Smith v. Harford Mutual Insurance Co.

751 S.W.2d 140, 1987 Tenn. App. LEXIS 3017
CourtCourt of Appeals of Tennessee
DecidedOctober 27, 1987
StatusPublished
Cited by6 cases

This text of 751 S.W.2d 140 (Smith v. Harford Mutual Insurance Co.) is published on Counsel Stack Legal Research, covering Court of Appeals of Tennessee primary law. Counsel Stack provides free access to over 12 million legal documents including statutes, case law, regulations, and constitutions.

Bluebook
Smith v. Harford Mutual Insurance Co., 751 S.W.2d 140, 1987 Tenn. App. LEXIS 3017 (Tenn. Ct. App. 1987).

Opinion

[141]*141OPINION

SANDERS, Presiding Judge (E.S.).

The Plaintiff has appealed from a directed verdict in his suit for malicious prosecution against the Defendants in connection with a fire that destroyed Oak Ridge Motor Company in Oak Ridge, Tennessee.

The Oak Ridge Fire Department responded to a blaze at Oak Ridge Motor Company on December 1, 1981, and reported the origin of the blaze as being suspicious. The fire burned the showroom and garage of the business, which was owned by Danny Schultz. Shortly after the fire Jess Hodge, the State Fire Marshal, investigated the fire scene and took samples for testing. Defendant-Appellee Luke Bright, an assistant Deputy Fire Marshall, worked for Jess Hodge and was the primary investigator for the Fire Marshal’s office and special investigator for the Attorney General of Anderson County of the fire at Oak Ridge Motor Company.

Defendant-Appellee Harford Mutual Insurance Company [Harford] was the insurance carrier on the building. Harford hired attorney Defendant-Appellee Archie Carpenter to represent them in the fire loss case and to act as a clearing house for the reports of the various investigators. Har-ford also hired Defendant-Appellee General Adjustment Bureau, Inc., [GAB] to investigate the fire. Defendant-Appellee J.P. Thompson, an investigator with property damage evaluation expertise, worked for GAB. In addition, Harford hired Defendant-Appellee Richard T. Chance of Richard T. Chance & Associates, Inc., of Virginia, who had extensive experience in arson and fraud investigation.

J.P. Thompson of GAB went to the fire scene the day after the fire and again with Richard Chance on December 4. While at Oak Ridge Motor Company, they talked with various employees of Schultz. Chance asked them for information concerning the fire. Carl Raines, an employee of Danny Schultz, was present on December 4. According to Carl Raines, Chance and Thompson told Raines there was a $25,000 reward for information concerning the fire. Chance gave his card to Raines and requested Raines to call Chance if Raines had any information. Chance found from his investigation the fire had two origins and other indices of arson were present.

After Chance returned to Virginia, Raines did call and say he had some information concerning the fire, but said he would have to have some money to furnish the information. Apparently Mr. Chance then talked to Harford and was told to clear the matter through Carpenter. Chance then referred Raines to Carpenter.

Carpenter met with Raines on January 8, 1982. After obtaining approval from Har-ford, Carpenter told Raines the company would give him $2,500 for his information concerning the fire if his information could be corroborated by other proof. Raines rejected the offer and left Carpenter’s office.

Early in February, Sam West, the Assistant District Attorney of Anderson County, called Richard Chance in Virginia and said that Raines wanted to make a statement. Chance returned to Knoxville and on February 11, 1982, Chance, with Sam West, and Luke Bright, the Assistant Deputy Fire Marshal, met with Carl Raines. At that meeting a tape recorded statement was taken from Raines.

In the statement Raines accused Plaintiff Eugene Smith, Loran Wichser and Danny Schultz of conspiring to burn Oak Ridge Motor Company. Wichser, an associate of Schultz, was said to be the middleman between Smith and Schultz. Raines said he heard Smith agree to bum the building and that a key was to be left for Smith’s use. Raines also said the mortgagee was threatening to foreclose on the mortgage on the building and that inventory and furniture had been moved out of the burned building before the fire.

Shortly after the statement was taken, Raines gave a notarized statement to Danny Schultz averring that his former statements were the result of bribery, were given under threat of persecution for fraud, and that Bright, Chance and West had told him what to say.

[142]*142Raines later gave another statement to Sam West of the attorney general’s office, in which he said Schultz forced him to give the notarized statement. It was apparent that Raines had recanted his prior statements to the various parties, and that his story would change dependant upon which person he would be giving his statement to. However, a considerable amount of the information Raines gave in his first statement was corroborated by other evidence.

Another witness, Mike Owens, also an employee of Danny Schultz, gave a statement to Defendant-Appellee Bright. In his statement Owens said he was told to block the entrance to the car lot off with a school bus the night of the fire. He also reported another employee of Schultz shortly before the fire had painted the windows in the burned building a dark blue.

The fire department had an anonymous informant who said that Schultz, Smith and Wichser were the persons who burned Oak Ridge Motor Company. The identity of the informant was not disclosed, except to the extent it was not Carl Raines.

At one point Mr. and Mrs. Schultz were prosecuted for threatening the witness, Carl Raines, after he had given his first statement.

Bright also obtained a search warrant for a house sold by Schultz to Wichser shortly before the fire. At the house Bright found an expensive desk owned by Schultz with business records in it and new boat furniture which had been removed from the burned building shortly before the fire.

Smith, Wichser and Schultz had all had fire loss claims in the past.

As a result of the investigation, Schultz, Wichser, and Smith were indicted for conspiracy to commit arson with the intent to defraud an insurance company by the Anderson County Grand Jury in March 1982. The indictment was brought by the Attorney General of Anderson County. Luke Bright testified before the grand jury. The only other evidence before the Grand Jury was that offered by the Attorney General.

Smith, Wichser, and Schultz were tried in August 1983. Carpenter, Chance and other Harford investigators were subpoenaed by the District Attorney to testify at the criminal trial. The trial judge directed a judgment of acquittal against Loran Wichser and Plaintiff Eugene Smith; a jury found Danny Schultz not guilty.

Separate suits were then filed by Eugene Smith, Danny Schultz and Loran Wichser for malicious prosecution, outrageous conduct, negligence and negligent investigation and conspiracy against Harford, Archie R. Carpenter, Luke Bright, GAB, J.B. Thompson, and Richard T. Chance & Associates, Inc.

A Motion in Limine was filed by Carpenter to exclude any evidence regarding a statement taken of Carl Raines on February 26,1982. This was taken under advisement by the trial court. A final decision was made granting the motion at the end of Plaintiffs’ proof at trial.

The cases were consolidated and tried together. At the end of Plaintiffs proof all Defendants moved for a directed verdict. The trial court found:

[T]he plaintiffs were required to prove the four elements of the causes of action that they sought to recover on constituting malicious prosecution. And those elements were never in dispute by any of the parties. One of those elements is that the criminal proceedings be brought without probable cause....

Free access — add to your briefcase to read the full text and ask questions with AI

Related

Ina Grace Jacobi v. VendEngine Inc.
Court of Appeals of Tennessee, 2025
Ronnie Gordon v. Tractor Supply Company
Court of Appeals of Tennessee, 2016
James L. Massingille v. G. Wayne Vandagriff
Court of Appeals of Tennessee, 2013
Sam Spicer v. Stace Thompson
Court of Appeals of Tennessee, 2004
Airline Construction, Inc. v. Barr
807 S.W.2d 247 (Court of Appeals of Tennessee, 1990)
Carter v. Baker's Food Rite Store
787 S.W.2d 4 (Court of Appeals of Tennessee, 1989)

Cite This Page — Counsel Stack

Bluebook (online)
751 S.W.2d 140, 1987 Tenn. App. LEXIS 3017, Counsel Stack Legal Research, https://law.counselstack.com/opinion/smith-v-harford-mutual-insurance-co-tennctapp-1987.