Rutledge v. St. Paul Fire and Marine Ins. Co.

• Decision Date: 17 June 1985
• Docket Number: No. 0533,0533
• Citation: 286 S.C. 360,334 S.E.2d 131
• Court: South Carolina Court of Appeals
• Parties: Pumroy RUTLEDGE, d/b/a The Fig Leaf Lounge, Respondent, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY and United States Fidelity and Guaranty Company, Appellants. . Heard

Page 131

334 S.E.2d 131

286 S.C. 360

Pumroy RUTLEDGE, d/b/a The Fig Leaf Lounge, Respondent, v. ST. PAUL FIRE AND MARINE INSURANCE COMPANY and United States Fidelity and Guaranty Company, Appellants.

No. 0533.

Court of Appeals of South Carolina.

Heard June 17, 1985.

Decided Aug. 6, 1985.

John L. Choate and Thornwell F. Sowell, III, of Nelson, Mullins, Grier & Scarborough, Columbia, for appellants.

James F. Wells, Rock Hill, for respondent.

GOOLSBY, Judge:

This is an action for breach of contract accompanied by a fraudulent act. The jury returned a verdict in favor of Pumroy Rutledge in the amount of $7,460.23 actual damages and $35,000.00 punitive damages. The trial judge awarded Rutledge attorney fees and prejudgment interest. St. Paul Fire and Marine Insurance Company (St. Paul) and United States Fidelity and Guaranty Company (USF & G) appeal. We reverse and remand the case for a new trial.

The issues on appeal relate to the sufficiency of the evidence to support an award of punitive damages, the admissibility of certain evidence, a comment by the trial judge, the trial judge's jury instructions, and the award of attorney fees and prejudgment interest.

St. Paul and USF & G issued fire insurance policies to Rutledge covering his business, the Fig Leaf Lounge. Each company assumed half the risk and provided combined coverages of $65,000.00 on the building and $7,000.00 on its contents. Mortgagee clauses in both policies listed First Citizens Bank and Trust Company of Lancaster (First Citizens) and Buford Byers, President of Rainbow Factors, Inc., a prior owner of the building.

On May 21, 1980, during the early morning hours, fire destroyed the Fig Leaf Lounge. Rutledge thereafter made a claim under both policies. St. Paul and USF & G investigated the loss and refused to pay Rutledge's claim. They did pay, however, the claims made by First Citizens and Byers in the amounts of $23,494.37 and $41,045.40, respectively. As a result, the remaining coverage on the building amounted to only $460.23. There also remained the $7,000.00 coverage on the contents.

After St. Paul and USF & G refused to pay his claim, Rutledge brought suit alleging the companies breached their contracts of insurance and that the breaches were accompanied by a fraudulent act. Rutledge alleged the fraudulent act was a representation made by St. Paul and USF & G that if he would take a polygraph test his claim would be paid regardless of the outcome.

St. Paul and USF & G denied the material allegations of the complaint and alleged they were not responsible for any fire loss either caused by Rutledge or resulting from actions taken by others on his behalf. Moreover, they alleged Rutledge's losses did not result from a risk contemplated by the parties and that Rutledge failed to advise them truthfully concerning the cause and origin of the fire.

I. Sufficiency of Evidence

The insurance companies first contend they were entitled to a directed verdict on the issue of punitive damages because there is no evidence their breaches of the insurance contracts were accompanied by a fraudulent act.

In support of the allegations in his complaint, Rutledge testified he was told by an attorney representing the two companies that they were going to pay the claim but that Rutledge would have to take a polygraph test before they would do so. Rutledge agreed to have the test administered to him after talking with a "lawyer friend in Lancaster, South Carolina" who told Rutledge, "[I]f there's no problem, take it." Rutledge thereafter took the test. St. Paul and USF & G did not pay Rutledge's claim.

In our view, the refusal by St. Paul and USF & G to make payment to Rutledge under their respective fire insurance policies unless Rutledge agreed to take a polygraph examination did not constitute a fraudulent act. Rutledge did not change his position because of any representation made by either company. Neither company did anything to prevent Rutledge from seeking recovery of any actual damages he suffered by reason of either their breach of the insurance contracts or their failure to pay him. Vann v. Nationwide Insurance Co., 257 S.C. 217, 185 S.E.2d 363 (1971).

At most, St. Paul and USF & G breached their contracts with Rutledge. But a mere violation of a contract will not support an allegation of fraud. Calder v. Commercial Casualty Insurance Co., 182 S.C. 240, 188 S.E. 864 (1936). Moreover, punitive damages are not recoverable for the mere refusal to pay a debt. Patterson v. Capital Life & Health Insurance Co., 228 S.C. 297, 89 S.E.2d 723 (1955).

The trial court erred, therefore, in not directing a verdict in favor of St. Paul and USF & G on the issue of punitive damages.

II. Admissibility of Evidence

St. Paul and USF & G raise a number of questions concerning the trial judge's refusal to admit certain evidence or to admit certain evidence unqualifiedly.

In considering these questions, we note that the admission or exclusion of evidence is within the sound discretion of the trial judge and that the exercise of his discretion will not be disturbed on appeal absent a clear showing of an abuse of discretion, the commission of legal error in its exercise, and prejudice to the rights of the appellant. S.C. State Highway Dept. v. Rural Land Co., 250 S.C. 12, 156 S.E.2d 333 (1967); Cudd v. John Hancock Mutual Life Insurance Co., 279 S.C. 623, 310 S.E.2d 830 (Ct.App.1983).

A.

St. Paul and USF & G maintain the trial judge erred in refusing to allow in evidence a letter from Rutledge's attorney to the Family Court of Lancaster County written six days after the fire occurred. The letter states, "Mr. Rutledge has asked me to notify you that his lounge burned this past week and therefore he will be without funds for the next few weeks. Sometime in the not too distant future he expects to receive an insurance settlement at which time he hopes to update his child support payments." The trial judge excluded the letter on the ground of relevancy.

The relevancy of proffered evidence is a matter resting largely within the trial judge's discretion. Ward v. Liberty Life Insurance Co., 232 S.C. 582, 103 S.E.2d 48 (1958); Neal v. Clark, 199 S.C. 316, 19 S.E.2d 473 (1942).

We discern no abuse of discretion here. The fact an insured, after sustaining a fire loss, expects to receive an insurance settlement is not, without more, proof that the insured intentionally burned his property to collect insurance proceeds.

Moreover, we fail to see how St. Paul and USF & G suffered any prejudice by the letter's exclusion. Other evidence in the record indicates Rutledge's property was destroyed by fire and that the property was covered by fire insurance. The record further reflects other evidence showing that Rutledge later submitted property lists to company representatives in proof of his loss, and that he anticipated shortly after the fire St. Paul and USF & G would pay him for his loss. St. Paul and USF & G offered other evidence showing Rutledge at the time of the fire had a problem with the family court relative to child support.

B.

The next question concerns the trial judge's refusal to allow St. Paul's and USF & G's expert witness on fire investigation to express his opinion about the cause and origin of the fire.

Melton A. Johnson was retained by St. Paul and USF & G to investigate the cause and origin of the fire that destroyed the Fig Leaf Lounge. Although Rutledge stipulated to Johnson's expertise in arson investigation, Johnson was not permitted to testify that in his opinion the fire "was a set or incendiary fire." The trial judge ruled that an expert witness cannot express an opinion about the ultimate issue in the case.

The trial judge was clearly wrong in so holding. Our Supreme Court held in Redman v. Ford Motor Co., 253 S.C. 266, 170 S.E.2d 207 (1969), and again in Hughes v. Children's Clinic, P.A., 269 S.C. 389, 237 S.E.2d 753 (1977), that a trial judge may in his discretion permit a qualified expert to testify as to his opinion on the ultimate issue before the jury.

Furthermore, Johnson's testimony that the fire "was a set or incendiary fire" was not an opinion on the ultimate issue before the jury. The ultimate issue was not whether the fire was set but whether Rutledge either set the fire or had it set.

In any case, we find no prejudice. Counsel conceded at oral argument the evidence proffered by Johnson was cumulative to other evidence in the record. Rutledge himself testified the fire was set.

C.

St. Paul and USF & G also argue the trial judge erred in not allowing in evidence an appraisal of the insured premises prepared three years before the fire. As we gather from the trial judge's comments, one of the grounds for excluding the appraisal was remoteness.

First Citizens prepared the appraisal in connection with a loan made by the bank to a prior owner of the property. The appraisal reflected the property had a value of $58,000.00 on May 20, 1977. Other evidence in the case showed Rutledge, in an arm's length transaction, acquired the property on July 5, 1979, for $79,000.00.

Whether the value reflected on an appraisal prepared three years earlier was too remote in point of time to be considered was an issue addressed to the sound discretion of the trial judge. Cf. South Carolina State Highway Dept. v. Wilson, 254 S.C. 360, 175 S.E.2d 391 (1970) (admissibility of the sales price of comparable property sold before the date of condemnation held within trial judge's discretion). We are not persuaded the trial judge in this instance abused his discretion in not allowing in evidence the appraisal and the value it recited, particularly since the property sold for considerably more than the value shown on the appraisal two years later. The price paid for property at an actual, voluntary, and bona fide sale thereof is presumptive evidence of the property's value. 32A C.J.S. Evidence § 1049 at 840 (1964).

D.

The next issue for our...