000
loan was required only if plaintiff recovered more than
$30,000 from other tortfeasors); Barker, 396 N.E.2d at 971
(contract construed as loan receipt agreement even though
repayment of a $25,000 loan was required only if plain-
tiff recovered more than $25,000 from another tortfeasor).
Thus, Keller is not entitled to setoff.
  Keller contends that notwithstanding the agreement’s
express terms, neither Ryder nor Fort ever intended full
No. 02-1342                                                   7

repayment because Fort’s lawyer only asked for $2.95
million at trial, and Fort would have had to recover $6.75
million to repay Ryder in full. We are unconvinced. The
record reveals that Fort initially sought $7 million in
damages, and Keller has not shown that this figure was
unreasonable; additionally, the loan receipt agreement
states that Ryder believed there was a “substantial possi-
bility” that Fort would receive a jury award of at least
$5 million. As for Keller’s assertion that full repayment
was impossible because Keller only had $2 million in
insurance coverage and no funds of its own, we note that
Keller has not pointed us to any evidence in the record
that either Fort or Ryder knew of Keller’s alleged inability
to pay when the loan receipt agreement was negotiated.3
  Keller further attempts to confuse the issue by argu-
ing that whether a loan has been fully repaid factors into
the determination of when setoff is warranted. Specifically,
the appellant cites Manns v. State, Department of High-
ways, 541 N.E.2d 929 (Ind. 1989), in which the Indiana
Supreme Court stated that “[a]t least to the extent actually
repayable from a judgment, loan receipt proceeds should
not be subject to pro tanto credit against such judgment.”
Id. at 933 (citing Duke’s GMC, Inc. v. Erksine, 447 N.E.2d
1118 (Ind. Ct. App. 1983)). Keller’s emphasis on Manns
is misplaced. The phrase “actually repayable from a judg-
ment” refers to whether actual repayment “from a judg-
ment” was contemplated at the time the loan receipt
agreement was entered into. Duke’s GMC v. Erksine, which
the Manns court relied on in making its determination,
dictates this reading. In that case, the defendant ap-
pealed the trial court’s refusal to tender a jury instruction
stating that the defendant was entitled to a setoff due in
part to a loan receipt agreement between the plaintiff


3
  The depositions Keller relies on to establish that Keller had
no funds were taken after the loan receipt agreement was signed.
8                                                No. 02-1342

and another tortfeasor. The appellate court found no error
because the loan receipt agreement at issue did “not
constitute a partial payment or satisfaction of a judg-
ment.” See 447 N.E.2d at 1122. The court arrived at this
decision despite the fact that the plaintiff did not have
to repay any portion of his $52,500 loan; repayment was
triggered only if the plaintiff was awarded over $300,000,
and the jury awarded only $150,000.
  Sanders v. Cole, 489 N.E.2d 117 (Ind. Ct. App. 1986), also
cited in Manns, further undermines Keller’s position. In
that case the plaintiffs received a $200,000 loan, and
were obliged to repay 25% of the first $400,000 recovered
from other defendants and every dollar in excess of
$400,000. See 489 N.E.2d at 125 (Garrard, J., concurring).
The court declined to require a setoff of the advanced
funds, noting that “[t]he parties agree the appellants
received $200,000.00 subject to a loan receipt agreement
and that amount is not to be applied as a credit since
it is repayable.” Id. (majority). The court made this de-
termination despite the fact that the jury verdict was not
sufficient to trigger full repayment of the loan. Id. Although
Sanders differs somewhat from the instant case in that
the judgment was ultimately reduced to zero because
of setoffs from various covenants not to sue, it supports
Fort’s argument that setoff is not required merely because
a loan is not fully repaid.
  Keller also cites State v. Ingram, 399 N.E.2d 808 (Ind. Ct.
App. 1980), in support of its argument that setoff is barred
only if a loan is fully repaid. First, as Keller admits, that
opinion was vacated by the Indiana Supreme Court and
therefore has no precedential value. See State v. Ingram,
427 N.E.2d 444 (Ind. 1981). Second, Ingram is clearly
distinguishable. In that case, the plaintiff received $3,500
from a lender, but under the terms of the agreement, the
lender sought only $1,500 back if the plaintiff recovered
at trial. See 399 N.E.2d at 809. Thus, it was clear at the
No. 02-1342                                                       9

time the contract was formed that the plaintiff was receiv-
ing a gift, rather than a loan, of $2,000. By contrast, in the
instant case Ryder expected repayment of the entire loan.4
  Because Indiana case law generally does not sup-
port Keller’s argument that setoff is required even when
full repayment was contemplated in the loan receipt
agreement,5 we find that the district court’s denial of
Keller’s motion for setoff was proper.6



4
  Additionally, Keller relies on R.L. McCoy, Inc. v. Jack, 752
N.E.2d 67, 71 (Ind. Ct. App. 2001) for the proposition that portions
of a loan that are not actually repayable are subject to setoff.
Although McCoy was brought under the Comparative Fault
Act, and is thus distinguishable from the instant case, we note
that the Indiana Supreme Court has recently ruled that setoff
in comparative fault cases is not warranted even if the settle-
ment payment provided to the plaintiff is larger than the subse-
quent jury award. See R.L. McCoy, Inc., 772 N.E.2d 987, 991 (Ind.
2002) (“The point is that the settlement between McCoy and the
Jacks had no bearing on Johnson’s obligation to pay according
to its liability.”). Thus, McCoy does not bolster Keller’s argument.
5
  We note that Board of Commissioners of Adams County v.
Price, 587 N.E.2d 1326, 1334-35 (Ind. Ct. App. 1992), which Keller
failed to cite in its briefs, may provide some support for Keller’s
position. However, we are not bound by the decisions of a state’s
intermediate appellate courts if “we have a compelling reason
to doubt that they have stated the law correctly.” See AAR
Aircraft & Engine Group, Inc. v. Edwards, 272 F.3d 468, 470 (7th
Cir. 2001) (determining that various Illinois appellate deci-
sions “did not accurately predict how the Illinois Supreme Court
would rule on a guarantor’s ability to waive commercial reason-
ableness”). A careful examination of Manns (discussed above)
reveals that the Price court’s holding is a likely inaccurate
statement of the rule regarding setoffs from loan receipt agree-
ments.
6
  Because we believe that the Indiana courts already provide
sufficient guidance on this issue, we deny Keller’s request for
                                                  (continued...)
10                                                   No. 02-1342

B. Loan Receipt Agreement as Impeachment Evidence
  Keller argues that the district court should have allowed
it to introduce the loan receipt agreement to impeach
Brad Scroggins, the Ryder manager primarily respon-
sible for overseeing Ryder’s business relationships with
companies like Keller and E.C. Trucking. More specifically,
Keller asserts that at trial, Scroggins attempted to as-
sign responsibility to Keller for the trip that Nance was
making at the time of the accident, and that the loan
receipt agreement would have revealed Ryder’s financial
interest in the case’s outcome (and thus Scroggin’s motiva-
tion for his position). The district court ruled the evi-
dence inadmissible because Scroggins did not know of
the agreement and thus could not offer any pertinent
testimony on the matter. Evidentiary rulings by the trial
judge are reviewed for an abuse of discretion, see Old
Republic Ins. Co. v. Employers Reins. Corp., 144 F.3d 1077,
1082 (7th Cir. 2001), and we will alter the district court’s
ruling only if failure to do so would be “ ‘inconsistent with
substantial justice.’ ” Id. (citing Fed. R. Civ. P. 61).
  We look to Bachenski v. Malnati, 11 F.3d 1371 (7th Cir.
1993) for guidance on this issue. In Bachenski, we found
no abuse of discretion where the district court ex-
cluded evidence of a settlement agreement and the wit-
ness had no personal knowledge of the agreement. More
specifically, we noted that while “[w]itness bias is a
quintessentially appropriate topic for cross examination,”
the district court “acted well within the the bounds of its



6
  (...continued)
certification to the Indiana Supreme Court. We note that “the
issue in this case arises often in state litigation, and the courts
of Indiana will have ample opportunity to revisit the subject if
our disposition is unsatisfactory.” Schmitt v. American Family
Mut. Ins. Co., 161 F.3d 1115, 1117 (7th Cir. 1998).
No. 02-1342                                                   11

discretion” when it “accepted the representation of coun-
sel that [the witness] personally did not know and would
not be informed about the existence of the settlement.” Id.
at 1375-76. Similarly, the district court in the instant case
accepted counsel’s representation that Scroggins had no
knowledge of the loan receipt agreement and therefore
excluded the agreement.
  Keller’s strongest grounds for distinguishing Bachenski
are that: 1) the witness’s bias in Bachenski was already
apparent for other reasons; and 2) while the settlement
agreement in Bachenksi might have improperly influenced
the jury, the loan receipt agreement at issue here would
not have resulted in improper influence. These arguments
are not convincing. Keller was able to cross-examine
Scroggins extensively about bias resulting from Ryder’s
potential liability for the accident. Additionally, the jury
might have been unable to limit its consideration of the
loan receipt agreement to the issue of bias, and instead
inferred that the plaintiff had already been fully compen-
sated for her loss through the loan receipt agreement. We
therefore find that the district court did not abuse its
discretion by excluding the loan receipt agreement.7



7
   Although the Federal Rules of Evidence ultimately govern the
admissibility of evidence in federal trials, we may look to state
evidence rules in diversity cases under certain circumstances.
See Shirley v. Russell, 69 F.3d 839, 844 (7th Cir. 1995); Brant
v. Vulcan, Inc., 30 F.3d 752, 760 (7th Cir. 1994). Keller there-
fore cites numerous Indiana cases for the proposition that loan
receipt agreements may be introduced into evidence to show a
witness’s bias. However, none of the cases relied on by Keller
address the issue whether a loan receipt agreement is admis-
sible when the witness has no knowledge of the agreement. See,
e.g., Manns v. State, Dep’t of Highways, 541 N.E.2d 929, 934
(Ind. 1989); Gray v. Davis Timber & Veneer Corp., 434 N.E.2d
146, 148 (Ind. Ct. App. 1982); State v. Thompson, 385 N.E.2d
198, 210-11 (Ind. Ct. App. 1979).
12                                               No. 02-1342

C. Actively Doing Business at the Time of the Accident
  Keller asserts that because it sold all of its assets to E.C.
Trucking the year before the accident occurred, there
was insufficient evidence to support the jury’s finding
that it was actively doing business at the time of the
accident. When reviewing a jury’s verdict for sufficiency
of the evidence, we view the evidence presented at trial,
including all reasonable inferences to be drawn from it,
in the light most favorable to the prevailing party. See
Molnar v. United Techs. Otis Elevator, 37 F.3d 335, 337 (7th
Cir. 1994).
   Keller correctly notes that before the accident, E.C.
Trucking acquired, among other things, Keller’s trucks,
licenses, permits, certificates, and ICC authority. How-
ever, Keller concedes that no evidence was presented
at trial to indicate that Keller had formally dissolved or
that Keller had formally merged with E.C. Trucking. The
evidence presented did reveal that Keller, not E.C. Truck-
ing, was listed on Nance’s January 2000 job application, log
books, road test, drug test, and other employment docu-
ments (such as his W-2s). In addition, one witness claimed
that Keller was still an entity registered with the govern-
ment. Three witnesses asserted at various points that
Nance was employed both by Keller and E.C. Trucking
(although two of these witnesses later made contrary
statements). We therefore find that sufficient evidence
existed to support the jury’s determination that Keller
was still doing business at the time of the accident.


D. Jury Instructions
  Finally, Keller complains that the jury instructions failed
to adequately inform the jury that Keller was not account-
able for E.C. Trucking’s conduct even when E.C. Trucking
was doing business using Keller’s name. Keller further
argues that the court should have instructed the jury not
No. 02-1342                                                13

to infer that Keller was responsible for the accident sim-
ply because of its affiliation with E.C. Trucking.
  When assessing the adequacy of jury instructions, we
review the instructions as a whole, and reverse only if
the instructions failed to adequately state the applicable
law and the litigant was thereby prejudiced. See Alston v.
King, 157 F.3d 1113, 1118 (7th Cir. 1998); Trytko v.
Hubbell, Inc., 28 F.3d 715, 725 (7th Cir. 1994). Additionally,
in the absence of “evidence to the contrary, we assume
that juries follow a court’s instructions.” See Minn. Mining
& Mfg. Co. v. Pribyl, 259 F.3d 587, 600 (7th Cir. 2001).
  Here, the district court explicitly stated the circum-
stances under which Keller would not be held accountable.
Jury Instruction 8 stated in part the following:
    If, on the other hand, you find that Mr. Nance was
    employed only by E.C. Trucking, Inc.—even if E.C.
    Trucking, Inc. was doing business as C.W. Keller
    Trucking, Inc.—then C.W. Keller Trucking, Inc. is
    not liable to Mrs. Fort.
This instruction alone was sufficient to convey that Keller
and E.C. Trucking are separate entities, and that the jury
should not hold Keller liable either because Keller was
affiliated with E.C. Trucking or because E.C. Trucking
was doing business as Keller at the time of the accident.
Moreover, other instructions conveyed these principles.
For example, Jury Instruction 10 made it clear that the
jury must determine whether Nance was employed by
Keller based solely on Keller’s conduct, not E.C. Trucking’s
actions. We therefore find that the instructions as a whole
were sufficient to convey to the jury that Keller and E.C.
Trucking were different companies, and that only Keller’s
actions were to be considered when assigning liability.
14                                           No. 02-1342

                   III. CONCLUSION
  For the reasons set forth in this opinion, we AFFIRM the
judgment of the district court.

A true Copy:
      Teste:

                       ________________________________
                       Clerk of the United States Court of
                         Appeals for the Seventh Circuit




                   USCA-02-C-0072—6-5-03
