Brandt Dist. Co. v. Federal Insurance Co.
| Decision Date | 16 March 2001 |
| Docket Number | No. 00-2598,00-2598 |
| Citation | 247 F.3d 822 |
| Parties | (8th Cir. 2001) BRANDT DISTRIBUTING CO., INC., A MISSOURI CORPORATION, APPELLANT, v. FEDERAL INSURANCE COMPANY, AN INDIANA INSURANCE CORPORATION, APPELLEE. Submitted: |
| Court | U.S. Court of Appeals — Eighth Circuit |
Appeal from the United States District Court for the Eastern District of Missouri.
Before Hansen and Heaney, Circuit Judges, and Fenner, 1 District Judge.
On March 6, 1996, a fire destroyed a two-story office building and adjoining warehouse in St. Louis, Missouri. The tenant of the building, Brandt Distributing Co., Inc. ("Brandt"), a distributor of coin-operated amusement equipment, filed a claim under its commercial insurance policy. The insurer, Federal Insurance Company ("Federal Insurance"), denied the claim because it believed that: (1) Brandt concealed or misrepresented its alleged involvement in causing the fire, and (2) Brandt was involved in intentionally causing the fire, either directly or indirectly. Federal Insurance relied upon the following provisions of the policy:
(1) Insured's Duties in the Event of Loss or Damage
You must see to it the following are done in the event of a loss or damage: Cooperate with us in the investigation, settlement or handling of any claim. Authorize us to obtain records or reports necessary for our investigation. As often as may reasonably be required, permit us to inspect the property and examine your books and records.
This insurance is void if you or any other insured intentionally conceals or misrepresents any material fact or circumstance related to this insurance at any time.
(2) Policy Exclusion
This insurance does not apply to loss or damage caused by or resulting from fraudulent, dishonest, or criminal acts or omissions committed alone or in collusion with others, by you, your partners, directors, trustees, and employees, or by anyone authorized to act for you or anyone to whom you have entrusted covered property for any purpose.
Brandt filed suit in Missouri state court to enforce the fire insurance policy, and Federal Insurance removed the case to the United States District Court for the Eastern District of Missouri based upon diversity jurisdiction. Brandt asserted claims under several provisions of the policy, including: (1) loss of the premises, (2) cost of conducting an inventory, (3) loss of inventory and stock, (4) loss of personal property, and (5) cost of the demolition and removal of debris.
Federal Insurance answered the complaint with the affirmative defenses, regarding each count, stating that: (1) the loss arose out of the intentional acts of Brandt, and (2) Brandt made material misrepresentations and concealed material facts relating to the insurance claim during Federal Insurance's examinations under oath, thereby voiding coverage under the policy. Federal Insurance included the actions and statements of Brandt's employees and/or others acting on its behalf as grounds for these defenses. Federal Insurance also filed a counterclaim seeking a declaratory judgment that Brandt's policy was void as of the date of the fire due to Brandt's alleged intentional concealment or misrepresentation of facts relating to the insurance.
After trial, the jury returned a verdict in favor of Federal Insurance. Thereafter, Brandt's Motion for New Trial was denied by the District Court, the Honorable E. Richard Webber presiding. We affirm.
On appeal, Brandt argues that the district court erred in instructing the jury that the burden of proof for Federal Insurance's affirmative defenses of arson and misrepresentation was by a greater weight of the evidence, and that the district court erred by failing to strike the testimony of a fire inspector from the St. Louis Fire Department that the fire was a "fraud" fire and "set for fraudulent purposes."
Brandt argues first that the district court erred by instructing the jury that the burden of proof for Federal Insurance's defenses was the "greater weight of the evidence" standard, as opposed to the "clear and convincing" standard Brandt suggested. Brandt contends that Missouri law requires the "clear and convincing evidence" standard for civil cases involving allegations of fraud or other quasi-criminal wrongdoing under Rodriguez v. Suzuki Motor Corp., 936 S.W.2d 104, 110 (Mo. 1996).
In Missouri, it is well established that the burden of proof of an insurer is to prove its allegations of arson as a defense to coverage by a preponderance of the evidence. McCreery v. Continental Ins. Co., 788 S.W.2d 307, 310 (Mo. App. 1990). Nonetheless, Brandt argues that Rodriguez changed the law and that the burden should be greater because the interests at stake reflect more than the loss of money, specifically the defendant's reputation. Brandt argues that the case at bar is the first one to address this issue since Rodriguez.
Rodriguez was a product liability case in which the Missouri Supreme Court held that for common law punitive damage claims the evidence must meet the clear and convincing standard of proof. Rodriguez, 936 S.W.2d at 111. In the course of discussing the standard of proof required for an award of punitive damages, the Missouri Supreme Court stated in its opinion that the clear and convincing standard is used in civil cases involving allegations of fraud or some other quasi-criminal wrongdoing by the defendant. The Missouri Supreme Court referenced that the interests at stake in those cases are deemed to be more substantial than mere loss of money and some jurisdictions accordingly reduce the risk to the defendant of having his reputation tarnished erroneously by increasing the plaintiff's burden of proof. Id. at 110 (citing Addington v. Texas, 441 U.S. 418, 423, 99 S.Ct. 1804, 1808, 60 L.Ed.2d 323, 329 (1979)).
Brandt's effort to gain support for its position by Rodriguez's reference to Addington is not well founded. In Addington, the United States Supreme Court reviewed an appellate court's opinion which held that the proper standard of proof in a civil commitment case involving a mentally ill person was "beyond a reasonable doubt." In addressing whether the standard for civil commitment should be beyond a reasonable doubt, preponderance of the evidence or an "intermediate standard, which usually employs some combination of the words 'clear,' 'cogent,' 'unequivocal,' and 'convincing,'" the Court held that the "intermediate standard" was applicable for civil commitments. The Court held as...
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