Court overturns fire insurance judgment for insureds; remands for new trial

The owners of Welch's Steak and Ribs, Inc., were forced to sue their insurance company after a fire destroyed the restaurant.  At trial the insurer introduced evidence which the trial judge deemed irrelevant and prejudicial, and as a result, the judge overturned the jury verdict in the insurance company's favor.  The insurer, North Pointe Insurance Company, appealed the judgment entered against it.

The Court of Appeals held that while the evidence introduced by the insurer was in fact irrelevant and prejudicial, the trial judge exceeded his authority when he entered judgment in favor of the insureds.  The case was instead remanded for a new trial with the prejudicial evidence to be excluded.

The jury had held that the restaurant owners had not committed fraud, however, it apparently concluded that they may have substantially over-stated their losses. The trial judge and the higher court concluded that a combination of the admission of irrelevant evidence and instructional ambiguity required that the case be re-tried.