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Breaking Legal Developments

06-12-2014

Published by:
Peter A. Lynch, Esq.
of Cozen O'Connor
palynch@cozen.com
http://www.cozen.com

 

EXECUTIVE SUMMARY:      This weekly newsletter covers:

  1. (1) Ohio Appellate Court Upholds use of Process of Elimination to determine fire cause under NFPA 921


(1) (1) OHIO APPELLATE COURT UPHOLDS USE OF PROCESS OF ELIMINATION TO DETERMINE FIRE CAUSE UNDER NFPA 921

In Sanders v. Nationwide (June 5, 2014), No. 99954, " target=_blank>http://www.supremecourt.ohio.gov/rod/docs/pdf/8/2014/2014-ohio-2386.pdf"> http://www.supremecourt.ohio.gov/rod/docs/pdf/8/2014/2014-ohio-2386.pdf, the Ohio Court of Appeals reviewed a trial judgment granted to an insurer based on its expert use of the process of elimination to determine the fire was intentionally caused. The Court of Appeals affirmed finding that process could be used to determine a fire cause.

Plaintiff-appellant, Sandra Sanders (“Sanders”), appealed from the jury’s verdict in favor of defendant-appellee, Nationwide Mutual Insurance Company (“Nationwide”), and the trial court’s grant of summary judgment in favor of Nationwide on Sanders’s bad faith claim.

The underlying facts of this case were previously set forth by this court in Sanders’s first appeal, Sanders v. Nationwide Mut. Ins. Co., 8th Dist. Cuyahoga No. 95228, 2011-Ohio-1933, discretionary appeal not allowed, 130 Ohio St.3d 1416, 2011-Ohio-5605, 956 N.E.2d 308 (“Sanders I”).

On October 29, 2006, [Sanders’s] home [and its contents were] destroyed by a fire. [Sanders] submitted a claim to Nationwide, who insured the home at the time. Nationwide made various payments on the claim and began an investigation into the fire. The investigation concluded that [Sanders’s] 17-year-old son, W.S., intentionally set the fire in [Sanders’s] house. On July 24, 2007, Nationwide notified [Sanders] that it was denying coverage of the claim, stating its reason for the denial as follows: “[W]e have concluded that the fire was caused intentionally by or at the direction of an insured and that the damage could reasonably have been expected to result from an insured’s acts, or was the intended result from such acts, including criminal acts.

Your Nationwide homeowner’s policy form HO-34A states on page D1 as follows:
Property Exclusions (Section I)
1. We do not cover loss to any property resulting directly or indirectly from any of the following. Such a loss is excluded even if another peril or event contributed concurrently or in any sequence to cause the loss. * * * (g) Intentional Acts, meaning loss resulting from an act committed by or at the direction of an insured that may reasonably be expected to result from such acts, or is the intended result from such acts. Intentional acts include criminal acts. Such acts exclude coverage for all insureds.”

On May 19, 2009, [Sanders] filed a complaint against Nationwide, alleging breach of contract and “bad faith tort.” On May 19, 2010, the trial court denied [Sanders’s] motion for partial summary judgment and granted Nationwide’s motion for summary judgment. Id. at ¶ 2-10.

On the first appeal, the appellate court affirmed the denial of Sanders’s motion for partial summary judgment and reversed the grant of Nationwide’s motion for summary judgment. Id. at ¶ 64. In reversing the grant of Nationwide’s summary judgment motion, noting that: “an intentional act exclusion to insurance coverage will not apply ‘where the insured was mentally incapable of committing an intentional act.’” Id. at ¶ 34, quoting Nationwide Ins. Co. v. Estate of Kollstedt, 71 Ohio St.3d 624, 627, 1995-Ohio-245, 646 N.E.2d 816.

The court found that there was a genuine issue of material fact regarding whether W.S. was capable of forming the intent to damage Sanders’s house by starting the fire. Id. at ¶ 57. The court reasoned, “the admission to arson at the juvenile court level is evidence — possibly even prima facie evidence — of intent in the insurance context, which creates a rebuttable presumption and shifts the burden to the other party to show lack of intent.” Id.

Following remand, the parties continued with discovery, and the matter proceeded to a jury trial on Sanders’s breach of contract claim. The trial court bifurcated Sanders’s bad faith claim. Prior to trial, Sanders moved to exclude the testimony of Ralph Dolence (“Dolence”), Nationwide’s expert on the issue of causation. The trial court held a Daubert hearing before trial to determine whether Dolence was permitted to testify to the origin of the fire. At the conclusion of the hearing, the trial court overruled Sanders’s objection and permitted Dolence to testify.

At trial, Sanders testified that after her ex-husband died in January 2006, her son, W.S., was diagnosed with several mental illnesses, including grief reaction, anxiety disorder, adjustment disorder, depression, alcohol abuse, and drug abuse. Sanders also testified to several instances, prior to the fire, where she had to call the police because W.S. was either under the influence of drugs or alcohol and he injured himself, his sister, or he destroyed Sanders’s personal property, including one instance where he lit small pieces of paper on fire and threw them around in the living room. Sanders testified that she returned home from work at approximately 4:00 a.m. on October 29, 2006, to find W.S., who was very intoxicated, in the living room with his friend. Sanders was not expecting him to be home because they had attended a Halloween party on the “east side.” W.S. asked Sanders to get him something to eat from McDonald’s. Sanders testified that she went to McDonald’s and waited in the drive-thru line for 45 minutes because there was a problem with the speaker at the drive-thru. Sanders testified that W.S. called her several times while she was at McDonald’s. The calls became progressively more aggressive. W.S. was upset and did not believe that Sanders was still waiting in line at the drive-thru. He accused her of not loving him anymore. In one of the last conversations, W.S. called and asked Sanders if she had fire insurance. Sanders described W.S. as working himself into a rage. At that point, she decided to leave McDonald’s and go to her girlfriend’s house. While she was at her girlfriend’s house, W.S. called her and told her the house was on fire. She rushed home to find her house on fire. W.S. told her that the fire started with a cigarette. A Nationwide agent asked her if she believed that W.S. accidentally started the fire. Sanders testified that she believed it was an accident, and W.S. was trying to harm something of hers. W.S. was taken to the hospital that night. W.S. was arrested the next day and subsequently charged with six counts of aggravated arson in juvenile court.

{¶7} W.S. testified that he had no recollection of events preceding the fire. His medical records from the hospital revealed that he had a blood alcohol concentration of .22, and marijuana, cocaine, and benzodiazepines in his system. W.S. testified that he pled guilty to an amended count of attempted arson in March 2007. The juvenile court adjudicated W.S. delinquent and nolled the remaining arson charges. W.S. testified that he pled guilty because at the time, it seemed like his only option to avoid “going to jail for years.”

Dolence, Nationwide’s expert on the cause and origin of the fire, testified that he owns Dolence Electric Technical Consultants, a fire investigation company. His company investigates fire origin and analyzes appliances and other possible sources of a fire. Dolence testified that he is a licensed private investigator in the field of fire investigations and certified with the International Association of Arson Investigators as a fire investigator and certified with the National Association of Fire Investigators as a fireand explosive investigator.

Dolence is also a member of the National Fire Protection Association (“NFPA”), a national organization that published regulation standards and guidelines for fire investigation. Dolence testified that he has been in the business for approximately 30 years. Dolence testified that the NFPA publishes a recommended guideline called NFPA 921, “which outlines just about anything you can encounter in a fire.” It is what most fire investigators use as a guideline and is what he used to investigate the fire at Sanders’s home.

Dolence opined, with a reasonable degree of scientific certainty, that the fire originated in the middle of the living room. Dolence testified that [t]hrough the process of our hypothesis, by the process of elimination, there was no natural item in that room that caused this fire. His conclusion was based on that, and based on “the readily available we call ordinary combustibles, someone or some * * * person or persons ignited ignitable materials or combustible materials in that room, deliberately setting this fire.

He explained that [t]he fire was caused by a deliberate act that someone ignited a — combustibles readily available in that room. By that I mean papers, anything that was in that room that would burn that was not unique. No one brought in gasoline. Nobody brought in pallets. Nobody brought in things external to the location of that room and set them on fire.

Dolence described the fire as a hot, very hot fire, very fast fire. It was not characteristic of a slow, smoldering fire, which would be — an example would be a cigarette. If I lost a cigarette, first of all, if you drop a cigarette on a carpet, say in our room here, right in front of this gentleman, it would go out. Now, if your coat fell on it and insulated it, over a period of time it could smolder and the temperature would increase and increase to the point of igniting the coat or something combustible. It’s a time duration thing. * * * [T]ime is a huge factor in considering if this was a cigarette or a careless smoking versus a fire that was fast and rapid, that burned very fast by the ignition of some material that spread[s.] * * * The temperature just soars. Until you get to a point that all the wall covering, all the furnishing, everything in the room about the same point in time reach the ignition temperature and it burst into flames. That’s called flash over. This room, in fact, did flash over.

As part of his investigation, Dolence checked the electrical system, the natural gas supply, hot water tank, furnace, the kitchen, and electrical appliances and did not find anything wrong with them.

On cross-examination, Dolence testified that he did not know what the exact ignition source was, but stated that, “[i]t was not anything natural in that room.” He further testified that he did not find any evidence or source of an open flame because the fire was a deliberate act. There were no heat sources from electricity or appliances that failed. Dolence testified that as part of his investigation, he ruled out all potential heat sources and potential ignition sources. He explained that [o]rdinary combustibles [i.e., cardboard, books, papers, magazines] were the fuel load. I believe I told you that it was an ignition source that could be readily concealed [i.e., a lighter, matches] * * * or destroyed. You saw the condition of the room when we saw it. It’s like finding a needle in the haystack. You don’t find them all the time. You don’t say undetermined because you can’t find things. * * * [T]he other information we had about the threat to burn the house, to ask if you had fire insurance, the fact that he was convicted in juvenile court for arson ought to have something to do with this. * * * [W.S.] admitted in a juvenile court that he set this fire.

We found this out well after this fire. Basically says everything we’re doing here today, that I was correct. This was a set fire. He admitted doing it.

At the conclusion of trial, the jury returned a unanimous verdict for Nationwide. The trial court then returned Sanders’s bad faith claim to the docket for disposition. Nationwide filed a motion for summary judgment, arguing that without coverage, there could be no breach of the duty of good faith. The trial court granted Nationwide’s motion, noting that the motion was unopposed. The trial court found that “[t]he jury determined that Nationwide did not breach the contract and that Sanders was not entitled to coverage for the fire loss that occurred on October 29, 2006. [Sanders’s] bad faith claim is therefore, dismissed as a matter of law.”

Sanders appealed raising assignments of error for Review.

The trial court erred in admitting the testimony of Nationwide’scause-and-origin expert, Ralph Dolence.

Testimony of Ralph Dolence
In the second assignment of error, Sanders argues the trial court erred in admitting Dolence’s trial testimony regarding the cause and origin of the fire, including his opinion that the fire was intentionally set. Specifically, Sanders contends that because Dolence was unable to identify the ignition source, he should not have been able to opine that the fire was intentionally set.

The court noted that “[t]he determination of the admissibility of expert testimony is within the discretion of the trial court. Evid.R. 104(A). Such decisions will not be disturbed absent abuse of discretion. Miller v. Bike Athletic Co. (1998), 80 Ohio St.3d 607, 616, 1998-Ohio-178, 687 N.E.2d 735.” Valentine v. Conrad, 110 Ohio St.3d 42, 2006-Ohio-3561, 850 N.E.2d 683, ¶ 9. In State v. Nemeth, 82 Ohio St.3d 202, 207, 1998-Ohio-376, 694 N.E.2d 1332, the Ohio Supreme Court noted that “[c]ourts should favor the admissibility of expert testimony whenever it is relevant and the criteria of Evid.R. 702 are met.”

Evid.R. 702, which governs expert testimony, provides in pertinent part: A witness may testify as an expert if all of the following apply:

(A) The witness’ testimony either relates to matters beyond the knowledge or experience possessed by lay persons or dispels a misconception common among lay persons; (B) The witness is qualified as an expert by specialized knowledge, skill, experience, training, or education regarding the subject matter of the testimony; (C) The witness’ testimony is based on reliable scientific, technical, or other specialized information.

A trial court examines whether the expert’s conclusion is based on scientifically valid principles and methods when determining whether the opinion of an expert is reliable under Evid.R. 702(C). Valentine at 44, citing Miller. In evaluating the reliability of scientific evidence, several factors are to be considered: (1) whether the theory or technique has been tested; (2) whether it has been subjected to peer review; (3) whether there is a known or potential rate of error; and (4) whether the methodology has gained general acceptance. Miller at 611, citing Daubert, 509 U.S. 579, 113 S.Ct. 2786, 125 L.Ed.2d 469 (1993).

A court should not focus on whether the expert opinion is correct or whether the testimony satisfies the proponent’s burden of proof at trial. Valentine at 44. Moreover, evidence should not be excluded merely because it is questionable or confusing, since the experts’ opinions would be subject to cross-examination and the credibility of their conclusions left to the trier of fact. Miller at 614.

This court addressed an analogous situation in Gilmore v. Village Green Mgt., 178 Ohio App.3d 294, 2008-Ohio-4566, 897 N.E.2d 1142 (8th Dist.). In Gilmore, plaintiff-Gilmore appealed the trial court’s judgment that partially granted defendant-Village Green’s motion to exclude plaintiff-expert Dolence’s, opinion regarding a fire at the Village Green apartments. In a May 2004 report, Dolence concluded that the fire originated in the floor space below level 3 and the ceiling space above level 2 of Building 3. He noted, however, that “the exact fire cause and mode of failure will probably never be identified due to the destruction of the site and pertinent evidence,” he nonetheless concluded, relying upon facts in evidence and the elimination of all other potential causes, that the cause of the fire was an electrical fault in the floor and ceiling space between levels 2 and 3 of Building 3.Id. at ¶ 4.

In a July 2005 report, Dolence “opined that missing wooden beams and negligent installation of the electrical feeder cables and wires caused the fire to occur and then rage out of control.” Although Dolence identified other potential factors that could have contributed to the cause of the fire, including water deterioration and water infiltration, he nonetheless specifically concluded that “the only feasible ignition source in this ceiling and floor area was the electrical wiring and wiring devices and the wiring junction and splice points.” Dolence again noted that “the total and devastating destruction of the section of the building where the fire originated makes it impossible for anyone to pinpoint the exact point and mode of failure.” Id. at ¶ 5.

Village Green moved to exclude Dolence’s testimony under Evid.R. 702, arguing that his opinions were merely speculative and could not meet the standards for admissibility of Daubert. The trial court held a Daubert hearing, at which Dolence testified that he followed the scientific method described in the [NFPA 921], a multi-step process that guides fire investigators through fire investigations using both inductive and deductive reasoning, in conducting his investigation. He testified that he conducted a physical examination of the site, collected evidence, formed a hypothesis, and then tested that hypothesis. Id. at ¶ 7. The trial court held that [Village Green’s] motion in limine seeking to exclude Dolence’s testimony is denied. Dolence’s opinion that the fire was electrical in origin may be admitted. Mr. Dolence’s next conclusion — that the electrical problem causing the fire was necessarily the result of sloppy construction practices in running and fixing the electrical wires through the flooring braces — goes too far. It is an inference based upon an earlier inference. Mr. Dolence first infers the electrical origin of the fire and then infers the electrical problem stemmed from defective construction. This is impermissible. Mr. Dolence may only testify to the fire being electrical in origin. Id. at ¶ 11.

The trial court further held that Dolence’s opinion “‘that the fire was caused by specific defects in the electrical wiring similar to those found in unburned parts of the building is too speculative to be heard by the jury.’” Id. at ¶ 12.

{¶39} On appeal, we reversed the trial court’s judgment with respect to Dolence’s testimony and concluded that [b]y using the deductive reasoning cited in the NFPA 921, Dolence systemically eliminated other potential causes of the fire such as arson, inadvertent negligence such as careless smoking, furnace failure, or a potted plant on a first floor patio. It was through this method of deductive reasoning that Dolence concluded that the sole possible cause of the fire was electrical in nature, and that the cause of the electrical fire was due to negligent construction. Specifically, Dolence testified that (1) the open-web floor joist system used by the Village in constructing the building caused the fire to spread “totally [un]encumbered”; (2) that the gusset plates used to hold the wood slats in place were not cut to fit the specific needs of the 2x4’s; (3) multiple electric feeder cables were placed under a single staple, which violates applicable building codes; and (4) multiple electric feeder cables were installed against the metal gusset plates which causes “resistance heating” and leads to fires. While Dolence admitted that water deterioration and oxidation “could” have contributed to the problem, he still opined, with a reasonable degree of scientific certainty, that faulty installation of the wiring was the cause of the electrical fire. Contrary to the trial court’s finding, we do not find that Dolence’s conclusion that negligent construction caused the electrical fire was merely “speculative” or “an inference based upon an inference.” His finding that the fire was electrical in nature is based on the scientific method established by the NFPA 921. Specifically, Dolence came to this conclusion based on his own observations, data collected, documents reviewed, witness accounts, and because he had ruled out all other possibilities. Id. at ¶ 30-31.

Similarly, in the instant case, Dolence testified that the fire originated in the middle of the living room. He then made a determination as to the cause of the fire from this area of origin. Dolence stated that [t]hrough the process of our hypothesis, by the process of elimination, there was no natural item in that room that caused this fire. The conclusion was based on that, and based on the readily available ordinary combustibles that someone or some * * * person or persons ignited ignitable materials or combustible materials in that room, deliberately setting this fire. He described the fire as “a hot, very hot fire, very fast fire. It was not characteristic of a slow, smoldering fire, which would be — an example would be a cigarette.” {¶41} Dolence opined, with a reasonable degree of scientific certainty, that [t]he fire was caused by a deliberate act that someone ignited a — combustibles readily available in that room. By that I mean papers, anything that was in that room that would burn that was not unique. No one brought in gasoline. Nobody brought in pallets. Nobody brought in things external to the location of that room and set them on fire. He reached this conclusion by personally inspecting the fire site, examining the evidence and speaking with Sanders. As part of his investigation, which complied with the NFPA 921, Dolence systematically eliminated other potential causes of fire such as the electrical system, the natural gas supply, hot water tank, furnace, the kitchen, and electrical appliances. While Dolence acknowledged that he could not determine the exact ignition source, he still opined that the fire was intentionally set.

The court was mindful that [t]he court’s role as gatekeeper does not focus upon the conclusions that an expert draws. Hertzfeld v. Hayward Pool Prod., Inc., 6th Dist. Lucas App. No. L-07-1168, 2007-Ohio-7097. When a competing expert points out weaknesses in the strength of an expert’s conclusion, it does not turn the challenged expert’s conclusion into the type of “subjective belief or unsupported speculation,” which Daubert prohibits. Id. Gilmore, 178 Ohio App.3d 294, 2008-Ohio-4566, 897 N.E.2d 114, at ¶ 33.

Accordingly, the assignment of error was overruled.

Judgment was affirmed.

Mr. Lynch can be reached at Cozen and O'Connor, 501 West Broadway, Suite 1610, San Diego, California 92101, 800-782-3366 (voice), 619-234-7831 (fax), palynch@cozen.com (e-mail), http://www.cozen.com. Follow us on Twitter at @firesandrain.

Please direct comments, suggestions, stories, and other items to the author by e-mail at palynch@cozen.com

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