J & H Auto Trim Co., Inc. v. Bellefonte Ins. Co.

• Decision Date: 10 June 1982
• Docket Number: No. 80-5750,80-5750
• Citation: 677 F.2d 1365
• Parties: J & H AUTO TRIM CO., INC., Plaintiff-Appellant, v. BELLEFONTE INSURANCE CO., et al., Defendant-Appellee.
• Court: U.S. Court of Appeals — Eleventh Circuit

Page 1365

677 F.2d 1365

J & H AUTO TRIM CO., INC., Plaintiff-Appellant, v. BELLEFONTE INSURANCE CO., et al., Defendant-Appellee.

No. 80-5750.

United States Court of Appeals, Eleventh Circuit.

June 10, 1982.

D. Russell Stahl, Gordon & Maney, David A. Maney, Tampa, Fla., for plaintiff-appellant.

Fowler, White, Gillen, Boggs, Villareal & Banker, P.A., William A. Gillen, W. Donald Cox, Tampa, Fla., for defendant-appellee.

Appeal from the United States District Court for the Middle District of Florida.

Before GODBOLD, Chief Judge, HILL and FAY, Circuit Judges.

FAY, Circuit Judge:

In this diversity suit, plaintiff J & H Auto Trim Company, Inc., has been to trial twice seeking recovery from the defendant insurance companies of $280,800; the aggregate amount of coverage provided by five policies issued by the defendants. Both juries rendered verdicts in favor of the plaintiff. A new trial was granted after the first verdict. After the second verdict, the District Court granted a judgment notwithstanding the verdict and, in the alternative, a new trial. We are convinced from our review of the record that the verdict rendered by the second jury is supported by substantial evidence and is not contrary to the great weight of the evidence. ¹ The order of the District Court is reversed and the jury verdict ordered reinstated.

This saga began when John Jackson and James Harris purchased a quantity of vinyl car tops, roof moldings, and other items in November, 1975, from Pop's Vinyl Tops, Inc., for $10,000. At the time, Pop's Vinyl Tops was encountering financial difficulty and an influx of cash was needed. All parties to the transaction recognized that a bargain sale had been made. Pop's Vinyl Tops sold approximately 25% of its inventory to Jackson and Harris, retaining mostly current model tops and selling mostly "obsolete" tops-a term used in the trade to refer to tops for other than current year automobiles. The obsolete tops were for automobile models from 1968 through 1974.

In mid-December, 1975, Jackson and Harris obtained $180,000 in insurance on the vinyl tops under three policies. ² In late January and early February, 1976, Jackson and Harris formed the plaintiff corporation and the vinyl goods were transferred to the corporation in exchange for the corporate stock. The bill of sale representing this transaction stated that $959,125 worth of goods (13,250 vinyl tops valued at $239,125 and 15,000 sets of vinyl roof moldings valued at $720,000) were transferred to the plaintiff. On February 4, 1976, the tops were insured for an additional $100,800 pursuant to two insurance policies. ³ On the night of February 9, 1976, the building in which the vinyl goods were stored was partially destroyed by fire. The following night, a second fire destroyed the building and its contents. Strong evidence indicated that both fires were deliberately set. After the fires, the plaintiff submitted a sworn proof of loss to the defendant insurance companies which claimed that the actual cash value of the insured property was.$345,925.

The case was initially tried in January, 1980, and the jury found for the plaintiff, determining the actual cash value of the insured merchandise to be.$345,925. After entry of an order granting the defendants' motion for a new trial, the case was tried again upon the same issues in July, 1980. The second jury was asked to respond to four interrogatories:

1. Have the defendants proved that in applying for the insurance policies in this case the plaintiff made any misrepresentations or concealed any fact which was either fraudulent or material to the acceptance of the risk by defendants or was such that in good faith the defendants would not have issued the respective policies in the amounts they did if the true facts had been known to them? (Answer Yes or No)

....

2. Have the defendants proved that the plaintiff intentionally burned, caused or procured the burning of the insured property? (Answer Yes or No)

....

3. Have the defendants proved that plaintiff wilfully misrepresented the value of the insured personal property damaged or destroyed in completing the proofs of loss or inventory submitted as a part thereof, or when plaintiff's representatives were examined under oath after the loss? (Answer Yes or No)

....

4. What was the "actual cash value" of the insured personal property damaged or destroyed by the fires involved in this case as of the date of such fires? ⁴

The jury answered "no" to the first three questions and calculated the actual cash value to be $165,000.

In response to the defendants' post-trial motion, the District Court granted a judgment n. o. v. as to questions 1, 3, and 4; and, should that ruling be reversed, the court granted a new trial as to all four questions. See 501 F.Supp. 942 (M.D.Fla.1980).

I. The Order Granting A Judgment Notwithstanding the Verdict

A motion for a judgment n. o. v. or directed verdict tests the sufficiency of the evidence to support a jury verdict. Boeing Co. v. Shipman, 411 F.2d 365, 373-74 (5th Cir. 1969) (en banc ). Since the sufficiency of the evidence to support a verdict is a question of law, the standard of review on appeal is the same as that applied by the trial court in making its initial ruling. Williams v. United Insurance Co. of America, 634 F.2d 813, 815 (5th Cir. 1981); United States v. Bucon Construction Co., 430 F.2d 420, 423 (5th Cir. 1970). Boeing Co. v. Shipman sets forth the criteria for evaluating such motions.

(T)he Court should consider all of the evidence-not just that evidence which supports the non-mover's case-but in the light and with all reasonable inferences most favorable to the party opposed to the motion.... (I)f there is substantial evidence opposed to the motions, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment might reach different conclusions, the motions should be denied, and the case submitted to the jury. A mere scintilla of evidence is insufficient to present a question for the jury.... There must be a conflict in substantial evidence to create a jury question. However, it is the function of the jury as the traditional finder of the facts, and not the Court, to weigh conflicting evidence and inferences, and determine the credibility of witnesses.

411 F.2d at 374-75 (footnote omitted) (emphasis added).

The Actual Cash Value-Interrogatory 4

In granting a judgment n. o. v. as to questions 1, 3, and 4, the trial judge recognized that the actual cash value ⁵ of the insured property was material to determining the amount of recovery and whether, because of concealments or misrepresentations regarding the actual value, the plaintiff should be denied recovery. Tackling that issue first, the trial judge ruled that testimony given by Jackson as to the value of the vinyl tops should not have been admitted into evidence and was not properly before the jury. Excluding that evidence, the District Court found that the only substantial evidence of the actual cash value was the price Jackson and Harris paid for the vinyl goods in November, 1975; that is, $10,000. The judgment n. o. v. as to question 4 limited recovery to that amount.

We begin by examining the basis of the trial court's exclusion of Jackson's testimony. Jackson testified that in December, 1975, he made four block sales to independent auto installers; that these sales were for lots of 20 to 50 tops; and that unpadded tops were sold for $18.00-$18.50 each, while padded tops were sold for $60.00-$75.00 each. Jackson also testified that the plaintiff corporation sold 500 tops to Jackson's wholly-owned business, Sporty Top Shop, Inc., for $13,000 ($30.00-$35.00 each for 300 padded tops and $18.50 each for 200 unpadded tops).

The trial court's ruling excluding Jackson's testimony is based on two grounds. First, that the only admissible evidence going to actual cash value was what the tops would have sold for in a bulk sale at the time of the loss or, failing that proof, their wholesale cost, i.e., the $10,000 purchase price. Second, that Jackson's testimony was self-serving and unsupported by other evidence. As to the latter, an owner of property is competent to testify regarding its value. "The weight of such testimony is, of course, affected by the owner's knowledge of circumstances which affect value, and as an interested witness, it is for the jury to evaluate the credibility of his testimony." Berkshire Mutual Insurance Co. v. Moffett, 378 F.2d 1007, 1011 (5th Cir. 1967) (footnotes omitted); see also Dietz v. Consolidated Oil & Gas, Inc., 643 F.2d 1088, 1094 (5th Cir.), cert. denied, --- U.S. ----, 102 S.Ct. 513, 70 L.Ed.2d 385 (1981).

As to the first ground, the District Court's ruling is unduly restrictive. Florida courts have adopted the broad evidence rule for determining the actual cash value of destroyed property. ⁶ New York Cent. Mut. Fire Ins. Co. v. Diaks, 69 So.2d 786, 788-89 (Fla.1954); Worcester Mutual Fire Insurance Co. v. Eisenberg, 147 So.2d 575, 576 (Fla.App.1962); see also Moffett, 378 F.2d at 1010-12 (applying the rule). "Under this rule, any evidence logically tending to establish a correct estimate of the value of the damaged or destroyed property may be considered by the trier of facts to determine 'actual cash value' at the time of loss." Eisenberg, 147 So.2d at 576.

In Diaks, the Florida Supreme Court explained that " 'actual cash value' means the actual value expressed in terms of money of the thing for the purpose for which it was used ....' " 69 So.2d at 789 (quoting McIntosh v. Hartford Fire Insurance Co., 106 Mont. 434, 78 P.2d 82, 84 (1938)) (emphasis in Florida opinion). The Diaks court indicated that, although not synonymous with actual cash value, replacement cost could be considered as one of the factors in determining actual cash value. 69 So.2d at 788-89. In Eisenberg, wholesale cost was listed as another factor which could properly be...