Turley v. State Farm Mut. Auto. Ins. Co., 90-3079

• Decision Date: 04 September 1991
• Docket Number: No. 90-3079,90-3079
• Citation: 944 F.2d 669
• Parties: 33 Fed. R. Evid. Serv. 1266 George TURLEY, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant-Appellant.
• Court: U.S. Court of Appeals — Tenth Circuit

Page 669

944 F.2d 669

33 Fed. R. Evid. Serv. 1266

George TURLEY, Plaintiff-Appellee, v. STATE FARM MUTUAL AUTOMOBILE INSURANCE CO., Defendant-Appellant.

No. 90-3079.

United States Court of Appeals Tenth Circuit.

Sept. 4, 1991.

Jeffrey L. Lauersdorf (James L. Sanders, Wallace, Saunders, Austin, Brown & Enochs, Chartered, with him, on the brief), Overland Park, Kan., for defendant-appellant.

Gordon M. Rock, Jr., Grimshaw & Rock, Chartered, Olathe, Kan., for plaintiff-appellee.

Before EBEL and McWILLIAMS, Circuit Judges, and ALLEY, District Judge. ^*

McWILLIAMS, Circuit Judge.

An insured brought suit against his insurer for damage to his automobile which allegedly had been stolen and stripped. Upon recovery of the vehicle, the parties agreed that it was damaged in the amount of $9,756.42. However, the insurer denied policy coverage. A jury trial resulted in a verdict for the insured against his insurer in the stipulated amount. The insurer appeals.

On February 27, 1986, James Brigman and his daughter, Michelle Brigman, leased a 1984 Chevrolet Corvette from one George Turley. The terms of the lease were that James Brigman would make monthly payments to Turley in the amount of $350 and that he (Brigman) would be responsible for maintenance and automobile insurance.

On February 28, 1986, James Brigman made application for automobile insurance on the Corvette with one Vernon Killian, an agent for State Farm Mutual Automobile Insurance Company ("State Farm"), with whom James Brigman had dealt for several years. In the application James Brigman listed his daughter, Michelle, as the primary driver. State Farm issued a policy of insurance to James and Michelle for coverage on the Corvette on February 28, 1986, effective at 1:00 p.m. Later that same day, George Turley was identified as the owner of the Corvette and was added as an additional insured. The policy issued by State Farm included comprehensive coverage for theft.

On March 3, 1986, Michelle Brigman contacted the Kansas City, Missouri Police Department and reported that the Corvette had been stolen on that date from the east side of the Bannister Shopping Mall sometime between 11:15 a.m. and 12:15 p.m. while she was shopping. As a matter of fact, however, the Kansas City, Missouri Police Department had recovered the Corvette on March 1, 1986, at about 3:30 p.m. ¹ , one day after the effective date of the insurance policy and two days before the date given by Michelle Brigman as the date of the theft. ²

Subsequent to the reported theft of the vehicle by Michelle Brigman to the police, the loss was reported to State Farm. The claims office of State Farm then contacted the named insureds, James and Michelle Brigman, and requested further information concerning the loss of the vehicle. On April 17, 1986, James and Michelle Brigman submitted claim documents to State Farm which included two affidavits, one from each of them, wherein they stated that the theft occurred on March 3, 1986, at the Bannister Shopping Mall. ³

State Farm denied Turley's claim that he, as the owner of the Corvette, be paid for the loss sustained by him. The reason given Turley by State Farm for its denial of coverage was as follows:

"[D]ue to the material misrepresentation made to [State Farm] and the falsified Kansas City, Missouri auto theft report, any and all claims for the theft or damage of the 1984 Corvette are hereby denied."

It was in this general setting that Turley (not James or Michelle Brigman), a citizen of Kansas, brought the present action against State Farm, a company incorporated under the laws of Illinois, in the district court for Wyandotte County, Kansas. State Farm thereafter removed the case to the United States District Court for the District of Kansas on the grounds of diversity, pursuant to 28 U.S.C. § 1441.

In the complaint, Turley alleged that he was the owner of the Corvette which State Farm had insured and that he was an additional insured in the policy which State Farm issued. He went on to allege that the vehicle was stolen on March 3, 1986, and not recovered by the Kansas City, Missouri Police Department until April 28, 1986, ⁴ with parts of the vehicle having been stripped and damaged. He then alleged that he had requested State Farm to pay for the property damage done to his vehicle and that State Farm had refused payment. Turley sought judgment in an amount in excess of $10,000.00.

By answer, State Farm denied liability, alleging that Turley was barred and estopped from any recovery because of his failure to cooperate with State Farm by materially misrepresenting facts relating to the "cause, origin and extent of the subject loss." State Farm also alleged that Turley was not entitled to recover any money because of "a breach of the policy conditions precedent to coverage." As a further defense, State Farm alleged that "no loss occurred which is covered under the terms and conditions of the policy." As a final defense, State Farm alleged that Turley should be denied recovery based on "the illegality of the actions of the named insureds."

After discovery, State Farm filed a motion for summary judgment with a supporting memorandum. It was State Farm's position that although it had no communications whatsoever with Turley, he was nonetheless bound by the material misstatements made to it by James and Michelle Brigman and that he, Turley, was barred from any recovery on the policy because of the Brigmans' failure to cooperate with State Farm's investigation. Turley filed a memorandum in opposition to State Farm's motion, arguing that under Kansas law any misrepresentations made by the Brigmans to State Farm did not bind him, an "innocent owner" of the stolen vehicle.

The district court denied State Farm's motion for summary judgment. ⁵ In so doing, the district court agreed with the parties that there was no Kansas law as to whether a failure to cooperate by a named insured could be vicariously attributed to a so-called "innocent" co-insured, and also that outside of Kansas there was a split of authority on that particular matter. However, the district court felt it did not have to decide that question, at least in a summary judgment setting, since it was of the view that before there could be any imputation of the Brigmans' conduct to Turley, it had to be first determined whether the Brigmans' misstatements were material and detrimental to State Farm and whether such statements were made with an intent to defraud State Farm, all of which presented genuine issues of material fact which could not be resolved on summary judgment. In this connection, the district court noted, inter alia, that based on the evidentiary matter before it, any statements submitted by James Brigman to State Farm were based on information given him by his daughter, Michelle, i.e., he had no personal knowledge of any facts surrounding the date, time and location of the alleged theft since he was in California at the time, and that Michelle Brigman, age 19, "had initially provided incorrect information because she was nervous and upset."

State Farm's initial argument in this court is that the district court erred in denying its motion for summary judgment and that we should reverse the present judgment in favor of Turley and remand with directions that the district court enter judgment in favor of State Farm. With this we do not agree.

This is not a case where the insured made false statements in his application for insurance. Rather, it is State Farm's position that Michelle Brigman made a false statement to State Farm concerning the date, time and location of the theft of the Corvette, to which James Brigman later subscribed, and that such conduct was not in accord with the policy requirement that the insureds "cooperate" with State Farm in its investigation of any claim of loss under the policy. In connection with this argument, it is State Farm's further position that the misconduct of the Brigmans is vicariously imputed to Turley to the end that he too is barred from any recovery under the terms of the policy.

As indicated, the district court was of the view that it did not have to rule on the imputability issue since the initial question of whether the Brigmans' conduct itself violated the terms of the policy presented issues of fact which could not be resolved on summary judgment. The district court noted that not every incorrect statement given by an insured to his insurer concerning loss would bar recovery under the terms of the policy. Whether the statements of the Brigmans were made with an intent to defraud State Farm, and whether such were material and prejudicial to State Farm's defense in the present proceeding, were enumerated by the district court as issues which should be explored at trial, and not resolved on summary judgment. Under the described circumstances, we are in accord with the district court's denial of State Farm's motion for summary judgment. See Elliott v. Metropolitan Casualty Ins. Co. of N.Y., 250 F.2d 680, 683 (10th Cir.1957), cert. denied, 356 U.S. 932, 78 S.Ct. 774, 2 L.Ed.2d 762 (1958) (applying Kansas law, the court stated that "[w]hen reasonable minds might differ as to the intent of the insured in furnishing false information to the insurer, the question of cooperation should be submitted to the trier of fact"); American States Ins. Co. v. Ehrlich, 237 Kan. 449, 701 P.2d 676, 679 (1985) (under Kansas law, the existence of fraud to justify recision of an insurance contract is never presumed and is ordinarily a question of fact); and Hustead v. Bendix Corp., 233 Kan. 870, 666 P.2d 1175, 1176 (1983).

Prior to trial, Turley filed a motion in limine in which he sought, inter alia, to preclude counsel for State Farm from mentioning in either voir dire or in his opening statement the fact that both Turley and Brigman had suffered felony convictions within the preceding ten years and that Turley had previously submitted false...