Standards of proof in Set Fire Bad Faith cases
In Newman v. State Farm, the 10th circuit discussed the quantum of proof necessary for an insurance company to show a set fire and avoid a bad faith claim. The Newman's house burned down when no one was home; Mrs. Newman had moved out and the rest of the family was camping. The cause and origin inspection showed the fire started in or near the stove, but no accelerants were found, and no cause was determined. State Farm was getting ready to pay the claim when it received information that the Newmans had paid someone to burn the house.
When the claim wasn't paid, the Newmans sued State Farm for breach of contract and bad faith. State Farm got summary judgment on the bad faith claim and the jury found for State Farm on the breach of contract claim. On appeal, the Newmans complained that the jury was not properly instructed on State Farm's intentional acts and false swearing defense.
“First, the Newmans argue[d] that contrary to Oklahoma law the district court did not instruct the jury that State Farm must prove each of the necessary elements of its arson defense.” But in a case where evidence of arson is circumstantial, proof that the fire had an incendiary origin along with proof of motive, intent, and opportunity by the insured is sufficient. The insurer is not required to prove motive, intent, and opportunity specifically as elements of arson. The jury was properly instructed that the affirmative defense of fraud need only be shown by a preponderance of the evidence, not by clear and convincing evidence. As to the false swearing defense, no detrimental reliance need be shown, since that was not a requirement under the policy.
There were also claims that State Farm's experts should not have testified, and that the trial court erred in excluding an additional expert of the Plaintiffs who was not timely listed. These rulings were affirmed based on the standard of review.
Those of you who work on appeals should take note of this case, as the record was not properly presented to the appellate court -- by either party. The court was extremely critical of the parties' failures to follow its rules.
