Nat. Pub. Co. v. Hartford Fire Ins. Co., 23651.

• Decision Date: 27 January 2006
• Docket Number: No. 23651.,23651.
• Citation: 892 A.2d 261,94 Conn.App. 234
• Court: Connecticut Court of Appeals
• Parties: NATIONAL PUBLISHING COMPANY, INC v. HARTFORD FIRE INSURANCE COMPANY.

Page 261

892 A.2d 261

94 Conn.App. 234

NATIONAL PUBLISHING COMPANY, INC v. HARTFORD FIRE INSURANCE COMPANY.

No. 23651.

Appellate Court of Connecticut.

Argued November 16, 2005.

Decided January 27, 2006^*.

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James V. Somers, with whom, on the brief, were Daniel P. Scapellati and John B. Farley, Hartford, for the appellant (defendant).

Nancy Fairchild Sachs, with whom, on the brief, were Russell J. Berkowitz and Eric G. Blomberg, Stamford, for the appellee (plaintiff).

DRANGINIS, FLYNN and DUPONT, Js.^**

FLYNN, J.

The defendant, Hartford Fire Insurance Company (Hartford), appeals from the judgment of the trial court, rendered after a jury verdict awarding $1,100,314.37 in damages to the plaintiff, National Publishing Company, Inc. (National), for National's insurance claim for losses and damage sustained as a result of theft and vandalism. The judgment reflected a $238,533.79 remittitur¹ from the jury's award of $1,338,848.16, which the plaintiff accepted. We note also that the amount originally awarded by the jury, before the court ordered the remittitur, was nearly $500,000 less than the $1.8 million in damages for which National sought recovery. On appeal, Hartford claims that the court improperly denied its postverdict motions for judgment notwithstanding the verdict and to set aside the verdict. Specifically, Hartford claims that the court should have granted its motions for the following reasons: (1) National failed to establish any damages by failing to produce evidence (a) "that it incurred damages," (b) of the "period of restoration," or (c) that "any of the claimed expenses qualified as either `normal operating expenses' or `extra expenses' under the policy"; (2) the court improperly admitted a summary spreadsheet into evidence without a proper foundation; (3) the court failed to charge the jury on Hartford's special defense that National failed to give proper notice of its claim pursuant to the policy; (4) the court improperly denied Hartford's motion for a mistrial after National's counsel made inflammatory remarks during closing argument; and (5) the court improperly excluded evidence regarding a prior felony conviction of National's principal, Paul Cohen.² We affirm the judgment of the trial court and begin by summarizing our reasoning.

As to Hartford's first claim, we conclude that National did establish some damages, which, as reduced by the court's remittitur, properly were found by the jury on the basis of the testimony of National's expert public adjuster as well as other evidence in the case. We decline to review Hartford's claim that National offered no evidence of the period of restoration for which the policy provided coverage because that never was raised in Hartford's motion for a directed verdict, as our rules of practice require. Further, we conclude that any foundational objections to National's expert testimony should have been made prior to the expert's testimony as to total damages, not at the end of the case; once admitted without objection, this testimony properly was considered by the jury, which also determined its weight and credibility. We also reject Hartford's claim that National offered no evidence as to which of the claimed damages fell under the business income-operating expense category and which fell under the extra expense category. The testimony of National's expert in and of itself was sufficient to do this.

As to Hartford's second claim, we conclude that there was a proper foundation for admission of the summary spreadsheet and that Hartford was not harmed by the court's restriction of its use to nonsubstantive purposes.

As to Hartford's third claim, we conclude that even if we were to assume, without deciding, that the court improperly refused to charge on the issue of notice as set forth in Hartford's sixth special defense, National met its burden of proving that Hartford was not prejudiced by the timing of National's notice, and Hartford failed to demonstrate that it was harmed by the court's refusal to charge on the issue of notice.

As to the remaining claims, we conclude that the court did not abuse its discretion in denying Hartford's motion for a mistrial because the summation remarks of National's counsel were not improper. We also hold that the court did not abuse its discretion in excluding evidence of the twenty-five year old conviction of National's president on the grounds that it was too remote in time, too prejudicial and might distract the jury from the issues in the case.

The following facts, which the jury reasonably could have found, and the procedural history of the case, are relevant to our resolution of the issues on appeal. In 1985, Cohen founded National, a publishing company, which published low cost, freestanding newspaper inserts for companies such as Wal-Mart Stores, Inc., Colgate-Palmolive Company and Kraft Foods Company, to name but a few. National's unique computer system contained individualized instructions for printing coupons for each of its many clients, and it created thousands of production grids, which were transmitted, via computer, to 13,000 newspapers around the United States. The business was sui generis. National was unique in terms of the product it produced, the services it provided, its distribution area, its customer base, its market, the variety of newspapers and publications it offered to its clients, and its computer software and database, which had been developed in-house and individually programmed by Eric Richmond, an associate of Cohen, before Richmond left National. Cohen estimated that National's database had a conservative value of $5 million but could have been worth as much as $20 million. Apart from Cohen's opinion as to the value of the database, an independent consultant also concluded that National's database was a valuable asset that should be listed on its balance sheet. National's sales increased from $300,000 in 1992 to $5.7 million in 1994, and, in 1993, it had a triple A-1 credit rating from Dun and Bradstreet.

By 1994, Cohen's associates, Karen Clark and Richmond, were running the day-to-day operations of National, and Cohen resided in Florida from December through May, and in Westport during the remainder of the year. Unhappy with National's mounting debt, their compensation and the prospects of Cohen's moving National to Florida, Clark and Richmond wanted to take control of the company, and, at a December 30, 1994 meeting, Cohen was confronted by a group of employees. Two of these employees, Ralph McCarthy and John Moore, "two big guys," blocked his exit. Cohen did not know what was going on, and he was not informed as to the purpose of the meeting. Cohen requested to speak privately with Clark and Richmond, but they declined, and Cohen sought to leave the meeting. As he was leaving, he was handed a letter from Clark, Richmond and other upper management personnel, which he read that same day after boarding a prescheduled return flight to Florida. In this letter, Clark, Richmond and others demanded approximately $1 million in compensation, majority ownership of National and Cohen's agreement to a voluntary reorganization of National. The letter further threatened that if their demands were not met, they would "force" National into involuntary bankruptcy. Two days later, Cohen received a letter of resignation from Richmond and Clark. Clark and Richmond formed a competing company, Media Management Creative Marketing Services, with several other individuals who had left National and joined Clark and Richmond.

On January 3, 1995, after returning to Connecticut, Cohen went to National and discovered that the offices had been ransacked. Computers, computer equipment, software, furniture, files, financial records and other business records were missing. A police report was filed, but Cohen did not become aware, until January 18, 1995, or later, that National's computer system had been sabotaged or that many unauthorized checks had been written. The full extent of the computer sabotage was not realized for many months.

Cohen did not immediately report the loss to Hartford because he did not know who National's insurance carrier was or whether National even had insurance because these documents were among the many missing or stolen files. However, Cohen later became aware of National's coverage by Hartford when, in a notice dated January 25, 1995, Hartford informed National that its policy was being cancelled for nonpayment of premium. On January 30, 1995, Cohen contacted the insurance agent listed on that notice, J.M. Layton & Company (J.M. Layton), and spoke with its chief executive officer, David Woodward. Cohen informed Woodward of the loss and requested a copy of National's insurance policy. Woodward testified that he did not report the loss immediately to Hartford because it was a property claim and not a liability claim. He requested that Cohen put the claim together so that J.M. Layton could submit it to Hartford. Woodward also met with Cohen at National and looked over the premises. After receiving a letter from Cohen's attorney, J.M. Layton filed its first report of loss with Hartford on March 19, 1995. Despite repeated requests from National for an advance of its insurance proceeds, Hartford did not investigate the claim until September, 1995.

Because the extensive computer damage made it virtually impossible for National to earn any revenue, it was forced into bankruptcy in March or April, 1995, which it later converted to a Chapter 11 reorganization. In July, 1995, National hired Eric Von Brauchitsch of New England Adjusting Company to assist with the processing of its insurance claim. Von Brauchitsch was approved by the Bankruptcy Court as National's public adjuster for its insurance claim. Although certain proof of loss forms had been requested by National in February, 1995, they never were...