Izen v. Winoker
| Decision Date | 11 April 1991 |
| Docket Number | No. 89-554-A,89-554-A |
| Citation | 589 A.2d 824 |
| Parties | Eliott IZEN, assignee of Crystal Craft, Inc. v. James WINOKER et al. ppeal. |
| Court | Rhode Island Supreme Court |
This case comes before us on cross-appeals by Eliott Izen, assignee of Crystal Craft, Inc. (plaintiff) and James R. Winoker and Marilyn Winoker (defendants). Both parties appeal from a judgment entered in the Superior Court wherein the plaintiff was awarded the sum of $600,000 in compensatory damages in respect to counts 1 and 2 of the plaintiff's complaint. In respect to this award, the trial justice denied a motion for new trial. In count 6 of the complaint, the plaintiff had sought punitive damages. In a separate hearing the trial justice granted the defendants' motion for a directed verdict in respect to the punitive-damage claim. During the pendency of this action Crystal Craft became insolvent, and a receiver was appointed. The receiver assigned Crystal Craft's claim against the defendants to Eliott Izen, the president and sole shareholder of Crystal Craft. For purposes of this opinion the term "plaintiff" will refer collectively to Crystal Craft and Eliott Izen. We affirm. The facts of the case insofar as pertinent to these appeals are as follows.
The plaintiff was engaged in the manufacture of point-of-sale display cases used mainly in the jewelry industry. This business had been carried on in the Stillwater Mill Complex (Stillwater) in Smithfield, Rhode Island. The plaintiff owned this mill complex from 1978 until 1983. On January 21, 1983, plaintiff and defendants entered into an agreement for the sale of Stillwater to defendants or their nominee. The agreement provided that plaintiff would have the privilege of remaining on the property for three months and thereafter for an indefinite term as a month-to-month tenant. One of the provisions of the sales agreement set forth in paragraph 17 is of particular importance in this litigation and reads as follows:
"[T]he Seller will keep the rented premises in good order and repair and will make no alterations or improvements to the same; the Seller will maintain general comprehensive public liability insurance insuring the Seller and the Buyer against liability for property damage or personal injury in the amount of not less than $500,000 (combined single limit); the Seller will supply the Buyer with evidence of the comprehensive public liability insurance; the Seller will indemnify the Buyer from all loss, cost or damage sustained by the Buyer on account of damage to property or injury to persons resulting from any accident or other occurrence on or about the rented premises; property of the Seller will be kept on the rented premises at the Seller's risk."
At the time of the sale the several buildings of Stillwater were protected by an automatic sprinkler system that was powered by a large pump in a building designated as building No. 2. This pump drew water from a pond located on the premises and known as Stillwater Pond. The water was distributed through the pump to a series of pipes running underground between the buildings and ultimately to an overhead sprinkler system in each of the seven buildings of the complex. The plaintiff occupied building No. 1, which was the largest building in the complex. A fire in any building would cause the nearest sprinkler head to spray water in the vicinity of the fire. A larger fire would trigger activity on the part of additional sprinkler heads located throughout the area. The fire pump and a smaller jockey pump would maintain water pressure within the system and would switch on automatically after the opening of one or more sprinkler heads. Further, the water flowing through the system would activate an electronic alarm connected to the town fire station.
In December of 1983, the sprinkler system, at least on an automatic basis, became inoperative probably because of one or more leaks in the underground piping system. These leaks caused the pressure in the system to be reduced to zero. This condition was reported to Gerald McCarthy (McCarthy), who handled maintenance and repairs at various properties owned by defendants. Evidence indicated that McCarthy, on behalf of defendants, promised to see to it that repairs were performed.
The condition of the system was further exacerbated in January of 1984 when some pipes and the jockey pump in the pumproom (building No. 2) froze during a period of frigid weather. The plaintiff discussed this condition with McCarthy, who again promised to effectuate the necessary repairs. McCarthy and/or James Winoker procured an estimate of the cost of repairing the piping and jockey pump in the sum of $3,450. This estimate was submitted to Aetna Insurance Company (defendants' insurer), which responded by saying that the cost of repairing the underground pipes was not covered by defendants' policy, but it did pay defendants $2,450, which covered the repair of the damage to the pipes and jockey pump minus a deductible of $1,000. However, defendants at that time paid for only $360 worth of repair to the piping in the pumproom.
On May 17, 1984, a fire of undetermined origin occurred on the premises occupied by plaintiff. Employees of plaintiff attempted to extinguish the fire by using hand-carried fire extinguishers. The sprinkler system responded briefly, but pressure was exhausted in less than twenty seconds. The fire had started in an area where unassembled cardboard boxes and wooden pallets were stored, and the flames soon advanced to a point beyond the ability of the employees to control. The fire department was summoned. The employees who fought the fire were forced to evacuate the building after about twenty minutes of seeking to contain the blaze. By the time the town fire department arrived at the scene, the main building was engulfed in flame, and all plaintiff's machinery, equipment, and inventory was destroyed.
Both parties raise issues in support of their respective appeals. In essence, defendants assert that the trial justice should have directed a verdict in their favor on the issue of compensatory damages or in the alternative should have granted their motion for a new trial after the award of compensatory damages. The plaintiff asserts that the trial justice erred in declining to submit the question of punitive damages to the jury. These issues will be dealt with in the order of their significance to this opinion. Further facts will be supplied as needed to provide a framework for consideration of the issues.
The defendants argue that the trial justice should have directed a verdict in respect to counts 1 and 2, which essentially allege that defendants were negligent in failing to maintain the automatic sprinkler system so that it would respond in the event of fire. The defendants argue that paragraph 17 of the sales agreement provides, as part of an arm's-length transaction, that plaintiff agreed to absolve defendants from any obligation to protect plaintiff or its property that was maintained in the rented premises. The plaintiff argues that the sprinkler system and its underground piping system constituted a portion of the premises retained by defendants and, therefore, were not controlled by paragraph 17 of the sales agreement. The plaintiff and the defendants cite Gormley v. Vartian, 121 R.I. 770, 403 A.2d 256 (1979), for the principle that a landlord must maintain retained portions of the leased or rented premises in a reasonably safe condition for the benefit of his or her tenants. With this proposition we are in general agreement. It is a familiar and well-settled doctrine in this jurisdiction that a trial justice, when considering a motion for directed verdict, must examine the evidence in a light most favorable to the plaintiff without evaluating it for credibility and drawing all reasonable inferences in favor of that plaintiff. It is only when the evidence and inferences drawn therefrom are such that a verdict in favor of the plaintiff could not be supported that the motion for direction should be granted. See, e.g., Lamoureux v. Davis, 504 A.2d 449 (R.I.1986); Haxton's of Riverside, Inc. v. Windmill Realty, Inc., 488 A.2d 723 (R.I.1985). In reviewing the trial justice's decision on a motion for directed verdict, this court must apply the same standard. Souza v. Narragansett Council, Boy Scouts of America, 488 A.2d 713 (R.I.1985).
Applying this standard to the evidence in the case, we are of the opinion that this evidence would have supported a finding that the automatic sprinkler system, together with...
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