Perry v. State Farm Fire & Cas. Co.
| Decision Date | 22 June 1984 |
| Docket Number | No. 83-8048,83-8048 |
| Citation | 734 F.2d 1441 |
| Court | U.S. Court of Appeals — Eleventh Circuit |
| Parties | 15 Fed. R. Evid. Serv. 1346 June T. PERRY, Plaintiff-Appellee, v. STATE FARM FIRE & CASUALTY COMPANY, Defendant-Appellant. |
Clayton H. Farnham, Atlanta, Ga., for defendant-appellant.
Andrew H. Marshall, Athens, Ga., for plaintiff-appellee.
Appeal from the United States District Court for the Middle District of Georgia.
Before KRAVITCH and ANDERSON *, Circuit Judges, and TUTTLE, Senior Circuit Judge.
In this diversity action, plaintiff June T. Perry sued State Farm Fire & Casualty Company ("State Farm") to collect under a homeowners insurance policy following the destruction, by fire, of Perry's home. A jury awarded Perry the full amount of her claim.
On appeal, State Farm contests various rulings of the district court excluding evidence from the jury's consideration. Finding no reversible error, we affirm.
June Perry owned a residence in Carnesville, Georgia, with her ex-husband, Jimmy Perry. The dwelling and its contents were insured under a State Farm Homeowners insurance policy for $62,655 and $33,108.54, respectively. On January 30, 1982, fire destroyed the property, and the Perrys thereafter submitted a claim to State Farm under the policy for the full amount of the coverage. State Farm's Senior Claims Specialist, Ed Pihl, investigated the fire loss. As part of his investigation, Pihl took an unsworn statement from June Perry on March 5, 1982.
On March 12, 1982, June Perry submitted to State Farm a Sworn Statement in Proof of Loss, in which she made a formal claim for one-half the dwelling coverage and the entire contents coverage. 1 On April 26, 1982, State Farm's attorney examined June Perry under oath about her claim.
State Farm denied Mrs. Perry's claim in a letter dated June 28, 1982. The letter explained that State Farm's investigation had revealed that the fire was started by Mrs. Perry or on her behalf. The letter added that Mrs. Perry had made a number of misrepresentations, both sworn and unsworn, voiding the policy under the following clause:
We do not provide coverage for any insured who has intentionally concealed or misrepresented any material fact or circumstance related to this insurance.
On August 5, 1982, Mrs. Perry sued State Farm in state court to enforce the policy. The case was removed to the United States District Court for the Middle District of Georgia. At trial, State Farm attempted to prove that Mrs. Perry had burned her home because she was financially desperate. State Farm introduced evidence that Mrs. Perry had received notice in October, 1981, three months before the fire, that her only source of income, her Social Security benefits, was being cut off. State Farm also introduced evidence that Mrs. Perry had received a notice of foreclosure on her home ten days before the fire. State Farm attempted to show that the house was in poor condition and worth less than half its insured value, but the district court excluded this evidence in the form in which it was offered.
State Farm also attempted to establish that Mrs. Perry had tried to hide her motive for arson by making material representations on March 5 and April 26, including misstatements about her income, the notice of foreclosure, and attempts to sell her house. The trial judge ruled evidence of these misrepresentations inadmissible, but did allow evidence of three alleged misrepresentations on the Sworn Proof of Loss.
At the conclusion of the trial, the jury found that Mrs. Perry had not caused the burning of her house, had not misrepresented material facts, and was entitled to a recovery of $33,910. The district court thereafter entered a slightly reduced judgment for the plaintiff in the amount of $33,108.54 plus interest and costs.
In this appeal, State Farm argues that the district court erred: 1) in excluding evidence of several of the alleged misrepresentations; 2) in excluding evidence of the condition of the house on the issue of motive for arson; and 3) in denying State Farm's motion to procure testimony from the Social Security Administration about the official termination date of Mrs. Perry's Social Security benefits.
State Farm argues that the trial court improperly excluded evidence of several material misrepresentations from the jury's consideration.
Under a misrepresentation clause, a willful and intentional misrepresentation of material facts made for the purpose of defrauding the insurer will void the contract. American Alliance Insurance Co. v. Pyle, 8 S.E.2d 154, 160, 62 Ga.App. 156 (1940). A misrepresentation is material if it "might affect [the insurer's] action in respect to ... settlement or adjustment of the claim of the insured." American Alliance Insurance Co. v. Pyle, 8 S.E.2d at 160. However, the insurer need not actually rely on the representation or suffer any prejudice therefrom. See Pittman v American Mutual Fire Insurance Co., 199 S.E.2d 893, 129 Ga.App. 399 (1973).
Whether a misrepresentation is material is a jury question, unless the evidence excludes every reasonable inference except that there was or was not a material misrepresentation. United Family Life Insurance Co. v. Shirley, 248 S.E.2d 635, 636, 242 Ga. 235 (1978). In this case, the trial court excluded evidence of the following alleged misrepresentations from the jury's consideration, thus finding implicitly that no reasonable jury could have found material misrepresentations on the basis of the proffered evidence.
In her March 5, 1982 statement, Perry told State Farm that she had a buyer, Sammy Macomson, for her house. When asked whether Macomson had made a firm offer, she said yes. On April 26 she again told State Farm that Macomson wanted to buy her house. At trial, State Farm argued that these were misrepresentations because Macomson had never made a firm offer for the house. State Farm acknowledged that Macomson had discussed buying the house with Perry, but wanted to introduce Macomson to testify that he would have been willing to buy the house only at a price that was less than half its insured value.
The trial court found that because Macomson had discussed buying the house, there was no material misrepresentation. We agree. No reasonable jury could have found that Perry's responses to questions about the efforts to sell her house were false. Her statement that she had a buyer for the house were true. If Mrs. Perry's response that she had a "firm offer" was not technically accurate, the fault lies with State Farm for failing to explain exactly what the term meant and to ask her the price at which the offer had been made.
On March 5, Perry was asked whether she had ever received a notice of foreclosure. She said no. On April 26, she was asked whether her bank had ever threatened foreclosure. She responded that "over a month" before the fire the bank had written her that "they were going to have to foreclose" on the house. In fact, Mrs. Perry received a letter from the bank ten days before the fire stating that the bank was accelerating her payments and that if she did not pay off her mortgage, it was going to foreclose.
The trial court found no misrepresentation because Mrs. Perry told State Farm about the bank's letter. It ruled immaterial the discrepancy over the actual date of the letter's receipt.
We agree that Perry's statement that she received the letter over a month, not ten days, before the fire could not be a material misrepresentation. The material point was not the date of the notice but the fact of its receipt.
Nor do we think a reasonable jury could find that Mrs. Perry's answer on March 5 was an intentional misrepresentation. Perry drew a distinction between a notice of foreclosure and a letter of acceleration, as demonstrated by her testimony at trial.
Q. Did you ever receive a notice of foreclosure of that house, Mrs. Perry?
A. No. sir.
Q. You never did?
A. No. sir. I received a letter stating they were going to foreclose unless I paid the payments.
It is therefore clear that Perry thought she was answering accurately on March 5 and that any inaccuracy was caused by State Farm's failure to define a notice of foreclosure or to ask follow-up questions about any other letters relating to foreclosure.
On April 26, Perry told State Farm that her house was in fine condition and needed no repairs. At trial, State Farm sought to introduce Perry's testimony from her divorce settlement proceeding four months before the fire that the house "needs paint, the front door has a hole in it, the screen is falling off, the carport has never been finished," the doors will not fasten, and the house is "probably" worth only $25,000. The trial court excluded the evidence on the issue of misrepresentation, because the value of the house was set by the inflation clause of the insurance policy and was therefore not an issue in the case.
The condition of the house and its value were clearly relevant to the issue of motive for arson. If the house was in fact in terrible condition, a statement that it was in fine condition and needed no repairs could be a material misrepresentation because it might falsely obscure a motion for arson, thus frustrating the insurer's investigation. However, we do not think a reasonable jury could find the proffered divorce testimony so at odds with Perry's general statements that the house was in fine condition and needed no repairs that the latter was a willful misrepresentation intended to deceive.
The repairs mentioned at the divorce trial were fairly minor. Moreover, it was not shown that the house at the time of the fire was in the same condition as it was during the divorce hearing. As for the divorce testimony that the house was "probably" worth $25,000, Perry qualified that estimate by admitting that she really...
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