Morin v. Aetna Cas. and Sur. Co., 81-265-A

• Citation: 478 A.2d 964
• Decision Date: 24 May 1984
• Docket Number: No. 81-265-A,81-265-A
• Parties: Ernest A. MORIN et al. v. AETNA CASUALTY AND SURETY COMPANY et al. ppeal.
• Court: United States State Supreme Court of Rhode Island

Page 964

478 A.2d 964

Ernest A. MORIN et al. v. AETNA CASUALTY AND SURETY COMPANY et al.

No. 81-265-Appeal.

Supreme Court of Rhode Island.

May 24, 1984.

Bradford Gorham, Providence, for plaintiffs.

William A. Curran/Dennis J. McCarten, Hanson, Curran & Parks, Providence, for defendants.

OPINION

BEVILACQUA, Chief Justice.

The plaintiffs, Ernest A. Morin and Ruth Morin, brought this civil action against the defendants, Aetna Casualty and Surety Company et al, to recover for damages resulting from a fire and explosion to their home and its contents. The defendants asserted as a defense that the plaintiffs intentionally caused the fire and filed a counterclaim seeking both compensatory and punitive damages on the ground that the plaintiffs had been convicted of statutory burning, conspiracy to commit statutory burning, conspiracy to defraud an insurer, burning with intent to defraud an insurer, and attempting to obtain money under false pretenses. See State v. Morin, R.I., 422 A.2d 1255 (1980).

Subsequently, defendants filed a motion for summary judgment. The trial justice granted defendants' motion as to compensatory damages, but denied the request for punitive damages. Both plaintiffs and defendants appeal.

The plaintiffs, on June 28, 1976, were the owners of a home located on Ruth Boulevard in Coventry. On this day, the home was extensively damaged by a fire. The real estate was insured by a policy issued by defendants. In the meantime, plaintiffs filed a sworn statement and proof of loss claiming a total loss to real and personal property in the amount of $261,000.

Thereafter, plaintiffs were indicted and charged with the above crimes. In January 1978, following a jury trial, plaintiffs were found guilty on all counts. After exhausting their appeals, their convictions were affirmed. See State v. Morin, R.I., 422 A.2d 1255 (1980).

During the pendency of the criminal proceedings, plaintiffs initiated this suit against defendants, alleging that they had unreasonably delayed in making payment of the insurance proceeds to the mortgage holders of the property. The plaintiffs also claimed that the delay resulted in the accrual of additional interest to plaintiffs' detriment. After payments of $49,754.72 and $12,695.28 were made respectively to each of the mortgagees, defendants filed a counterclaim to recover the sums paid, alleging that the payments made to Warwick Federal Savings and Loan Association and the Greater Providence Deposit Corporation, the mortgagees, were made as a direct result of the fraud perpetrated by plaintiffs.

Thereafter, defendants filed a motion for summary judgment as to plaintiffs' claim as well as their own counterclaim. In granting the motion, the trial justice held that because plaintiffs were already criminally convicted, they were collaterally estopped from litigating their claim in a civil suit.

On appeal, we will confine ourselves to two issues: (1) whether a criminal conviction is admissible to bar recovery in a civil suit based on the same facts or occurrence; and (2) whether punitive damages are allowable, when the parties have been convicted of criminal conduct in obtaining money under the terms of their fire policy, in a civil suit based upon the same transaction or occurrence.

I

The first issue of whether a criminal conviction is admissible to bar recovery in a civil suit based on the same facts or occurrence is one of first impression in this jurisdiction.

Responding to this issue, plaintiffs contend that a criminal conviction is not admissible as evidence in a civil suit in which the truth of the facts underlying the conviction is raised. As a general rule, this is true. Aetna Casualty & Surety Co. v. Anderson, 200 Va. 385, 388, 105 S.E.2d 869, 872 (1958); see State v. Bradnack, 69 Conn. 212, 214, 37 A. 492, 493 (1897). However, this rule is subject to a widely recognized exception. A majority of jurisdictions will not exclude criminal judgments from evidence in a civil suit where the party's motive in bringing the civil suit is to benefit from his criminal act. See, e.g., State Farm Mutual Automobile Insurance Co. v. Worthington, 405 F.2d 683, 686 (8th Cir.1968); Imperial Kosher Catering, Inc. v. Traveler's Indemnity Co., 73 Mich.App. 543, 545, 252 N.W.2d 509, 510 (1977); Mineo v. Eureka Security Fire and Marine Insurance Co., 182 Pa.Super. 75, 81, 125 A.2d 612, 615 (1956); Eagle, Star & British Dominions Insurance Co. v. Heller, 149 Va. 82, 106, 140 S.E. 314, 321 (1927).

However, the courts are generally divided over the question of whether the evidence is only prima facie evidence ¹ or conclusive evidence of the facts determined. Seattle-First National Bank v. Cannon, 26 Wash.App. 922, 927-28, 615 P.2d 1316, 1319-20 (1980).

Courts recognizing this exception have relied on one of two theories. Some courts have held that recovery is barred on the basis of "the public interest which requires that the laws against crime be enforced, and that courts aid no man in any effort he may make to benefit from his own violation of them." Mineo v. Eureka Security Fire & Marine Insurance Co., 182 Pa.Super. at 84, 125 A.2d at 617; see Imperial Kosher Catering, Inc. v. Traveler's Indemnity Co., 73 Mich.App. at 545, 252 N.W.2d at 510. The other theory that has been relied upon is that of collateral estoppel, which prevents the "relitigation of a particular issue or a determinative fact after the party estopped has a full and fair opportunity to present its case in order to promote the policy of ending disputes." Seattle-First National Bank v. Cannon, 26 Wash.App. at 927, 615 P.2d at 1320; see Travelers Insurance Co. v. Thompson, 281 Minn. 547, 555, 163 N.W.2d 289, 294 (1968).

We believe that the better view is the one adopted in the Pennsylvania case of Mineo v. Eureka Security Fire & Marine Insurance Co., 182 Pa.Super. 75, 125 A.2d 612 (1956).

In Mineo, a case similar to the one at bar, the owners of a restaurant destroyed by fire were convicted of having set the fire. Prior to the fire, the restaurant owners assigned their interest in four fire insurance policies to the plaintiff, to whom they owed money. The plaintiff then brought suit against the defendant insurance companies to recover for the damage caused by the fire. Id. at 77, 125 A.2d at 613. At trial the defendant introduced records of the insureds' convictions into evidence. Id. at 77, 125 A.2d at 614. In admitting the evidence the court held that reason can lead to no other conclusion than "when one is convicted of a felony and subsequently attempts to benefit from the commission, the record of his guilt should be a bar to his recovery." Id. at 86, 125 A.2d at 618.

The plaintiffs erroneously rely on Korsak v. Prudential Property & Casualty Insurance Co., R.I., 441 A.2d 832 (1982), in support of their claim that a criminal conviction is not admissible as evidence in a subsequent civil suit in which the truth of the issues underlying the conviction is raised. The case before us, however, is distinguishable from Korsak. In Korsak we held that the insured's nolo contendere plea, which was followed by a suspended sentence with probation, was not admissible as summary-judgment proof of the facts underlying the conviction. Id., 441 A.2d at 834. Here, unlike in Korsak, plaintiffs were convicted by a jury after a trial. Their convictions therefore are substantially different...