Thorne v. Member Select Insurance Company
OPINION AND ORDER denying 134 Defendants Renewed Motion for Judgment as a Matter of Law. Signed by Magistrate Judge John E Martin on 1/23/17. (nal)
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
MEMBER SELECT INSURANCE
CAUSE NO. 2:09-CV-87-JEM
OPINION AND ORDER
This matter is before the Court on Defendant’s Renewed Motion for Judgment as a Matter
of Law [DE 134], filed by Defendant on July 5, 2016. Defendant asks the Court to vacate the jury’s
verdict and enter judgment in its favor under Federal Rule of Civil Procedure 50. On July 19, 2016,
Plaintiff filed a response, and on August 5, 2016, Defendant filed a replied.
On September 23, 2014, upon consent of the parties, the case was reassigned to the
undersigned United States Magistrate Judge to conduct all further proceedings and to order the entry
of a final judgment in this case. Therefore, this Court has jurisdiction to decide this case under 28
U.S.C. § 636(c).
On June 6, 2016, this case proceeded to trial before a jury. On June 7, 2016, at the close of
Plaintiff’s evidence, Defendant moved for judgment as a matter of law, and Plaintiff responded to
that motion. On June 8, 2016, in the interest of allowing the case to proceed to the jury and without
ruling on the merits, the Court denied Defendant’s motion and instructed Defendant to renew its
motion within 28 days after the entry of judgment under Federal Rule of Civil Procedure 50(b).
On June 9, 2016, the jury returned a verdict in Plaintiff’s favor, awarding $87,000 in
damages. Judgment was entered that same day. On July 5, 2016, within Rule 50(b)’s 28-day time-
frame, Defendant filed this renewed Motion for Judgment as a Matter of Law.
This case involves a dispute over whether Defendant, an insurance company, should have
paid Plaintiff’s claim for a fire at Plaintiff’s house. The parties agree that the following facts were
proven at trial.
Plaintiff owned a house in Griffith, Indiana (the “Property”). Plaintiff’s brother paid $86,000
for the home in 1998, and Plaintiff later purchased the Property in 2002 for $75,000.00. About two
years after purchasing the Property, Plaintiff refinanced his mortgage, which had been paid down
to $67,000, adding a line of credit worth $20,000 secured by the house.
Plaintiff slept mostly at his warehouse in Valparaiso, Indiana, rather than at the Property.
Gas and electricity to the Property had been disconnected because of non-payment, and Plaintiff had
not been to the house for over three weeks before it caught fire on February 24, 2008.
The parties cite Indiana state law for the judgment as a matter of law standard. However,
even in diversity cases such as this, federal standards apply to the procedural determination of
whether a verdict is supported by sufficient evidence. See Walter v. Bruhn, 40 Fed. Appx. 244, 246
(7th Cir. 2002).1 Under federal law, a Court may grant a motion for judgment as a matter of law if
“there is no legally sufficient evidentiary basis for a reasonable jury to find for [the non-moving]
party on that issue.” Fed. R. Civ. P. 50(a); Reeves v. Sanderson Plumbing Prods., 530 U.S. 133, 149-
The Walter court noted, “Although courts in [the Seventh Circuit] have formerly applied state standards to
the determination of mid-trial and post-trial motions regarding the sufficiency of the evidence, we have since ‘adopt[ed]
the federal reasonable-person standard accross the board: pre-trial, mid-trial, post-trial, and on appeal, for evaluating both
the merits and the quantum of relief,’ in diversity as well as federal cases.’” 40 Fed. Appx. at 246 (quoting To-Am Equip.
Co., Inc. v. Mitsubishi Caterpillar Forklift Am., Inc., 152 F.3d 658, 664 (7th Cir. 1998) (internal quotations omitted).
51 (2000). “Judgment as a matter of law is proper only if a reasonable person could not find that the
evidence supports a decision for a party on each essential element of the case, viewing the evidence
in the light most favorable to the nonmovant” and making all reasonable inferences permitted by the
evidence. Campbell v. Peters, 256 F.3d 695, 699 (7th Cir. 2001) (citations omitted); Susan Wakeen
Doll Co., Inc. v. Ashton Drake Galleries, 272 F.3d 441, 449 (7th Cir. 2001).
Defendant moves for judgment as a matter of law on two grounds. First, Defendant argues
there was insufficient evidence to support the jury’s finding that Plaintiff was entitled to insurance
coverage for the fire under Defendant’s policy. Second, Defendant argues that even if there was
enough evidence to support liability, there was insufficient evidence to support the jury’s damage
award in the amount of $87,000.
Defendant contends that Plaintiff did not introduce sufficient evidence to demonstrate that
the Property was covered by the policy at the time of the fire. The parties agree that the policy
covered Plaintiff’s house only if used as his “residence.” Plaintiff argues that sufficient evidence
supported the jury’s coverage finding and that judgment as a matter of law is inappropriate on this
The policy did not define the term “residence” with any specificity. The Court instructed the
jury to consider the following three factors in determining whether the Property was, in fact,
Plaintiff’s residence: (1) Plaintiff’s physical presence in the house; (2) whether Plaintiff had a
subjective intent to reside there; and (3) Plaintiff’s access to the house and its contents. Court’s Final
Jury Instruction 23; see also Alexander v. Erie Ins. Exch., 982 F.2d 1153, 1159 (7th Cir. 1993).
Plaintiff testified that he intended to live at the Property. He also testified that he kept almost
all his personal belongings at the Property, that his mail was delivered there, and that he went there
often, even if only to pick up his mail. Furthermore, other than his brother, who had also lived at
house, Plaintiff was the only person with keys to the house. All this tends to show, even minimally,
that the Property was Plaintiff’s “residence” under Indiana law. See Alexander, 982 F.2d at 1159.
There is also significant evidence supporting a finding that the Property was not Plaintiff’s
residence. Even though it was the middle of winter at the time of the fire, Plaintiff did not know that
the Property’s gas or electricity had been shut off. Plaintiff’s brother rarely saw Plaintiff at the
Property, and Plaintiff had been sleeping almost exclusively at his warehouse. In fact, Plaintiff had
not been to the Property in over three weeks before the fire.
In reviewing a jury’s verdict, however, the Court does not decide between competing sets
of evidence. For the jury’s verdict to stand, the Court need only be convinced that there is a
“reasonable basis in the record to support” the jury’s verdict. Susan Wakeen Doll, 272 F.3d at 44950. The Court “may not make credibility determinations or weigh the evidence.” Reeves, 530 U.S.
at 150 (citations omitted). Here, a reasonable person could find that the Property was Plaintiff’s
residence. He owned the Property, kept his belongings there, had his personal mail delivered there,
and was physically present—albeit infrequently—at the Property.
Accordingly, because there was sufficient evidence to support the jury’s finding concerning
coverage, the Court declines to disturb the jury’s verdict on that ground.
Defendant also argues that Plaintiff failed to introduce evidence sufficient to prove the
amount of his damages under the insurance contract. “There must be an adequate basis in the record
for an award of damages, but it is not necessary for the evidence to show the amount of damages
with absolute certainty or precision.” Burton v. GMC, No. 1:95-CV-1054, 2008 U.S. Dist. LEXIS
62758, at *75-6 (S.D. Ind. Aug. 15, 2008) (citing Trustmark Ins. Co. v. General & Cologne Life Re,
424 F.3d 542, 552 (7th Cir. 2005)). A trier of fact must not rely on speculation or guesswork in
arriving at the damages amount but may make a “reasonable estimate of damage based upon the
relevant data.” Harbor House Condo. Ass’n v. Mass. Bay Ins. Co., 703 F. Supp. 1313, 1319 (N.D.
Ill. 1988) (citations omitted). Put simply, the jury was to base their “decision on the evidence and
not on guess or speculation. However, damages [did not need to] be proven to a mathematical
certainty.” Court’s Final Jury Instruction 25.
After the parties presented their evidence, the Court instructed the jury that the “measure of
[Plaintiff’s] damages is the amount that would put [Plaintiff] in the same position he would have
been in had the contract been fulfilled.” Court’s Final Jury Instruction 25. Plaintiff’s insurance
policy with Defendant included the following language concerning how much Plaintiff would be
paid in the event of a covered loss:
HOW LOSSES ARE SETTLED
Personal Property and Structures that are not Building
We will pay Actual Cash Value at the time of the loss in settlement
of loss to: personal property; structures that are not buildings;
antennas, carpeting, awnings, domestic appliances and outdoor
equipment, all whether or not attached to buildings. This includes
deduction for depreciation. We will pay no more than: the cost to
repair or replace the damaged property with property of like kind and
quality; or the Limits of Liability of this Policy.
We will pay the cost to repair or replace the damaged part of the
Dwelling or Additional Structures with equivalent construction and
for equivalent use, without deduction for depreciation if, at the time
of loss, the amount of insurance for the Dwelling or Additional
Structures covered by this Policy is 80% or more of the Replacement
If the cost to repair or replace the damaged property is more than
$5,000, we will not be liable for Replacement Cost until actual repair
or replacement is completed with equivalent construction for
In determining Replacement Cost, do not include the cost of
excavation, underground pipes, wiring and drains, foundations or
other supports below the surface of the lowest basement floor. If
there is no basement, do not include the cost of those supports below
the surface of the ground and inside the foundation walls.
If you decide not to repair or replace the damaged property with
equivalent construction and for equivalent use, settlement will be on
an Actual Cash Value basis; this includes deduction for depreciation.
You may make claim [sic] within two years after the settlement for
any additional payment on a Replacement Cost basis if you repair or
replace the damaged property with equivalent construction and for
Homeowners Insurance Policy 6500-41904-IN-46 (“Homeowners Policy”) at 10 [DE 14-2].
The parties dispute the meaning of “Actual Cash Value” as applied to Plaintiff’s house. In
deciphering the meaning of a contract’s terms, Indiana state law governs. See Bourke v. Dun &
Bradstreet Corp., 159 F.3d 1032, 1036 (7th Cir. 1998) (“In a diversity case, a federal court applies
federal procedural but state substantive law. . . . Rules of contract interpretation are treated as
substantive to avoid driving a wedge between state and federal diversity contract cases.”).
Defendant argues that “Actual Cash Value” means replacement cost less depreciation. This
interpretation, though, is inconsistent both with the internal language of the policy and with Indiana
law. The policy language quoted above says that Defendant would “pay the cost to repair or replace
the damaged part of the Dwelling or Additional Structures with equivalent construction and for
equivalent use, without deduction for depreciation.” Homeowners Policy at 10 (emphasis added)
[DE 14-2]. However, the policy also says that if Plaintiff decided “not to repair or replace the
damaged property with equivalent construction and for equivalent use, settlement [would] be on an
Actual Cash Value basis; this includes deduction for depreciation.” Homeowners Policy at 10
(emphasis added) [DE 14-2].
Indiana courts repeatedly contrast “replacement cost” policy provisions with “actual cash
value” provisions. See, e.g., Erie Ins. Exch. v. Sams, 20 N.E.3d 182, 190 (quoting Travelers Indem.
Co. v. Armstrong, 442 N.E.2d 349, 352 (Ind. 1982)); Gregory & Appel Ins. Agency v. Phila. Indem.
Ins. Co., 835 N.E.2d 1053, 1060 (Ind. Ct. App. 2005) (“Actual cash value is not the equivalent of
replacement cost.”). Furthermore, Indiana Supreme Court has noted that replacement cost coverage
“reimburses the insured for the full cost of repairs, if he repairs the building.” Travelers Indem. Co.
v. Armstrong, 442 N.E.2d 349, 352 (Ind. 1982) (emphasis added). Here, Plaintiff did not repair or
replace the home after the fire. Accordingly, Defendant’s position – that Plaintiff needed to prove
replacement or repair costs to show the actual cash value of the Property – is unfounded.
The policy, itself, does not define “Actual Cash Value.” Similarly, Indiana law does not
provide a precise definition. Instead, Indiana courts have held that the “broad evidence rule” governs
the methods by which a party to an insurance contract may prove actual cash value. See Travelers,
442 N.E.2d at 352; Gregory & Appel Ins. Agency v. Phila. Indem. Ins. Co., 835 N.E.2d 1053, 1060
(Ind. App. 2005) (“In determining the actual cash value of property, Indiana follows the broad
evidence rule.”); Ohio Cas. Ins. Co. v. Ramsey, 439 N.E.2d. 1162 (Ind. App. 1982).
Under the broad evidence rule, the trier of fact may consider “every fact and circumstance”
tending to support a “correct estimate of the loss.” Travelers, 442 N.E.2d at 357 (quoting
McAnarney v. N.Y. Fire Ins. Co., 159 N.E. 902 (N.Y. 1928)). This allows a plaintiff to prove the
actual cash value of damaged property by submitting to the jury evidence of “original cost and cost
of reproduction; the opinions upon value given by qualified witnesses; the declarations against
interest which may have been made by the insureds; the gainful uses to which the buildings might
have been put, as well as any other fact reasonably tending to throw light upon the subject.” Id. at
356 (quoting McNarney, 159 N.E. at 905). Even evidence under Defendant’s “replacement cost less
depreciation” definition of actual cash value is an appropriate, but not required, method of proving
of “actual cash value.” Id. at 357 (quoting Elberon Bathing Co. v. Ambassador Ins. Co., 389 A.2d
439, 444 (N.J. 1978)).
Here, the jury received some evidence that “tend[ed] to throw light upon the subject” of
value. See Travelers, 442 N.E.2d at 356 (quoting McAnarney, 159 N.E. at 905). The evidence
showed that Plaintiff’s brother bought the Property for $86,000 in 1998, and Plaintiff eventually
bought the Property for $75,000 in 2002. Also, sometime around 2004, when Plaintiff had paid the
mortgage down to $67,000, he opened a $20,000 line of credit secured by the Property. Plaintiff
argues that adding the value of the line of credit to mortgage balance shows that the Property’s value
was at least $87,000 around 2004. Plaintiff also testified at trial about the general condition of the
Property and its contents before and after the fire.
The question is whether this evidence was “legally sufficient evidentiary basis for a
reasonable jury” to calculate Plaintiff’s damages. Fed. R. Civ. P. 50; see also Reeves, 530 U.S. at
149. Defendant argues that the $87,000 figure – apparently derived from the mortgage and line of
credit value in 2004 – improperly captures both the land and the house because the policy only
covered damage to Plaintiff’s house. Indeed, under Indiana law, “a fire insurance policy is a contract
of indemnity, [so] the intent of the parties to the policy is to place the insured in the same financial
position he would have been in had no loss occurred.” Ramsey, 439 N.E.2d at 1165 (emphasis
To compensate Plaintiff for the value of both the land and the house, Defendant argues,
would put Plaintiff in a better position than he would have been in had the house not burned down
at all. Defendant also contends that the jury could not reasonably infer the 2008 pre-fire value of the
home from the 2004 value because the jury would be required to guess how the housing market and,
consequentially, the value of Plaintiff’s house changed between 2004 and 2008.
While the evidence supporting the jury’s verdict on the damages issue is minimal, a
reasonable juror could have found that the evidence supported $87,000 in damages. See Campbell,
256 F.3d at 699. Between the four-year-old valuation of the Property and testimony about the
house’s size, condition, and contents, the jury could calculate a rough estimate of Plaintiff’s
damages. Cf. Wasson v. Peabody Coal. Co., 542 F.3d 1172, 1175 (7th Cir. 2008) (setting aside
jury’s damage award “because it was based on nothing but speculation”). Even though Plaintiff did
not offer evidence separating the value of the home from the land, the jury knew roughly how big
the home and the lot were because they were shown pictures and heard testimony about its size, and
damages need not be proven to a mathematical certainty. See Court’s Final Jury Instruction 25.
Furthermore, Defendant has not shown that it would be entitled to judgment – erasing the
jury’s entire liability determination – solely because of an issue with the jury’s damages calculation.
As discussed above, there was sufficient evidence for the jury to find that Defendant was liable
under the policy for Plaintiff’s damages. Plaintiff’s house burned down and Defendant was obligated
to, but did not, pay Plaintiff under the policy. So the fact of damages has been established without
any speculation. Plaintiff’s house burned down, and Defendant did not pay him for the damage, even
though it was covered by the policy. See Floyd v. Jay Cnty. Rural Elec. Membership Corp., 405
N.E.2d 630, 633 (Ind. App. 1980) (“Less certainty is required to prove the amount of loss than the
fact that some loss occurred.”) (citations omitted).
If Defendant wished to contest solely the amount of damages the jury awarded, remittitur or
a motion for a new trial would have been the appropriate vehicles. Neither party moved for a new
trial. Under Federal Rule of Civil Procedure 59(b), the parties had 28 days from the entry of
judgment within which to file any motions for a new trial on the damages issue. That time has
expired, and Rule 6(b) expressly prohibits any extension of that time.
The Court may sua sponte order a new trial on the damages issue under Rule 50(b)(2).
However, when “a motion is based primarily on the excessive nature of the damages [awarded by
a jury], the jury’s award may be vacated and a new trial granted only if the verdict is monstrously
excessive or if there is no rational connection between the evidence on damages and the verdict.”
McNabola v. Chi. Transit Auth., 10 F.3d 501, 516 (7th Cir. 1993) (internal quotations omitted).
Here, the jury’s award was not “monstrously excessive” and appears rationally related to the 2004
valuation of the home, Plaintiff’s testimony about the contents and condition of the Property, and
pictures taken inside and outside the home.
Accordingly, the Court declines to disturb the jury’s damages verdict.
Consistent with the foregoing discussion, the Court DENIES Defendant’s Renewed Motion
for Judgment as a Matter of Law [DE 134]. The Court will address Plaintiff’s Motion to Alter or
Amend the Judgment [DE 129] in a separate order.
SO ORDERED this 23rd day of January, 2017.
s/ John E. Martin
MAGISTRATE JUDGE JOHN E. MARTIN
UNITED STATES DISTRICT COURT
All counsel of record
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