Saturday, July 30, 2016

Firefight

Concord Gen. Mutual Ins. Co. v. Gritman, 2016 VT 45

By Elizabeth Kruska

Back in the spring of 2009, a bunch of kids in Ludlow did what kids in towns full of second homes will sometimes do—they went to an empty vacation house to hang out. Some empty vacation houses also have attractive nuisances, like swimming pools, or in this case, an outdoor fireplace. I have always admired outdoor fireplaces, and thanks to this opinion, I now know the name for an outdoor fireplace is chimnea.

Anyway, the kids – and I use the word “kids” loosely—these are young adults, probably in their late teens or early twenties, saw the chimnea on the deck and thought exactly what you would expect, “let’s build a fire!” Because the hanging out included drinking beer (the quantity of which is somewhat disputed) and smoking weed, a couple conclusions were made. First, it’s fair to say that judgment was at least a little bit impaired, and second, there were plenty of lighters available for starting the fire in the chimnea.

So, the kids set about finding some brush and sticks and whatnot for the fire. They put the tinder in the chimnea and someone lit it, although it’s really not clear whose lighter started the fire. The fire got going, and there was apparently testimony at trial that the fire was hot enough that people had to back away from the fire. Eventually, the kids decided to put out the fire by putting some dirt on it, and pouring beer on it. Various kids left at different times.

Sometime overnight the house burned to the ground and the homeowners, the Flanagans, suffered considerable losses. They sued the kids involved and at trial were awarded some amount of damages. One of the defendants, Mr. Stinson, appealed the finding against him on three separate grounds. He argued that he was found to be liable for the damages under a concerted-action theory and he should not have been found so liable. He also argued that the method the trial court used to figure out the damages was wrong. He also makes a constitutional argument that pre-judgment and post-judgment interest at 12% is unconstitutional. SCOV affirms on all these counts.

Let’s start with the constitutional argument. This wasn’t terribly well presented, in SCOV’s opinion, and they almost didn’t address it. But they did, and said that the statute is constitutional. In civil cases there can be awards of prejudgment and post-judgment interest, and by statute, the interest rate is 12%. Mr. Stinson argued that the interest rate should be tied to the market interest rate. Otherwise, when there’s a disparity, plaintiffs could end up getting a windfall. SCOV gets down to basic constitutional law principles and says that constitutionally-speaking, commercial transactions are subject to a rational basis review. That is to say, it’s constitutional if there is any rational relation between the statute and what it is trying to do. SCOV there is a rational basis here, and if people have an issue with the statute, that it’s really best addressed through the legislature.

With that out of the way, let’s get to the other issues. Mr. Stinson argued that he really shouldn’t have been found liable under concerted-action liability. Vermont follows the Restatement (Second) of Torts with respect to concerted action. Here, the Flanagans argued that Mr. Stinson knew one of the other kids present did something negligent and substantially assisted or encouraged that person.

There are three ways someone could be liable under a concerted action theory. First is if someone acts with another person in common design. Let’s use these basic facts as an example. Suppose A and B decided together to make a fire. A gathered the brush and B lit the match. They acted in common design to get to the point of lighting a fire. A second way is if someone knows the other’s conduct is a breach of duty and gives that person substantial encouragement or assistance. So here, let’s say B doesn’t have anything to do with setting the actual fire, but instead tells A how to do it or otherwise assists A so the fire gets going. The last way is if a person assists another person and the first person’s conduct on its own is a breach of duty to a third person.

The case here is based on the second theory, that Mr. Stinson, while not necessarily the person who set the fire, provided substantial encouragement or assistance. SCOV is clear in saying that the actor has to have actual knowledge or awareness of what’s going on, and not just be a bystander. The actor also has to provide actual assistance. But, it also isn’t just knowledge. The actor also has to provide actual substantial assistance in the act. Five factors have to be considered. First is the nature of the act. Second is the nature and kind of assistance given. Third is the relationship between the actor and the other person engaged in the act. Fourth is whether the actor was present at the event or not. Last, the actor’s state of mind must be considered.

Mr. Stinson argued that the facts were insufficient to prove that he had knowledge of the negligent act that caused the house to catch fire. He further argued that even if he knew, he didn’t give substantial assistance or encouragement. Last, he argued that causation couldn’t be proven.

SCOV disagrees. They go through the facts and determine that Mr. Stinson knew about the fire in the chimnea. Everyone present seemed to know it was a pretty hot fire, as they had to step back from it. Mr. Stinson left before other people, but there wasn’t any evidence to suggest he took any steps toward making sure the fire was appropriately extinguished before he left.

SCOV also points out that Mr. Stinson was drinking beer with the other kids before they made the fire, and in their impaired state, were all involved in making the fire. He was there when they decided to do it, and he helped to gather and collect brush to feed the fire. He was present during pretty much the whole gathering, and participated in it. And when he left, even though he left a little bit before other people, he didn’t make any plans or effort to make sure the fire was completely out. SCOV says that in total, the jury was well within its province to find him liable under a concerted action theory.

Mr. Stinson also tried to make the argument that nobody actually really testified about who actually started the fire. This isn’t a Billy Joel moment where someone proclaims “we didn’t start the fire” this is more a moment of “someone started the fire but nobody could really say who.” Mr. Stinson argues that since nobody knows who started the fire, nobody knows who was actually negligent. SCOV disagrees with this and points out that there was expert testimony, and even though the expert pointed out there were a couple different means of ignition, it’s clear it was, you know, the fire on the deck of the house that caused the house to burn down.

The Flanagans lost a lot of personal property in the fire, and relied on an insurance adjuster to establish the value of the property. Here’s the thing about personal property: it’s hard to know what it’s worth. Some things change in value over time—some goes up and some goes down. Some never changes. The insurance adjuster relied on estimates and some documents from the Flanagans, and also did some calculations. The adjuster figured out the cash value of the property by taking what he believed to be the value of it, and applying a depreciation factor to each lost item. In the end, he determined the loss to be just over $100,000.

Mr. Stinson repeatedly objected to this method of calculation, and instead argued the court should use the actual market value of the items in their pre-fire state.

The thing is, this is hard. When we’re talking about a house full of stuff, we’re talking about valuables, but we’re also talking about things that are hard to value. What’s the fair market value of a toaster? It depends on the toaster, I guess. My parents have a toaster they got as a wedding gift in 1972, and even though it’s got some serious quirks, it still toasts. My dad loves that toaster and if I asked him what it would cost to replace it, he would tear up and tell me it is irreplaceable. The fair market value of this toaster is probably $10, which I would call generous, given what I know of this toaster.

In any case, somehow . . . someone has to come up with a way to assign a value to the contents of the house. It’s not reasonable to expect that the Flanagans would get the value they paid for the items (unless they were brand new, of course). SCOV says that the loss of value in property is the value compared to its pre-injury value. SCOV also says that it’s fine for a jury to consider depreciation in terms of figuring out the value. If the Flanagans presented evidence that their living room couch cost $1000 when they bought it 10 years ago, it seems fair that the jury could consider 10 years of wear and tear in figuring out the proper value.

SCOV also points out that this was an issue going in to the trial. Mr. Stinson could have called a witness or witnesses to present other methods of calculation or different arguments. But he didn’t, so the jury was free to consider the evidence before them.

Justice Skokglund dissents. She points out that based on the facts, there was some doubt as to whether Mr. Stinson knew of the others’ tortious conduct that caused the house to burn down. In the crew of kids involved, the only one who was completely off the hook was the one who left before the fire even started. The testimony about when Mr. Stinson left the party was varied. Justice Skoglund struggles with what the tortious conduct even was, since there was no causal nexus between the kids’ trespassing and the negligence that caused the house to burn down. She points out the only real facts tying Mr. Stinson to the house burning down was the fact that he was there when the fire in the chimnea was burning and that he didn’t say anything to the remaining friends about making sure the fire was out when he left. He wasn’t there when the other kids attempted to put dirt and beer on the fire, so it’s hard to say he was responsible for what they did or didn’t do. And finally, just because he was there while the fire in the chimnea was burning, nobody really knows what his state of mind was.

Justice Skoglund sees this more along the lines that Mr. Stinson was there while the ill-advised chimnea fire took place, but to attribute the house burning down to his negligence is too attenuated.

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