Arson and Fraud

Jury Says "No" To Arson Charge

NEW YORK - Jurors awarded the owner of a burned-out restaurant and inn more than a million dollars recently, refusing to accept testimony by insurance company witnesses that the 1993 fire was intentionally set and the building was nearly devoid of furniture (West Branch Realty Corp. v. Exchange Insurance Co.), No. 1931/94 N.Y. Sup., Putnam Co.)

Trial in the Dreamworld Inn case lasted more than seven weeks, as West Branch Realty Corp. attempted to collect $1 million on the building and $195,000 for the contents.

West Branch purchased the turn-of-the-century building and 21 acres of land for $485,000, intending to renovate the property and reopen by March 1993.

Renovations were not completed in July 1993, when the building was destroyed by fire.

The local fire chief declined to state a cause because of the degree of fire consumption, but Exchange Insurance Co. conducted its own investigation. Investigators included the head of the company's special investigations unit, Michael Jasek, and cause-and-origin expert Ralph Fuente of Loss Analysis, Inc.

Exchange did not allege arson until West branch sued for coverage in November 1994, according to West Branch.

Fuente testified at trial that he visited the site on two dates immediately after the event and determined that the fire was deliberately set. According to a trial report, he denied on cross-examination that investigators were predisposed to find arson, but stated that he had been told the fire was arson b3fore his first visit to the site.

Exchange also contended at trial that the contents claim was exaggerated, calling members of the town planning board and the town engineer to state that the building was nearly empty when they toured it shortly before the fire. Similar testimony was given by an electrician who had been working at the site.

West Branch challenged the testimony on cross-examination, attempting to show that local officials did not enter rooms where the furniture was said to be stored, or had faulty recollections.

The jury deliberated for two days, concluding that the cash value of the building was just over $1 million, which was set off by a $450,000 mortgage payment, and that West Branch was entitled to its full claim for lost contents. The verdict was issued on Feb. 21.

West branch was unable to introduce evidence by its own experts that the fire had an electrical cause. While West Branch argued that it had not conducted an independent investigation until Exchange first raised the arson defense, the trial court ruled that the delay in discovering the evidence warranted its preclusion.

West Branch is represented by Dennis T. D'Antonio and Jonathan D. Abraham of Weg & Myers in New York. Exchange is represented by Thomas O'Connor of Bouck Holloway Kiernan & Casey of Albany, N.Y.