No. 89-471
IN THE SUPREME COURT OF THE STATE OF MONTANA
1990
EMASCO INSURANCE COMPANY,
Plaintiff and Respondent,
-vs-
DUSTIN 0. WAYMIRE and JULIA A, WAYMIRE,
Defendants and Appellants.
APPEAL FROM: District Court of the Thirteenth Judicial District,
In and for the County of Yellowstone,
The Honorable William J. Speare, Judge presiding.
COUNSEL OF RECORD:
For Appellant:
Brad L. Arndorfer; Arndorfer Law Office, Billings,
Montana
For Respondent:
James L. Jones and Robert L. Sterup; Dorsey O.
Whitney, Billings, Montana
Submitted on Briefs: Feb. 9 , 1990
Decided: March 20, 1990
Filed:
I
"Clerk
Justice R. C. McDonough delivered the Opinion of the Court.
Defendant Dustin and ~ u l i aWaymire appeal the judgment of the
Thirteenth Judicial District Court, Yellowstone County, in a case
involving a claim under a fire insurance policy. The District
Court, sitting without a jury, entered judgment in favor of the
plaintiff, Emcasco Insurance Company (Emcasco), relieving Emcasco
from all obligations to pay the Waymires any amount under the
policy of insurance, on the grounds that the Waymires concealed,
misrepresented, or ommitted material facts when applying for the
policy and they intentionally caused the fire destroying the
property. We affirm.
The Waymires raise the following issues on appeal:
(1) Is there substantial credible evidence to support the
District Court's finding that the Waymires were responsible for
causing the fire that destroyed the insured premises?
(2) Is there substantial credible evidence to support the
District Court's finding that appellants concealed, misrepresented
or omitted material facts in applying for the policy of insurance
on their former home?
The District Court made the following findings of fact: The
Waymires were the owners of a residence located at 3511 Bitteroot
Drive, Billings, Montana. The Waymires purchased a fire insurance
policy from Emcasco insuring their residence in the amount of
$95,000.00, personal property in the amount of $76,000.00, loss of
use in the amount of $19,000.00, and other structures in the amount
of $9,500.00, along with other additions such as cleanup costs as
contained in the policy. The Waymires had intermittently insured
the residence with Emcasco from May 1, 1984 until the time of the
fire.
The policy in question was issued in June of 1986. The agent
who filled out the application for this policy testified that
Mr. Waymire apparently misrepresented his loss history because the
agent specifically noted that there were no previous losses listed
on that application and that Mr. Waymire had reviewed and signed
it. Actually, the Waymiretshad two prior fire losses at the same
location---one in July 1979, the other in September 1980---both
involving the burning of a mobile home. Emcascots agent, its
underwriter, and its expert witness, all testified that Emcasco
never would have issued the policy if it had known of the Waymire's
prior losses.
On the night of May 30, 1987, the Waymire residence at 3511
Bitteroot Drive was damaged by fire. At the time, the Waymires
lived in the residence with their two sons, Jeffrey, age 27, and
David, age 28. Mr. Waymire and his sons had built the log home,
a garage, a barn, and a gun shop on the premises. Mr. Waymire is
an electrician by trade but has not been regularly employed in that
field since 1983.
Instead, Mr. Waymire and sons ran a wholesale firearms
business out of their home at 3511 Bitteroot Drive. The business
was primarily a mail-order business with sales generated through
ads in a firearms publication called Shotsun News. Consequently,
the Waymires usually had a large inventory of firearms on hand on
their property, which they stored primarily in the gunshop,
although they kept some, particularly their personal firearms, in
their family residence. To finance this business, Mr. Waymire
borrowed $61,800.00 from Valley Credit Union on June 26, 1985,
secured by a trust indenture on the property. The note called for
payments of $959.00 a month and a balloon payment on July 1, 1990.
A second loan from the credit union secured by another trust
indenture subsequently raised this monthly obligation to
approximately $1,400.00. Mr. Waymire also purchased a substantial
portion of his gun inventory on credit from his supplier,
Interarms. At the time of the fire, he owed Interarms $29,028.18.
Several days prior to the fire, the Waymires removed Mrs.
Waymire's Lowrey organ, a family heirloom, from the home and
delivered it to a repairman who had serviced it before at the
Waymire residence. The repairman had offered to examine it at
the Waymire home but testified that Mr. Waymire "in~isted'~
on
bringing it to him. In 25 years, this was the only local customer
to have done this. Also, on the day of the fire, the two Waymire
sons left town for a gun show in Lewistown, Montana, taking most
of the family's personal gun collection, usually kept in the house,
with them, as well as other guns kept in the gunshop. Also on the
morning of the fire, one of the Waymire sons purchased two
lljerrycansl' diesel fuel, allegedly for the family tractor, and
of
left them outside the gunshop. At 5:00 on the evening of the fire,
Mr. and Mrs. Waymire left the premises for the evening to travel
to Roberts, Montana to visit a hunting guide about planning a
future trip. They took the family dog with them. They were gone
at the time that the fire started around 10: 00 p.m. and returned
sometime after 11:OO p.m.
After the fire, investigators found one of the jerrycans in
the basement of the remains of the house. They also discovered
that an apparent burglary had allegedly been committed the same
evening of the fire. The lock to the gun shop had been broken with
a pick found nearby and several of the the less expensive items
from the gun inventory were missing. However, the most valuable
items in the inventory were not taken. Thirteen guns were taken
from the shop valued at $70.00 each and two at $135.00 each. The
Waymires apparently left the house unlocked, because two rifles
belonging to each of the Waymire sons and valued at $650.00 each
were allegedly stolen from the home and there was no evidence
indicating a break-in. During the investigation Mr. Waymire stated
that it was his belief that the alleged burglars took one of the
fuel cans and set fire to the house after the burglary.
Investigators also found what they believed may have been the
remains of some type of timing device commonly used to delay the
ignition of arson caused fires.
The Waymire's had twice listed the home for sale without
success and one week before the fire had the property appraised.
The District Court also found that the Waymire's firearms
business was causing the family serious cash flow problems. At
the time of the fire, the Waymires were two months behind on one
of the loans on their home and one month behind on another. Their
debts at the time of the fire totaled $113,397.00. Thus, the
District Court found that the Waymires had a financial motive to
cause the fire. Their potential recovery from the policy was
$171,000.00 plus loss of use up to $19,000.00 The insurance
payment would also terminate their monthly obligations of nearly
$1,400.00 to their credit union. After the fire the Waymires would
still own the land, three buildings, and the business inventory,
free and clear of all debts.
Emcascotsexpert, Chriss Rallis, a trained fire investigator,
concluded that the fire was incendiary in nature and deliberately
set due to (1) the rapid ignition and spread of the fire, (2) the
presence of tlaccelerantll
pour patterns on some of the wood
recovered from the debris, (3) the presence of a fuel can in the
debris which Mr. Waymire told him did not belong in the house, (4)
evidence that one of the doors to the house was unlocked, (5) the
fact that two prize guns were not found in the debris, and (6) the
fact that Mr. Waymire told him that he thought that the fire had
been deliberately set, in conjunction with the burglary. Mr.
Rallis further testified that the circumstances surrounding the
fire were consistent with common characteristics of insurance fraud
fires and inconsistent with other types of fires such as
pyromaniac, revenge, or vandalism fires.
Furthermore, Terry Jesse, a detective with the Yellowstone
County Sheriff's office with eleven years of experience and
extensive training in the investigation of burglaries testified
that in his opinion the burglary was simply staged to draw
attention away from the arson.
The District Court concluded that there was a reasonable basis
for Emcascols denial of the claim and such denial was in good
faith. The Court further concluded that Mr. Waymire was barred
from recovering under the policy because he concealed,
misrepresented, or omitted material facts in his application, and
because Ittheevidence establishes the Defendants were responsible
for causing the fire." The Waymirets now appeal.
First, we note that this case was decided by the trial judge
sitting without a jury. The trial judge observed the demeanor of
the witnesses and is in a better position to judge their
credibility than a reviewing court, thus It[w]e will not substitute
our judgment for that of the trier of fact, but rather will only
consider whether substantial credible evidence supports the
findings and conclusions.~~
Spraggins v. Elvidge (1982), 199 Mont.
155, 159, 647 P.2d 859, 861, quoting Cameron v. Cameron (1978), 179
Mont. 219, 228, 587 P.2d 939, 945. "Findings of fact shall not be
set aside unless clearly erroneous, and due regard shall be given
to the opportunity of the trial court to judge of the credibility
of the witnesses." Rule 52(a), M.R.Civ.P.
The insurance policy issued to the Waymires specifically
excluded coverage to insureds who deliberately set fire to their
own property with the intent to destroy it. This principle is also
pervasive in the common law, and has been consistently recognized
by this Court. See e.s. Britton v. Farmer's Ins. Group (1986), 221
Mont. 67, 721 P.2d 303; Mountain West Farm Bureau Ins. Co. v.
Girton (1985), 215 Mont. 408, 697 P.2d 1362; St. Paul Fire & Marine
Ins. Co. v. Cumiskey (1983), 204 Mont. 350, 665 P.2d 223; Hier v.
Farmers Mutual Fire Ins. Co., (1937), 104 Mont. 471, 67 P.2d 831,
110 A.L.R. 1051. Arson for insurance fraud may be established by
circumstantial evidence. Mountain West, 697 P.2d at 1364. Emcasco
had the burden of proving by a preponderance the following
elements:
(1) the incendiary nature of the fire;
(2) that the insureds had a motive for setting the fire, and
(3) surrounding circumstantial evidence implicating the
appellants in setting the fire or causing it to be set. Britton,
721 P.2d at 317; Silva v. Fire Ins. Exchange (D. Mont. 1986), 647
F.Supp. 1397, 1400.
We conclude that there was substantial evidence to support
the trial judge's finding that the Waymires intentionally caused
the fire which destroyed their home. The evidence that the fire
was incendiary in nature was overwhelming and essentially
uncontested.
We also conclude that Emcasco offered substantial evidence
that the Waymires had a financial motive for setting the fire due
to cash flow problems in their gun business and the specter of a
balloon mortgage payment. In their brief the Waymires contend that
the District Court's finding no. 27 concerning the adjusted gross
income (A.G.I.) of the Waymires for the years 1982-1987 is clearly
erroneous, in that it compares gross income and taxable income
figures instead of adjusted gross income figures. The Waymires
argue that a correct comparison would not indicate a decrease in
their income and a corresponding financial motive for arson. A
simple review of the Waymires' tax returns for these years
(plaintiff's exhibits 25-30) indicates that the figures cited by
the District Court are the appropriate adjusted gross income
figures. These figures also demonstrate a significant decrease
in the Waymires' income over this period. Thus, there is no merit
in this contention.
Finally, Emcasco also offered substantial surrounding
circumstantial evidence that the Waymirest intentionally set or
caused the fire to be set: (a) the fire occurred at night after
dark; (b) the insureds were away from the premises at the time
of the fire; (c) an accelerant was used; (d) the accelerant was
made available on the premises by the insureds; (e) the property
had been for sale without success; (f) valuable and sentimental
personal property was removed from the premises prior to the fire;
and (g) the insureds were experiencing financial difficulty and
payments on the mortgages on the property were a significant
expense to the insureds. See e.q. Mountain West, 697 P.2d at
1364. !'The arson scheme fit the insurance arsonist profile and
was incompatible with other arson profiles such as revenge or
vandalism." Mountain West, 697 P.2d at 1364. Substantial
evidence supports the conclusion that the Waymires intentionally
caused the destruction of their home.
Having concluded that substantial evidence supports the
trial judge's finding that the Waymires intentionally caused the
loss of their home and that the District Courts findings are not
clearly erroneous, we need not address the other issue raised by
the appellants. The judgment of the District Court is
AFFIRMED.
We Concur: