Frontier Exploration, Inc. v. American Nat. Fire Ins. Co.

Decision Date17 December 1992
Docket NumberNo. 92CA0012,92CA0012
Citation849 P.2d 887
PartiesFRONTIER EXPLORATION, INC., Plaintiff-Appellant, v. AMERICAN NATIONAL FIRE INSURANCE COMPANY, Defendant-Appellee. . I
CourtColorado Court of Appeals

Tobey & Pelz, P.C., Harlan P. Pelz, Charles E. Stuart, Denver, CO, for plaintiff-appellant.

Rothgerber, Appel, Powers & Johnson, Franklin D. O'Loughlin, Brian J. Spano, Denver, CO, for defendant-appellee.

Opinion by Judge DAVIDSON.

Plaintiff, Frontier Exploration, Inc., (Frontier) appeals from the judgment entered on a jury verdict in favor of defendant, American National Fire Insurance Company, (American) on American's counterclaims for fraudulent representation and fraudulent concealment. We affirm in part and reverse in part and remand with directions.

On March 13, 1988, a specialized truck equipped with seismic equipment owned by Frontier was damaged in an accident, and thereafter, Frontier made a claim for the losses against its insurer, American. On April 6, 1988, representatives for Frontier and American met to discuss Frontier's claim. During that meeting American discussed a payment to Frontier of $175,050--$72,050 for repairs by out-of-state companies on the truck and the seismic unit, $8,000 to transport the truck and unit to the places of repair, and $100,000 for two-months rental of replacement equipment while repairs were being effected, minus a $5,000 deductible for the total claim.

On April 21, American paid $117,050 of the $175,050 to Frontier. Frontier, instead of applying the moneys as was discussed at the April 6th meeting, expended only $77,174.38 to upgrade a used truck and to repair the seismic unit, all accomplished by Frontier at a cost less than the repair estimates obtained by American. When American learned that Frontier had neither leased any equipment nor sent the damaged truck and seismic unit off-site for repair, it refused to pay the $58,000 balance.

Frontier then brought this action against American to recover damages, including the $58,000, for breach of contract, promissory estoppel, and bad faith breach of insurance contract. American counterclaimed for, inter alia, fraudulent representation and fraudulent concealment.

The primary issue at trial was whether this $175,050 total represented a cash-out settlement which Frontier alleged the parties had agreed to at the April 6th meeting or whether, as American asserts, the payment was intended to be only for damages and losses actually incurred by Frontier.

The jury returned a verdict against Frontier on all of its claims and in favor of American for false representation and nondisclosure or concealment. It awarded to American $117,050 for the fraudulent concealment and the court entered judgment in that amount.

I.

Frontier first contends that the trial court erred by directing a verdict in favor of American on Frontier's promissory estoppel claim. Specifically, it argues that, contrary to the trial court's findings, Frontier established a prima facie case and that, therefore, the court erred by taking the question from the jury. We disagree.

A.

Initially, we note that when the court is a trier of fact, as it is in regard to equitable claims, a motion denominated a "motion for directed verdict" is actually a motion to dismiss pursuant to C.R.C.P. 41(b). In ruling on such a motion, the standard is not whether the evidence, when viewed in the light most favorable to plaintiff, established a prima facie case, see Gossard v. Watson, 122 Colo. 271, 221 P.2d 353 (1950), but whether judgment in favor of defendant is justified on the evidence presented. Campbell v. Commercial Credit Plan, Inc., 670 P.2d 813 (Colo.App.1983); C.R.C.P. 41(b) ("the plaintiff has shown no right to relief").

Here, in directing the verdict against Frontier, the trial court assumed that promissory estoppel, although it is an equitable claim, was properly a question for the jury. Then, viewing the evidence in the light most favorable to plaintiff, the trial court dismissed such claim on the ground that Frontier had not established a prima facie case. Compare Mead Associates, Inc. v. Antonsen, 677 P.2d 434 (Colo.App.1984) with Snow Basin, Ltd. v. Boettcher & Co., 805 P.2d 1151 (Colo.App.1990).

The parties do not argue any reversible error regarding the standard applied by the trial court. Moreover, the directed verdict standard--in which all evidence must be viewed in the light most favorable to the plaintiff--is less exacting than that under C.R.C.P. 41(b), see Conrad v. City & County of Denver, 656 P.2d 662 (Colo.1982), and inures to the benefit of plaintiff. Thus, in addressing Frontier's contention, we will assume the correctness of the standard applied by the court. Central City Opera House Ass'n v. Brown, 191 Colo. 372, 553 P.2d 64 (1976) (if the trial court found that the plaintiff had not established a prima facie case, it follows that the court of necessity was ruling that plaintiff was not entitled to recover under the evidence).

B.

By the doctrine of promissory estoppel, a promise is binding on a promissor if the promisee relies to his detriment on that promise and the promissor should reasonably have expected the promise to induce action or forbearance in reliance thereof. To be entitled to relief, a party must show that, to its detriment, it changed its position in justifiable reliance on the promise of another. City of Sheridan v. Keen, 34 Colo.App. 228, 524 P.2d 1390 (1974).

Here, viewing the evidence in the light most favorable to Frontier, we find that there was evidence of a promise by American to settle Frontier's claim for $175,050 which Frontier believed could be used in any manner it chose. Based on that representation, Frontier alleged in its complaint and presented testimony to support that it then "proceeded with a different course than the insurance company had been outlining up to that date, and that was to convert the truck." Accordingly, Frontier decided not to repair the damaged truck, not to send the seismic unit out-of-state for repair, and not to rent any replacement equipment. Instead, it proceeded to convert the used truck and to repair the seismic equipment at a total cost of $77,174.38--less than the $80,050 that American estimated for repairs and considerably less than the $117,000 actually paid to it by American. Thus, it expended less than it was paid by American.

Frontier argues also that its change in position caused it to forego business interruption coverage. However, $100,000 of the $175,050 was for the lease of replacement equipment during the repair period in accordance with that policy provision, and Frontier decided not to rent the equipment after it received the $117,050. Further, insofar as Frontier implies that because of its change of position it incurred loss of income during downtime, the record does not in any way support this assertion.

Thus, there was no showing of a detrimental change of position, and consequently, we agree with the trial court that Frontier did not establish a prima facie case of promissory estoppel.

II.

Frontier next contends that there was no evidence of Frontier's intent to deceive or of American's justifiable reliance on undisclosed facts. It argues, therefore, that the jury's verdict on American's counterclaims of false representation and nondisclosure or concealment cannot stand. We disagree.

When sufficiency of the evidence is challenged on appeal, our task is to determine whether the evidence, viewed as a whole, and in the light most favorable to the prevailing party, is sufficient to support the jury's verdict. Kogan v. People, 756 P.2d 945 (Colo.1988); City of Aurora v. Loveless, 639 P.2d 1061 (Colo.1981). It is the right of the jury to determine the credibility of witnesses and the weight to be afforded evidence and to draw all justifiable inferences of fact from the evidence. People v. Bennett, 183 Colo. 125, 515 P.2d 466 (1973).

False representation requires, inter alia, an intent to deceive by the one making the representation and justifiable reliance by the one to whom the representation is made. See CJI-Civ. $3rd 19:1 (1989); Forsyth v. Associated Grocers of Colorado, Inc., 724 P.2d 1360 (Colo.App.1986). Nondisclosure or concealment requires proof of these same elements. See CJI-Civ. 3rd 19:2 (1989); Ackmann v. Merchants Mortgage & Trust Corp., 645 P.2d 7 (Colo.1982).

Fraud and reliance may be inferred from circumstantial evidence. Kopeikin v. Merchants Mortgage & Trust Corp., 679 P.2d 599 (Colo.1984).

Here, the evidence reveals that, during the time Frontier was negotiating its claim with American, Frontier did not disclose to American that it had purchased a used truck; that it had decided to upgrade this truck rather than repair the damaged truck; that it was repairing the seismic unit itself; that it, therefore, was not incurring transportation costs on either the truck or the unit; and that it intended not to lease any replacement equipment for use during the repair period.

The record shows that Frontier was aware that American's $175,050 total was specifically based an $80,050 estimate for repairs and transportation charges. It knew also that American, under the insurance policy, was obligated to pay only the least among repairs, replacement, or property value. Yet, Frontier accepted the $117,050 partial payment, signed a Sworn Proof of Loss representing that it had incurred those losses, and then proceeded to upgrade a different vehicle and to fix the unit at a considerable savings without telling American of the cost differential.

Moreover, over a three-week period, Frontier responded to American's request for written quotes on replacement units, attended a meeting specifically to explain to American why four replacement units, rather than only one, was needed, and signed the Sworn Proof of Loss. However, it did not disclose to American that it had not leased such units and did not intend to do so.

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