Schaffner v USAA Casualty Ins., (04-1041) 08/16/2005

    Charles P. Beaux Schaffner (plaintiff-insured) appeals from a judgment filed 13 November 2003 ordering plaintiff to pay USAA Casualty Insurance Company (defendant-insurer) $88,000.00 following a jury verdict finding plaintiff had (1) intentionally burned or caused the burning of his insured property (house and car) and (2) misrepresented a material fact regarding his insurance claim.
    A fire occurred at approximately 3:00 a.m. on Sunday 5 March2000 causing extensive damage to plaintiff's house and car. Plaintiff's house and car were insured through defendant.
    John Darryl Pope (Pope), a fire investigator and witness for defendant, and Doug McClure (McClure), a Charlotte Fire Investigator, presented technical testimony at trial. Plaintiff and defendant stipulated in the presence of the jury that the fire was of an incendiary origin via the use of gasoline.
    Testimony was also offered that during the investigation by Inspector McClure on Monday, 6 March 2000, he found a playtex glove and a bank check register, the latter apparently belonging to the plaintiff's ex-wife, Kimberly Ann Schaffner, in the driveway of plaintiff's house. Plaintiff alleged he was not at his home when the fire occurred. On 7 March 2000, while at a work-related conference in Arlington, Virginia, plaintiff received a call from his realtor informing him of the fire. Plaintiff returned to Charlotte that same day.
    On 8 March 2000, plaintiff notified defendant of the fire. Jim Ludlow (Ludlow), Property Claim Representative for defendant, and Inspector McClure met plaintiff at the scene of the fire to examine plaintiff's house and car. Inspector McClure subsequently stated the fire was intentionally set. Defendant did not approve the claim at that time, and after 10 months of investigation, issued a final denial letter on 2 January 2001 on the groundsplaintiff intentionally set the fire.
    Plaintiff had purchased his house on 27 August 1999 and financed it through BB&T Mortgage. On 29 January 2001 plaintiff requested assistance from BB&T Mortgage in resolving the fire loss claim against defendant. Instead, defendant paid BB&T Mortgage $88,000.00 per the mortgage insurance portion of the policy.
    Following an investigation and determination the fire had been intentionally set and after the issuance of a final denial letter, plaintiff commenced this civil action on 23 March 2001 for damages against defendant and set forth three claims: (1) breach of contract on the homeowners policy; (2) breach of contract on the automobile policy; and (3) punitive damages for breach of a duty of good faith in resolving the contract claims.
    Defendant's answer was filed on 24 May 2001, in which defendant admitted the policies, payment of the premiums, fire loss of the house and car, loss of personal property and of living accommodations, timely filing of notice of the loss, and timely filing of the proof of loss. In a counterclaim, defendant alleged plaintiff violated the terms of the policies by intentionally burning the house and the car, and also alleged misrepresentation and fraud in the presentation of the loss. In a Substitution to Motion to Amend, defendant sought by subrogation the return of the $88,000.00 paid to BB&T Mortgage.      On 25 September 2001 plaintiff filed a motion for summary judgment as to liability on the two claims for damage to plaintiff's house and car. On 31 January 2002 plaintiff's motion was denied.
     An order granting defendant's motion for partial summary judgment on plaintiff's claim for punitive damages was filed 28 June 2002. On 19 September 2003, following a jury verdict, plaintiff was ordered to pay defendant $88,000.00. Plaintiff appeals.

    In reviewing a motion for directed verdict and a motion for judgment notwithstanding the verdict on appeal, the evidence is viewed in the light most favorable to the non-movant, resolving all conflicts in his favor and giving the non-movant the benefit ofevery inference which reasonably could be drawn from the evidence in his favor. Kiousis v. Kiousis, 130 N.C. App. 569, 572, 503 S.E.2d 437, 440 (1998); see also Best v. Duke Univ., 337 N.C. 742, 749, 448 S.E.2d 506, 510 (1994) . Only where evidence, when so considered, is insufficient to support a verdict in the non- movant's favor should the motion for directed verdict be granted. Id . “All conflicts must be resolved in [the non-movant's] favor, and [the non-movant] must be given the benefit of every reasonable inference.” Shields v. Nationwide Mut. Fire Ins. Co., 61 N.C. App. 365, 374, 301 S.E.2d 439, 445, disc. review denied, 308 N.C. 678, 304 S.E.2d 759 (1983). “The question presented by a motion for a directed verdict is whether the evidence is sufficient to entitle the non-movant to have a jury decide the issue in question.” United Lab., Inc. v. Kuykendall, 322 N.C. 643, 661, 370 S.E.2d 375, 387 (1988). The same standard of review “is to be applied by the courts in ruling on a motion for [judgment notwithstanding the verdict] as is applied in ruling on a motion for a directed verdict.” Smith v. Price, 315 N.C. 523, 527, 340 S.E.2d 408, 411 (1986).
    Here, we review whether the trial court properly denied plaintiff's motion for directed verdict and judgment notwithstanding the verdict. In a civil action for intentional burning , the insurer must prove by a preponderance of the evidencethat the insured: (1) participated directly or indirectly (2) in the intentional burning of the insured property. Freeman v. St. Paul Fire & Marine Ins. Co., 72 N.C. App. 292, 299, 324 S.E.2d 307, 311, cert. denied, 313 N.C. 599, 330 S.E.2d 609 (1985). “Plaintiff's motive and opportunity are merely circumstances to be considered in determining whether there has been an intentional burning by the insured or some one procured by him. These are not essential elements of the defense.” Id. Unless “the insured's misrepresentations cannot in any way be seen as innocent,” the issue of fraud or false swearing is a question of fact which remains entirely within the province of the jury. Webster Enters. v. Selective Ins. Co., 125 N.C. App. 36, 43, 479 S.E.2d 243, 248 (1997) (quotations omitted).
    Defendant's evidence at trial showed: (1) on 4 March 2000 plaintiff rented both a minivan and a sedan, incurring significant mileage on each, yet claimed he only drove the sedan, not the minivan, to his conference in Arlington, Virginia; (2) plaintiff however, denied specifically requesting the minivan and denied that several confirmation calls were made between himself and the rental company; (3) on 8 March plaintiff returned the minivan with 329 additional miles and paid for the rental with a credit card; (4) after speaking with the fire investigators, plaintiff removed the charge from his credit card and paid the rental fee in cash; (5)plaintiff was unable to explain how the minivan accumulated 329 miles when he did not drive it to the conference; (6) before he left Charlotte, plaintiff warned his neighbor to call 911 if his ex-wife, who drove a minivan, was seen on plaintiff's property; (7) a glove and check register had been missing from the ex-wife's home after plaintiff had recently visited her and these same items were found at the scene of the fire.
    The evidence also tended to show: on 5 March 2000, b etween 3:00 and 3:30 a.m., plaintiff's neighbors heard a loud thump, like “metal hitting metal”, and observed a minivan hurriedly leaving plaintiff's driveway. The neighbors called 911 and reported plaintiff's house was being vandalized. The neighbors next observed plaintiff's house on fire and saw a minivan speed away.
    In the light most favorable to defendant, the evidence presented was sufficient to go to the jury. The jury was able to evaluate exhibits and testimony from plaintiff, his ex-wife, co- workers, vendors, and fire experts. They found plaintiff testified falsely about the events surrounding the fire. Further, the jury found plaintiff had materially misrepresented his claim and that he had participated directly or indirectly in the intentional burning of the insured property. Accordingly, plaintiff's motions for directed verdict and judgment notwithstanding the verdict were properly denied.

    Defendant argues the trial court erred by granting defendant's motion for partial summary judgment as to plaintiff's “bad faith” punitive damages claim.
    Summary judgment is appropriate where the pleadings depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that a party is entitled to a judgment as a matter of law. N.C. Gen. Stat. § 1A-1, Rule 56(c) (2003). “An issue is material if the facts alleged would constitute a legal defense, or would affect the result of the action, or if its resolution would prevent the party against whom it is resolved from prevailing in the action.” Koontz v. Winston-Salem, 280 N.C. 513, 518, 186 S.E.2d 897, 901 (1972). The movant must establish that a triable issue of fact is lacking. Sykes v. Keiltex Indus., Inc., 123 N.C. App. 482, 484-85, 473 S.E.2d 341, 343 (1996). If the movant meets this burden, the non- movant must then “produce a forecast of evidence demonstrating that the [non-movant] will be able to make out at least a prima facie case at trial.” Collingwood v. General Elec. Real Estate Equities, Inc., 324 N.C. 63, 66, 376 S.E.2d 425, 427 (1989). The trial court must view the evidence in the light most favorable to the nonmoving party. Bruce-Terminix Co. v. Zurich Ins. Co., 130 N.C. App. 729,733, 504 S.E.2d 574, 577 (1998).
    In order to recover punitive damages for the tort of bad faith refusal to settle, the plaintiff must prove (1) a refusal to pay after recognition of a valid claim, (2) bad faith, and (3) aggravating or outrageous conduct. Dailey v. Integon General Ins. Corp., 75 N.C. App. 387, 331 S.E.2d 148, disc. rev. denied, 314 N.C. 664, 336 S.E.2d 399 (1985).
     The defendant's policy stated: “We do not insure for loss caused directly or indirectly by any of the following. Such loss is excluded regardless of any other cause of event contributing concurrently or in any sequence to the loss. Intentional loss, meaning any loss arising out of any act committed: (1) By or at the direction of an “insured”; and (2) With the intent to cause a loss.” This was reiterated in a letter to plaintiff dated 15 March 2000, as defendant attempted to determine who was responsible for setting the fire, and hence, whether the claim was valid.
    In determining the existence of bad faith, the insured's case cannot simply be “based on an honest disagreement or innocent mistake.” Dailey at 396, 331 S.E.2d at 155 . In its claims review process, defendant came to the same conclusion the investigating law enforcement and independent investigators did: the fire was caused intentionally. Based on inconsistencies and misrepresentations in plaintiff's affidavits provided during theclaims review process, there was significant evidence plaintiff had participated in an intentional burning of his house and car on 4 March 2000. Given plaintiff's lack of credibility, the conclusion as to how the fire started showed more than an honest dispute between plaintiff and defendant. Coverage for an intentionally set fire was clearly excluded from defendant's policy. The dispute as to whom would be attributed to starting the fire was of genuine concern.
    To establish that an insurer acted in bad faith, the insured must prove, in addition to the tortious act (here, plaintiff argues a refusal to settle), some element of aggravation indicating an insurer's actions were “wilful, wanton and in conscious disregard of [its] duty to pay plaintiff's insurance claim.” Von Hagel v. Blue Cross and Blue Shield, 91 N.C. App. 58, 62-63, 370 S.E.2d 695, 699 (1988). In all defendant's communications with plaintiff, we find no indication that defendant acted unreasonably or with undue delay in its investigation of the fire or the ensuing fire loss claim. Defendant's initial written request for information from plaintiff was made 22 March 2000, with several subsequent requests. Plaintiff's delay in fully responding to such requests was documented in a 17 August 2000 letter from defendant to plaintiff's counsel:
        On 7 July 2000, we sent correspondence to yourequesting certain specific documentation that was discussed in [plaintiff]'s examination, but to date, we have not received the documentation or a response to our phone call to your office on 10 July 2000 and on 9 August 2000. As set forth in [defendant]'s letter to you of 12 July 2000, an evaluation of this claim cannot be completed without the production of documents and a completion of the examination under oath.

Defendant's legitimate requests for information in investigating plaintiff's claim did not show the existence of aggravating or outrageous conduct, or bad faith in defendant's claims process. Reviewing the evidence in the light most favorable to plaintiff, he has failed to satisfy his burden of proof. Defendant's motion for partial summary judgment was properly granted.
    Affirmed.
    Judges MCGEE and STEELMAN concur.
    Report per Rule 30(e).