Lummis v. State Farm Fire & Cas. Co.

• Citation: 469 F.3d 1098
• Decision Date: 05 December 2006
• Docket Number: No. 06-1266.,06-1266.
• Parties: John D. LUMMIS and Cynthia A. Macbeth, Plaintiffs-Appellants, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellee.
• Court: United States Courts of Appeals. United States Court of Appeals (7th Circuit)

Page 1098

469 F.3d 1098

John D. LUMMIS and Cynthia A. Macbeth, Plaintiffs-Appellants, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellee.

No. 06-1266.

United States Court of Appeals, Seventh Circuit.

Argued October 31, 2006.

Decided December 5, 2006.

Donna C. Marron (argued), David L. Pippen, Plews, Shadley, Racher & Braun, Indianapolis, IN, for Plaintiffs-Appellants.

Karl L. Mulvaney (argued), Dennis F. Cantrell, Bingham McHale, Indianapolis, IN, for Defendant-Appellee.

Before POSNER, WOOD, and EVANS, Circuit Judges.

EVANS, Circuit Judge.

Most people who watch television can sing it: "Like a good neighbor, State Farm is there." John Lummis thinks State Farm should have been, but wasn't "there" for him after a fire destroyed his home in Jamestown, Indiana. And State Farm's refusal to cover the loss gave birth to this litigation, which ultimately included a jury trial and a prior ruling on a motion for summary judgment that took a critical issue out of the jury's hands. Only the summary judgment matter is before us on Lummis's appeal.

The house Lummis "owned" (we use quotation marks because his grip on the home was rather tenuous) was covered by a State Farm homeowner's policy. Like all policies of this sort, an insurer is excused from paying if the insured is intentionally complicit in setting the fire that led to the loss. And that's the position State Farm staked out soon after the house burned to the ground.

Lummis, and his ex-wife Cynthia Macbeth, sued State Farm on two claims: breach of contract and bad faith. Like his house, the bad-faith claim was gutted when the district court dismissed it on summary judgment. Subsequently, a jury found that State Farm breached the contract by not covering the loss. Lummis and Macbeth were awarded $46,800.46 in damages and, because the jury rejected a State Farm counterclaim, they were not ordered to pay back various sums (we're not sure, but it looks like they add up to something in the neighborhood of $25,000) advanced under the policy on a reservation-of-rights basis. Although State Farm eventually had to honor the policy, whether "bad faith" motivated its decision to refuse to ante up is another story. Here are the facts (some of them, at least) that are important on the issue before us.

For some time prior to the fire, Lummis lived in the Jamestown house with his girlfriend, Beth Howe, and her three children. And Lummis was in a financial bind: between the $1,300 a month garnished from his wages in order to pay child support for four of his six children, and supporting Howe and her three children, he had not made a mortgage payment for almost 2 years. The mortgage holder (the Cendant Mortgage Company), who had been paying the premiums on the State Farm policy, obtained a foreclosure decree on the house on February 5, 2003. The fire occurred the very next day.

Howe called 911 to report the fire around noon. She then called Lummis at work. Most people, upon learning that their house is on fire, would hurry home as fast as possible. Not Lummis. Lummis's boss offered him a ride home immediately. He turned it down. He took his buddy up on the second offer of a ride later in the day. When he got to the house, he reported the fire to State Farm. He didn't seem too worried, though—the agent who took his call thought he sounded pretty nonchalant and cavalier about the whole thing. State Farm started the claims process and an investigation into the cause of the fire as soon as it got the call.

One of the most important clues to the fire's origin was a red plastic container found at the scene that tested positive for traces of gasoline and kerosene. Firefighters know this mixture—which burns "long and hot"—is an ideal accelerant for a fire. Lummis, who was a volunteer firefighter with the Jamestown Fire Department for about 7 years, would, State Farm concluded, be more familiar with this mixture as an accelerant than would the average Joe. Ultimately, all investigators who looked into the fire determined that it was started intentionally. State Farm concluded that Lummis, perhaps with help from Howe, intentionally started the blaze, so it denied coverage.

We review grants of summary judgment de novo and will uphold them only if no genuine issue of material fact exists and the movant is entitled to judgment as a matter of law. And here, of course, we draw all factual inferences in favor of Lummis. Hrobowski v. Worthington Steel Co., 358 F.3d 473, 475 (7th Cir. 2004); Rogers v. City of Chicago, 320 F.3d 748, 752 (7th Cir.2003). Since this is a diversity case, we apply the substantive...