731 F.2d 1245 (6th Cir. 1984), 83-5470, Arms v. State Farm Fire & Cas. Co.

Docket Nº:83-5470.
Citation:731 F.2d 1245
Party Name:James D. ARMS, et al., Plaintiffs-Appellees, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellant.
Case Date:April 13, 1984
Court:United States Courts of Appeals, Court of Appeals for the Sixth Circuit

Page 1245

731 F.2d 1245 (6th Cir. 1984)

James D. ARMS, et al., Plaintiffs-Appellees,

v.

STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellant.

No. 83-5470.

United States Court of Appeals, Sixth Circuit

April 13, 1984

Submitted Jan. 11, 1984.

Page 1246

Dennis H. Inman, Taylor, Tilson, Inman & Reams, Morristown, Tenn., for defendant-appellant.

Fred L. Myers, Sr., John William Myers, Myers & Myers, Newport, Tenn., for plaintiffs-appellees.

Before KENNEDY, MARTIN and CONTIE, Circuit Judges.

CONTIE, Circuit Judge.

Plaintiffs James and Rose Mary Arms brought this action to recover the proceeds of a fire insurance policy covering a residence in Newport, Tennessee. The action was filed in Cocke County, Tennessee, Circuit Court, but was removed to federal court on the basis of diversity of citizenship. A jury trial was held on April 6, 1983. At the close of the evidence, the district judge granted the plaintiffs' motion for a directed verdict. Defendant State Farm Fire & Casualty Company now appeals.

State Farm's sole defense at trial was that the Arms had either deliberately set the fire themselves or hired someone to set the fire on their behalf. The sole question on review, therefore, is whether State Farm presented sufficient evidence of arson by or on behalf of the Arms to raise a jury question. We conclude that sufficient evidence was presented and that the district judge erred in taking the case from the jury.

I.

The entire trial transcript consists of only 55 pages. We can therefore summarize the testimony offered at trial with no great difficulty.

The parties stipulated that the residence was insured by State Farm and that it had been totally destroyed by fire. The parties also stipulated the amount of damages. It was stipulated that if the Arms were entitled to recover anything, they were entitled to recover $24,081.82.

Plaintiff James D. Arms testified on his own behalf. He stated that he had purchased the Newport residence in 1974 and that he and his wife had lived there until 1981. In February of 1981, Mr. Arms obtained employment in Jonesboro, Tennessee. Jonesboro, Mr. Arms testified, is approximately 50 miles from Newport. For a period of time, Mr. Arms commuted between the Newport residence and his work in Jonesboro. In March of 1981, the Arms purchased a home in Jonesboro. The purchase price of the Jonesboro home was $33,900.00. The Arms obtained the house by assuming an $18,000.00 mortgage on the Jonesboro home, by borrowing $11,000.00 on a six-month note from First Tennessee Bank, and by refinancing their existing mortgage on the Newport residence to obtain an additional $5,000.00. This refinancing caused the interest rate on their Newport mortgage to rise to 18%.

At the same time that the Arms purchased the Jonesboro home, they listed the Newport residence for sale with a realtor. The residence was listed for sale at $23,500.00. The Arms chose this price to facilitate a "quick sale." Mr. Arms testified that he and his wife sought a quick sale in order to ease the financial burden caused by the indebtedness incurred to acquire the Jonesboro home. The Arms' attempts to sell the Newport residence were unsuccessful.

During this time, the summer months of 1981, the Arms leased the Newport residence for $150.00 a month. The $150.00 was to be used to meet the mortgage payments on the Newport residence. A dispute of an undisclosed nature arose with the tenants of the Newport residence and the Arms never received any rent from them. As a result, the Newport mortgage fell two months into arrears. In September of 1981, the Arms received a bank notice concerning their past due mortgage payments. Counsel for State Farm characterized

Page 1247

the notice as a "dunning letter"; Mr. Arms referred to it as a "friendly reminder." Mr. Arms testified that the payments on the Newport mortgage were subsequently brought up to date. Around this same time, the Arms "removed" the tenant from the premises.

The listing agreement with the real estate agency expired in September of 1981 and the Arms did not renew it. Also in September of 1981, the $11,000.00 note came due with interest owed in an amount slightly less than $1,000.00. The Arms were unable to pay either the principal or interest on the note and had to refinance the obligation by signing a second note. Mr. Arms was asked on cross-examination if he was not "pretty well strapped financially." He admitted that he was "fairly well" strapped.

On October 6, 1981, the Arms received a letter from State Farm informing them that their insurance policy on the Newport residence required that the house be occupied and that because the house was vacant the policy would be cancelled effective November 3, 1981. Mr. Arms testified that he did not attempt to seek other insurance coverage and that at this time he had "no prospect" for selling the Newport residence.

On the evening of October 21, 1981, a fire occurred at the Arms' Newport residence. This fire, which originated in the rear of the house, caused significant damage but did not irreparably harm the residence.

On October 30, 1981, a second fire occurred, this time originating in the front portion of the house. After this fire, the residence was irreparably damaged.

Mr. Arms testified that at the time of both fires he was in Jonesboro, approximately 50 miles away. 1

State Farm called Grover Dunn to testify as an expert witness. He testified that chemical analysis performed on samples of debris collected after each of the two fires revealed the presence of hydrocarbon accelerants, such as gasoline or kerosene, in seven out of the nine samples. He also testified that upon arriving at the Newport residence after the first fire, he smelled an odor characteristic of gasoline or kerosene. Mr. Dunn further testified that in his opinion both fires were of an incendiary origin.

Richard Snyder, a Senior Field Claims Representative of State Farm, also testified for the defense. He stated that, upon arriving at the Newport residence after the first fire, he smelled an odor characteristic of gasoline or kerosene. He further testified that it would have cost $7,500.00 to $10,000.00 to repair the house after the first fire. He stated that the second fire was "substantially larger" than the first. This fire was centered in the front portion of the residence and it "damaged areas that were not fire damaged the first time." Mr. Snyder testified that the cost to repair the house after the second fire exceeded the worth of the home; it was thus a total loss.

Upon questioning by defense counsel, Snyder explained the different consequences of partial and total losses. After a partial loss occurs, the residence is repaired and State Farm issues a check to the insureds with the contractor as a lienholder. Upon a partial loss, no funds are paid to the mortgagee of the residence. Upon a total loss, however, State Farm is required by law to pay off the mortgagee, releasing the insureds from the mortgage. Snyder testified that a mortgagee is paid, in the case of a total loss, regardless of the insureds' responsibility for the fire.

Snyder testified that State Farm, after determining to its satisfaction that arson was involved, conducted an investigation to determine who might have had a motive to destroy the residence. Snyder testified that State Farm could not identify any persons, other than the Arms, who would have had such a motive.

After briefly recalling Mr. Arms to the stand as an adverse witness, State Farm rested its case. Counsel for the Arms then

Page 1248

moved for a directed verdict. The district judge granted the motion, explaining that,

I don't think you have got anything here. You have got a person who has, in the economic climate in which he finds himself, he was in a rather tight position financially. But, because people get in tight positions financially, and then go around burning up houses [sic]. I don't think there is any evidence here to indicate the Arms, either one of them, had anything to do with the burning of the house. They weren't near it. They were home and wherever they live 50 miles plus away.

I don't think there is any evidence here, and the motion will be granted.

After the jury was brought back into the courtroom, the district judge explained what had happened.

Ladies and gentlemen, what has happened here is that the plaintiffs moved for judgment at the close of the plaintiffs' presentation, and the Court has granted it. The Court granted it because there is no evidence in this case that the Arms, that either of them set fire to the house or caused it to be burned. All the insurance company showed was Arms were in a tight financial position at the time. That doesn't say they went out and burned the house down. People don't do that. They survive. They don't have to go and burn houses down, and there is no evidence to indicate that they did.

You can stretch it and say they had a motive, but did they follow through with the motive. There is no evidence that they did at all. So, the Clerk will enter a judgment in favor of the plaintiffs.

State Farm's motion for a new trial was denied. State Farm thereafter filed a timely notice of appeal.

II.

A federal court exercising its diversity jurisdiction applies the standard for a directed verdict used by the courts of the state whose substantive law governs the action. Foster v. Caterpillar Tractor Co., 714 F.2d 654, 656 (6th Cir.1983); Gootee v. Colt Industries Inc., 712 F.2d 1057, 1062 (6th Cir.1983); Gold v. National Savings Bank, 641 F.2d 430, 434 (6th Cir.), cert. denied, 454 U.S. 826, 102 S.Ct. 116, 70 L.Ed.2d 100 (1981). 2 Tennessee courts require that a trial court presented with a motion...

To continue reading

FREE SIGN UP
60 practice notes
  • 490 N.W.2d 864 (Mich. 1992), 90632, Smith v. Michigan Basic Property Ins. Ass'n
    • United States
    • Michigan Supreme Court of Michigan
    • 29 Septiembre 1992
    ...Stulsaft Foundation v. Superior Court, 245 Cal.App.2d 409, 419-420, 54 Cal.Rptr. 12 (1966); Arms v. State Farm Fire & Casualty Co., 731 F.2d 1245, 1249 (C.A.6 1984); State v. Haugen, 458 N.W.2d 288, 291 (N.D.1990); Childs v. Zurich American Ins. Co., 476 So.2d 403, 408 (La.App.1985); 19......
  • 527 So.2d 632 (Miss. 1988), 57650, McGory v. Allstate Ins. Co.
    • United States
    • Mississippi Supreme Court of Mississippi
    • 4 Mayo 1988
    ...66-67 (N.D.Miss.1986); and Gardner v. Wilkinson, 643 F.2d 1135, 1136 (5th Cir.1981). See also Arms v. State Farm Fire & Casualty Co., 731 F.2d 1245, 1249 (6th Cir.1984); Don Burton, Inc. v. Aetna Life & Casualty Co., 575 F.2d 702, 707 (9th Cir.1978); Mele v. All-Star Ins. Corp., 453......
  • 250 F.Supp.2d 923 (E.D.Tenn. 2002), 1 00-CV-184, West v. Media General Operations, Inc.
    • United States
    • Federal Cases United States District Courts 6th Circuit Eastern District of Tennessee
    • 14 Marzo 2002
    ...F.3d at 1087; Grantham and Mann v. American Safety Products, 831 F.2d 596, 602 (6th Cir. 1987); Arms v. State Farm Fire & Cas. Co., 731 F.2d 1245, 1248-49 (6th Cir. Page 930 ; Eaton v. McLain, 891 S.W.2d 587, 590 (Tenn.1994). Media General demonstrates considerable chutzpah in even maki......
  • 849 F.2d 230 (6th Cir. 1988), 86-5072, Roysdon v. R.J. Reynolds Tobacco Co.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Sixth Circuit
    • 14 Junio 1988
    ...the standard for directed verdict of the state whose substantive law governs the action. Arms v. State Farm Fire & Casualty Co., 731 F.2d 1245, 1248 (6th Cir.1984). Tennessee law requires that trial judges and appellate courts take the strongest legitimate view of the evidence in favor ......
  • Free signup to view additional results
60 cases
  • 490 N.W.2d 864 (Mich. 1992), 90632, Smith v. Michigan Basic Property Ins. Ass'n
    • United States
    • Michigan Supreme Court of Michigan
    • 29 Septiembre 1992
    ...Stulsaft Foundation v. Superior Court, 245 Cal.App.2d 409, 419-420, 54 Cal.Rptr. 12 (1966); Arms v. State Farm Fire & Casualty Co., 731 F.2d 1245, 1249 (C.A.6 1984); State v. Haugen, 458 N.W.2d 288, 291 (N.D.1990); Childs v. Zurich American Ins. Co., 476 So.2d 403, 408 (La.App.1985); 19......
  • 527 So.2d 632 (Miss. 1988), 57650, McGory v. Allstate Ins. Co.
    • United States
    • Mississippi Supreme Court of Mississippi
    • 4 Mayo 1988
    ...66-67 (N.D.Miss.1986); and Gardner v. Wilkinson, 643 F.2d 1135, 1136 (5th Cir.1981). See also Arms v. State Farm Fire & Casualty Co., 731 F.2d 1245, 1249 (6th Cir.1984); Don Burton, Inc. v. Aetna Life & Casualty Co., 575 F.2d 702, 707 (9th Cir.1978); Mele v. All-Star Ins. Corp., 453......
  • 250 F.Supp.2d 923 (E.D.Tenn. 2002), 1 00-CV-184, West v. Media General Operations, Inc.
    • United States
    • Federal Cases United States District Courts 6th Circuit Eastern District of Tennessee
    • 14 Marzo 2002
    ...F.3d at 1087; Grantham and Mann v. American Safety Products, 831 F.2d 596, 602 (6th Cir. 1987); Arms v. State Farm Fire & Cas. Co., 731 F.2d 1245, 1248-49 (6th Cir. Page 930 ; Eaton v. McLain, 891 S.W.2d 587, 590 (Tenn.1994). Media General demonstrates considerable chutzpah in even maki......
  • 849 F.2d 230 (6th Cir. 1988), 86-5072, Roysdon v. R.J. Reynolds Tobacco Co.
    • United States
    • Federal Cases United States Courts of Appeals Court of Appeals for the Sixth Circuit
    • 14 Junio 1988
    ...the standard for directed verdict of the state whose substantive law governs the action. Arms v. State Farm Fire & Casualty Co., 731 F.2d 1245, 1248 (6th Cir.1984). Tennessee law requires that trial judges and appellate courts take the strongest legitimate view of the evidence in favor ......
  • Free signup to view additional results