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02/24/95 PENNSYLVANIA NATIONAL MUTUAL CASUALTY

February 24, 1995

PENNSYLVANIA NATIONAL MUTUAL CASUALTY INSURANCE COMPANY
v.
WILLIAM J. LANE



Appeal from Marshall Circuit Court. (CV-93-200185). William D. Jetton, Trial Judge.

Released for Publication June 25, 1995.

Almon, Shores, Houston, Ingram, Cook, and Butts, JJ., concur.

The opinion of the court was delivered by: Almon

ALMON, JUSTICE.

Pennsylvania National Mutual Casualty Insurance Company appeals from a final judgment dismissing its counterclaim against William and Glenice Lane in the Lanes' action for insurance benefits based on a fire that destroyed the Lanes' home. Pennsylvania National's counterclaim alleged that Mr. Lane had intentionally caused the fire. *fn1 The issue is whether Pennsylvania National presented substantial evidence that Mr. Lane had a motive to burn his home, an element of its arson defense to the insurance claim.

On May 26, 1992, a fire destroyed the Lanes' Marshall County residence and its contents. The Lanes were out of state on vacation at the time of the fire. Before the Lanes left for vacation, Mr. Lane gave a key to the house to David Moon, a friend of one of the Lanes' daughters, who was to check on the house while they were gone. On the night of the fire, Daniel Small, a teenaged neighbor, was outside near the Lanes' home. He saw David Moon and another man go into the house, where they remained for approximately three to five minutes. Approximately 10 to 15 minutes after Moon and the other man left the house, Small noticed smoke coming from the house; he alerted his parents, who called the fire department.

Olen Morrison, a fire marshal and the assistant chief of the Boaz Fire Department, participated in extinguishing the fire, and he afterwards investigated the fire. Upon arriving at the house, Morrison found that the front door was locked and had to be kicked open to gain access to the burning house. He concluded from his post-fire investigation that there was no evidence of forced entry into any door or window of the residence. Morrison found some evidence indicating that the fire may have been intentionally set, and he requested that the State fire marshal's office conduct a further investigation.

Larry Gardiner, a deputy fire marshal for the State of Alabama, determined that the fire was intentionally set. Deputy Fire Marshal James Epperson interviewed several people, including David Moon, in connection with the State's investigation. Moon confirmed that he had been given a key to the Lanes' residence and further stated that he had been in the Lanes' house one or two times during the several days before the fire; that he had driven to the house the night of the fire; that he had noticed nothing unusual about the house at that time; and that he had returned to the house at approximately 3:00 p.m. the day following the fire.

The Lanes' residence and its contents were insured by a policy of insurance issued by Pennsylvania National. Pennsylvania National retained Pyrtech, Inc., on May 29, 1992, to investigate the cause and origin of the fire. Jeffrey Crain, one of Pyrtech's investigators, examined the house on June 1, 1992. He concluded that the fire had been intentionally set in several independent areas throughout the main floor of the house. Crain determined from the patterns of burning that the fire was caused by the ignition of liquid accelerants that had been poured onto the floor in these areas.

On November 30, 1992, Pennsylvania National paid $18,887.75 to Mrs. Lane and $77,955.59 to Transamerica Financial Services and Bank of Boston, the mortgagees listed on the insurance policy. These payments were for damage to the dwelling and to Mrs. Lane's personal property. On July 26, 1993, Pennsylvania National paid $1,493.29 to Mrs. Lane for additional living expenses. Pennsylvania National denied any payment to Mr. Lane, contending that the residence was intentionally burned by someone acting on his behalf.

On September 16, 1993, the Lanes filed a complaint against Pennsylvania National, alleging breach of contract, fraud, and bad faith failure to pay their insurance claim. Pennsylvania National's answer included a counterclaim alleging that Mr. Lane intentionally caused the fire and that Pennsylvania National, therefore, was entitled to recover from him the $98,336.63 it had paid to Mrs. Lane and to the listed mortgagees. The Lanes answered the counterclaim, denying that Mr. Lane had intentionally caused the fire or that he was guilty of any fraudulent conduct.

On December 21, 1993, the Lanes filed a motion for summary judgment on the counterclaim. The motion was supported by Mr. Lane's affidavit in which he stated: "I did not have anything to do with causing the fire, nor did I pay anyone or request anyone to set the fire." The parties concede that the Lanes' motion, supported by Mr. Lane's affidavit, was sufficient to shift the burden to Pennsylvania National to present substantial evidence creating a genuine issue of material fact as to whether Mr. Lane engaged in arson. For Pennsylvania National to establish a prima facie case of arson, it must prove that "(1) the fire was intentionally set; (2) [Mr. Lane] had a motive for committing the alleged arson; and (3) [Mr. Lane] either set the fire or had it set, which may be proved by unexplained surrounding circumstantial evidence implicating [Mr. Lane]." Shadwrick v. State Farm Fire & Casualty Co., 578 So. 2d 1075, 1077 (Ala. 1991); see Mueller v. Hartford Ins. Co., 475 So. 2d 554 (Ala. 1985); Great Southwest Fire Ins. Co. v. Stone, 402 So. 2d 899 (Ala. 1981).

As to the first element, the record contains no evidence supporting any theory of the cause of the fire but arson. As to the second element, Pennsylvania National submitted the statements of Mr. Lane made in a July 30, 1992, examination under oath to show that Mr. Lane had a motive to set fire to the Lanes' residence. *fn2 Pennsylvania National concludes its argument relating to motive by stating: "Mr. Lane's efforts to sell the house, the resulting friction with his wife, his interest in moving to Florida, his serious problems with his children and his unnatural desire to get away from his children certainly combine to show a motive by the insured for the destruction of the property."

The statements of Mr. Lane upon which Pennsylvania National bases its Conclusion and which it submits as substantial evidence of a motive by Mr. Lane to cause his home and its contents to be burned are as follows:

"Q. Had you ever either talked about putting the house up for sale or, in ...


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