because plaintiff has a viable claim for "bad faith" consequential damages. Whether this contention is simply a lapse in logic, or an awkward attempt to camouflage the weakness of plaintiff's claim, counsel completely fails to address the standard of "egregious circumstances" required by the New Jersey Supreme Court to support an award of punitive damages.
Moreover, plaintiff points to nothing in the summary judgment record to support its claim for punitive damages. "A motion for summary judgment must be granted unless the party opposing the motion can produce evidence which, when considered in light of that party's burden of proof at trial, could be the basis for a jury finding in that party's favor." J.E. Mamiye & Sons, Inc. v. Fidelity Bank, 813 F.2d 610, 618 (3d Cir. 1987) (Becker, J., concurring) (citing Anderson, 477 U.S. 242, 91 L. Ed. 2d 202, 106 S. Ct. 2505, and citing Celotex Corp. v. Catrett, 477 U.S. 317, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986)). PMI bears the burden at trial of presenting facts sufficient to support a claim for punitive damages, facts tending to show malice on Aetna's part. PMI has not invited this court's attention to a single fact in the summary judgment record upon which it plans to rely at trial in support of its claim for punitive damages. Accordingly, Aetna will be granted partial summary judgment on plaintiff's claim for punitive damages.
B. PMI's Cross-Motion for Partial Summary Judgment
Under the standard for summary judgment set forth above, this court must first inquire whether there are any genuine, material factual issues which preclude a summary adjudication. See Anderson, 477 U.S. at 250. A material factual issue is one which "might affect the outcome of the suit." Orsatti v. New Jersey State Police, 71 F.3d 480, 482 (3d Cir. 1995). Whether the fire at PMI's headquarters was caused by accident or arson is a material factual issue in this case.
PMI contends that it is entitled to partial summary judgment on the issue of Aetna's liability for the insurance proceeds because the fire was not incendiary in origin. PMI's Rule 56 Brief at 9-13. Interestingly, PMI admits that there is a dispute between the investigators as to whether the fire had two or three distinct points of origin,
but nowhere asserts that the fire had a single point of origin. Id. at 9-10. However, PMI offers the testimony of Battalion Chief, Frank Zoda, of the Trenton Fire Department, who was on the scene while firefighters extinguished the Hamilton Avenue fire, whose initial report stated that an electrical cause was "possible." See PMI's Rule 56 Brief, exhibit E (Dep. of Frank Zoda), at 123; and id., exhibit F.
Notwithstanding this manifest factual dispute, which emerges from PMI's own brief, and which goes to what is arguably the most hotly disputed issue in this case, PMI contends that it can prevail on summary judgment. PMI's counsel argues that because of a lack of "scientific proof" of the fire's causation, none of Aetna's witnesses may testify at trial. PMI's Rule 56 Brief at 11-13. This astounding contention is based on a seriously flawed reading of the United States Supreme Court's decision in Daubert v. Merrell Dow Pharmaceuticals, Inc., 509 U.S. 579, 125 L. Ed. 2d 469, 113 S. Ct. 2786 (1993). Daubert addresses the standards to be applied by a trial judge when faced with a proffer of expert scientific testimony based upon an novel theory or methodology. See Lappe v. American Honda Motor Co., 857 F. Supp. 222, 228 (N.D.N.Y. 1994), aff'd sub nom. Lappe v. Honda Motor Co. Ltd. of Japan, 1996 U.S. App. LEXIS 12252, NO. 95-7389, 1996 WL 170209 (2d Cir. April 11, 1996). Nothing in Daubert suggests that trial judges should exclude otherwise relevant testimony of police and fire investigators on the issues of the origins and causes of fires. See, e.g., United States v. Markum, 4 F.3d 891, 895-96 (10th Cir. 1993) (discussing Daubert standard in context of firefighter's testimony as to cause of fire); cf. American Technology Resources v. United States, 893 F.2d 651 (3d Cir.) (holding that expert's qualification can be based on practical experience as well as academic training and credentials), cert. denied, 495 U.S. 933, 109 L. Ed. 2d 505, 110 S. Ct. 2176 (1990).
In sum, Aetna has pointed to evidence tending to show the suspicious nature of the Hamilton Avenue blaze. Plaintiff contests the assertion that the fire was the result of arson. Accordingly, there are genuine issues of material fact relating to Aetna's asserted reasons for its denial of coverage.
PMI also argues that Aetna has waived its right to deny, or is estopped from denying, coverage by virtue of its partial payment of $ 100,000.00. PMI's Rule 56 Brief at 15-18. This argument is meritless. Waiver is the intentional relinquishment of a known right. Shebar v. Sanyo Business Systems Corp., 111 N.J. 276, 291, 544 A.2d 377 (1988). There has been no waiver in this case. Aetna expressly reserved its rights in the March 15, 1993 letter from Ciaramella to PMI's adjuster, which immediately followed the $ 100,000.00 payment. NJNB's Rule 56 Brief, exhibit J. Furthermore, as this letter makes clear, PMI was then under a May deadline for submitting its proofs of loss. Id. PMI could not realistically have understood the $ 100,000.00 partial payment to be a signal of Aetna's willingness to pay the underlying claim several months before PMI had submitted its complete proofs of loss.
Estoppel is an equitable doctrine designed to protect an innocent party from prejudice resulting from an unwitting reliance on another party's misrepresentations. Hakimoglu v. Trump Taj Mahal Assoc., 876 F. Supp. 625, (D.N.J. 1994), aff'd, 70 F.3d 291 (3d Cir. 1995). PMI asserts that it was prejudiced by Aetna's "delay" in completing its investigation, so that its position was compromised between the extension of the advance in March, 1993, and the final denial of coverage, almost six months later. At best, these allegations are far too vague to establish the absence of any genuine issues of material fact regarding prejudice to PMI.
Finally, PMI argues that even if it were proved that Salvatore Polizzi had somehow been involved in causing the fire, that fact would not bar PMI from recovering the insurance proceeds. PMI's Rule 56 Brief at 18. The question whether, in all instances, intentional arson by a corporate officer or minority shareholder precludes recovery by the insured corporation is an unsettled issue in New Jersey. See Sassano v. BLT Discovery, Inc., 245 N.J. Super. 539, 550 n.3, 586 A.2d 307 (App. Div. 1991) (discussing numerous apparently contradictory New Jersey rulings). Compare Italian Fisherman v. Commercial Union Assurance Co., 215 N.J. Super. 278, 282, 521 A.2d 912 (App. Div.) (holding that arson committed by "principal managing agent" of a closely-held corporation precludes recovery of fire insurance proceeds by the corporation), certif. denied, 107 N.J. 152, 526 A.2d 211 (1987), with, Ambassador Ins. Co. v. Montes, 76 N.J. 477, 483, 486 n.3, 388 A.2d 603 (1978) (citing, with approval, Fidelity-Phenix Fire Ins. Co. v. Queen City Bus & Transfer Co., 3 F.2d 784 (4th Cir. 1925)), in which the president of a corporation, who owned 25% of the outstanding capital stock, intentionally set fire to a motor bus owned by the corporation; wherein the fire insurance company was compelled to pay the proceeds to the corporation for the benefit of creditors and stockholders other than the wrongdoer).
Happily, it is unnecessary for this court to reach this unsettled question of New Jersey law in order to decide the present motion. Aetna's August 31, 1993, letter clearly bases its denial of coverage, in part, on Aetna's conclusion that "one and/or both of the insureds, acting alone and/or in collusion with others, were fraudulently connected with [the fire]."
Aetna's Rule 56 Brief, Exhibit B, at 2. Thus, a genuine issue of material fact exists regarding whether Mary Ann Polizzi was involved in the alleged arson, or whether she is an innocent coinsured.
Because, as to each of PMI's asserted bases for summary judgment, there remain genuine issues of material fact, PMI's motion for partial summary judgment as to liability must be denied.
C. Aetna's Motion for Separate Trials
As noted at the outset of this opinion, Aetna has moved for separate trials on the coverage issues and the bad faith/punitive damages issues. Because this court will grant Aetna's motion for partial summary judgment as to both of these issues, there is no need to decide the question of a separate trial. Accordingly, the court will dismiss Aetna's motion for separate trials as moot.
For the reasons set forth above, the motion of defendant, Aetna Life & Casualty Co., for partial summary judgment barring recovery of bad faith damages and punitive damages will be granted. The cross-motion of plaintiff, Polizzi Meats, Inc., for partial summary judgment on liability will be denied. The remaining motions, by Aetna and NJNB for separate trials and by NJNB for summary judgment will be dismissed as moot. The court will enter an appropriate order.
STEPHEN M. ORLOFSKY
United States District Judge
Dated: June 19, 1996
This matter having come before the Court on June 19, 1996, on the motion of defendant, Aetna Life & Casualty Company, for Partial Summary Judgment, Michael A. Scannapieco, Esq., appearing on behalf of the defendant, and Michael F. Chazkel, Esq., of Chazkel & Associates, P.C., appearing on behalf of the plaintiff, Polizzi Meats, Inc., and, Brian J. Mulligan, Esq., of Sterns & Weinroth, P.C., appearing on behalf of the plaintiff-intervenor, New Jersey National Bank; and,
The Court having considered the complaint, the answer, and the briefs, depositions and affidavits filed in support of and in opposition to these motions, for the reasons set forth in this Court's OPINION filed concurrently with this ORDER;
It is on this 19th day of June, 1996, ORDERED that:
1. The motion of defendant, Aetna Life and Casualty Company, for partial summary judgment on PMI's claims for bad faith damages and/or punitive damages is GRANTED; and,