Orfanos v. Athenian, Inc.

• Decision Date: 01 September 1985
• Docket Number: No. 432,432
• Citation: 505 A.2d 131,66 Md.App. 507
• Parties: Evangelos ORFANOS, et al v. ATHENIAN, INC., et al. ,
• Court: Court of Special Appeals of Maryland

Page 507

66 Md.App. 507

505 A.2d 131

Evangelos ORFANOS, et al v. ATHENIAN, INC., et al.

No. 432, Sept. Term, 1985.

Court of Special Appeals of Maryland.

March 5, 1986.

Harvey Greenberg (Kent L. Greenberg, on brief), Baltimore, for appellants.

Michael S. Radcliffe (M. Stanley Radcliffe, Dennis J. Psoras, Radcliffe & Radcliffe, P.A., on brief), Towson, C. MacNair Speed, Baltimore, for appellees.

Argued before GILBERT, C.J., and WILNER and ADKINS, JJ.

WILNER, Judge.

On April 27, 1982, a fire erupted at the Athenian Restaurant at 4700-02 Eastern Avenue in Baltimore, substantially damaging both the restaurant furnishings and equipment and the buildings in which they were housed. The buildings were owned by appellants Evangelos and Mary Orfanos; they were leased to appellees Spiros Stavrakas and James Gianakos, who, through their corporation Athenian, Inc., owned and operated the restaurant. In force at the time of the fire was an insurance policy purchased by Athenian, Inc. and written by St. Paul Surplus Line Insurance Company (St. Paul). The policy provided fire insurance coverage on the contents of the restaurant and liability coverage with respect to personal injury or property damage caused by Athenian, Inc. Appellants had a separate fire insurance policy on the buildings.

In September, 1982, appellants filed an action in equity against Stavrakas, Athenian, Inc. and St. Paul, alleging, among other things, that the fire was due to hazardous conditions which the defendants failed to correct, that the existence of those conditions constituted both negligence and a breach of the lease, that, in contravention of the lease, the defendants had failed to restore the premises and had announced their intention to vacate it, that the defendants had made claim to St. Paul for their losses, and that, if they received payment, they were "unlikely to apply said insurance proceeds to the restoration of said personal property." Appellants asked for a declaratory judgment that the lease remained in effect and for the appointment of a trustee to collect the insurance proceeds from St. Paul. Although it does not appear that any relief was ever granted to appellants in that action, it sufficed to preclude St. Paul from actually paying the fire insurance proceeds to its insureds.

In January, 1983, appellants dismissed the equity action and filed, in place of it, a three-count declaration at law against Stavrakos, Gianakos, Athenian, and St. Paul. All three counts were based on the underlying claim that the fire resulted from hazardous conditions around the cooking units. Count I charged breach of the lease; Count II charged negligence; and Count III charged intentional and malicious destruction of property. Those counts, of course, sought money damages. In a separate claim at the end of the declaration, however, appellants sought an injunction restraining St. Paul from distributing the proceeds of its policy. In support of that claim, they incorporated the averments of Counts I, II, and III, and stated that Athenian, Inc. was "no longer a viable business entity," that the right to collect the insurance proceeds was its only asset, and that the defendants would render those proceeds "inaccessible" if paid to them.

Three pertinent things occurred thereafter: (1) at some point, St. Paul filed an interpleader and deposited the fire insurance proceeds in court; (2) appellants filed an amended, and then a two-count second amended, declaration, alleging breach of the lease and negligence but abandoning the intentional injury claim; and (3) Athenian, Inc. filed a counterclaim (and then an amended counterclaim) against appellants contending that, by filing the actions against St. Paul and thereby causing St. Paul not to pay the fire insurance proceeds to it, appellants had intentionally and maliciously interfered with its insurance contract. The proceedings terminated in the Circuit Court when (1) on June 7, 1984, the court sustained appellants' demurrer to the amended counterclaim without leave to amend and (2) on March 28, 1985, after a non-jury trial, the court found no liability under the second amended declaration and therefore entered judgment thereon for appellees.

Neither side is pleased with its loss, and so we have cross-appeals. Appellants complain that certain of the court's critical findings and conclusions are erroneous and that the court erred in striking certain rebuttal testimony. Athenian, Inc. believes that its amended counterclaim stated a cause of action.

I. Complaints By Appellants

The gravamen of appellants' action, as set forth in their second amended declaration, both as to the breach of lease and negligence counts, was that the fire resulted from hazardous conditions which appellees created and allowed to remain in the vicinity of the cooking units. Count I of the second amended declaration states that, in contravention of the lease appellees "carelessly allowed dangerous conditions to exist in and about the cooking units upon the demised premises" and that "as a direct and proximate result of [appellees'] breach of the aforesaid Lease Agreement, a fire did occur upon the demised premises" on April 27, 1982, causing damage to the buildings. Count II was a bit more specific in describing the dangerous conditions--permitting the cooking units to remain in a state of disrepair by allowing an accumulation of cooking grease, failing to clean the hood and duct area "of said units" with sufficient frequency, failing to inspect the automatic dry chemical extinguishing system on a regular basis, failing to have fire extinguishers in the immediate vicinity of the cooking units, and failing to disconnect unused cooking units from the power sources--but it too alleged that the breach of these "duties" "directly and proximately resulted in the aforesaid fire on the demised premises."

There were a number of issues and sub-issues raised at trial, but it is fair to say that appellees' principal defenses were that (1) they had regularly cleaned and attended to the cooking units and the hood and duct located directly above those units, and (2) in any event, the fire did not start in or near the cooking units, and, thus, any accumulation of grease in or about those units or in the hood or duct was not the cause of the fire. The court accepted the second of these defenses, finding that "the fire probably originated in an area that would not be directly affected by the cooking grease," and that, as a result, appellants had not met their burden of proof on the issue of causation--whether the fire resulted from the conditions alleged to exist in or around the cooking units. Although early in its oral opinion, the court, referring to Count I, indicated that "[t]he contract action basically seems to have been abandoned" as there was "[v]ery little testimony" as to that count, it seems clear in context that the ruling on Count I was not based on abandonment as much as on appellants' failure to meet their burden of proof as to causation.

Appellants make two complaints about that finding: first, they argue that it was clearly erroneous on the facts; second, they contend that, even if the fire did not start in or near the cooking units, the accumulation of grease in the vicinity of those units caused the fire to spread or become more severe than otherwise would have been the case, which itself is actionable. We find some merit in the second contention.

We shall avoid the temptation to recount all of the voluminous and conflicting evidence as to how and where the fire started and spread, for it really is not necessary. A quick summary will suffice. The restaurant was located on the corner of Eastern Avenue and Newkirk Street. It was divided, essentially, into three parts. The first part was the dining area, which patrons entered from Eastern Avenue. In back of the dining area was the kitchen, and behind that was a freezer and storage area. Each part was separated from the adjoining part by a wall that ran from the Newkirk Street side of the building partway across the width of the restaurant; because these walls did not extend all the way across, there was access from one area to another on the right-hand side.

Two ventilation systems served the restaurant, one serving the dining room, the other serving the kitchen. The dining room system consisted of two rectangular-shaped ducts suspended about six inches below the ceiling, one along the right wall and the other about one-third distant from the left (Newkirk Street) wall. These ducts ran back to the kitchen and then joined a rectangular duct that ran perpendicularly and vented through the Newkirk Street wall.

The second system consisted of a hood suspended from the ceiling directly over the cooking units and a round duct that ran through the back wall of the kitchen into or toward the storage area, then turned up through the ceiling, and eventually vented through the roof near the back wall of the building. ¹

There was evidence that these two systems were entirely separate from each other and did not interconnect. Although parts of both systems ran through the kitchen and therefore were in somewhat close proximity, they were at different locations and elevations and did not abut each other. The part of the dining room system that ran along the right wall of the dining area had been rendered dysfunctional by a baffler that a former tenant had placed at the point where the other duct coming from the dining room joined the perpendicular duct in the kitchen.

There was no evidence establishing precisely where, or how, the fire started. There was some evidence, however, to show that it either commenced or initially was confined in that part of the dining room ventilation duct running perpendicularly near the kitchen ceiling toward Newkirk Street. From that evidence, coupled with the layout of the two systems, the court could reasonably infer that the fire was not ignited...