Providence Mutual Fire Ins. Co. v. Brendan Kinsella (2011)

MEMORANDUM OF DECISION

This case was tried to the court on May 3, 4, and 5, 2011.   Both parties were represented by experienced counsel who filed post-trial briefs on May 20, 2011.

The plaintiff, Providence Mutual Fire Insurance Company, sued the defendant, Brendan Kinsella, for monetary damages arising out of the plaintiff's payment of the defendant's insurance claim for the alleged theft of a race car engine and auto tools from his garage at his home in New Milford.   The plaintiff paid the defendant $45,045.08 on the claim but now alleges that it has discovered that the engine and tools were never stolen.   The complaint is in three counts:  count one alleges breach of contract;  count two is based upon a breach of the implied covenant of good faith and fair dealing;  count three is based upon fraud.

The court finds the following facts.   The plaintiff purchased a homeowner's insurance policy from the defendant for a home on Pumpkin Hill Road in New Milford.   He is a successful building contractor who has for many years pursued the hobby of mud racing, a style of automobile racing involving drag racing on dirt or mud.   During the relevant time period, he was a member of the National Mud Racers Organization and raced in its sanctioned races all over the country.   He was extremely competitive and spent substantial time and money on his hobby.

At the end of 2004, the defendant paid $42,000 to purchase a drag racing engine from Steve Schmidt, a well-known builder of racing engines.   The engine had a displacement of 705 cubic inches and, therefore, was known as a 705 engine.   This was an extremely large engine for this style of racing.   So large, that witnesses at the trial had only seen one other engine this large in competition, and that engine was owned by Jason Williams, a racer from North Carolina or West Virginia, who was the defendant's major competitor.   The defendant's engine was further distinguishable by a steel block and a custom made “stretch carburetor” made by Gary Williams.   To the knowledge of the other witnesses, only Jason Williams had a Gary Williams stretch carburetor of this kind.

Using his new engine, the defendant raced during the 2005 season using a chassis with which he grew dissatisfied.   At the end of the racing season in late fall he ordered a new chassis from Shamrock Welding for the 2006 season.   He removed the 705 engine from the old chassis, and wrapped the engine in blankets and stored it in the garage attached to his house.

On January 8, 2007 at 12:09 p.m., the defendant was called by his burglar alarm company, United Alarm, to notify him that the burglar alarm at the plaintiff's home was sounding.   Soon thereafter, the defendant submitted a burglary claim and reported to the plaintiff that when he arrived at his house after receiving the call from his alarm company he found that the back door of his garage was kicked in, that the middle bay of his garage was open, and that the 705 Steve Schmidt engine was missing as was a tool box and tools.   Apparently the alarm was activated when someone forced entry into a detached garage from which nothing was taken.   A report was made to the New Milford Police Department.   The police made an investigation which ended without any arrests being made.

The defendant gave the plaintiff a full written statement regarding the loss.   Thereafter, the plaintiff took a statement under oath from defendant and, by check dated February 27, 2007, paid him $45,045.08 for theft of the engine, tool box and tools.

Sometime in January or early February 2007, the defendant drove his truck to New Jersey and delivered the 705 Steve Schmidt engine with a Gary Williams stretch carburetor to Pat Musi, an engine builder.   Mr. Musi was engaged by the defendant to refresh the engine and to add a nitrous oxide feature which would allow the defendant to compete in a new class.   Pat Musi completed this work on or about February 13, 2007 and submitted an invoice to the defendant in the amount of $14,087.30.   The defendant picked up the rebuilt engine from Pat Musi and installed it in the new chassis from Shamrock Welding.   He raced with this chassis and engine during the 2007 racing season.   He told other competitors and friends that it was a new engine built by Pat Musi.

Sometime during the summer of 2008 the defendant had a falling out with his best friend and racing companion, Scott Sanford, over an entirely different race car.   But, this dispute led Mr. Sanford to make a complaint to the New Milford Police Department.   Included within the complaint were details of Mr. Sanderson's suspicions that the defendant had made a false report about the 2007 theft of the 705 engine and that the defendant had committed insurance fraud.   Mr. Sanford had gone so far as to hire an investigator to help him.   During the course of this complaint someone made a report to the plaintiff that the defendant still possessed the 705 Steve Schmidt engine which he had reported as stolen.   This led the plaintiff to do an investigation which caused it to bring this lawsuit to recover the money it had paid to the defendant for the theft of the engine.

The facts found above are essentially uncontested.   The facts found below are based upon the court's determination of the credibility of the witnesses and upon circumstantial evidence.  “It is the trier's exclusive province to weigh the conflicting evidence, determine the credibility of witnesses and determine whether to accept some, all or none of a witness' testimony.”  (Internal quotation marks omitted.)  Hoffer v. Swan Lake Ass'n., Inc., 66 Conn.App. 858, 861 (2001).  “[T]he probative force of the evidence is not diminished because it consists, in whole or in part, of circumstantial evidence rather than direct evidence ․ It has been repeatedly stated that there is no legal distinction between direct and circumstantial evidence so far as probative force is concerned.   It is not one fact, but the cumulative impact of a multitude of facts which establishes guilt [or liability] in a case involving substantial circumstantial evidence.”  (Citations omitted.)  State v. Riser, 70 Conn.App. 543, 552 (2002).   Here, it is the cumulative impact of a multitude of circumstantial facts which leads the court to conclude that the plaintiff's version of the facts is true.

Because the defendant delivered to Pat Musi a 705 Steve Schmidt engine with a Williams stretch carburetor after the theft was reported, his explanation of this seeming contradiction is crucial to the resolution of this case.   The defendant attempted to explain this contradiction by testifying that he bought a second 705 Steve Schmidt engine with a Williams stretch carburetor for $18,000 before the original engine was even reported stolen.   He testified that he paid the money in cash to a racer named Tony who he met at the end of October 2006 at a track or drag strip in New Hampshire.   He testified that Tony was getting a divorce and was liquidating his racing equipment without the knowledge of his wife.   The defendant testified that this need for secrecy was the reason that he paid cash without a receipt, and that Tony refused to give the defendant his last name or telephone number.   The defendant testified that Tony told him to meet him on the day after Thanksgiving in a parking lot off the Quincy Market exit from the Mass. Pike in Boston.   The defendant said he followed these instructions, met Tony and followed him for about 20 minutes to Tony's garage where he paid Tony the cash and took possession of the engine.   He testified that this is the engine which he sent to Pat Musi, not the original 705 engine which he had purchased from Steve Schmidt and which was stolen from his garage.

There are several reasons why I do not believe this story.   The defendant is a successful business person who meets with customers, suppliers and subcontractors on a regular basis.   These meetings are arranged and confirmed by phone so that appointments take place as scheduled.   The plaintiff obtained the defendant's cell phone records, many of which were offered in evidence.   There was no evidence of any calls to or from Tony. It is not believable that the defendant and Tony would have set up an appointment to meet a month later at a busy section of Boston without any confirmation by phone in the interim.   I do not believe that the defendant would have driven to Boston with $18,000 in cash in his truck without confirming the time and place of the meeting scheduled more than a month ago.   It is interesting to note that when the defendant was deposed on April 28, 2010 he testified that he had seen the engine for sale at the track in New Hampshire:  “Sometime probably back in October I had been calling the guy.”   This deposition took place before the cell phone records had been received and before he realized how devastating the records could be for his case.   Then, once he realized that his phone records would not show any such calls to Tony, he changed his story at trial and testified that Tony would not give him his telephone number and that they had no subsequent contact after the meeting in October at the track.

It does not make sense that Tony would bother to try to keep his identity secret from the defendant.   People at the New Hampshire track would surely know the last name of a racer named Tony who raced with a 705 Steve Schmidt engine.   This engine was so big and distinctive many people at the New Hampshire track would have known Tony's identity.   The defendant could easily have learned Tony's last name and how to contact him.

Another reason why I do not believe the defendant's story that he bought another 705 engine from Tony is that he did not tell his best friend and racing partner, Scott Sanford, that he had done so.   Both men testified that at, at the time of this alleged purchase in November 2006, that they were “like brothers.”   They went to races together and worked on their cars together.   Mr. Sanford kept his car in the defendant's detached garage.   Mr. Sanford had keys to both of the defendant's garages and the code for the burglar alarm.   It is inconceivable that the defendant would have made a great deal on the purchase of a new engine and not have told Mr. Sanford.   The defendant testified that he did not tell Mr. Sanford about the new engine at the time of the purchase because Mr. Sanford was a negative person and he did not want to listen to a negative reaction.   This is not credible.   In fact, the entire story of the purchase of a second engine from Tony is so incredible that it undermines the defendant's entire testimony.

When the defendant received the engine back from Frank Musi after the refreshing and conversion to nitrous oxide, he told Mr. Sanford and other friends that it was a Pat Musi engine which his girlfriend had bought from Pat Musi. This was clearly not true.   The defendant had no plausible explanation for this untruth.   The only reasonable inference which can be drawn is that the defendant was attempting to pass this engine off in the racing community as a Pat Musi engine which had no relationship to his 705 Steve Schmidt engine which allegedly had been stolen.

In order to offset the overwhelming circumstantial evidence that he lied about buying a second engine, the defendant advanced certain arguments which must be addressed.   First, he attempted to argue that the engine refreshed by Pat Musi was a 707 engine, not the 705 engine he purchased from Steve Schmidt.   This argument is rejected as being unsubstantiated.   It is based upon a hearsay statement allegedly made by someone who worked at Pat Musi's shop.   Pat Musi refuted it in his testimony.   Next, the defendant argued that there was a gouge in the original 705 Steve Schmidt engine as well as a welded oil pan which were not present in the engine refreshed by Pat Musi. Again, this claim was not substantiated by credible evidence.   The photographs offered by the parties simply are not clear enough to provide support for this claim.   Other than the plaintiff himself, there were no witnesses who supported this claim.   This includes Pat Musi as well as the plaintiff's friends in the racing community.   Next, the defendant argued that there would have been no need to send the original Steve Schmidt engine to Pat Musi for refreshing because it had not been raced enough to require refreshing.   But, this claim depends upon the credibility of the defendant, something which was destroyed by the fanciful story of buying a second 705 Steve Schmidt engine from Tony in Boston.

The defendant also attempted to rely upon testimony from Scott Whetmore, a friend, neighbor and material supplier to the defendant's business.   Mr. Whetmore testified that sometime around Thanksgiving 2006 the defendant asked him if he could store a race car engine in his heated basement.   He testified that the defendant told him that he had purchased the engine in Boston and needed to store it for awhile in a heated space.   He recalled that the defendant arrived at night with the engine in the back of a truck and that he stored it in his basement until sometime in January 2007 when he removed it.   Mr. Whetmore is not a racer and could not identify the engine.   The reasonable inference from Mr. Whetmore's testimony is that he was used as a dupe in the defendant's scheme to defraud the plaintiff.   The defendant simply loaded the original 705 Steve Schmidt engine into his truck and put it in Mr. Whetmore's basement sometime before the alleged burglary.   This was a convenient place to hide the engine until he could bring it to Pat Musi. By telling Mr. Whetmore that he had purchased the engine in Boston, he hoped to create a witness who would support his story if necessary.   It is important to recall that the plaintiff did not tell anyone else, especially his friend and partner Mr. Sanford, that he had purchased this engine in Boston and that he was storing it in the Whetmore basement while he had an identical engine stored in his own garage.

Finally, the defendant attempted to convince the court that the 705 Steve Schmidt engine was seen in his garage during a mid-December Christmas party, a time when Mr. Whetmore says that an engine was in his basement.   If true, this would establish that the defendant actually did have two engines just before the alleged burglary.   But, the evidence that the 705 engine was seen in the garage at the Christmas party was not convincing.   At most, Mr. Whetmore said that he saw something which took to be an engine wrapped in a blanket in the garage.   Because Mr. Whetmore went to Christmas parties at the defendant's home for several years, it is likely that he did not have a clear recollection of 2006.   But, even if Mr. Whetmore's recollection is accurate, the evidence is insufficient to draw the reasonable inference that the original 705 engine was under the blanket.   It is equally reasonable to infer that the defendant placed something under the blanket which resembled an engine in size so as to provide support for his scheme to defraud the insurance company.

There are similar problems with the defendant's claim that he had tools stolen along with the engine.   He testified that in the burglary he had lost a 5' x4' red, rolling, Mac toolbox filled with tools.   I believe the testimony of Scott Sanford that the defendant did not own such a toolbox at the time of the alleged burglary.   Further, there would have been no reason for the defendant to have had such a toolbox in his attached garage at that time because he and Mr. Sanford worked on their race cars in the detached garage.

The plaintiff bears the burden of proof on its complaint.   As to counts one and two the plaintiff must prove its case by the ordinary civil standard of fair preponderance of the evidence.  Rego v. Connecticut Ins. Placement Facility, 219 Conn. 339, 347 (1991).   As to the third count—fraud—the plaintiff must prove its case by clear and convincing evidence.  “[C]lear and convincing proof denotes a degree of belief that lies between the belief that is required to find the truth or existence of the [fact in issue] in an ordinary civil action and the belief that is required to find guilt in a criminal prosecution ․ [The burden] is sustained if evidence induces in the mind of the trier a reasonable belief that the facts asserted are highly probably true, that the probability that they are true is substantially greater than the probability that they are false or do not exist.”  (Citations omitted) Wildwood Associates Ltd. v. Esposito, 211 Conn. 36, 42 (1989).

Having carefully considered and weighed all of the evidence, I find that the defendant has proven, by clear and convincing evidence, that the defendant falsely reported to the plaintiff that he had sustained the loss of a 705 race car engine and a red Mac toolbox and tools in a burglary on January 8, 2007.   I find, by the same standard, that the defendant manufactured the entire incident and then sent the same 705 engine to Pat Musi for work which would enable him to attempt to pass off the engine as a new engine made by Pat Musi. The defendant attempted to deceive his friends, the plaintiff insurance company and this court.

The plaintiff's attorney has submitted an affidavit and itemized bill that the plaintiff has paid counsel fees of $46,851.02 plus out-of-pocket expenses of $3,017.55 to prosecute this action.   Although these fees and expenses are high, this was a time-consuming case to prepare and present because it was so dependent upon a great deal of circumstantial evidence.   The fees and expenses are found to be fair and reasonable.

The plaintiff has sustained its burden of proof on all three of its causes of action:  breach of contract, breach of the covenant of good faith and fair dealing, and fraud.   Judgment shall enter in favor of the plaintiff on all counts and it is awarded damages in the amount of $45,045.08 to recover for the insurance proceeds paid to the defendant.   In addition, on the third count based upon fraud, the plaintiff is awarded attorneys fees and out-of-pocket expenses in the amount of $49,868.57.   In addition, the plaintiff may recover its taxable costs provided they do not duplicate any of the out-of-pocket expenses already awarded.

BY THE COURT,

John W. Pickard

Pickard, John W., J.