Representing Insureds Since 1970



A Connecticut federal jury held recently that Donald Golden neither set fire to his $2.9 million home nor intentionally misrepresented material facts to an insurance investigator (Pacific Indemnity Co. v. Donald Golden (No. 5-89-388 [GLG], D. Conn.).

Jurors were reportedly charged on materiality in accordance with a 1993 Second Circuit U.S. Court of Appeals' decision in the same case, wherein the court reversed summary judgement for the insurance company and sent it back for trial.

Donald Golden sought coverage from Pacific Indemnity Co., a Chubb Insurance Co. affiliate, after a December 1988 fire destroyed his Greenwich, Conn., home. The home, which was for sale for $2.9 million at the time of the fire, had recently been appraised for $2.7 million and was insured for $2.25 million, according to a trial report.

Pacific investigated the fire, which was considered suspicious by the local fire marshal. No one was ever charged.

Pacific paid $1,710,255.99 to a mortgagee, but filed a declaratory judgment action against Golden to recoup that sum and to allow it to deny coverage to Golden.

The Misrepresentation.

At issue throughout the case was the materiality of a lie told by Golden to a Pacific investigator 12 days after the fire.

On the night of the fire, Golden told the local fire marshal that he had 60 gallons of gasoline stored in the house. The gasoline was safely removed.

Golden told police the gasoline was for his snowmobiles. At an interview 10 days later, at which he was not under oath, Golden repeated the lie to Pacific's investigator. Golden later said the gasoline was to be used for poisoning a neighbor's landscaping plants and that he lied to the investigator to be consistent with the story given police.

Pacific contended the falsehood was material in that it affected its investigation, and the District Court agreed. The Second Circuit reversed, saying the materiality of the misrepresentation was for the finder of fact.

(Text of Opinion in Section B. Mealey's Document #10-960508-102).

Investigator's Cross-Exam.

The issue was raised again at trial, where Pacific's investigator testified that she relied on the gasoline can testimony. On cross-examination, Golden's attorney asked, "And would it be correct that when you go out and interview insureds on claims on this, you're not taking what they say at face value, are you? "No," the investigator answered.

Golden's attorney elicited an affirmative response when he asked next if the investigation into the facts would continue even after an interview. He then asked, "So you aren't accepting what Mr. Golden was saying to you as being true?

"No." the investigator replied.

Golden's attorney argued to the jury that those responses showed a lack of reliance on the misrepresentation. He also argued that Golden did not intend to mislead the insurer, but wanted to remain consistent with the story given police to avoid trouble for any actions toward his neighbor.

The jury found for Golden on the arson question as well.

(Text of Jury Verdict Form in Section C. Mealey's Document #20-960508-103).

No Arson.

The jury also declined to adopt Pacific's theory that Golden set the fire or caused it to be set. Pacific relied on testimony from the Greenwich, Conn. Fire marshal and the state police, who opened that three separate ignition points and who testified that the gasoline was found with a 150-foot length of clothesline floating in it as a possible wick.

Golden countered that the firefighter who removed the gasoline from the house found it at the opposite end of the house from the fire, and upon opening the closed containers did not observe the clothesline that was readily visible more than a day later.

Golden also questioned why the rope's presence was not mentioned in an affidavit for a search warrant the day after the fire, why the rope was floating and why it had not become saturated and sunk by the time the photograph was taken.

Golden also asserted that several months prior to the fire he had increased his insurance to $2.25 million despite the insurer's attempt to have him raise it to $2.5 million, and that he had a probable buyer for his house at or near the asking price at the time of the fire.

At the end of the three-week trial on March 21, Pacific's oral motion for judgment notwithstanding the verdict was denied. No appeal was filed.

Golden is represented by Dennis T. D'Antonio of Weg & Myers in New York. Pacific Indemnity is represented by Franklin D. Tell and Alfred Polidore of Tell, Cheser & Breitbart in New York.