Rose v. State Farm Fire & Cas. Co.

• Decision Date: 08 September 2014
• Docket Number: No. 13–3887.,13–3887.
• Citation: 766 F.3d 532
• Court: U.S. Court of Appeals — Sixth Circuit
• Parties: Richard K. ROSE, Plaintiff–Appellant, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant–Appellee.

766 F.3d 532

Richard K. ROSE, Plaintiff–Appellant,

v.STATE FARM FIRE & CASUALTY COMPANY, Defendant–Appellee.

No. 13–3887.

United States Court of Appeals,Sixth Circuit.

Argued: June 18, 2014.

Decided and Filed: Sept. 8, 2014.

ARGUED:Don C.A. Parker, Spilman, Thomas & Battle, PLLC, Charleston, West Virginia, for Appellant. Gregory A. Harrison, Dinsmore & Shohl LLP, Cincinnati, Ohio, for Appellee. ON BRIEF:Elliot G. Hicks, Michael G. Gallaway, Spilman, Thomas & Battle, PLLC, Charleston, West Virginia, for Appellant. Gregory A. Harrison, Dinsmore & Shohl LLP, Cincinnati, Ohio, for Appellee.

Before: SILER, GILMAN, and GIBBONS, Circuit Judges.

OPINION

SILER, Circuit Judge.

Richard Rose owned a house in Ohio that burned in a fire. An investigation as to whether the fire was purposefully caused was ultimately inconclusive. Nevertheless, State Farm Fire and Casualty Company (State Farm), the holder of Rose's homeowner's insurance policies, denied his claim. Rose initiated suit, alleging breach of contract and bad faith. State Farm asserted that the policies were void because Rose concealed material information about his financial status when he was interviewed after the fire. The district court agreed and granted summary judgment to State Farm on both of Rose's claims. Because we find that a factual question remains as to whether Rose misled State Farm's investigators regarding his financial situation, we REVERSE and REMAND.

I.

Rose owned a home in Bidwell, Ohio, that was insured by State Farm under a homeowner's policy that was in effect during the time of the fire. Although that policy covered most of his personal property, Rose also had a Personal Articles Policy that covered two Rolex watches. Collectively, these policies are the subject of this litigation.

On the morning of January 7, 2009, a fire destroyed Rose's home. The district court summarized the information Rose provided about that morning:

On that day, [Rose's] wife left for work at her usual time, somewhere between 7:45am and 8:20am. [He] remained in the home with his four dogs. As was his usual custom, [Rose] believes he probably smoked a cigarette while drinking his coffee. At some point, he drove his SUV down his driveway to see if his neighbor was available to talk about some work the neighbor was supposed to perform on [Rose]'s property. The neighbor was not at his shop, and between five and ten minutes later, [Rose] returned to his property. While he was in the front of the property, he noticed smoke coming out of the upstairs foyer window. Because his front door was locked, [Rose] ran around to the unlocked backdoor where he saw smoke and flames through the double windows of his kitchen area. [Rose] then ran to the sliding glass door at the back of the house where his dogs were sitting, ‘in a state of panic.’ (Rose Dep. at 95). He opened the door and let his dogs out; the oldest dog had to be pulled out from underneath the dining room table. At this point the dogs were about twelve feet from where [Rose] had seen flames in the window. Shortly thereafter, the windows over the kitchen sink blew out. [Rose] then called 911 and placed his dogs in his truck. He could not recall whether the dogs were covered in soot or smelled of smoke. [Rose]'s wife testified that the dogs smelled and required baths and that one dog was seen by the veterinarian.

Rose v. State Farm, No. 2:10–cv–874, 2012 WL 3583248, at *1 (S.D.Ohio Aug. 20, 2012). Later that day, Rose reported to State Farm a fire loss with respect to his home and personal property. He claimed $696,373.30 for the dwelling, $512,765.57 for damage to personal property, $30,000 for additional living expenses, and $29,850 for one Rolex watch.

State Farm assigned Rob Raker to investigate Rose's claim. On January 20, 2009, Raker took a recorded statement from Rose and his current wife, Shelly Rose. He also spoke with Rose's ex-wife, Kim Jividen, and gathered information by searching public records, such as court and real estate records. Raker also retained a fire investigator. After visiting the remains of the house, analyzing burn patterns, and consulting with electrical-engineering experts, the fire investigator issued a report regarding the cause of the fire. The report found that the fire originated in the kitchen area of the home, that electrical items did not appear to be the source of the fire, and that neither smoking nor cooking was suspected as a cause. Although the report indicated that non-reported human action could not be eliminated as a cause, it did not specifically conclude that the fire was “incendiary,” i.e., deliberately ignited. At the conclusion of its investigation, State Farm denied Rose's claims for insurance proceeds. The company alleged Rose violated the “Intentional Acts” and “Concealment or Fraud” conditions of his respective insurance policies.¹

In 2010, Rose sued for money damages in Ohio state court, alleging breach of contract against State Farm as well as a tort claim for bad faith. After State Farm properly removed the case to federal court on diversity grounds, both parties filed cross-motions for summary judgment. On the issue of whether the fire was incendiary, the district court found that multiple issues of material fact remained. Accordingly, the court declined to grant summary judgment to either party based on the “Intentional Acts” clause. The district court, however, did find that some of the answers Rose gave in his recorded statement to State Farm were both misleading and material. Specifically, it held that Rose's failure to identify multiple tax liens and judgments, when questioned by Raker about his financial status, voided his insurance policies under the concealment provisions in those contracts. As a result, the district court found that summary judgment in favor of State Farm was warranted. Subsequently, the district court denied Rose's Fed.R.Civ.P. 59(e) Motion to Alter or Amend Judgment.

II.

We “review a district court order granting summary judgment under a de novo standard of review, without deference to the decision of the lower court.” Brannam v. Huntington Mortg. Co., 287 F.3d 601, 603 (6th Cir.2002). Summary judgment is proper “if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Id. (citing Fed.R.Civ.P. 56(c)). In reviewing a summary judgment motion, we must view all the facts, evidence, and any inferences that may permissibly be drawn, in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587–88, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986).

Furthermore, although this court will “generally review a denial of a motion to alter or amend a judgment under Rule 59(e) for abuse of discretion, when the Rule 59(e) motion seeks review of a grant of summary judgment, ... we apply a de novo standard of review.” Johnson v. City of Memphis, 617 F.3d 864, 867 (6th Cir.2010) (citing Shelby Cnty. Health Care Corp. v. Majestic Star Casino, LLC, 581 F.3d 355, 375 (6th Cir.2009)) (internal quotation marks omitted).

III.

To properly analyze whether the answers Rose provided in his recorded statement were intentionally misleading, it is necessary to review his entire exchange with Raker on the issue of prior lawsuits:

[Raker] Q. Uh, have you ever been involved in any type of lawsuit?

[Rose] A. Yes.

Q. Just, from your expression it sounds like it might be lengthy list.

A. You haven't been self-employed have you?

Q. (inaudible)

A. Uh, it's, uh, let's see I got sued for a lady breaking a tooth on a piece of food. I got sued by a lady that said she fell in my parking lot because the parking lot was un, unsafe. Uh, I'm in the middle of a lawsuit, an ongoing lawsuit now with, uh, Fifth Third Bank actually.

* * *

Q. What's that relating to?

A. Um, it's a business relationship that, uh, they reneged on and we filed a lawsuit against them.

Q. So you're the plaintiff?

A. No, well, probably ought to call the attorneys that's handling it in Columbus, (inaudible) Mark Kessler and let them talk about it with you.

Q. Is it, well let me just ask. Is it an individual suit or ...

A. No ...

Q. Is it one ...

A. It's a company.

Q. Okay, which company?

A. RSB.

Q. RSB, okay.

A. Uh, do you want his phone number?

Q. Sure.

A. 614–233–5168

Q. Okay, other suits?

A. None that's, you know, nothing that's been to trial or nothing like that.

Q. Okay, let me ask you this. Have there ever, have there been any judgments against you?

A. Yes, Fifth Third's got one for four million dollars and they've had it for two years.

Q. Is that this, this ...

A. Yes, that's all intertwined.

Q. Where's that suit filed?

A. Gallia County Courthouse.

Q. Okay.

A. And I don't have any (inaudible) you get stuff from vendors, like NTN is, they filed one for like 14 hundred dollars because I, I didn't owe it and I told them I wasn't paying it, do what they had to do. I mean it's a year and a half ago, uh but that's about it and like I said it's right there in the courthouse.

Q. Okay and this all in Gallia County?

A. Yes.

Q. Any, any suits in any other counties?

A. No.

Q. In any other states?

A. No.

State Farm contends that, based on this exchange and a 2006 judgment order from the Gallia County Common Pleas Court, the district court found that Rose concealed the existence of a $4,826,595.20 judgment against him individually. The district court's opinion, however, offered no analysis on Rose's characterization of the Fifth Third Bank litigation as business-related (as opposed to implicating him individually). Instead, the court appears to have based its concealment conclusion only on the “multiple tax liens and judgments” that Rose “failed to identify.” Regardless, State Farm's argument on this point is unpersuasive.

In order for State Farm to validly invoke the concealment...