Ferrara & DiMercurio v. St. Paul Mercury Insurance Company

Ferrara & DiMercurio (F&D) (plaintiff) owned a fishing boat that was destroyed in a fire in 1993. F&D made a claim under their insurance policy with St. Paul Mercury Insurance Company (St. Paul) (defendant). St. Paul denied coverage after making a finding that the fire was caused by arson. F&D filed suit on the basis that St. Paul had breached the insurance contract and acted in bad faith. A subsequent trial ended in a hung jury. A second trial resulted in a verdict for the plaintiff. After an appeal, the case was reversed and remanded for a third trial, at which the jury found that St. Paul had established that the fire was the result of arson by either the plaintiff or a third party. F&D then appealed. At trial, the two sides used expert witnesses to testify about the cause of the fire. St. Paul used John Malcolm as an expert, and Malcolm testified that the fire was deliberately set and had three points of origin. F&D used an expert, Paul Sullivan, who testified that an accidental electrical fire started the blaze. F&D argued that Malcolm should not have been allowed to testify because his opinion was based on unreliable data that Malcolm did not personally collect and because St. Paul had failed to disclose that Malcolm would testify about the cause and origin of the fire. Malcolm had initially investigated the fire after being hired by St. Paul four days after the blaze. Malcolm took measurements and photos and prepared a report about the electrical system. Malcolm worked with another investigator, Fred O’Donnell, to review the scene of the fire, often working together, sometimes holding measuring tapes for each other and calling each other over to review various burn sites. In fact, O’Donnell and Malcolm both testified for St. Paul at the first two trials, but then O’Donnell died. Accordingly, at the third trial, St. Paul decided Malcolm would be their lone fire expert, giving opinions on the boat’s electrical system, as he had at the first two trials, and the fire’s cause and origin. Malcolm acknowledged that he had read O’Donnell’s and the local fire department’s reports in preparation for Malcolm’s testimony.