Rena, Inc. v. Brien

• Decision Date: 17 April 1998
• Docket Number: No. 91QKY046-699,D,91QKY046-699
• Citation: 708 A.2d 747,310 N.J.Super. 304
• Parties: RENA, INC. and Peter Tyris, Plaintiffs-Respondents/ Cross-Appellants, v. T.W. BRIEN, Underwriters at Lloyd's, London, For Himself and on Behalf of All Other Underwriters Subscribing to Policyefendants/Third-Party Plaintiffs-Appellants/ Cross-Respondents, v. George TYRIS, Michael Tyris and Peter Tyris, Third-Party Defendants-Cross-Appellants. FORKED RIVER HOUSE, INC., a New Jersey Corporation, Plaintiff-Intervenor-Respondent/Cross-Appellant, v. RENA, INC., Peter Tyris, George Tyris, Michael Tyris, Myla Restaurant Inc., Underwriters at Lloyd's of London, Quaker Agency Inc., and Sheldon, Matlack, Knipe Associates, Inc., Defendants-Respondents/ Cross-Appellants.
• Court: New Jersey Superior Court — Appellate Division

Page 304

310 N.J.Super. 304

708 A.2d 747

RENA, INC. and Peter Tyris, Plaintiffs-Respondents/ Cross-Appellants, v. T.W. BRIEN, Underwriters at Lloyd's, London, For Himself and on Behalf of All Other Underwriters Subscribing to Policy

No. 91QKY046-699, Defendants/Third-Party Plaintiffs-Appellants/ Cross-Respondents, v. George TYRIS, Michael Tyris and Peter Tyris, Third-Party

Defendants-Cross-Appellants.

FORKED RIVER HOUSE, INC., a New Jersey Corporation, Plaintiff-Intervenor-Respondent/Cross-Appellant, v. RENA, INC., Peter Tyris, George Tyris, Michael Tyris, Myla

Restaurant Inc., Underwriters at Lloyd's of London, Quaker

Agency Inc., and Sheldon, Matlack, Knipe Associates, Inc.,

Defendants-Respondents/ Cross-Appellants.

Superior Court of New Jersey Appellate Division.

Argued Oct. 28, 1997.

Decided April 17, 1998.

Lawrence A. Dugan, Boston, MA (Morrison, Mahoney & Miller) of the Massachusetts bar, admitted pro hac vice, for defendant/third-party plaintiff-appellant/cross-respondent T.W. Brien, Underwriters at Lloyd's, London (Gennet, Kallmann, Antin & Robinson and Mr. Dugan, attorneys; Stanley W. Kallmann, Parsippany, and Mr. Dugan on the brief).

Alan C. Milstein, Pennsauken, for

respondents/cross-appellants Rena, Inc. and Peter Tyris (Sherman, Silverstein, Kohl, Rose & Podolsky, attorneys; Mr. Milstein, on the brief).

Thomas P. Butz, Toms River, for plaintiff-intervenor-respondent/cross-appellant Fork-ed River House, Inc. (Schuman, Butz & Babcock, attorneys; Mr. Butz on the brief).

Christopher P. Leise, Westmont, for defendants-respondents/cross-appellants Sheldon, Matlack, Knipe Associates, Inc. (White and Williams, attorneys; Mr. Leise and Lynda M. Cicco on the brief).

Before Judges KEEFE, PAUL G. LEVY and WECKER.

The opinion of the court was delivered by

WECKER, J.A.D.

This opinion addresses cross-appeals in A-3102 from two judgments granted at the end of all the evidence in this jury trial pursuant to R. 4:40. ¹ In the first part of this opinion, we address the appeal of T.W. Brien, Underwriters at Lloyd's, London (Lloyd's) from a judgment entered in favor of plaintiffs Rena, Inc. and Peter Tyris and third-party defendants George Tyris, Michael Tyris and Peter Tyris (collectively "Tyris" or "the Tyris parties"). The judgment held Tyris entitled to payment on a fire insurance policy issued by Lloyd's covering property leased by Tyris from the owner, plaintiff-intervenor Forked River House, Inc. The trial judge determined that Lloyd's had failed to prove its arson defense to the Tyris parties' declaratory action for coverage and therefore awarded judgment to Tyris on the policy. Because the arson defense was submitted to the jury and the jury found that Lloyd's did prove that the Tyris brothers procured someone to set the fire, we reverse and remand for entry of judgment in favor of Lloyd's on the policy.

In the second part of this opinion, we address the appeal of Forked River House from a judgment in favor of defendant Sheldon, Matlack, Knipe Associates, Inc. ("Matlack"), the insurance broker who placed the policy, for failure to name Forked River as an insured on the Tyris fire insurance policy. At the close of all the evidence, the court dismissed Forked River's negligence claim. We affirm, although our reasons differ from those of the trial judge.

The issues in the appeals before us arise out of a fire on April 26, 1992, at a bar and restaurant known as the Forked River House, in Forked River, New Jersey. The fire broke out after 4 a.m. in the morning, the restaurant and bar having closed at about 2:30 that night. At the time, the restaurant was owned and operated by Tyris. However, the real estate was owned by an unrelated corporation, Forked River House, Inc., whose principal was George Mackres. Tyris had purchased the business from Mackres in 1978, signing a promissory note for a substantial portion of the purchase price and entering into a long-term lease on the premises. In 1985 Tyris sold the business and assigned the lease to a third-party. However, when that party was unable to pay under the terms of the sale, the business reverted to Tyris along with the lease. Tyris, either directly in the name of two of the brothers or through a newly-formed corporation named Rena Inc., continued to operate the restaurant business. However, the Tyris parties fell behind in their payments on the note as well as the lease. On March 17, 1992, Mackres and Tyris entered into a new agreement incorporating the Tyris parties' obligations under the 1978 promissory note and lease between them.

I

When the insurance coverage case was tried, the evidence before the jury included the following. The insurance policy issued by Lloyd's to Tyris covered fire damage to the building in the face amount of $500,000 for the building and $100,000 for the contents. The policy, however, included an exclusion in the event of damage resulting from "any fraudulent, dishonest or criminal act done by or at the instigation of any insured, partner or joint adventurer in or of any insured, an officer, director or trustee of any insured...." It is undisputed that if the fire was intentionally caused by or at the direction of any of the Tyris parties, the resulting damage would not be covered under this policy.

The jury heard undisputed evidence that an accelerant was used to spread the fire, and that the fire had been set intentionally. In addition, the jury heard testimony that Peter Tyris was the last one out of the restaurant that night, that he took another employee home, and that when he returned, the restaurant was on fire. Two persons who lived on the premises, one the mother of the Tyris brothers and the other a cook in the restaurant, died in the fire. Local fire officials and the county prosecutor's office undertook an arson investigation. Lloyd's began its own investigation as well. There was substantial evidence that the Tyris brothers were actively engaged in several businesses, each of which had serious financial problems in the months before the fire.

The jury also heard testimony from an employee at another restaurant owned by the Tyris brothers in Cherry Hill. The employee, Stephan Kotzker, testified that about six weeks before the fire, George Tyris asked him if he knew anyone who could help with "Jewish lightening" ² at his place at the shore. Kotzker ended the conversation and immediately repeated it to another employee, Ronald Banks. Banks testified at the trial, corroborating that Kotzker had told him of George Tyris's request. Kotzker also testified that shortly after the fire he heard Michael Tyris, in the presence of George and Peter at one of their restaurants, say "Oh my God my mother wasn't suppose [sic] to be there. Peter should have had them out of there. Oh, I can't believe this is happening."

The parties stipulated that the damage caused by the fire exceeded the face amount of the policy, and that if Lloyd's was liable, the full $500,000 would be payable for the structure and $100,000 for the contents. There was also testimony offered both by Tyris and Mackres that the Tyris brothers did not set the fire, denied any involvement in the fire, were not in financial difficulty, had no motive to cause the fire, and that Kotzker's testimony was unreliable and untrue. Thus the facts surrounding the Tyris parties' responsibility for the fire, either by setting it themselves or by obtaining someone else to set the fire, were very much in dispute at trial.

At the close of all the evidence, and despite the disputed state of the evidence, the trial judge granted Tyris's R. 4:40-1 motion for judgment against Lloyd's on the arson defense. The judge initially questioned whether Lloyd's was bound by the testimony of its adjuster, who had expressed the belief that Peter Tyris himself set the fire, to the exclusion of the alternate theory that one or more of the Tyris brothers arranged for someone else to set the fire. The judge does not appear to have ruled on this basis, and the record clearly reflects that throughout the pretrial and trial of this matter, Lloyd's maintained either that one of the Tyris brothers himself set the fire or that one or more of them arranged for the fire to be set.

However, in granting the motion against Lloyd's, the trial judge improperly weighed the credibility of the Kotzker testimony. Tyris had objected to Kotzker's testimony about the Michael Tyris statement on the ground of surprise. Kotzker had been named in answer to interrogatories as a person with relevant knowledge. To the extent that the specific statement attributed to Michael Tyris had not been revealed in discovery, any prejudice was dispelled when the judge gave Tyris the opportunity to depose Kotzker before he testified in front of the jury. Tyris did not take his deposition, and after a hearing pursuant to N.J.R.E. 104, Kotzker was permitted to testify. Nevertheless, in ruling on the motion for judgment, the judge stated:

This court had the opportunity to observe this witness during the Rule 104 hearing out of the presence of the jury and his contradictory statements presented to the jury. While the inconsistency was alluded to during the trial, the jurors did not have the opportunity to observe his demeanor during the Rule 104 hearing and compare it to that during the trial before the jury. This court had the unusual ability to make that observation.

Only if all of the testimony against Tyris had been incredible, such that reasonable minds could not differ, would a motion for judgment have been warranted. That was hardly the case here, and it was error to weigh the evidence as the judge did.

On a motion for judgment under R. 4:40-1, the standard is the same as that for determining a motion for judgment notwithstanding the verdict under R. 4:40-2, or for determining a motion for involuntary dismissal under R. 4:37-2(b). The court must accept as true all evidence supporting the position of the...