MCWG Obtains Defense Verdict in Arson/Fraud Trial

Classon Realty Corp. v. Tower Ins. Co. of New York, Index No. 32189/05 (Sup. Ct., Kings Cty., Jan. 20, 2011).  This case involved insurance fraud and arson.  The plaintiff was a shell corporation that was operated solely by its principal, who was a real estate developer and formerly a member of the board of directors of the Empire State Bank.  The arson occurred on January 14, 2005 at plaintiff's two-story commercial building, which was located in Brooklyn, New York. 

By coincidence, Mound Cotton had represented a different insurance company in connection with an arson claim, arising out of a 1990 fire, that was also made by the principal of plaintiff.  In addition, the investigation uncovered another incendiary fire at a property owned by plaintiff's principal in 1996. 

With regard to plaintiff's principal's financial motive to set the fire, several judgments had been entered against him totaling almost a million dollars, but this information was concealed until the time of trial through numerous fraudulent "satisfactions of judgment" that had been filed on his behalf.  Further, an alleged contract of sale for the premises that was allegedly executed shortly before the loss, which plaintiff is principal claimed erased any financial motive for him to set the fire, was proven to be fraudulent.  Indeed, it was discovered that the property at issue had been in the process of foreclosure for over a year at the time of the fire. 

The evidence concerning the opportunity to commit the arson was even more compelling.  Plaintiff's principal testified during his examination under oath that he was not been in New York on the date of the fire; however, his EZ-Pass records proved that he actually entered New York via the George Washington Bridge about one hour before the fire.  During his examination under oath, he also concealed his prior felony conviction for bank fraud. 

After a two-week trial before Justice Debra Silber, in which the plaintiff's principal was cross-examined over a three-day period, the jury unanimously concluded after about one hour -- by a standard of clear and convincing evidence -- that plaintiff intentionally set fire to the insured premises and, thereafter, committed fraud and made material misrepresentations under oath.  Tower was represented at trial by Kevin F. Buckley and Daniel M. O'Connell of Mound Cotton.