Opinion
Civ. No. 3:99cv323.
October 26, 2000.
MEMORANDUM OPINION
This matter is before the Court for final judgment following trial without jury, the Court having taken the Defendant's motion for judgment at the close of the Plaintiff's case and all the evidence under advisement with the consent of counsel pending the submission of post-trial memoranda. Jurisdiction in this Court is proper by consent of the parties pursuant to 28 U.S.C. § 636(c)(1) and federal jurisdiction is premised on 28 U.S.C. § 1332(a)(1) because there is a complete diversity of citizenship with an amount in controversy exceeding $75,000.00. The Court, upon consideration of all the pleadings, evidence at trial, and argument of counsel, grants final judgment pursuant to Fed.R.Civ.P. 52(a) and (c) in favor of the Defendant for the following reasons.
The Defendant rested without presenting evidence and renewed its motion for judgment as a matter of law made at the conclusion of the Plaintiff's case. The Court concluded that the appropriate way to proceed at that juncture would be to resolve the motion and then request proposed findings if necessary, the parties having agreed to a post-trial submission of proposed findings of fact and conclusions of law before trial. For the reasons set forth herein and the resulting action taken, such additional submissions are rendered moot.
The action was initiated by American Motorist Insurance Company (AMICO), an insurer of the Richmond Coliseum, a city-owned and operated sports and entertainment facility, to recover contribution from the Hartford Fire Insurance Company (Hartford), another insurer, for damage caused by an electrical "arcing" and ensuing fires inside and outside of the main "switchgear" equipment cabinet that occurred at the Coliseum on January 8, 1997. The Court concludes that the AMICO policy covers all damage to the switchgear equipment itself and all damage, including smoke damage, caused by any electrical arcing which did not result in the ignition of self-sustaining fire and ensuing damage. At the same time, the Hartford policy "kicks in" for damage resulting from self-sustaining fire, even if the fire was initiated — ignited, but not sustained — by the electrical arcing. The question presented is whether certain damage (mainly smoke damage) caused by the fires that were initiated but not sustained by the electrical arcing was covered by the Hartford policy and, if so, to what extent Hartford must contribute to or indemnify AMICO.
Reference is periodically made in the record to the "Kemper policy" which the Court understands to be the same as the AMICO coverage.
During argument after the close of the evidence and in its post-trial submission, the Defendant challenged the Plaintiff's ability to seek relief on the basis of contribution and/or indemnification because of the alleged insufficiency of the Plaintiff's pleadings, including the amended Complaint. The Court is satisfied that the basic allegations of the Complaint, as amended, sufficiently plead the cause of action. Fed.R.Civ.P. 12(e), which the Defendant did not utilize, provides the method to seek clarification if the Defendant had been in any doubt. The Defendant was obviously not prejudiced (or apparently in doubt) given the comprehensive position that it maintained throughout the proceedings, and its recent protestations after the conclusion of trial are otherwise too late to justify relief.
The equipment is described by the Plaintiff (without objection) as ". . . electrical machinery used for the distribution of electrical loads coming into [the facility] from the outside supply lines." (Post Trial Brief in Opp'n to Def.'s Mot. to Dismiss, at 1).
Findings of Fact
The Court finds the following facts as established by a preponderance of the evidence:
1. Those facts to which the parties stipulated in Joint Exhibit No. 1, incorporated herein by reference;
2. The explosive arcing caused various articles to be ignited within the immediate area outside the metal cabinet (switchgear cabinet) that housed the switchgear equipment itself where the initial explosion occurred;
3. The ensuing "spot" fires were self-sustaining after the stage of initial combustion;
4. Some self-sustaining spot fires also continued to burn within the switchgear cabinet after the cessation of the electrical arcing;
5. The damage which is the basis of this case was caused by smoke emanating from the arcing and ensuing fires; and
6. The smoke damage attributable to the ensuing spot fires inside and outside the cabinet that resulted from the arcing cannot be quantified nor sufficiently distinguished from that caused directly by the arcing, except for the reasonable inference that such damage was de minimis, given the consistent evidence (including by Plaintiff's own expert) that there was only "limited fire damage" at least outside the cabinet given the greater extent and involvement of the arcing event. (Pl.'s Ex. 11 at 3).
The various articles included a wooden pallet, an old scoreboard, several cushioned theater-type seats, air filters, and belting. With the possible exception of the belting, none of the materials that were stored in the switchgear room were claimed as a loss under either policy.
Conclusions of Law
The Court is asked to interpret two insurance policies and, in doing so, to decide if the facts of this case warrant apportionment. The AMICO policy clearly covers the damage caused directly by the electrical arcing and the Hartford policy exception to its exclusion covers any damage resulting from the ensuing spot fires that occurred both inside and outside the switchgear cabinet as a result of the initial arcing. The burden is on the Plaintiff to prove, as it has, not only that there was a "covered peril" to which the Hartford coverage applied, but also to quantify damages in a meaningful way. Plaintiff claims it has proven "through the testimony of numerous witnesses that there was a fire within the switchgear and switchgear room. Plaintiff has also proved that fire caused smoke damage". . . "in excess of 600,000." (Pl.'s Resp. to Def.'s Reply in Supp. of Def's Mot. for J. at 5). While equitable or pro rata apportionment is within the discretion of the Court to apply where it is difficult to explicate that which is "arcing smoke damage" and "fire smoke damage," this is not a case in which such judicial discretion should be utilized because of the lack of any objective basis upon which to apportion liability. See e.g., State Capitol Ins. v. Mutual Assurance, 218 Va. 815, 819-820, 241 S.E.2d 759, 761 (1978) (holding pro rata apportionment by trial judge was proper); and Aetna Cas. Ins. v. Nat'l Union Fire Ins. Co., 233 Va. 49, 54, 353 S.E.2d 894, 897 (1987) (holding that pro rata apportionment was proper where two "other insurance" clauses were mutually repugnant and each policy provided for apportionment). The Court is simply unwilling to speculate as to any possible apportionment of liability when the evidence is so lacking as to the quantifiable damage caused by the self-sustaining spot fires and especially where the Plaintiff's own expert testimony describes such damage as de minimis. Furthermore, even if the Court were to conclude that the Hartford policy exception applies to the fire and smoke damage that occurred inside the cabinet after the cessation of the arcing, the corresponding damage as established by the evidence was also clearly de minimis. The Court agrees with the Plaintiff that Hartford has the burden of proving that the policy exclusion of damage due to arcing applies. The burden-shifting analysis is obviated, however, by the Court's finding that the exception to the exclusion (fire) applies in regard to which the Plaintiff maintains the burden. Surely, the Defendant is not required to prove the extent of its own liability. See, e.g., Guaranty National Insur. v. Vic Manufacturing, 143 F.3d 192, 193 (5th Cir. 1998) ("[o]nce the insurer has proven that an exclusion applies, the burden shifts back to the insured to show that the claim falls within an exception to the exclusion"). This is Plaintiff's burden to prove, and integral to its case is proving damages with some reasonable degree of specification and quantification so as to allow for proper apportionment. See e.g., Carr v. Citizens Bank and Trust Co., 325 S.E.2d 86, 90 (Va. 1985) (citing Hale v. Fawcett, 214 Va. 583, 585-586, 202 S.E.2d 923, 925 (1974)). Plaintiff, as always, has the burden as the party seeking relief to prove damages. Plaintiff has proven at most only negligible damage subject to the Hartford coverage.The only remaining basis upon which the Plaintiff could prevail would be on the strength of the "other insurance" language that is contained in both policies. However, as argued by the Defendant in its post-trial submission, such mutual coverage would only apply if the same coverage was involved. Clearly, the two policies, by design and effect, "covered" different perils — arcing and ensuing fire — indeed, the very reason for their mutual existence and possible application. The Plaintiff argues, albeit belatedly, that the Defendant must share in the liability because "both policies cover smoke damage generally." (Pl.'s Resp. to Def.'s Reply in Supp. of Def's Mot. for J. at 6). However, the Plaintiff's focus is misdirected. The issue is whether or not the same "peril" is "covered," regardless of whether an occurrence results in the same type of damage.
The Defendant's motion for judgment in its favor is therefore GRANTED.
An appropriate Order shall issue.