Brookins v. State Farm Fire and Cas. Co., Civ. A. No. CV180-66.

• Decision Date: 04 January 1982
• Docket Number: Civ. A. No. CV180-66.
• Citation: 529 F. Supp. 386
• Parties: Jerry T. BROOKINS and Alta A. Brookins, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Georgia

529 F. Supp. 386

Jerry T. BROOKINS and Alta A. Brookins, Plaintiff, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

Civ. A. No. CV180-66.

United States District Court, S. D. Georgia, Augusta Division.

January 4, 1982.

George W. Fryhofer, Waynesboro, Ga., for plaintiff.

A. Montague Miller, Augusta, Ga., for defendant.

ORDER

BOWEN, District Judge.

In this diversity action, plaintiffs' recast complaint alleges, inter alia, the following: (1) defendant State Farm Fire and Casualty Company State Farm issued a fire policy to plaintiffs, insuring their residence against loss by fire; (2) plaintiffs were at all relevant times owners of the insured property, subject to an indebtedness to the Farmers Home Administration FmHA; (3) the fire policy was in effect on November 6, 1978, when plaintiffs' residence was destroyed by fire; and (4) plaintiffs have complied with all conditions and terms precedent to recovery under the policy. Plaintiffs seek payment on the policy for the fire loss as well as twenty-five per cent (25%) bad faith damages and attorney's fees.

In its answer, State Farm denied liability, asserted several affirmative defenses and counterclaimed as follows: (1) for sums paid upon assignment of a promissory note and security deed executed by plaintiffs; and (2) for sums paid to plaintiffs in advance expenses immediately after the fire loss. The case is presently before the Court on defendants' motion for summary judgment on plaintiffs' main claim as a whole, or, in the alternative, for summary judgment on the claim for bad faith damages and attorney's fees, and for summary judgment on its counterclaim for amounts due on the assigned promissory note. Upon review of the pleadings, affidavits, exhibits and discovery on file, the following facts emerge as uncontested:

On August 24, 1978, State Farm issued to Jerry T. and Alta A. Brookins a policy of insurance for property coverage. The policy provided maximum coverage of $35,000.00 for the insured dwelling, $17,500.00 for unscheduled personal property, and $7,000.00 for additional living expenses, and had a term of twelve months with an expiration date of August 24, 1979. With the usual qualifications, the policy insured against all direct loss to the insured caused by fire. Pertinent to defendant's motion, the policy was conditioned as follows: (1) all actions on the policy for recovery shall be commenced within twelve months from the inception of the loss, (2) within sixty days after the loss, the insured shall render to the insurer a proof of loss; (3) the insured shall submit to examination under oath by the insurer; (4) the insured shall furnish a complete inventory of destroyed, damaged and undamaged property, showing in detail quantities, costs, actual cash value and amount of loss claimed; and (5) the entire policy shall be void upon concealment or fraud on the part of the insured. A copy of the policy form issued to plaintiffs, which contains the above provision, was on file with the Insurance Commissioner of the State of Georgia.

On November 6, 1978, when the subject policy was in full force and effect, plaintiffs' dwelling was destroyed by fire. Together with other items in the residence, plaintiffs' insurance policy was destroyed in the fire. State Farm's local insurance agent was informed of the fire the same date by some unknown third party, and he promptly notified an insurance adjuster for State Farm of the loss. Thereafter, on November 7, 1978, the insurance adjuster went to Waynesboro, Georgia, to investigate the loss, met with defendant's local agent, received an unsigned notice of loss partially completed by the agent (P-2), and was given directions to the site of the fire.

When the insurance adjuster arrived at plaintiffs' property to begin his preliminary investigation, he met with Jerry T. Brookins. At that time, Mr. Brookins signed a "non-waiver agreement" (D-12) which provided in pertinent part: (1) "there is a question to the origin or cause of the loss or occurrence;" (2) "there is a question of whether there has been a loss sustained because of a peril insured against;" and (3) State Farm, in ascertaining the amount of loss and in investigating the cause thereof, shall not waive its rights under the policy, and any rights of any other party to the agreement shall not be waived. Items number one and two were handwritten by the insurance adjuster; item three was pre-printed language on the non-waiver form. In addition to procuring execution of the non-waiver agreement, the insurance adjuster gave Mr. Brookins a check for $1,500 (apparently the endorsed draft is in the possession of the district attorney's office) (D-10), left some personal property inventory forms with him and instructed him on procedures for completing the forms. Mr. Brookins was not asked to sign the notice of loss form since he had not entered any information on the form.

Following this meeting between the insurance adjuster and Mr. Brookins, it appears that in the week subsequent to the fire, Mr. Brookins telephonically communicated with the local agent; however, they never met in person, nor did Mr. Brookins sign a formal claim. On November 21, 1978, however, the insurance adjuster met with Mrs. Brookins, and a brief discussion ensued concerning the personal property inventory and other matters; no documents were signed. The following day, both Mr. and Mrs. Brookins met with the insurance adjuster, and he took statements from them, which were recorded on tape and subsequently transcribed. Mrs. Brookins also executed the non-waiver agreement previously signed by Mr. Brookins. Immediately prior to this second meeting, the insurance adjuster had received information that the origin of the fire might be arson.

Two days following this second meeting, on November 24, 1978, an employee of the Burke County, Georgia Sheriff's Office obtained a warrant for the arrest of Jerry T. Brookins on a charge of "knowingly conspiring ... to destroy his residence by fire for the purpose of collecting the insurance thereon." Approximately one year later, a Burke County grand jury indicted Mr. Brookins for arson in the first degree. Following a two-day trial in Burke County Superior Court, the jury, by verdict returned December 6, 1979, acquitted Mr. Brookins of the offense charged.

In the time period between the issuance of the warrant for Mr. Brookins' arrest and his eventual acquittal some thirteen months later, numerous correspondence occurred between the parties and between the parties' counsel. By letter dated November 28, 1978, restricted delivery (D-7), State Farm informed the Brookins that the fire loss was under investigation, enclosed a proof of loss form for completion and quoted in full the policy language pertaining to the proof of loss requirement. On January 2, 1979, plaintiffs executed the proof of loss form (D-4), claiming a total loss of $54,500.00, and returned the form, with no accompanying documents, to State Farm by letter of the same date (D-5). Thereafter, by letter dated January 12, 1978, (D-8) the claim superintendent for State Farm, as required by law, notified the Assistant State Fire Marshall for the State of Georgia that, according to the investigations of State Farm and the Burke County Sheriff's Office, the subject fire was deliberately set.

On February 14, 1979, State Farm wrote a letter to the Brookins, certified mail — return receipt requested (D-9), stating that the proof of loss filed by the Brookins was insufficient for the following reasons: (1) it was not supported by an inventory of the damaged or destroyed personal property claimed; (2) it was not supported by any estimate to support the amount claimed for the dwelling item; and (3) it did not state the origin of the loss. In the months following this letter, there ensued a lengthy exchange of correspondence between counsel for both parties regarding the examination of Mr. and Mrs. Brookins under oath (D-1). Counsel for State Farm first requested such an examination on January 23, 1979, and, receiving no reply, again made the request on February 15, 1979. Responding to the second letter, plaintiffs' counsel requested an extension of time to "set up" the examinations and stated that he "certainly intended to cooperate." Almost three months later, on May 10, 1979, defendant's counsel again wrote counsel for plaintiffs stating that he had not heard from him as yet and was still anxious to undertake the examinations. Once again, counsel for State Farm repeated this request on August 7, 1979. Finally, on December 18, 1979, two weeks after the jury acquittal of Jerry T. Brookins, plaintiffs' counsel responded that Mr. and Mrs. Brookins would be available for examination under oath. On January 7, 1980, defendant's counsel informed counsel for plaintiffs that because of plaintiffs' failure to comply with the terms and provisions of the insurance policy and due to the nature of the origin of the loss, State Farm no longer desired examinations under oath and denied any liability.

Prior to the last two of the above-described correspondence, State Farm, by check dated November 12, 1979, paid to FmHA the sum of $16,335.14 and was thereafter assigned by FmHA a promissory note and deed to secure debt executed by plaintiffs. On January 8, 1980, counsel for plaintiffs made demand upon State Farm for the purported amount of loss plus twenty-five per cent (25%) damages for bad faith. Subsequently, on April 8, 1980, plaintiffs instituted the present action.

In its motion, State Farm seeks summary judgment on plaintiffs' claim as a whole on the following bases: (1) plaintiffs failed to submit an appropriate proof of loss and an inventory as required under the terms and conditions of the policy; (2) plaintiffs failed to submit to an examination under oath; and (3) plaintiffs did not file their action within the time provided for in the policy.

Proof of Loss

The subject insurance policy...