Hoosier Ins. Co. v. North South Trucking Supplies, Inc.

• Decision Date: 29 August 1997
• Docket Number: No. 25A03-9602-CV-67,25A03-9602-CV-67
• Citation: 684 N.E.2d 1164
• Parties: HOOSIER INSURANCE CO., Appellant-Defendant, v. NORTH SOUTH TRUCKING SUPPLIES, INC., Appellee-Plaintiff.
• Court: Indiana Appellate Court

Page 1164

684 N.E.2d 1164

HOOSIER INSURANCE CO., Appellant-Defendant, v. NORTH SOUTH TRUCKING SUPPLIES, INC., Appellee-Plaintiff.

No. 25A03-9602-CV-67.

Court of Appeals of Indiana.

Aug. 29, 1997.

George E. Martz, Robert A. Durham, Rocap, Witchger & Threlkeld, Indianapolis, for Appellant-Defendant.

Alan D. Burke, Rochester, for Appellee-Plaintiff.

OPINION

HOFFMAN, Judge.

Appellant-defendant Hoosier Insurance Company brings this appeal from the trial court's decision to deny Hoosier's motion for judgment on the evidence. The facts relevant to the appeal are set forth below.

In December of 1990, Lisa Ann Shoemaker's husband was killed in an automobile accident. Shortly after his death, Lisa received approximately $160,000 from an insurance policy her husband held. With the insurance proceeds, Lisa purchased a home for $50,000 and a car for $10,000. She then invested the balance of the proceeds in four bank funds, one being a retirement fund.

In August of 1991, Lisa began to date Scott Casey. At some point during their relationship, Lisa discussed with Scott her financial situation.

Through her relationship with Scott, Lisa was introduced to Scott's parents, John Norman Casey (Norman) and Carol Casey. As a result of becoming acquainted with the Casey family, Lisa learned that Norman worked as a salesman for Vaughn Goodspeed, who owned and operated a business that sold supplies to truck stops.

In January of 1992, Norman, Carol, Scott and Lisa were gathered at Norman's home. The topic of conversation turned to Vaughn Goodspeed's business and the fact that Vaughn was going out of business. Norman commented that he thought the business would be a good investment and that if he had the money, he would like to take over the business. Carol then asked Lisa how much money she had and if she would be interested in investing in the business. Lisa replied that she had approximately $70,000. Norman told Lisa that she could potentially triple her investment if she invested in the business.

A few days later, Lisa agreed to invest in the business. Because Norman did not have any cash to invest in the business, he supplied a building that he was buying on contract. The company Norman and Lisa formed was called North South Trucking Company.

After agreeing to invest in the business, Lisa went to the bank to withdraw the $70,000. Because she was told that the transaction would take several days, Lisa immediately wrote three checks to Norman at $2,000 each. Lisa was told that the $6,000 would be used for buying inventory to keep the truck stops supplied. The inventory was stored in Norman's building.

When Lisa's transaction to withdraw the $70,000 was completed, she opened a savings and a checking account at the Farmers and Merchants Bank, at Norman's request, and deposited $69,000 between the two accounts. Both Lisa and Norman were eligible to write checks on the accounts.

Norman then suggested that the new business he and Lisa were starting be incorporated. When the corporation was formed, Lisa was named president and Norman was named secretary of North South Trucking Supplies, Inc. (North South). Lisa owned 100 percent of the shares of the corporation. No one else had an ownership interest in the corporation.

Lisa, who knew very little about the supply business, helped with daily packaging of inventory. Occasionally, Lisa would write a check; however, Norman wrote most of the checks, performed the accounting for the business, and monitored the accounts payable and receivable. Norman acted as the salesman for the business and determined what inventory and how much inventory should be ordered. Norman did not consult with Lisa before he made his decisions. Instead, he informed her of what decisions he made.

On April 17, 1992, Norman purchased an insurance policy on North South's inventory with coverage totaling $65,000. On May 4, 1992, Norman made a telephone call to his insurance agent and informed him that, upon performing a final inventory check, Norman had determined that the total value of the inventory was $95,000 instead of $65,000. That same day, the insurance agent increased the policy limit to $95,000.

In the early morning hours of May 6, 1992, a fire occurred in the building in which North South stored its inventory. Norman was the last person to leave the building containing the inventory before the fire began. Norman testified that he left the building at 12:30 A.M. and locked the doors. Shortly after 3:00 A.M., the Fulton County Sheriff's Department received a report of the fire. When the fire department arrived, the firefighters found the doors to the building locked.

Before the fire could be suppressed, a large portion of the house and the attached block warehouse were damaged. After inspecting the remains of the buildings, an Indiana State Fire Marshal investigator determined that the fire was intentionally set. An investigator for Barker Herbert Laboratories reached the same conclusion and further testified that, in his opinion, Norman was the most likely suspect.

In the months following the fire, Norman attempted to determine the amount of loss suffered by North South. On October 5, 1992, a sworn statement in proof of loss form, created by Norman and signed by Lisa, was submitted to the insurance carrier, Hoosier Insurance Company (Hoosier). The proof of loss form claimed that the actual cash value of the property at the time of the loss was $101,124.86.

Hoosier considered the claim submitted by Lisa and Norman. As part of its investigation, Hoosier hired Stephen Meils, a certified public accountant, to do an account analysis of North South's inventory at the time of the fire. Meils determined the value of the inventory to be $36,000. Based upon Meils' finding and pursuant to the following language in North South's policy, Hoosier denied the claim:

The CONCEALMENT, MISREPRESENTATION OR FRAUD Condition is replaced by the following:

CONCEALMENT, MISREPRESENTATION OR FRAUD

We will not pay for any loss or damage in any case of:

1. Concealment or misrepresentation of a material fact or

2. Fraud

committed by an insured at any time and relating to a claim under this policy.

The claim was denied in December 1992, on the basis that the fire was intentionally set and that Norman and Lisa misrepresented the actual value of the property lost in the fire.

On February 22, 1993, North South filed suit against Hoosier seeking an amount equal to the value of the inventory lost in the fire. In March of 1993, North South hired Virga Smith, a certified public accountant, to determine the value of the inventory lost in the fire. Smith determined the value of the inventory to be $35,585.82. On April 30, 1993, North South filed an amended complaint adding Norman as a defendant.

The case was tried to a jury in November of 1995. During the trial, Norman was dismissed as a party to the action. At the close of the trial, Hoosier made a motion for judgment on the evidence arguing that Norman and Lisa, in filing the claim for $101,124.86, deliberately inflated the value of the inventory lost in the fire. Although the trial court took the motion under advisement, it nevertheless submitted the case to the jury.

On November 16, 1995, the jury returned a verdict in favor of North South and awarded the corporation $36,175. On November 27, 1995, the trial court entered judgment upon the jury verdict and denied Hoosier's motion for judgment on the evidence. Hoosier appeals the trial court's decision.

The following issues, as restated, are raised for our review:

(1) whether the trial court erred in denying Hoosier's motion for judgment on the evidence; and

(2) whether the trial court committed reversible error in refusing to give Hoosier's tendered instructions.

Hoosier claims that the trial court erred when it overruled its Ind.Rules of Procedure, Trial Rule 50(A) motion for judgment on the evidence filed at the close of all the evidence. Hoosier contends that North South's claim should be excluded from coverage because the evidence presented at trial was without conflict and susceptible only to the inference that North South made misrepresentations of material fact in its sworn statement in proof of loss form.

Motions for judgment on the evidence (directed verdict) are governed by T.R. 50. ¹ Pursuant to that rule, a defendant's motion for judgment on the evidence made at the close of the plaintiff's evidence or at the close of all the evidence should be granted only in the absence of evidence or reasonable inference on at least one essential element of the plaintiff's claim. Freson v. Combs, 433 N.E.2d 55, 61 (Ind.Ct.App.1982). The evidence must be without conflict and susceptible to but one inference, that being in favor of the moving party. Id. In examining the evidence, the trial judge must draw all fair and rational inferences in favor of the party opposing the motion and give that party every favorable intendment of the evidence. Id. The court may not substitute its judgment for that of the jury on questions of fact nor grant the motion because the evidence decidedly preponderates in favor of the moving party. Id.

Appellate review of rulings on motions for judgment on the evidence is subject to the same standards which govern the trial court in ruling on the motion. Id. Our task therefore is to determine whether there was any evidence justifying submission of North South's claim against Hoosier to the jury. See Hendrickson & Sons Mtr. Co. v. Osha, 165 Ind.App. 185, 207-208, 331 N.E.2d 743, 757 (1975).

North South's complaint contained an allegation that Hoosier breached its fiduciary obligation to North South by denying North South's claim seeking reimbursement for the inventory lost in the fire. Hoosier's answer countered that because North South submitted a sworn statement in proof of loss form that was false and misleading, in that it overstated the value of the inventory and the actual loss claimed,...