Nahmias Realty, Inc. v. Cohen

• Citation: 484 N.E.2d 617
• Decision Date: 30 October 1985
• Docket Number: No. 4-185A16,4-185A16
• Parties: NAHMIAS REALTY, INC., Appellant (Plaintiff Below), v. Alvin COHEN and Affiliated Agencies, Inc., Appellees (Defendants Below).
• Court: Indiana Appellate Court

Page 617

484 N.E.2d 617

NAHMIAS REALTY, INC., Appellant (Plaintiff Below), v. Alvin COHEN and Affiliated Agencies, Inc., Appellees

(Defendants Below).

No. 4-185A16.

Court of Appeals of Indiana,

Fourth District.

Oct. 30, 1985.

Michael A. Bergin, Burton M. Harris, Locke, Reynolds, Boyd & Weisell, Indianapolis, for appellant.

James R. Fisher, Ice, Miller, Donadio & Ryan, Indianapolis, for appellees.

CONOVER, Judge.

Plaintiff-appellant Nahmias Realty, Inc. (Nahmias) appeals the Marion Superior Court's award of no damages after it found liability as to defendants-appellees Alvin Cohen and Affiliated Agencies, Inc. (Affiliated).

Reversed.

ISSUE

Restated, the sole issue presented by this appeal is whether the trial court's award of no damages after its finding of liability amounts to an inadequate recovery. ¹

FACTS

Nahmias owned a commercial building in Indianapolis. It relied on Affiliated to adequately insure the building against fire loss. Affiliated purchased a fire policy from American Insurance Company (American) which contained a "replacement cost" endorsement, but through clerical error Affiliated failed to insure the building in an amount sufficient to satisfy the policy's co-insurance clause. Affiliated also failed to advise Nahmias it could obtain code update coverage by purchasing a waiver of the standard clause in replacement cost fire policies excluding it. Under code update coverage the insurance carrier after a loss pays the additional cost of modifying the building to conform to current fire and building codes, including the undamaged parts of the building.

In 1977, the building burned, and Nahmias elected to repair it. American, however, refused to pay the full cost necessary to restore the building to its former condition because Nahmias was underinsured. It bought another building. In 1983, the city of Indianapolis condemned the damaged building, paying $250,000 for it as is. Nahmias sued American and Affiliated.

Eventually, Nahmias and American entered into a covenant for $357,000. Affiliated admitted and the court during a bench trial found Affiliated was liable. The court below, however, awarded Nahmias no damages because it determined all sums due Nahmias as damages had been satisfied by American's payment to Nahmias under the covenant. Nahmias appeals.

Further facts are set forth below, as necessary.

DISCUSSION AND DECISION

I. Standard of Review

Our First District, speaking through Ratliff, J., recently stated our standard of review in inadequate damage cases, saying:

We are bound by a very strict standard of review on questions of inadequate or excessive damages. Barrow v. Talbott, (1981), Ind.App., 417 N.E.2d 917. We may not reverse a damage award if it is within the scope of evidence before the trial court, and we shall not reweigh the evidence or judge the credibility of the witnesses who presented it. Indiana University v. Indiana Bonding and Surety Co., (1981), Ind.App., 416 N.E.2d 1275. A judgment for damages will be reversed as inadequate only when it is apparent from the evidence that the damages assessed were so small as to convince us that "the trier of fact was motivated by prejudice, passion, partiality, or corruption, or else considered some improper element in arriving at its assessment." Lindenborg v. M & L Builders and Brokers, Inc., (1973), 158 Ind.App. 311, 302 N.E.2d 816, 822.

English Coal Co., Inc. v. Durcholz (1981), Ind.App., 422 N.E.2d 302, 311-312, trans. denied. Accord, Beyer v. State (1972), 258 Ind. 277, 280 N.E.2d 604, 610; Annee v. State (1971), 256 Ind. 686, 271 N.E.2d 711, 712, reh. denied, 256 Ind. 686, 274 N.E.2d 260; Indiana & Michigan Electric Co. v. Hurm (1981), Ind.App., 422 N.E.2d 371, 381. It is clear the trial court did not enter its award of no damages because of prejudice, passion, partiality or corruption, nor does Nahmias allege the same in this appeal.

Reducing Nahmias's issues to their essence, it claims the award is inadequate because (a) the trial court considered some improper elements in arriving at its assessment, and (b) the amount of the award is not within the scope of the evidence before the trial court. Durcholz, 422 N.E.2d at 312. Even if the former is true, Nahmias must unequivocally demonstrate the no damages award is not within the scope of the evidence in this appeal because

[t]he standard of review applied by this court requires that we affirm a trial court's action if it can be sustained on any legal theory. Llewellyn v. Beasley, (1981), Ind.App., 415 N.E.2d 789. We do not presume error by the trial court, and the burden of proving that reversible error occurred is on the appellant. New York Central Railway Co. v. Milhiser, (1952), 231 Ind. 180, 106 N.E.2d 453, reh. denied 108 N.E.2d 57; American Optical Co. v. Weidenhamer, (1980), Ind.App., 404 N.E.2d 606 (trans. pending ).

Durcholz, 422 N.E.2d at 307. Thus, we will sustain the trial court if its judgment regarding damages falls within the limits established by the probative evidence even though non-probative material and incorrect legal principles were considered incidentally by the trial court in reaching its decision as to damages.

Because the trial court admitted over appropriate objection all kinds of evidence pertaining to the damages suffered by Nahmias because of Affiliated's neglect, we must first discuss the measure of damages which applies in this case, then weed out the non-probative evidence before the court below as it considered this case prior to judgment.

II.

A. Measure of Damages

If an insurance agent undertakes to procure insurance for his principal and through his fault or neglect fails to do so, the agent is liable to the principal for any damage resulting from his failure. Bulla v. Donahue (1977), 174 Ind.App. 123, 126, 366 N.E.2d 233, 236. See also, State Farm Life Ins. v. Ft. Wayne National Bank (1985), Ind.App., 474 N.E.2d 524, 528; Town and Country Mutual Ins. Co. v. Savage (1981), Ind.App., 421 N.E.2d 704, 707.

The applicable measure of damages in this case is (a) the amount which would have been due under the policy which Affiliated should have obtained for its client Nahmias, Bulla, 174 Ind.App. at 128, 366 N.E.2d at 237, plus (b) any consequential damages resulting from Affiliated's breach of duty, see, e.g., State Farm Life Ins. v. Ft. Wayne National Bank, 474 N.E.2d 524 (increased estate taxes); Town and Country Mutual Ins. Co. v. Savage, 421 N.E.2d 704 (prejudgment interest for the amount of the claim which can be ascertained), less (c) the cost of unpaid premiums or cost of insurance. Joseph Forest Prod's., Inc. v. Pratt (1977, Sup.Ct.Org.) 278 Or. 477, 564 P.2d 1027, 1029; Greenfield v. Insurance, Inc. (1971) 19 Cal.App.3d 803, 97 Cal.Rptr. 164, 169-170; 44 C.J.S. Insurance Sec. 172, p. 863. No particular degree of mathematical certainty is required in awarding damages so long as the amount awarded is supported by probative evidence, but it may not be based upon mere conjecture, speculation, or guess work. Whiteco Properties, Inc. v. Thielbar (1984), Ind.App., 467 N.E.2d 433, 438; Lloyds of London v. Lock (1983), Ind.App., 454 N.E.2d 81, 83, modified at 455 N.E.2d 967; Colonial Discount Corp. v. Berkhardt (1982), Ind.App., 435 N.E.2d 65, 67. Where there is doubt as to the exact proof of damages, such uncertainty must be resolved against the wrongdoer. Indiana Tri-City Plaza Bowl v. Glueck's Estate (1981), Ind.App., 422 N.E.2d 670, 678; Friendship Farms Camps, Inc. v. Parson (1977), 172 Ind.App. 73, 80, 359 N.E.2d 280, 284; Gene B. Glick Co., Inc. v. Marion Construction Corp. (1975), 165 Ind.App. 72, 331 N.E.2d 26, 38, reh. denied, 165 Ind.App. 72, 333 N.E.2d 140.

B. Probative Evidence

Any award of damages (in this case no damages) must be supported by probative evidence. Whiteco Properties, Inc., 467 N.E.2d at 438; Lloyds of London, 454 N.E.2d at 83; Colonial Discount Corp., 435 N.E.2d at 67.

The word probative is defined as follows:

In the law of evidence. Having the effect of proof; tending to prove, or actually proving.

Testimony carrying quality of proof and having fitness to induce conviction of truth, consisting of fact and reason co-operating as co-ordinant factors. Globe Indemnity Co. v. Daviess, 243 Ky. 356, 47 S.W.2d 990, 992.

Black's Law Dictionary, Revised 4th Edition, p. 1367. Before we proceed further, we believe it necessary to determine what evidence before the trial court was non-probative vis-a-vis that which was.

It is uncontested in this record Nahmias wanted its building restored to its former condition under the repair and replacement provisions of the policy (R. 799), but it was not restored because neither American nor Affiliated would guarantee payment for the repairs. (R. 919-921). Thus, only the measure of damages above noted was appropriate in this case. Nahmias sought replacement cost insurance not reimbursement for the actual cash value of the property at the time the loss occurred. But for Affiliated's neglect, Nahmias would have so recovered. We discuss replacement cost insurance as applicable in this case below. Here we note, the damage concepts of fair market value, fair cash value, fair rental value, etc., have no applicability in this case. The evidence and the trial court's findings concerning such evidence were not material and thus were irrelevant. Relevancy is the logical tendency of evidence to prove a material fact. State v. Hall (1982), Ind., 432 N.E.2d 679, 682; Lake County Council v. Arredondo (1977), 266 Ind. 318, 363 N.E.2d 218, 220; McClamroch v. McClamroch (1985), Ind.App., 476 N.E.2d 514, 518. Materiality looks to the relationship between the evidence offered and the issues in the case. Thus, if logically relevant evidence is offered to prove a proposition which is not a matter in issue, such evidence is evidentially irrelevant because it does not tend to prove any issues in the case, i.e., such evidence is immaterial. Discussing the relationship between these...