Opinion ID: 1952793
Heading Depth: 1
Heading Rank: 2

Heading: sun insurance's appeal

Text: [¶ 18] Sun contends that it should have been allowed to demonstrate that the Credit Unions were insured and had already been compensated by insurance for the losses claimed in this action. It argues that the proffered evidence established mitigating factors that the jury should have been allowed to consider in evaluating its assessment of punitive damages, and that it was relevant to causation. Sun also asserts that the evidence was admissible on the issue of whether the Credit Unions' reliance on the misrepresentations in the certificates of insurance was reasonable. [¶ 19] The Credit Unions contend that the existence of other insurance was properly excluded by the court pursuant to Werner, 393 A.2d at 1335. The Credit Unions also assert that Sun failed to adequately preserve the issue as to reliance and, moreover, that Sun failed to make use of the limited evidence pertaining to the statements made by the Credit Unions on the proofs of loss that the court did allow Sun to present. [¶ 20] The collateral source doctrine provides that, if a plaintiff is compensated in whole or in part for his damages by some source independent of the tortfeasor, he is still permitted to have a full recovery against [the tortfeasor]. Werner, 393 A.2d at 1335. The premise underlying this rule is that either the injured party or the tortfeasor will receive a windfall if part of a loss is paid by an independent source, and, as between the injured party and the tortfeasor, the injured party should reap the benefit of the windfall. Potvin v. Seven Elms, Inc., 628 A.2d 115, 116 (Me.1993). [¶ 21] We agree with the Credit Unions that evidence of other insurance covering the same losses was not admissible on issues of causation and punitive damages. The trial court erred, however, in overly restricting Sun's use of the statements signed by the Credit Unions on proof of loss forms submitted to their own insurers shortly after the theft. The Credit Unions allege that Sun fraudulently issued certificates of insurance, which represented that Maine Armored Car had insurance policy coverage for thefts of the checks placed in the lock box, and as a necessary element of their fraud claims, that the Credit Unions relied on those certificates to their detriment. On the reliance issue, Sun should have been allowed to fully present the statements on the proofs of loss that were signed under oath by the Credit Unions and submitted to their own insurers. These statements affirmatively asserted, or clearly reflected, that no insurance, other than their own policies, existed to cover the loss from the May 22, 1992 theft of the checks from the lock box. Pursuant to the collateral source doctrine, the Credit Unions are not precluded from recovering against Sun for the value of the lost checks in this action for fraudulent misrepresentation. Nevertheless, such statements are relevant for the limited purpose of determining whether the asserted reliance by the Credit Unions on the certificates issued by Sun was reasonable. [¶ 22] The Credit Unions contend that Sun failed to preserve the issue of the admissibility of the proof of loss statements on the issue of relevance. Even if Sun preserved their reliance argument, the Credit Unions further assert that Sun failed to take advantage of the limited use of the statements that the trial court allowed. An issue is raised and preserved if there was a sufficient basis in the record to alert the court and any opposing party to the existence of that issue. Chasse v. Mazerolle, 580 A.2d 155, 156 (Me.1990). [¶ 23] In opposing the Credit Unions' pretrial motion in limine to exclude the evidence of the proofs of loss and the statements contained in them, Sun clearly and emphatically argued the relevance of that evidence to the issue of reliance. At trial, when the court reconsidered the in limine motion and the admissibility of the statements on the proofs of loss, Sun was less clear on the reasons for their admissibility, but the court expressly stated its awareness that the evidence went to the issue of reliance. Although the parties are responsible to direct the attention of the courts to the record, and to clearly state supporting reasons for objections, see e.g., M.R. Evid. 103(a), Sun's arguments opposing the Credit Unions' motion in limine sufficiently preserved the admissibility of the statements of the proofs of loss as relevant to whether the Credit Unions relied on the certificates of insurance. [¶ 24] Moreover, the strict limitations placed on that evidence by the trial court prevented Sun from making any effective use of those statements at trial to impeach the contentions of the Credit Unions that they reasonably relied on the certificates of insurance. For the statements on the proofs of loss to make sense, they must have a context, i.e., that they are statements appearing on proofs of loss submitted by the Credit Unions to their own insurers to recover for the same losses that the Credit Unions contend they relied on the certificates to cover. The fact that the Credit Unions had their own insurance covering the theft of the checks does not preclude their suit against Sun for fraud, see Werner, 393 A.2d at 1335, and does not mean that the Credit Unions could not or did not reasonably rely on the certificates. Sun is entitled to test the reasonableness of that reliance, however, and the jury must be aware that the statements were made in conjunction with proofs of loss submitted to their own insurers.
[¶ 25] Although we vacate the compensatory damage awards, Sun contends that it is entitled to judgments as a matter of law on the Credit Unions' fraud claims because there is insufficient evidence of fraud. We review the trial court's denial of a motion for a judgment as a matter of law by examining the evidence in the light most favorable to the nonmoving party to determine whether any reasonable view of the evidence, including all justifiable inferences to be drawn therefrom, could sustain the verdict. Guardianship of Hughes, 1998 ME 186, ¶ 20, 715 A.2d 919, 924. The burden is on the moving party to show that the adverse verdict is clearly and manifestly wrong. Schiavi v. Goodwin, 542 A.2d 367, 368 (Me.1988). [¶ 26] A defendant is liable for fraud if the plaintiff establishes the following elements by clear and convincing evidence: [The defendant] (1) makes a false representation (2) of a material fact (3) with knowledge of its falsity or in reckless disregard of whether it is true or false (4) for the purpose of inducing another to act or to refrain from acting in reliance upon it, and (5) the plaintiff justifiably relies upon the representation as true and acts upon it to his damage. Letellier v. Small, 400 A.2d 371, 376 (Me. 1979). When clear and convincing evidence is required, plaintiffs bear the burden of persuasion to place in the ultimate factfinder an abiding conviction that the truth of [their] factual contentions are `highly probable.' Taylor v. Comm'r of Mental Health & Mental Retardation, 481 A.2d 139, 153 (Me.1984) (quoting Colorado v. New Mexico, 467 U.S. 310, 316, 104 S.Ct. 2433, 81 L.Ed.2d 247 (1984)). [¶ 27] Sun contends that the Credit Unions failed to prove false misrepresentation, justified reliance, and scienter. Sun also asserts that three of the Credit Unions failed in their proof of damages. We disagree. [¶ 28] The certificates of insurance stated that Sun had issued a policy to Maine Armored Car, [c]overing the liability assumed by [Maine Armored Car] for loss or damage, from any cause whatsoever, to property of customers, consisting of... Checks, Drafts, Notes ... and all other Commercial Papers, and other Documents and Papers of value. (Emphasis added.) The certificates also listed exclusions from coverage but did not mention exclusions pertaining to theft. The actual policies issued by Sun to Maine Armored Car, however, did not cover losses from any cause whatsoever. Rather, the policies did provide coverage for theft, but only thefts committed in a particular manner, and did not cover the kind of theft that occurred in this case. Thus, viewing the evidence in the light most favorable to the Credit Unions, a jury could conclude to a high probability that the representations in the certificates stating that Maine Armored Car was fully covered for losses from any cause whatsoever were false. [¶ 29] A party may justifiably rely on the fraudulent misrepresentation of [another] ... without investigating the truth or falsity of the representation. Reliance is unjustified only if the plaintiff knows the representation is false or its falsity is obvious to him. Estate of Whitlock, 615 A.2d 1173, 1176 (Me.1992); see Ferrell v. Cox, 617 A.2d 1003, 1006 (Me. 1992) (holding that an experienced attorney who conveyed a utility easement was justified in relying on the judge or attorney grantee's representations that the easement would not be shared with others). [¶ 30] Sun presented evidence that: (1) the Credit Unions are experienced in insurance-related matters and knew that the certificates of insurance clearly stated that they conferred no rights, that the certificates did not represent the full provisions of the insurance policy and did not claim to do so; (2) the certificates stated that the referenced policy could be canceled without notice to the holder; and (3) some of the Credit Unions may not have actually read the entire certificates. The Credit Unions, however, produced evidence to show that Sun issued the certificates for the purpose of causing the Credit Unions to believe that Maine Armored Car was insured for the loss of its customers property from any cause whatsoever. Moreover, there was testimony from the Credit Unions that their employees did believe that the representations in the certificates were true, they relied upon the certificates in deciding to do business with Maine Armored Car, and they entrusted their property to Maine Armored Car only after reviewing the certificates. [¶ 31] In order to succeed in an action for fraud, a plaintiff must also prove that the defendant's false misrepresentation was made with knowledge of its falsity, or in reckless disregard of its accuracy. Letellier, 400 A.2d at 376. Sun wrote the insurance policies and subsequently issued the certificates of insurance through an insurance broker. The representations in the certificates that Maine Armored Car had insurance to cover its customer losses from any cause whatsoever were not mere casual comments or off-hand remarks; rather the representations contained formalized statements of fact concerning insurance coverage, complete with seals and signatures that conveyed credibility. [¶ 32] The certificates vary in several important respects from the language of the policies. Given the significance of these differences, and viewed in a light most favorable to the Credit Unions, a fact finder could reasonably infer that the representations contained in the certificates were made in reckless disregard of their truth or falsity. [¶ 33] Finally, plaintiffs must prove pecuniary loss. Jourdain v. Dineen, 527 A.2d 1304, 1307 (Me.1987). The Credit Unions satisfied this requirement by presenting evidence that they suffered losses when the checks were stolen and that they have aggressively, but unsuccessfully, attempted to execute judgments obtained against Maine Armored Car for the past three years. Thus, although the evidence would have supported a contrary verdict, when viewed in the light most favorable to the Credit Unions, a sufficient evidentiary basis exists to support the jury's finding that Sun was liable for fraud and misrepresentation. Accordingly, Sun is not entitled to judgments as a matter of law. The entry is: Judgments as a matter of law on punitive damages affirmed. Judgments awarding compensatory damages to the Credit Unions vacated. Remanded to the Superior Court for further proceedings consistent with this opinion.