This opinion will be unpublished and

may not be cited except as provided by

Minn. Stat. §480A.08, subd. 3 (1998)




Montanari Homes, Inc., et al.,



Integrity Mutual Insurance Company,


Filed April 27, 1999


Anderson, Judge

Ramsey County District Court

File No. CX-97-88

Robert J. Patient, 1250 Norwest Center, 55 East Fifth Street, St. Paul, MN 55101 (for respondents)

Harold A. Shillingstad, Patrick R. Martin, Cosgrove, Flynn & Gaskins, P.L.L.P., 333 South Seventh Street, 2900 Metropolitan Centre, Minneapolis, MN 55402 (for appellant)

Considered and decided by Toussaint, Chief Judge, Anderson, Judge, and Holtan, Judge.[*]



Appellant, Integrity Mutual, challenges the admission of testimony regarding threats made by a third party. Also at issue in this appeal are allegations that the district court used the wrong measure of damages, the damage issue was not submitted to the jury properly, and that respondent Bart Montanari, president of respondent Montanari Homes, Inc., made misrepresentations regarding his criminal record. We affirm.


An arson fire on November 28, 1995, partially damaged an apartment complex owned by Montanari Homes, Inc. Montanari Homes had purchased an insurance policy covering the building from Integrity Mutual on November 2, 1995. Integrity Mutual denied coverage and respondents brought suit.

At trial, Integrity Mutual had the burden of showing that Bart Montanari either (a) set the fire intentionally or (b) willfully, and with intent to defraud Integrity Mutual, misrepresented material facts concerning the claim. As part of the investigation of the claim, Bart Montanari participated in an examination under oath during which he did not disclose eight criminal convictions, four of which were felonies more than ten years old. Bart Montanari testified at trial he did not disclose the criminal convictions because they occurred a long time ago, he was embarassed by them, he felt they had nothing to do with the claim, and he was trying to forget about them.

Integrity Mutual argued the misrepresentations made by Bart Montanari were willful and done with the intent to defraud. The jury, on the special verdict form, was asked:

After the loss did Plaintiff, Bart Montanari, d/b/a Montanari Homes, Inc. willfully and with intent to defraud, conceal or misrepresent any material fact or circumstance concerning the claim made to Defendant Integrity Mutual Insurance Company.

The jury answered "no" to this question.

Integrity Mutual challenges the district court's admission of hearsay testimony concerning threats made against Bart Montanari by a former tenant. Bart Montanari testified the former tenant, Cueles Wallace, personally threatened his life and also threatened to burn the building after he barricaded himself in his apartment. Kevin Moore, a St. Paul police officer, also testified Wallace made threats against the building while they were removing him from his apartment.

The district court submitted two measures of damages to the jury: fair market value and cost of repair. The jury determined the fair market value was $95,000 and the cost-of-repair was $120,000. Integrity Mutual argues that neither figure accurately reflects the "actual cash value" of the property, which is the measure of damages under the policy.


1. Hearsay

The question of whether to admit or exclude evidence rests within the broad discretion of the trial court and its ruling will not be disturbed unless it is based on an erroneous view of the law or constitutes an abuse of discretion. Entitlement to a new trial on the grounds of improper evidentiary rulings rests upon the complaining party's ability to demonstrate prejudicial error.

Uselman v. Uselman, 464 N.W.2d 130, 138 (Minn. 1990) (citations omitted).

The statements of Cueles Wallace, to which Bart Montanari and Officer Moore testified, are hearsay. Minnesota Rule of Evidence 801(c) states:

"Hearsay" is a statement, other than one made by the declarant while testifying at the trial or hearing, offered in evidence to prove the truth of the matter asserted.

Respondents argued the statements were not offered to prove Wallace burned down the building. Rather, under respondents' theory, the statements were offered for the purpose of showing that a third party had made threats concerning the building. Respondents' tortured interpretation ignores the substance of the testimony, which was intended to lead the jury to conclude that it was Wallace, not Bart Montanari, who set fire to the building.

Admission of hearsay statements is harmless error because Integrity Mutual has not shown that prejudice resulted. The fact the jury decided against appellant on the question of whether Bart Montanari set fire to the building cannot be connected solely, or even principally, to this hearsay testimony. Integrity Mutual's evidence linking Bart Montanari to the fire was weak at best. There were no eyewitnesses to the fire. There was no expert testimony pointing to Bart Montanari as the arsonist. The only witness linking Bart Montanari to the fire, Gary Ciernia, had never met Bart Montanari and had last seen him a year before the fire. Allowing Bart Montanari and Officer Moore to testify to statements made by Wallace, while improper, was harmless error.

2. Misrepresentations

Appellant challenges the denial of its motion for judgment notwithstanding the verdict (JNOV) because Bart Montanari did not disclose his criminal convictions.

In reviewing the facts in a case where a motion for [JNOV] has been denied, we must affirm if there is any competent evidence reasonably tending to sustain the verdict.

Rettman v. City of Litchfield, 354 N.W.2d 426, 429 (Minn. 1984) (citation omitted). JNOV is appropriate when the jury's findings are contrary to applicable law. Huyen v. Driscoll, 479 N.W.2d 76, 78 (Minn. App. 1991), review denied (Minn. Feb. 10, 1992). JNOV is also proper where there is "no competent evidence tending to sustain the verdict." Bisher v. Homart Dev. Co., 328 N.W.2d 731, 733 (Minn. 1983).

A jury verdict will not be set aside unless it is "manifestly and palpably contrary to the evidence viewed as a whole and in the light most favorable to the verdict." The verdict will be sustained if it is possible to do so on any reasonable theory of the evidence.

Roemer v. Martin, 440 N.W.2d 122, 124 (Minn. 1989) (citations omitted).

"Under insurance provisions voiding a policy for misrepresentation or fraud, only willful or intentional misstatements calculated to deceive the insurer operate to void the policy." Henning-Nelson Const. Co. v. Fireman's Fund American Life Ins. Co., 383 N.W.2d 645, 654 (Minn. 1986) (citation omitted). The determination of whether a misrepresentation is willful or intentional is a question of fact. Id. The special verdict form correctly presented this fact question for the jury's determination. The jury determined the misrepresentations were not willful or intentional and were not calculated to deceive the insurer concerning the claim. There is evidence in the record sustaining the jury verdict and the district court did not err in denying JNOV.

3. Damages

A reviewing court is not bound by and need not give deference to a trial court's decision on a purely legal issue. Frost-Benco Elec. Ass'n v. Minnesota Pub. Utils. Comm'n, 358 N.W.2d 639, 642 (Minn. 1984).

Integrity Mutual challenges the district court's submission to the jury of two different measures of determining damages (fair market value and cost of repair) and the district court's subsequent award of damages.

Brooks Realty, Inc. v. Aetna Ins. Co., 276 Minn. 245, 255-56, 149 N.W.2d 494, 501 (Minn. 1967), sets out the law in Minnesota concerning actual cash value. In Brooks, the court held that, to determine actual cash value, the broad evidence rule is applicable. Id. The court will consider any evidence logically tending to establish actual cash value. Id. at 253, 149 N.W.2d at 500.

In determining the actual amount of a partial loss, the insurable value as stated in the policy should not be used as a basis, but the question should be decided upon the evidence before the jury that tends to prove what is the amount of the actual loss and damage sustained by the insured from the fire, the actual value of the building at the time of the fire, cost of reconstruction, cost of removing the debris, amount of salvage, all being proper subjects of inquiry.

Id. at 254, 149 N.W.2d at 500 (quoting Oppenheim v. Fireman's Fund Ins. Co., 119 Minn. 417, 425, 138 N.W. 777, 780 (Minn. 1912)).

Appellant argues that the jury should have been instructed to arrive at one figure for actual cash value. While instructing the jury to make separate findings on fair market value and cost of repair created more than a little possibility for confusion, both are appropriate factors to consider in determining actual cash value under Brooks, and we conclude that no reversible error was committed by the district court. The evidence in the record supports the cost-of-repair. We note that the insurance policy specifically permits cost of repair as a possible method of satisfying an insured's claim. The district court did not commit reversible error in awarding damages based on the jury's special verdict.


[*] Retired judge of the district court, serving as judge of the Minnesota Court of Appeals pursuant to Minn. Const. art. VI, § 10.