Pickwick Park Ltd. v. Terra Nova Ins. Co.

• Decision Date: 21 January 1992
• Docket Number: No. 90-464-A,90-464-A
• Citation: 602 A.2d 515
• Parties: PICKWICK PARK LTD. et al. v. TERRA NOVA INSURANCE CO.
• Court: Rhode Island Supreme Court

Page 515

602 A.2d 515

PICKWICK PARK LTD. et al. v. TERRA NOVA INSURANCE CO.

No. 90-464-A.

Supreme Court of Rhode Island.

Jan. 21, 1992.

William Landry, Blish & Cavanagh, Providence, Steven Feingold, Warwick, for plaintiff.

Raymond A. LaFazia, Providence, for defendant.

OPINION

SHEA, Justice.

This matter comes before the Supreme Court on the appeal of the defendant, Terra Nova Insurance Co. (Terra Nova), from a judgment in favor of the plaintiff, Pickwick Park, Ltd. (Pickwick), in the amount of $25,000 entered after a jury trial.

Pickwick filed the civil action against Terra Nova in the Providence County Superior Court on March 5, 1984. The complaint alleged a failure to pay a valid claim against the insurance policy issued by Terra Nova. John F. DiStefano (DiStefano), as mortgagee on the insurance policy, brought a separate action against Terra Nova. The cases were consolidated for a trial that commenced on October 23, 1989. The trial court permitted DiStefano to dismiss his action against Terra Nova because the mortgage had been paid.

The evidence presented at trial showed that Donna DiStefano Jeff (Jeff) is the president and sole stockholder of Pickwick, a Rhode Island corporation engaged in the business of real estate development. On July 19, 1983, Pickwick purchased a fifteen-room residence located at 37 Phenix Avenue in Cranston, Rhode Island. Pickwick executed a mortgage in the amount of $130,000 in favor of DiStefano, the corporation's managing agent. On August 23, 1983, Pickwick purchased an all-risk insurance policy from Terra Nova for the property. The policy provided up to $95,000 in coverage with a $250-deductible provision.

DiStefano testified that he planned to move the home to the rear portion of the lot and construct a shopping center on the front portion zoned Commercial. On September 2, 1983, at around noon, while one David Gardiner (Gardiner) was performing excavation work in connection with the planned shopping center, he blacked out owing to the day's heat and excessive cocaine use the night before. Gardiner testified that upon regaining consciousness, he discovered that the bulldozer had collided with the house.

The house was inspected by John Rega, chief building inspector for the city of Cranston, on September 12, 1983. Rega determined that the accident caused structural damage to the house and ordered that the building be vacated and demolished within thirty days. A building company tore down the house approximately three weeks after the building inspector ordered demolition. On October 25, 1983, Pickwick submitted a sworn statement of proof of loss that sought $95,000 less the $250 deductible for the loss.

Terra Nova sent three separate notices to DiStefano and Jeff requesting that they appear at the offices of Terra Nova's attorney to make statements under oath concerning the loss. DiStefano and Jeff claim that they did not appear on the scheduled dates because of family problems and illness. On December 22, 1983, Terra Nova rejected plaintiffs' proof of loss. The reasons specified were (1) Terra Nova did not agree with the amount of the claimed loss, and (2) DiStefano and Jeff had failed to appear on the scheduled dates to give statements under oath.

At the start of trial in the Superior Court, Pickwick filed a motion in limine that sought to exclude from evidence information about its prior insurance claims. The trial court ruled that evidence of prior claims DiStefano filed as a result of fire damage to property he owned was inadmissible. However, the trial court did admit into evidence a claim filed as a result of Gardiner's having lost control of a bulldozer that then collided with a building owned by Jeff known as Whitey's Tavern.

At the close of plaintiff's case in chief the trial court denied Terra Nova's motion for a directed verdict. The jury found in favor of Pickwick and awarded damages in the amount of $25,000. A judgment was entered on October 27, 1989, in the amount of $25,000 plus interest. On November 17, 1989, the trial court denied Terra Nova's motion for a new trial. Terra Nova filed its notice of appeal on December 4, 1989.

I

The first issue raised is whether the trial court erred when it denied Terra Nova's motion for a directed verdict.

According to Terra Nova the cooperation clause within the subject policy requires a plaintiff to submit to examination under oath if requested to do so by Terra Nova. Terra Nova alleges that the failure of DiStefano and Jeff to appear on three separate occasions to give statements under oath, as requested by Terra Nova, was a material breach of the cooperation clause. Terra Nova cited Daniel v. Pawtucket Mutual Insurance Co., 506 A.2d 1032, 1034 (R.I.1986), as authority for its assertion that a material breach of the cooperation clause bars Pickwick from seeking recovery under the policy. According to Terra Nova, it is entitled to judgment as a matter of law and the trial court erred by failing to grant said motion.

Pickwick argues that there was sufficient evidence on the record for the trial court to conclude that because of Terra Nova's unreasonable conduct, Pickwick did not breach the cooperation clause. Specifically it alleges that Terra Nova acted unreasonably in regard to scheduling the times for taking the sworn statements and in regard to the information requested from Pickwick. Pickwick further argues that even if Terra Nova's demands were reasonable, it failed to show that it was prejudiced by the failure of DiStefano and Jeff to give sworn statements and, thus, Pickwick was not barred from seeking recovery under the policy. See Corrente v. Fitchburg Mutual Fire Insurance Co., 557 A.2d 859, 863 (R.I.1989); Siravo v. Great American Insurance Co., 122 R.I. 538, 542, 410 A.2d 116, 118 (1980).

The law in Rhode Island is well settled concerning the standard for reviewing the trial court's decision on a motion for a directed verdict. As the trial court did when hearing the motion, this court on review must "consider the evidence in the light most favorable" to the nonmoving party "without weighing the evidence or considering the credibility of the witnesses and extract from that record only those reasonable inferences that support the position of the party opposing the motion." AAA Pool Service & Supply Co. v. Aetna Casualty, and Surety Co., 479 A.2d 112, 115 (R.I.1984) (quoting Fox v. Allstate Insurance Co., 425 A.2d 903, 905 (R.I.1981)). If after making such a review there are issues of fact upon which reasonable minds may differ, then the motion for directed verdict must be denied and the jury must decide those issues. AAA Pool Service & Supply Co., 479 A.2d at 115; Pimental v. D'Allaire, 114 R.I. 153, 156, 330 A.2d 62, 64 (1975).

Daniel v. Pawtucket Mutual Insurance Co., is but one of several cases in which we have held that an insurance company must show that it has been prejudiced before an insured's failure to comply with the procedural requirement in a policy will bar recovery. 506 A.2d at 1033-34 (sworn proof of loss requirement); Corrente, 557 A.2d at 863 (notice of loss requirement); Siravo 122 R.I. at 542, 410 A.2d at 118 (sworn proof of loss requirement). In Daniel the defendant insurer demonstrated that it was prejudiced by the plaintiff's failure to comply with the policy requirement that she file a complete and sworn proof of loss and by her subsequent failure to give a statement under oath that would have taken the place of the sworn proof of loss.

In the case at bar plaintiff through its agent DiStefano notified its insurance agent within twenty-four hours of the accident. Agents of Terra Nova were allowed to inspect the damaged premises within one week of the accident. After receiving an order to demolish the premises from the chief building inspector, plaintiff filed a sworn proof of loss with Terra Nova. On three separate occasions DiStefano and Jeff did fail to appear to give statements under oath as requested by Terra Nova; however, they failed to appear because of family illness or family problems. We also note that the scheduling process was arbitrary in that the insurer did not consult with DiStefano and Jeff when Terra Nova selected the dates when they were directed to appear to give their statements. Terra Nova then chose to deny the claim rather than reschedule to a time when DiStefano and Jeff were available. Further, Terra Nova intended to inquire not into the substance of the claim submitted to it but rather into prior claims filed by DiStefano and Jeff.

After reviewing the evidence in the record, we conclude that reasonable minds may differ on the issue of whether Terra Nova was prejudiced by the failure of DiStefano and Jeff to give statements under oath. Therefore, the trial justice did not err in denying Terra Nova's motion for a directed verdict and letting the jury decide the issue.

II

The next issue before us is whether the trial court erred when it ruled not to admit evidence concerning prior fire-loss claims filed with other insurance companies by DiStefano.

At trial Terra Nova raised the defense of fraud to Pickwick's claim. In order to prove fraud, Terra Nova sought to introduce evidence of prior insurance claims for several fire losses to properties owned by DiStefano. Terra Nova also sought to introduce evidence of a prior insurance claim arising out of a bulldozer's colliding with a building owned by Jeff and known as Whitey's Tavern, that is, the earlier incident in which Gardiner lost control of his bulldozer. After an offer of proof the trial court excluded evidence concerning the prior fire losses but did admit evidence about the prior bulldozer accident.

Terra Nova argues that the trial court's ruling denied it the opportunity to present evidence that tends to establish a common scheme or design to defraud insurance companies. Additionally Terra Nova alleges that the ruling denied it the opportunity to contradict or impeach DiStefano.

The...