Converse v. State Farm Fire & Cas. Co.

• Docket Number: 5:21-CV-457 (TJM/ATB)
• Decision Date: 12 July 2023
• Parties: RICHARD CONVERSE, and STEPHANIE CONVERSE, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.
• Court: U.S. District Court — Northern District of New York

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RICHARD CONVERSE, and STEPHANIE CONVERSE, Plaintiffs, v. STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

No. 5:21-CV-457 (TJM/ATB)

United States District Court, N.D. New York

July 12, 2023

DECISION & ORDER

Thomas J. McAvoy Senior, U.S. District Judge

Before the Court are the parties' motions for summary judgment. See dkt. # 38-39. The Court will decide the motions without oral argument.

I. BACKGROUND

This case concerns insurance coverage for rental property in Watertown New York. Plaintiffs Richard Converse and Stephanie Converse own the property. Defendant State Farm Fire and Casualty Company (“State Farm”) insured the property at the relevant time. After a fire on December 8 2019, Plaintiffs sought coverage under the insurance policy. Plaintiffs brought this action when Defendant denied coverage for much of the claim.

The property in question was at 442 Flower Avenue East Watertown, New York.

Defendant's Statement of Material Facts (“Defendant's Statement”), dkt. # 44-9, at ¶ 1.^[1] State Farm insured that property under a homeowners policy. Id. The policy in question contained certain provisions that Defendant highlights. Id. at ¶¶ 2-4. One provision describes an insured's duties after a loss, which include a requirement that the insured “must cooperate with us in the investigation of the claim” and provide within 60 days a “signed, sworn proof of loss” that details the “time and cause of the loss,” describes damaged structures and property, and details expenses for rental of replacement property. Id. Another provision describes “conditions,” which explains that “[w]e do not provide coverage for an insured who, whether before or after a loss has: a. intentionally concealed or misrepresented any material fact or circumstances; or b. engage[d] in fraudulent conduct.” Id. at ¶ 3. A final provision covers lawsuits against State Farm, setting out that “[n]o action will be brought unless there has been compliance with the policy provisions. Any action by any party must be started within two years after the date of loss or damage.” Id. at ¶ 4.

Though they disagree about the implications of the document, the parties agree that Plaintiff Stephanie Converse sent a letter to Joseph Pelton on or about November 8, 2019. Id. at ¶ 5. The letter stated:

Joe,

How have you been? I miss you! Hope all is well and your (sic) doing good.

Having issues with my house again. Need help this time! I will pay $5,000 cash when I get the insurance. The back door will be unlocked and open to the basement. That's where the access to utilities are. Tues and Wed (sic) are good during day. Make look like electrical. I will come up after it happens so I will meet up with you. property (sic) is at 442 & 444 Flower Ave. East. It's a mint green house with garage.

Love you,

See you soon.

Stephanie.

Id. The envelope that contained the letter had a November 8, 2019 postmark. Id. While Plaintiffs admit that Stephanie Converse mailed the letter, they “deny any implication or allegation that Stephanie Converse committed insurance fraud, paid anyone to commit arson on the property, or was in any way involved in the fire that caused the loss on the property.” Plaintiffs' Response to Defendant's Statement of Material Facts (“Plaintiff's Response”) at ¶ 5.

Stephanie Converse filed a claim on December 8, 2019 for the loss caused by the fire. Defendant's Statement at ¶ 7. Julio Loarca of State Farm conducted a recorded interview of Stephanie Converse on December 11, 2019. Id. at ¶ 9. Loarca asked Stephanie Converse if she had “ever ask[ed] anyone to burn the house?” Id. ¶ 10. Converse responded “no.” Id. Loarca also asked “[d]id you ever have a conversation with anyone about burning the house?” Id. at ¶ 11. Converse replied “[n]o. Not that I can recall.” Id. When asked about the phrase “not that,” Converse replied, “but no.” Id. Loarca also asked Stephanie Converse is she had “ever writ[ten] anyone either via text, via email or paper about . . . requesting to burn the house.” Id. at ¶ 12. Converse replied “[n]o I have not.” Id.

State Farm mailed Stephanie Converse a letter on December 11, 2019, which she received on December 17, 2019. Id. at ¶¶ 14-15. The letter contained a blank Sworn Statement in Proof of Loss and a return envelope. Id. at ¶ 16. The letter stated that the Sworn Statement should be returned by February 17, 2020. Id. at ¶ 16. A follow up letter from State Farm Counsel Roy Mura on January 2, 2020 reminded Stephanie Converse that she had to return the sworn statement “as requested in State Farm's letter dated December 11, 2019.” Id. at ¶ 22. That letter warned that “a failure . . . to timely complete and return the Sworn Statement in Proof of Loss form for the reported loss may result in loss [of] your rights under the . . . policy.” Id. at ¶ 23. The letter also informed Plaintiff that State Farm did not waive any policy conditions and sought to schedule an examination under oath for Stephanie Converse. Id. at ¶ 24. Converse did not submit a sworn statement by February 17, 2020. Id. at ¶ 25.

On January 2, 2020, Detective Hill of the Lee County, Florida, Sheriff's Office conducted a recorded interview with Plaintiff Stephanie Converse. Id. at ¶ 17. Detective Hill asked Plaintiff to “be specific and tell me about your story there and I'm asking you to tell me the truth and not lie to me” about the fire. Id. at ¶ 18. Stephanie Converse responded that “I had reached out to somebody and asked them to burn my house down . . . Joe Pelton.” Id. Converse explained that she had written “Joe a letter and asked him.” Id. at ¶ 19. They spoke on the phone, however, and Pelton told Converse that he was “not going to do it, and that he doesn't have the heart, because it would, you know, especially hurting somebody[.]” Id. Asked what would “motivat[e]” Pelton to burn the house down, Converse replied “[f]ive thousand dollars.” Id. Converse further stated that she spoke to Pelton on the phone “like a couple of weeks” after sending the letter. Id. at ¶ 20. She told him that “I wanted him to do it.” Id. In a later call, however, Pelton told Converse that he “couldn't do it,” though Converse also remembered that Pelton may have told her he would go and look at the property. Id. That call came “[w]ithin about three days.” Id. Converse also admitted that she gave Pelton “specific instructions” in her letter, directing him on where to get into the home and providing days when the tenants would likely be away. Id. at ¶ 21.

Stephanie Converse appeared for an examination under oath (“EUO”) in connection with her insurance claim on March 13, 2020. Id. at ¶ 26. Converse's counsel emailed a Sworn Statement in Proof of Loss to State Farm on March 12, 2020. Id. at ¶ 27. She also provided that Statement at the start of her March 13, 2020 examination. Id. During the examination, State Farm contends that Converse stated “she could not think of anything inaccurate or imprecise in her interview” with Loarca. Id. at ¶ 28. Plaintiffs point out that Stephanie Converse affirmed during the examination that “everything as far as you can recall [was] truthful about what you told Mr. Loarca[.]” Plaintiffs' Response at ¶ 28. Converse further testified that she could not “recall asking anybody to burn . . . I mean I can't remember. I don't know if I did or I didn't.” Id. at ¶ 29. She further testified that she could not “recall” whether she had offered “to pay anybody money to” burn the property down. Id.

Stephanie Converse further testified about an interview with two Lee County, Florida Sheriff's Office members, who had come to her home and “seized” her phone. Id. at 30. The investigators had asked Converse if she had spoken with one of the property's tenants and “asked her to do it.” Id. They had also asked her if she “knew a particular guy.” Id. According to Converse, the investigators had asked her about Joe Pelton “because Joe used to live with us and now Joe's back in New York.” Id. Asked to explain why the investigators asked about Pelton, Converse responded that “I may have joked with Joe a long time ago.” Id. Further questioned about whether the two had any “conversation or communication with Joe about the property after that,” Plaintiff stated “I can't recall. I don't believe so or I can't recall. I don't know.” Id. Plaintiff testified that “I sent Joe a card in the mail, like a birthday card. That's the only really [sic] communication.” Id. Pressed about whether she sent any communication concerning the house, Stephanie Converse testified that “I can't recall.” Id. When confronted with the letter to Pelton, Plaintiff testified that “I recall wrting him a letter, but I don't recall what I put in it because I was intoxicated.” Id. at ¶ 31.

Defendant denied Stephanie Converse's claim on October 7, 2020. Id. at ¶ 33.

Plaintiffs filed a Complaint in the Supreme Court of Jefferson County, New York, on March 22, 2021. See dkt. # 2. The Complaint contains three counts. Count 1 alleges breach of contract. Count 2 seeks declaratory judgment. Count 3 alleges a breach of the covenant of good faith and fair dealing. Defendant removed the case to this Court. See dkt. # 1. After the Court granted the Defendant's motion to dismiss Counts 2 and 3 of the Complaint, the parties engaged in discovery. At the close of discovery, the parties filed the instant motions.

II. LEGAL STANDARD

The parties seek summary judgment. It is well settled that on a motion for summary judgment, the Court must construe the evidence in the light most favorable to the non-moving party see Tenenbaum v. Williams, 193 F.3d 581, 593 (2d Cir. 1999), and may grant summary judgment only where "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a...