Miller v. Great Am. Ins. Co.

CourtUnited States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
Citation59 F.Supp.3d 749
Decision Date10 November 2014
Docket NumberAction No. 2:11CV67.
PartiesJohn S. MILLER d/b/a Chesapeake Core Supply, Plaintiff, v. GREAT AMERICAN INSURANCE CO., Defendant.

59 F.Supp.3d 749

John S. MILLER d/b/a Chesapeake Core Supply, Plaintiff
v.
GREAT AMERICAN INSURANCE CO., Defendant.

Action No. 2:11CV67.

United States District Court, E.D. Virginia, Norfolk Division.

Signed Nov. 10, 2014.
Filed Nov. 12, 2014.


59 F.Supp.3d 749

Douglas Eugene Kahle, Glen Michael Robertson, Wolcott Rivers Gates P.C., Virginia Beach, VA, for Plaintiff.

Daniel Maurice O'Connell, Kevin F. Buckley, Mound Cotton Wollan & Greengrass, New York, NY, Kenneth Reed Mayo, Reed Mayo Law Firm PC, Virginia Beach, VA, for Defendant.

59 F.Supp.3d 750

MEMORANDUM OPINION AND FINAL ORDER

REBECCA BEACH SMITH, Chief Judge.

This matter comes before the court on the Motion for Summary Judgment and accompanying Memorandum in Support (“Motion for Summary Judgment”), and the “Motion to Supplement the Record and Rule on Summary Judgment” (“Motion to Supplement”), filed by the Defendant, Great American Insurance Company (“Great American”), on March 18, 2013, and September 12, 2014, respectively. ECF Nos. 37, 38, and 56. The Plaintiff, John S. Miller, filed his Memorandum in Opposition to the Motion for Summary Judgment on March 29, 2013, ECF No. 42, and the Defendant filed its Reply on April 1, 2013. ECF No. 43.1 The Plaintiff did not file a Response to the Defendant's Motion to Supplement, and the time to do so has expired. As such, the Motion for Summary Judgment and Motion to Supplement are now ripe for review. For the reasons set forth below, the Defendant's Motion for Summary Judgment and Motion to Supplement are GRANTED.

I. Factual and Procedural History

A. Factual History2

The Plaintiff operated a sole proprietorship trading as Chesapeake Core Supply (the “Business”), which was located at 1751 West Road in Chesapeake, Virginia. Compl. ¶¶ 5, 7, ECF No. 1. Chesapeake Core Supply was in the business of buying and selling auto parts and scrap metals. Id. ¶ 6. The Plaintiff maintained an insurance policy (the “Policy”) issued by Great American, which provided coverage for damage to the Business, consisting of a commercial office building and a warehouse, and to the Business personal property, such coverage having a liability limit of $484,000 for the building, and $106,101 for the Business personal property. Id. Ex. A. Loss of property through fire is a loss covered by the Policy. Id. ¶ 10. As part of the standard coverage provisions, the Policy included a “Concealment, Misrepresentation, or Fraud” provision under the “General Conditions” section. Id. Ex. A.3

On February 12, 2009, during the Policy period, the Business caught fire, physically damaging both the commercial office building and its contents, which included Business personal property. Id. ¶ 8. On April 1, 2009, the Plaintiff filed a sworn statement of Proof of Loss with Great American, in which he stated the total amount of loss as $157,026, which consisted of $121,146 in damages to the building structure and $35,880 in damages to the Business

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personal property. Id. Ex. B. The Plaintiff's Business personal property claim included damage to a Dyson vacuum cleaner, valued at $500, and damage to twenty-five (25) airbags, valued at a total of $4800. See Mem. Supp. Mot. Summ. J. Ex. 5. The Proof of Loss Form included the following statement: “Applicable in Virginia- it is a crime to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial of insurance benefits.” Compl. Ex. B.4

Upon the request of Great American, on September 14, 2009, the Plaintiff was examined under oath regarding the losses he sustained from the fire. Mem. Supp. Mot. Summ. J. ¶ 13. During this first examination, the Plaintiff advised Great American of an increase in the amount of loss based on a new estimate for the repair of the building.Id. ¶ 16. The new loss amount was documented as $170,462. Id. The Plaintiff was again examined under oath on April 14, 2010, regarding the losses he suffered from the fire. Id. ¶ 18. At this point, the Plaintiff had not received any payment from Great American for the losses associated with the fire, despite his numerous efforts to collect payment. Id. ¶ 21.

B. Procedural History

On February 4, 2011, the Plaintiff filed a Complaint in this court alleging that Great American breached its insurance contract with the Plaintiff when it refused to pay him, in accordance with the Policy for the losses associated with the fire. The Complaint further alleged that the Plaintiff repeatedly requested payment under the Policy in advance of filing the Complaint. Compl. ¶ 21. The Plaintiff also sought the “award of attorney's fees and costs incurred as a result of Great American's bad faith, as provided in Virginia Code § 32.8–209.” Id. ¶ 26.

Great American, in its Answer to the Complaint, filed on March 9, 2011, denied that the Plaintiff had sufficiently supported his claimed losses under the Policy, and asserted as one of its affirmative defenses that the Plaintiff:

gave false testimony during his Examinations Under Oath regarding, among other things, items in the claim that were not damaged in the fire, the disposition of certain items that were claimed, [Miller's] ownership of duplicates of items that were claimed, and by inflating the value of allegedly fire damaged items in the claim.

Answer ¶ 30. Great American argued that this false testimony breached the Policy's “General Conditions” pertaining to the “Concealment, Misrepresentation or Fraud” provision, which states:

This Coverage Part is void in any case of fraud by you as it relates to this Coverage Part at any time. It is also void if you or any other Insured, intentionally conceal or misrepresent a material fact concerning: (1) this Coverage Part; (2) the Covered Property; (3) your interest in the Covered Property; or (4) a claim under this Coverage Part.

Id. ¶ 29; Compl. Ex. A (emphasis added).5

Sometime in October 2009, the Commonwealth of Virginia instituted an insurance

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fraud investigation of the Plaintiff's claim under the Policy. The investigation yielded the recovery from the Plaintiff's home of some of the items he listed on the inventory submitted as part of his insurance claim. Mem. Supp. Mot. Summ. J. at 2. As a result, the Commonwealth of Virginia commenced a criminal action against the Plaintiff for attempting to obtain money by false pretense, in violation of Virginia Code §§ 18.2–26 and 18.2–178. The Plaintiff was subsequently indicted by a grand jury in the Circuit Court for the City of Chesapeake on February 1, 2011. Id. at 3–4.

Thereafter, on April 15, 2011, Great American moved to stay the civil proceedings in this court, pending the resolution of the criminal action against the Plaintiff in the Circuit Court for the City of Chesapeake.6 The court accordingly granted the request to stay the civil proceedings, and required Great American to update the court periodically regarding the status of the criminal proceedings. Order, May 5, 2011, ECF No. 17; see also Order, Sept. 12, 2011, ECF No. 19.

On February 15, 2013, after a bench trial in the Circuit Court for the City of Chesapeake, the Plaintiff was found guilty of the felony of attempting to obtain money by false pretense in violation of Virginia Code §§ 18.2–26 and 18.2–178, based on a fraudulent insurance claim that he submitted regarding damage and losses associated with a Dyson vacuum cleaner and a number of airbags.See Mem. Supp. Mot. Summ. J. at 4–8; Mem. Opp'n Mot. Summ. J. at 2. On February 22, 2013, the court lifted the stay. ECF No. 36.

On March 18, 2013, Great American filed the instant Motion for Summary Judgment and accompanying Memorandum in Support. On March 20, 2013, the Plaintiff filed a notice of appeal with the Court of Appeals of Virginia appealing his state court criminal conviction. Def.'s Mot. & Mem. Suppl. R. Ex. 1 at 1, ECF No. 56. On March 29, 2013, the Plaintiff responded to the Defendant's Motion for Summary Judgment. ECF No. 42. On that same day, the Plaintiff filed a Motion to Reinstitute Stay pending the resolution of his appeal with the Court of Appeals of Virginia. Great American replied to the Plaintiff's Response in Opposition to Summary Judgment on April 1, 2013. ECF No. 43. On April 9, 2013, Great American responded to the Plaintiff's Motion to Reinstitute Stay, and the Plaintiff replied on April 15, 2013. The court reissued the stay by Order of April 19, 2013, and required the Plaintiff to update the court periodically regarding the status of the criminal proceedings. ECF No. 47.

On October 16, 2013, the Court of Appeals of Virginia found the Plaintiff's argument meritless and denied his petition for appeal. Def.'s Mot. Mem. Suppl. R. Ex. 1 at 1; see also Status Report, ECF No. 52. On July 16, 2014, the Supreme Court of Virginia denied the Plaintiff's appeal. See Def.'s Mot. Mem. Suppl. R. Ex. 2 at 1; see also Status Report, ECF No. 55. In response to the Status Reports, ECF Nos. 52 and 55, Great American...

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