7th Circuit upholds $87,000 verdict against insurer after house fire

An insurance company must pay $87,000 in damages to an Indiana homeowner whose house burned to the ground after the 7^th Circuit Court of Appeals determined there was sufficient evidence to support the jury’s damages award. 

After his home in Griffith burned down in 2008, David Thorne filed a claim for coverage with Member Select Insurance Company. Member Select denied Thorne’s claim, determining either he or his brother had intentionally caused the fire.

When Thorne sued the insurance company, a jury awarded him $87,000 in damages. Member Select responded with a motion for judgment as a matter of law, arguing there was insufficient evidence for a jury to find Thorne was a resident of the house, or to determine damages.

The U.S. District Court for the Northern District of Indiana denied Member Select’s motion, prompting the instant appeal in David Thorne v. Member Select Insurance Company, 17-1377. In a Monday opinion, the 7^th Circuit Court of Appeals upheld the district court’s ruling, finding first that sufficient evidence existed to prove Thorne was a resident of the house, as is required for coverage under Member Select’s policy.

Specifically, Judge Thomas M. Durkin — sitting by designation from the Northern District of Illinois — pointed to evidence that Thorne got his mail at the property, kept his personal belongings there and was the only person beside his brother who had keys to the house. Even though Thorne testified that he rarely slept at the Griffith home, Durkin said there was sufficient evidence for the jury to conclude the home was Thorne’s “residence” for purposes of the insurance policy.

“The evidence was sufficient to demonstrate that Thorne had a ‘subjective intent’ to reside in the house,” the judge wrote.

The circuit court next determined the district court properly used Indiana’s “broad evidence rule” to discern the meaning of the “actual cost value” to be paid pursuant to Member Select’s policy. The policy does not define what “actual cost value” entails, Durkin said, creating ambiguity that must be held against the insurance company.

Further, though Member Select argued the phrase can be defined as “replacement cost less depreciation,” the term depreciation is also ambiguous, Durkin said. Thus, the court properly used the broad evidence rule to define the ambiguous term and determine the jury’s damages verdict was reasonable, he said.

Finally, Durkin wrote that under the broad evidence rule, a factfinder must “consider all evidence an expert would consider.” In this case, that means the jury properly considered evidence regarding the $20,000 line of credit Thorne secured by the house when he had paid the mortgage down to $67,000 — even though that evidence was about four years old — in reaching its decision to award $87,000 in damages.

“They jury’s reliance on such evidence, even absent lay or expert opinion evidence, does not make the award unreasonable,” Durkin wrote. “To the extent Member Select believed that the age of the evidence made it misleading, or that additional evidence regarding the value of the land would have made the damages verdict more accurate, Member Select could have presented such evidence itself. It chose not to.”