Abon, Ltd. v. Transcontinental Ins. Co., 2005 Ohio 3052 (OH 6/16/2005)

• Decision Date: 16 June 2005
• Docket Number: Case No. 2004-CA-0029.
• Citation: 2005 Ohio 3052
• Parties: Abon, Ltd, et al, Plaintiffs-Appellants/Cross-Appellees. v. Transcontinental Insurance Company, Defendant-Appellee/Cross-Appellant.
• Court: Ohio Supreme Court

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2005 Ohio 3052 Abon, Ltd, et al, Plaintiffs-Appellants/Cross-Appellees.
v.
Transcontinental Insurance Company, Defendant-Appellee/Cross-Appellant. Case No. 2004-CA-0029. Court of Appeals of Ohio, Fifth District, Richland County. Date of Judgment Entry: June 16, 2005.

Civil appeal from the Richland County Court of Common Pleas, Case No. 2002CV868.

Affirmed.

Timothy B. Pettorini, John H. Schaeffer, 225 North Market St., Box 599, Wooster, OH 44691, for Plaintiff-Appellant/Cross Appellees.

Robert E. Chudakoff, Penton Media Building, 1300 East Ninth St., Ste. 900, Cleveland, OH 44114-1583, for Defendant-Appellee/Cross-Appellant.

Hon: John F. Boggins, P.J., Hon: W. Scott Gwin, J., Hon: William B. Hoffman, J.

OPINION

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GWIN, J.

{¶1} This appeal arises from an action brought in the Richland County Court of Common Pleas by plaintiffs/appellants/cross-appellees Abon, Ltd., Abon Cards & Coins, Ltd., Star Collectors Ltd., and B & B, Ltd., (collectively referred to as "Abon" or "Appellants") against defendant/appellee/cross-appellant Transcontinental Insurance Company ("Appellee").

{¶2} Abon Ltd. submitted a fire loss claim to appellee for damage to the building, business, and personal property located at 115 Park Avenue West in Mansfield, Ohio. The fire occurred on March 30, 1999. Appellee received notice of fire on or about April 1, 1999. Appellees denied appellants' claim.

{¶3} Abon filed its complaint on September 11, 2002, alleging that it was owed insurance proceeds from the fire loss pursuant to a policy of insurance issued by appellee. Abon also claimed appellee acted in bad faith in denying its insurance claim. Appellee filed its answer and denied that Abon was owed any money from the fire loss and asserted the affirmative defenses of arson, misrepresentation and lack of insurable interest.

{¶4} On March 29, 2003, both parties moved for partial summary judgment. On August 4, 2003, the trial court issued an order regarding both motions. Essentially, the trial court dismissed Abon's bad-faith claim and appellee's lack of insurable interest affirmative defense. The trial court also ruled that Abon's losses exceeded the appellee's policy limits; therefore Abon did not need to prove damages at trial. The trial court granted summary judgment in favor of the appellees on appellants' claim for bad

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faith and punitive damages. Finally, the trial court denied appellants' motion for summary judgment on the arson defense.

{¶5} On December 16, 2003, the matter came before the trial court for trial. At the close of appellee's case, Abon moved for a directed verdict on appellee's affirmative defenses of arson and misrepresentation. The trial court denied these motions.

{¶6} Both parties rested on December 23, 2003 and the jury received the case the next day. Late in the afternoon of December 24, 2003, the jury returned a verdict in favor of appellee on its affirmative defense of misrepresentation. The jury could not reach a verdict on the arson issue.

{¶7} Abon timely filed motions for judgment notwithstanding the verdict and a new trial. The trial court denied Abon's motions on February 19, 2004. Abon then filed the instant appeal raising the following nine assignments of error:

{¶8} "I. The trial court erred in its ruling granting can's partial summary judgment motion on appellants' bad faith claim.

{¶9} "II. The trial court erred in overruling appellants' motions for summary judgment and directed verdict regarding arson.

{¶10} "III. The trial court erred in overruling appellants' motions in limine regarding prior fires and allowing this testimony to be admitted at trial.

{¶11} "IV. The trial court erred in allowing at trial the expert testimony of james churchwell.

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{¶12} "V. The trial court erred in not excluding for cause juror thomas pollock.

{¶13} "VI. The trial court erred in overruling appellants' moiton for directed verdict on the issue of misrepresentation.

{¶14} "VII. The trial court erred in overruling appellnats' motion for new trial and judgment notwithstanidng the vrdict in the decision of post-trial motions entered on the 19th day of February, 2004.

{¶15} "VIII. The trial court erred in granting appellee's motion in limine re: lack of criminal prosecution, filed on or about September 17, 2003.

{¶16} "IX. The trial court erred by granting appellee's motion to open and close eivdence and final argument."

{¶17} Appellee filed a cross-appeal raising the following three assignments of error:

{¶18} "I. Abon ltd. lacked an insurable interest in the business personal property (inventory) and therefore cannot recover for loss to such property.

{¶19} "II. The `property of others' provision did not `save' coverage for the damage to the investory.

{¶20} "III. Cards & coins, star, and b&b were never insureds and lacked any standing to bring any claim arising from the policy."

{¶21} The facts relative to this case are as follows.

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{¶22} Larry and Donna Bence are in the collectable and memorabilia business. The Bence's sell coins, sports cards and all types of pop culture memorabilia.

{¶23} The Bence's formed various entities for their collectibles business for tax and accounting purposes. Abon, Ltd. owns the real estate located at 115 Park Avenue West, Mansfield, Ohio. [Hereinafter referred to as the "Abon Building."]

{¶24} On March 30, 1999, business was conducted as usual at the Abon Building. At the end of the day, around 7:15 p.m., Mr. Bence closed the store, turned off the lights and locked the building. After Mr. Bence left the Abon building, he met his wife and friends for dinner at a local restaurant. After dinner, Mr. and Mrs. Bence went to visit Mr. Bence's mother at a nursing home in Ashland, Ohio. After concluding their visit around 10:00 p.m., Mr. and Mrs. Bence proceeded to their home in Ashland, Ohio. At approximately 2:00 a.m. the next morning, the Bence's received a phone call from the Mansfield Fire Department informing them that the Abon Building was on fire. The fire was discovered by the Mansfield Police who while on patrol heard an explosion at around 11:20 p.m. that evening.

{¶25} Fire caused extensive damage to the second floor of the Abon Building. The dispute at trial concerned the origin of the fire. It was determined that the fire originated on the second floor in the vicinity of a fan, trouble light, extension cord and power strip. Almost the entire inventory that was contained on the second floor was destroyed. Appellee hired M.F. Bank to inventory the business personal property loss which occurred at the Abon Building. M.F. Bank stopped counting the inventory once it had reached the amount of $1,192,099.66.

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{¶26} Appellees retained its own independent fire investigator, James Churcwell, CFI, CPII of Churchwell Fire Consultants, Inc., who performed an extensive inspection and investigation of the fire and concluded that the fire originated on the second floor of the building, and that the fire was "incendiary in nature, having been deliberately set."

{¶27} The box van, trouble light, extension cord and power strip found in the area of the origin of the fire were examined and analyzed by two professional electrical engineers retained by appellees. Samuel J. Sero P.E. of Renaissance Engineering examined the items recovered from the origin area and determined that none of these items caused the fire. Appellees also retained Daniel Santon, P.E. of Rudick Engineering, Inc. to examine the same items and provide a second independent opinion. Mr. Santon independently concluded that these items did not cause the fire. With all of the limited number of ignition switches in the origin area having been eliminated, Mr. Churcwell concluded that the fire was incendiary in cause.

{¶28} During the course of its investigation, appellees interviewed Mr. Bence. It was determined that he was the last person in the building on the night of the fire and that he left alone. Mr. Bence turned off the lights, checked all the doors and made sure the building was locked up. Mr. Bence originally told appellee's investigator that he set the Sonitrol alarm system when he left the building on the night of the fire. Sonitrol alarm records provided to appellee showed that Mr. Bence had not set the alarm when he left that night. Those records further revealed only once in the previous six months had the alarm not been set from one business day to the next as occurred on the night of the fire.

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{¶29} The building also had a video surveillance system consisting of nine cameras that taped the first floor of the building. Mr. Bence ran three VCR's to which the surveillance cameras recorded, and used a different set of color-coded and labeled tapes for each day. When appellees investigators asked for the tapes, Mr. Bence was initially unable to provide them. However, during the course of its investigation appellee's learned that Mr. Bence himself had removed the "Tuesday tapes" the morning after the Tuesday night fire. Mr. Bence's daughter later found two of the "Tuesday tapes" in the closet of the family's home. Mr. Bence later provided to appellee's investigators three "Tuesday tapes"— the two his daughter had found and a third tape that was neither labeled with a day of the week, nor color coded like all of the other surveillance tapes that Mr. Bence used. When a third, unmarked tape was found to have programming that actually predated the fire, Mr. Bence claimed to have lost the third tape.

{¶30} Appellees retained Rebul & Henderson, Inc., a forensic accounting firm to examine the financial condition of the Bence's and their business. This investigation revealed that Mr. Bence was having financial problems around the time of the fire. The report of Joel Chenevey, CPA, submitted into evidence at trial, showed a steady decline in cash receipts for Mr. Bence's businesses during the fifteen months preceding the fire. Cash receipts during...