An unpublished opinion of the North Carolina Court of Appeals does not constitute controlling legal authority. Citation is disfavored, but may be permitted in accordance with the provisions of Rule 30(e)(3) of the North Carolina Rules of Appellate Proced
NORTH CAROLINA COURT OF APPEALS
Filed: 16 August 2005
CHARLES P. BEAUX SCHAFFNER,
v. Mecklenburg County
No. 01 CVS 4362
USAA CASUALTY INSURANCE
Appeal by plaintiff from judgment filed 13 November 2003 by
Judge David S. Cayer in Mecklenburg County Superior Court. Heard
in the Court of Appeals 23 March 2005.
Tillett Law Offices, by Thomas M. Tillett, for plaintiff-
Cox & Tillery, P.A., by J. Thomas Cox, Jr. for defendant-
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
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
against defendant. Instead, defendant
paid BB&T Mortgage
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
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
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
The issues on appeal are: whether the trial court erred by
denying plaintiff's motions for
directed verdict and
notwithstanding the verdict;
and (II) granting defendant's motion
for partial summary judgment on plaintiff's bad faith punitive
Plaintiff first argues the trial court erred by denying his
and judgment notwithstanding the
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.
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
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
, 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)
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
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,
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
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
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
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.
Judges MCGEE and STEELMAN concur.
Report per Rule 30(e).
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