Ferrara & DiMercurio v. St. Paul Mercury Insurance

240 F.3d 1, 49 Fed. R. Serv. 3d 63, 2001 A.M.C. 1340, 2001 U.S. App. LEXIS 2394, 2001 WL 114319
CourtCourt of Appeals for the First Circuit
DecidedFebruary 14, 2001
Docket00-1137
StatusPublished
Cited by44 cases

This text of 240 F.3d 1 (Ferrara & DiMercurio v. St. Paul Mercury Insurance) is published on Counsel Stack Legal Research, covering Court of Appeals for the First Circuit primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Ferrara & DiMercurio v. St. Paul Mercury Insurance, 240 F.3d 1, 49 Fed. R. Serv. 3d 63, 2001 A.M.C. 1340, 2001 U.S. App. LEXIS 2394, 2001 WL 114319 (1st Cir. 2001).

Opinion

LEVIN H. CAMPBELL, Senior Circuit Judge.

For a second time this case comes to us on appeal. See Ferrara & DiMercurio v. St. Paul Mercury Ins. Co., 169 F.3d 43 (1st Cir.1999)(hereinafter Ferrara /)• The facts have not changed.

I. BACKGROUND

On July 3, 1993, the commercial fishing vessel F/V TWO FRIENDS was destroyed by a fire. Plaintiff-Appellant Ferrara & DiMercurio (“F&D”), owner of the vessel, sought to recover insurance under a Hull Policy issued by defendant-appellee St. Paul Mercury Insurance Company (“St. Paul”). St. Paul denied coverage after its investigation ended with a determination of arson, which it understood to be excluded from coverage under the policy. Thereafter, F&D brought an action in the district court claiming that St. Paul’s refusal to pay was a breach of the insurance contract and constituted “bad faith” in violation of Massachusetts General Laws ch. 93A. After a first trial ended in a hung jury, a second trial ended with the court directing a verdict in favor of the plaintiff.

At the time the district court directed a plaintiffs verdict, the court accepted that St. Paul would not be hable could it prove its affirmative defense that the fire was deliberately set by the insured. But the court ruled that the evidence put forward was legally insufficient for a jury to find that plaintiff had deliberately set its boat on fire. St. Paul had also asserted that it would be exempt from liability were the fire found to have been deliberately set by an unknown third party, relying upon the language of an exclusion for “malicious acts” found in the so-called Strikes, Riots, and Civil Commotions (“SR&CC”) clause. However, the court construed that provision as excluding from coverage only those fires deliberately set by third parties in the context of civil unrest, a setting absent here.

On appeal, this court disagreed with the district court’s rulings, reversing and remanding the case for a third trial. We held that the SR&CC clause excluded from coverage all fires (whether or not arising in the context of civil unrest) that were deliberately set by third parties. See Fer-rara I, 169 F.3d at 53. Notwithstanding the clause’s title — “strikes, riots and civil commotions” — we stated:

“Malicious acts” is set forth in the SR&CC clause as a separate, unmodified exclusion from coverage.... [NJothing in the plain language and grammar of the clause supports the district court’s constriction of excludable “malicious acts” to only those acts perpetrated within the context of one or more of the other co-listed events. Nor, in our view, would an objectively reasonable insured interpret the “malicious acts” exclusion so narrowly.
... Hence, to limit the phrase, “malicious acts,” to just those activities related to the former categories would be to render the “malicious acts” provision redundant, an interpretation running counter to the customary assumption that all words within a clause serve some purpose....
Here, the malicious acts in question are arson — and not, as a practical matter, arson by the owner or its agents, which are actions separately excluded from coverage by law, but the rarer acts of fire-setting by vandals or other malicious individuals. Such acts fall within the general category of intentional third-party violence which can be said to be a principal overall theme of the SR&CC clause. The “malicious acts” category serves the relevant purpose of excluding destructive acts not public or tumultuous *4 enough to be considered a riot or civil commotion. In sum, the SR&CC clause unambiguously excludes from coverage losses caused by “malicious acts,” including arson, whether or not the malicious acts occur in the context of one or more of the other events listed in the SR&CC clause. Thus, on remand, the jury should be permitted to determine whether the fire on July 3, 1993, was deliberately set by third parties. Should the jury answer that question in the affirmative, St. Paul would not be liable under the Hull Policy.

Id. at 51-53 (citations and quotation marks omitted).

Having reversed the district court’s holding that arson by a third party was only a defense when occurring during civil unrest, this court also reversed the district court’s other conclusion that the evidence . at trial was legally insufficient to support the insurer’s arson-by-the-insured defense. We determined that evidence in the record of motive and opportunity on the part of F&D to commit arson was such that “reasonable jurors could determine that [plaintiff] deliberately set fire to the TWO FRIENDS in order to fraudulently obtain the proceeds of the insurance policy.” Id. at 56.

The parties returned to district court to prepare for a third trial, this time before yet a third judge, Judge Harrington. Based upon their mutual understanding of this court’s decision in Ferrara I, both parties agreed that the following single question would be submitted to the jury to be answered “Yes” or “No”: “Do you find that the defendant, St. Paul Mercury Insurance Company, has established by a preponderance of the evidence that the fire was of an incendiary nature or deliberately set?”. This question was apparently meant to incorporate both holdings of Fer-rara I, entitling St. Paul to the defense of arson by third parties as well as to the defense of arson-by-the-insured. The jury returned a verdict in favor of defendant St. Paul, answering ‘Wes” to the special verdict. F&D appeals.

Unlike in Ferrara I, when we were faced with, among other issues, the task of construing somewhat unusual language in the insurance policy, this time the issues presented are more commonplace. F&D claims reversible error on the basis of certain evidentiary rulings, any one of which, F&D argues, entitles it to a fourth trial. We disagree. F&D also appeals from the district court’s denial of plaintiffs post-trial motion for sanctions. For the reasons that follow, we affirm all of the rulings below.

II. LEGAL ANALYSES OF EVIDENTIARY ISSUES

Having recited the facts in our first opinion, we need not repeat all of them here. For a more complete account, we refer the reader to Ferrara I, 169 F.3d at 45-49. We report here only those facts that are relevant to the three evidentiary issues raised on this appeal. The three evidentiary issues are as follows 1 : (A) the propriety of allowing the jury to hear evidence of the principal shareholders’ alleged motive and opportunity to burn their own boat; (B) the propriety of admitting into evidence against F&D the expert testimony of John Malcolm regarding the cause and origin of the fire; (C) the effectiveness of the district court’s curative instruction to the jury to strike and disregard an answer provided on cross-examination by John Malcolm regarding information that was subject to a protective order. We discuss each of these issues in turn below.

A. Motive and Opportunity Evidence to Bum the F/V TWO FRIENDS

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Bluebook (online)
240 F.3d 1, 49 Fed. R. Serv. 3d 63, 2001 A.M.C. 1340, 2001 U.S. App. LEXIS 2394, 2001 WL 114319, Counsel Stack Legal Research, https://law.counselstack.com/opinion/ferrara-dimercurio-v-st-paul-mercury-insurance-ca1-2001.