Omni Holding & Development Corporation v. Farm Bureau Mutual Insurance Company of Arkansas, Inc.

ARKANSAS COURT OF APPEALS

NOT DESIGNATED FOR PUBLICATION

JOHN MAUZY PITTMAN, JUDGE

DIVISION II

OMNI HOLDING & DEVELOPMENT CORP.

APPELLANT

V.

FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC.

APPELLEE

CA00-811

April 11, 2001

APPEAL FROM THE CRITTENDEN COUNTY CIRCUIT COURT

[NO. CIV99-150]

HON. DAVID N. LASER,

CIRCUIT JUDGE

AFFIRMED

This case involves an insurance claim on a farm combine owned by appellant Omni Holding & Development Corporation that was destroyed in a fire. The combine was in the possession of the insured, Robert Clarke, at the time of the fire, and Clarke filed an insurance claim for its loss. The appellee insurer asserted that the fire was caused by arson and refused to pay the claim. Clarke and Omni Holding & Development Corporation, the latter being the loss payee under the policy, brought an action against the insurer but did not prevail at trial, the jury finding on special interrogatories that Clarke concealed or misrepresented material facts relating to his claim, and that the fire was intentionally set by agents of Omni Holding & Development Corporation or at Omni's direction. Omni moved for judgment notwithstanding the verdict or a new trial on the grounds that there was no evidence to

support the jury's finding that the fire was set or caused by Omni. The trial court denied those motions, and this appeal followed.

For reversal, appellant contends that the jury's finding that appellant was responsible for the arson is pure speculation unsupported by substantial evidence, and that the trial court therefore erred in denying his motions for judgment notwithstanding the verdict or, in the alternative, for new trial. Our standard of review is well-settled:

Appellate review of a ... motion for judgment notwithstanding the verdict entails determining whether the non-movant's proof was so insubstantial as to require a jury verdict, if entered on his behalf, to be set aside. St. Edward Mercy Medical Ctr. v. Ellison, 58 Ark. App. 100, 946 S.W.2d 726 (1997). The same standard of review applies to a denial of a motion for a new trial made on the ground that the jury's verdict was clearly contrary to the preponderance of the evidence. McLaughlin v. Cox, 324 Ark. 361, 922 S.W.2d 327 (1996); Scott v. McClain, 296 Ark. 527, 758 S.W.2d 409 (1988). The question we must answer is whether there was substantial evidence to support the jury's verdict. Croom v. Younts, 323 Ark. 95, 913 S.W.2d 283 (1996). Substantial evidence is evidence that is of sufficient certainty and precision to compel a conclusion one way or another, forcing or inducing the mind to pass beyond suspicion or conjecture. Winchel v. Craig, 55 Ark. App. 373, 934 S.W.2d 946 (1996). On appeal, we will only consider the evidence favorable to the appellee, together with all its reasonable inferences. St. Edward Mercy Medical Ctr. v. Ellison, supra. Home Mutual Fire Insurance Co. v. Jones, 63 Ark. App. 221,226, 977 S.W.2d 12 (1998).

Considering, as we must, only the evidence favorable to the appellee, the record reflects that Tom Papachristou suffered serious financial setbacks and was heavily in debt when he sold the assets of his business to Omni in 1992. Omni did not acquire Papachristou's outstanding debt, and Papachristou was employed as Omni's general managerin Arkansas, although he was not given the authority to sign any checks. In 1997, Papachristou learned of a combine that had been damaged in a fire and purchased the combine on behalf of Omni for $38,000. After spending approximately $74,000 to refurbish the combine, Omni attempted to sell it for $110,000 without success. Omni's tax return for 1997 showed that Omni suffered a $98,000 loss, most of which was attributable to the combine.

Mr. Clarke was a farmer who had known and worked with Papachristou for twenty years. Papachristou allowed Clarke to use the combine after attempts to sell the combine proved unsuccessful. Although there was testimony that a lease or purchase agreement was discussed between Papachristou and Clarke, no such agreement was executed and Clarke never paid Omni anything for his use of the combine, which continued over the course of two harvest seasons. Clarke did, however, insure the combine for $110,000, with Omni named as loss payee. The actual market value of the combine was approximately $65,000.

The combine caught fire and burned in Clarke's wheat field on Sunday, June 14, 1998, at approximately 2:00 p.m. Although Clarke normally had several employees working with him at this time of year, on this particular day the employees were sent home early, and Clarke was the only witness to the fire. There was a rural fire department in Clarke's locale but, although Clarke had a mobile telephone, he did not call for assistance when the fire broke out. However, Clarke immediately called Papachristou, who came to look at the combine, and he called the insurer the next morning.

John Walker, a forensic analyst specializing in determining the cause of fires, testified that he investigated the remains of the combine at the scene of the fire. He stated that the fire occurred in a remote area, with no dwellings or other buildings in sight. On examining the combine, he discovered that the serial numbers appeared to have been intentionally obliterated with a wire brush or grinder; that there were areas of intense burning at the bottom of the combine in places where fuel would not ordinarily be present, and that there was no indication that the fire was the result of accumulated field trash or of an electrical or mechanical malfunction. On this basis, Mr. Walker formed the preliminary conclusion that the fire was most likely the result of an intentional act. He subsequently took samples of the ground beneath the combine and of the fuel remaining in the combine's fuel tank. Analysis of these samples showed that diesel fuel was present in the fuel tank, and that kerosene was present in the soil samples. Mr. Walker opined that the fire was intentionally set by someone who poured kerosene over the combine.

Appellant does not dispute the sufficiency of the evidence of arson, but instead argues that the evidence was insufficient to show that Omni was responsible for setting the fire. We agree that a mere showing of arson does not automatically relieve the insurer from liability under a fire policy excluding loss caused by the insured, and that it is also necessary to prove by direct or circumstantial evidence that the insured set the fire or caused the item to be burned. Rankin v. National Liberty Insurance Co., 188 Ark. 195, 65 S.W.2d 17 (1933). However, we do not agree that the evidence in the present case does not support the jury's finding that Omni was responsible for causing the fire.

While there were no eye witnesses to the setting of the fire, the deliberate burning of an insured building by its owner is usually accomplished alone and in secret. Any material fact in issue, however, may be established by circumstantial evidence even though the testimony of other witnesses may be undisputed. The fact that evidence is circumstantial does not render it insubstantial as the law makes no distinction between direct evidence of a fact and circumstances from which it may be inferred. The circumstances may be such that different minds can reasonably draw different conclusions from them without resort to speculation. Where there are facts and circumstances in evidence from which reasonable minds might reach different conclusions, the matter is an issue of fact which must be submitted to the jury for determination.

Our court on many occasions has declared that circumstantial evidence which is sufficient to warrant a jury in drawing a reasonable inference that the insured was the author of a fire is sufficient to sustain a verdict in favor of the insurer.

Farmers Insurance Exchange v. Staples, 8 Ark. App. 224, 227-28, 650 S.W.2d 244 (1983). Based on the record before us, we think that the jury could properly have found that appellant had both motive and opportunity to burn the combine, and could properly have inferred that appellant, or someone at its direction, set the fire. See Nationwide Mutual Fire Insurance Co. v. Bryson, 60 Ark. App. 293, 962 S.W.2d 824 (1998).

Affirmed.

Baker and Roaf, JJ., agree.