Liberty Mut. Fire Ins. Co. v. Scott

• Decision Date: 23 May 2007
• Docket Number: No. 06-1626.,06-1626.
• Parties: LIBERTY MUTUAL FIRE INSURANCE COMPANY, Appellee, v. Portia SCOTT, Appellant.
• Court: U.S. Court of Appeals — Eighth Circuit

486 F.3d 418

LIBERTY MUTUAL FIRE INSURANCE COMPANY, Appellee, v. Portia SCOTT, Appellant.

No. 06-1626.

United States Court of Appeals, Eighth Circuit.

Submitted: March 14, 2007.

Filed: May 23, 2007.

Robert G. Pennell, argued, Clayton, MO, for appellant.

Robert L. Brady, argued, St. Louis, MO (T. Michael Ward, on the brief), for appellee.

Before MELLOY, SMITH, and BENTON, Circuit Judges.

SMITH, Circuit Judge.

Liberty Mutual Fire Insurance Company ("Liberty Mutual") filed a declaratory judgment action against Portia Scott, seeking a declaration that its first-party property insurance policy afforded no coverage for fire damage to Scott's house and personal property. At the close of evidence, the district court¹ granted Liberty Mutual's motion under Federal Rule of Civil Procedure 50 for judgment as a matter of law. Scott subsequently filed a motion for a new trial pursuant to Federal Rule of Civil Procedure 59, which the district court denied. Scott appeals, arguing principally that the district court erroneously relied on the doctrine of judicial estoppel in granting Liberty Mutual's motion for judgment as a matter of law. We affirm.

I. Background

Scott's home was damaged in a fire that was later determined to have been set intentionally. Scott submitted to Liberty Mutual, her insurance provider, a signed proof of loss, claiming $121,744.65 in real property damages and $93,077.19 in personal property damages. In the proof of loss, Scott failed to differentiate between the replacement cost and the actual cash value of her personal property.² According to the proof of loss, Scott obtained most of the enumerated items more than a year before the fire. Scott signed the proof of loss and made the following warranty:

No attempt to deceive [Liberty Mutual] has in any way been made, and all material facts have been provided to [Liberty Mutual]. All of the property claimed as part of the loss was destroyed or damaged at the time of the loss, and no property saved from or not damaged in the loss as been hidden.... All statements included anywhere on this form or on attachments have been carefully read to or by [Scott] and are warranted by [Scott] to be full[,] complete[,] and true.

In the year preceding the fire, Scott filed for bankruptcy. In her bankruptcy petition, Scott declared only $7,340 worth of personal property. Of this sum, she attributed $6,510 to her automobile and dog and $830 to other personal property, including $500 in furniture; $20 in books, records, and family photos; $300 in clothing for her and her daughter; and $10 in jewelry. Scott signed her bankruptcy petition, verifying under penalty of perjury that the information she provided was true and correct.

In response to Scott's insurance claim, Liberty Mutual brought this declaratory judgment action in federal district court, seeking a declaration as to its liability under the policy. Liberty Mutual alleged, inter alia, that Scott "intentionally concealed and misrepresented . . . the nature and extent of the claimed damage, and the value for which a claim was presented." In support of its allegation, it cited the following policy provision:

2. Concealment or Fraud.

a. Under SECTION I — PROPERTY COVERAGES, with respect to all "insureds" covered under this policy, we provide no coverage for loss under SECTION I — PROPERTY COVERAGES if, whether before or after a loss, one or more "insureds" have:

(1) Intentionally concealed or misrepresented any material fact or circumstance;

(2) Engaged in fraudulent conduct; or

(3) Made false statements; relating to this insurance.

Scott counterclaimed for breach of contract.

In response to Scott's counterclaim, Liberty Mutual asserted the policy's "concealment or fraud" provision. According to Liberty Mutual, the policy did not provide coverage for the fire at Scott's residence because, in part, Scott misrepresented the nature and extent of her damages. Liberty Mutual asserted that Scott made false statements during its claim investigation, citing the substantial value disparity between Scott's proof of loss and bankruptcy petition.

The case proceeded to trial by jury. At the close of evidence, Liberty Mutual moved for judgment as a matter of law on Scott's counterclaim. The district court granted the motion, concluding that "the evidence is insufficient as a matter of law to entitle Defendant to prevail against Plaintiff. . . ."

Scott then moved for a new trial, arguing that (1) the district court's judgment was based on the affirmative defense of judicial estoppel, which Liberty Mutual had not pleaded in its complaint; (2) the evidence did not support the judgment; and (3) the district court erred in excluding evidence that she was harassed by her former boyfriend. The district court denied Scott's motion, stating, in relevant part:

Upon careful review of the record and application of the above standards, the Court finds Scott's contentions to be without merit. No rational jury would be able to reconcile the difference between her stated personal property in the bankruptcy and in the insurance claim less than a year later. Because of this material misrepresentation, she breached the contract and thus may not collect under either the personal property or the real property sections of the policy.

In a footnote to this paragraph, the district court explained:

When ruling on the Rule 50 motion, the Court stated that Scott was judicially estopped from claiming $93,000 in personal property losses. Scott argues that the doctrine of judicial estoppel does not apply here, as the bankruptcy valuation was not a statement made under oath during the course of a trial. See Monterey Dev. Corp. v. Lawyer's Title Ins. Corp., 4 F.3d 605, 609 (8th Cir.1993) ("Judicial estoppel prevents a person who states facts under oath during the course of trial from denying those facts in a second suit, even though the parties in the second suit may not be the same as those in the first."). However, "even when the prior statements were not made under oath, the doctrine [of judicial estoppel] may be invoked to prevent a party from playing `fast and loose' with the courts." Id. (citing Konstantinidis v. Chen, 626 F.2d 933, 937 (D.C.Cir.1980); State ex rel. KelCor, Inc. v. Nooney Realty Trust, Inc., 966 S.W.2d 399, 403 (Mo.Ct.App.1998)).

(Emphasis added).

II. Discussion

On appeal, Scott argues that (1) the district court erred in applying the doctrine of judicial estoppel because Liberty Mutual never pleaded it as an affirmative defense; (2) even if Liberty Mutual timely raised judicial estoppel, the district court erred in applying the doctrine in the instant case because the disparities in the personal property values were to be expected, as the bankruptcy schedule contained actual cash value figures, while the proof of loss reflected replacement costs; and (3) even if judicial estoppel applies to the personal property claim, the district court erred in concluding that she violated the "concealment or fraud" provision of the insurance policy because the policy language requires that any alleged concealment or fraud relate to the insurance policy—not the filings made in the bankruptcy court.

In response, Liberty Mutual asserts that the district court (1) did not rely on judicial estoppel, to the exclusion of other grounds, in entering judgment as a matter of law for Liberty Mutual; (2) properly exercised its discretion in applying judicial estoppel to protect the dignity of the judicial process; (3) and properly entered judgment as a matter of law for Liberty Mutual because application of judicial estoppel requires the acceptance of Scott's statement in her bankruptcy pleadings to be taken as true.³

"We review a grant of judgment as a matter of law de novo, applying the same standard as the district court." Matrix Group Ltd., Inc. v. Rawlings Sporting...