Ussery v. Allstate Fire & Cas. Ins. Co.
| Decision Date | 14 December 2015 |
| Docket Number | CASE NO.: 5:13-CV-83 (LJA) |
| Parties | Albert Ussery and The Estate of Miriam Ussery, by and through Adminstratrix Tammy Jean Martin f/k/a Tammy Jean Ussery, Plaintiffs, v. Allstate Fire and Casualty Insurance Company, Defendant. |
| Court | U.S. District Court — Middle District of Georgia |
Christy Crowe Childers, David Hamilton McCain, Jay Clifford Traynham, Macon, GA, for Plaintiffs.
Melissa C. Patton, Marvin D. Dikeman, Atlanta, GA, for Defendant.
LESLIE J. ABRAMS
The Parties in the above-captioned matter have cross-moved for summary judgment. (Docs. 19, 21.) For the following reasons, Defendant's Motion for Summary Judgment (Doc. 19) is DENIED and Plaintiffs' Motion for Summary Judgment (Doc. 21) is GRANTED .
This action arises out of Defendant's denial of coverage under an insurance policy (“the “Policy”) pursuant to which Defendant insured Plaintiffs' dwelling and personal property that subsequently were destroyed in a fire. Defendant denied Plaintiffs' claim in its entirety based on its discovery of a bankruptcy petition (the “Bankruptcy Petition”) in which Plaintiffs listed a significantly lower personal property valuation than that stated in Plaintiffs' insurance claim. According to Defendant, the discrepancy between the two valuations conclusively established that Plaintiffs breached the concealment of fraud provision found in the Policy. Plaintiffs dispute this determination. The facts of this case are relatively straightforward and mostly undisputed.2
Defendant issued Plaintiffs the Policy, which was effective from August 28, 2011 through August 28, 2012, insuring Plaintiffs' dwelling for $274,608 and their personal property for $205,956. (See Doc. 19-3.) At the core of the Parties' dispute is a provision in the Policy entitled “Misrepresentation, Fraud of Concealment” (the “Misrepresentation Clause”), which states that Defendant does “not cover any loss or occurrence in which any insured person has concealed or misrepresented any material fact or circumstance.” (Id. at 26.)
On November 10, 2011, Plaintiffs' dwelling and the contents therein were completely destroyed in a fire, resulting in a total loss. (Doc. 21-1 at ¶¶ 5, 44.) After informing Defendant of the fire, Plaintiffs were instructed to prepare a Personal Property Inventory Loss form (the “Loss Form”), which required Plaintiffs to, among other things, approximate the original costs of their lost property. (Doc. 20-9 at 9-10.) With the assistance of their daughter, Plaintiffs prepared the Loss Form and submitted a sworn proof of loss valuing their personal property at the Policy limit of $205,956.3 (Doc. 21-1 at ¶¶ 7, 41.) Plaintiffs also submitted a proof of loss to recover the full Policy limit of $274,608 for the destruction of their home. (Id. at ¶ 41.) Following the submission of Plaintiffs' claim, Defendant began investigating the veracity of Plaintiffs' personal property valuation. During the course of its investigation, Defendant discovered that, prior to the fire, Plaintiffs had filed for Chapter 13 bankruptcy in February of 2011.4 (Doc. 19-1 at ¶¶ 5, 7.) In their Bankruptcy Petition, Plaintiffs valued their personal property at $2,700. (Id. at ¶ 8.)
Upon discovering the Bankruptcy Petition, Defendant exercised its right under the Policy to conduct an examination of Plaintiffs under oath. (Id. at ¶ 10.) At the examination, on February 23, 2012, Plaintiffs were advised of Defendant's investigation into their personal property valuation and the discovery of the Bankruptcy Petition. (Id. at ¶ 11.) In response to Defendant's inquiry into the differing valuations, Plaintiffs admitted that their Bankruptcy Petition did not list all of their possessions and inaccurately reflected the true value of their personal property. (See Id. at ¶¶ 13-22; see generally Docs. 19-4, 19-5.) Nevertheless, Plaintiffs maintained that they were simply following the advice of their bankruptcy attorney when valuing the property at $2,700. (Doc. 19-1 at ¶ 23.) Notably, Plaintiffs accurately valued their home in their Bankruptcy Petition, (Doc. 19-10 at 10), and there is no dispute regarding any depreciation of the home from the time the Policy was issued until the time of the fire. (Doc. 21-1 at ¶ 47.)
Based on the difference between Plaintiffs' personal property valuation in their proof of law and in their Bankruptcy Petition, Defendant determined that Plaintiffs had made material misrepresentations in connection with the submission of their insurance claim. (Id. at ¶ 33.) Consequently, by letter dated March 28, 2012, Defendant denied Plaintiffs' claim in its entirety (the “March 28 Letter”), asserting that Plaintiffs had violated Georgia law and breached the terms of the Policy. (Doc. 1-3.) The March 28 Letter did not set forth (i) the facts Plaintiffs allegedly misrepresented in the proof of loss, (ii) which Georgia laws Plaintiffs allegedly violated, or (iii) which provisions of the Policy Plaintiffs allegedly breached. (Id. )
Following the denial of their insurance claim, but before receiving a discharge in their bankruptcy, Plaintiffs amended their Bankruptcy Petition nunc pro tunc to include the exact inventory, and reflect the same value, of their personal property as listed in their insurance claim. (Doc. 21-1 at ¶ 29; see also Doc. 21-10.) The Bankruptcy Judge overseeing Plaintiffs' bankruptcy subsequently held that the amendment “related back to the original filing date of the Petition and resulted in no changes to the repayment terms under the confirmed Chapter 13 plan.” (Doc. 30-2.) In addition, the Bankruptcy Judge modified the Chapter 13 plan to ensure that any recovery by Plaintiffs in this action would “be dispersed to the unsecured creditors to satisfy the best interest of creditors test.” (Id. )
After amending their Bankruptcy Petition, on October 10, 2012, Plaintiffs submitted a letter pursuant to Georgia's bad faith statute, O.C.G.A. § 33–4–6
, demanding payment of their insurance claim. (Doc. 1-4 at 2.) On November 1, 2012, Defendant denied Plaintiffs' demand, maintaining that Plaintiffs had made material misrepresentations in connection with the submission of their claim and, thus, were entitled to no recovery. (See Doc. 1-6.) As with its prior denial of coverage, Defendant did not question or request proof of any of the items Plaintiffs listed in their inventory or the valuation Plaintiffs assigned to their personal property in the proof of loss. (Id. ) Instead, Defendant sought an explanation for Plaintiffs' “decision to omit items from their sworn bankruptcy petition,” and requested that the Plaintiffs “present documents and information regarding any debt relief they realized as the result of the bankruptcy petition they filed, including documents and information regarding any effort they made to return or renounce those benefits.” (Id. at 1-2.)
Defendant's adjustors subsequently testified that Plaintiffs' insurance claim was denied because of the significantly lower personal property valuation listed in the Bankruptcy Petition and Defendant's belief that judicial estoppel barred Plaintiffs from pursuing their claim. (See Docs. 20-1, 20-5, 20-7, 20-13.) Defendant's dwelling adjustor, Jackson Howell, testified that after completing his evaluation of Plaintiffs' claim, he was prepared to pay the policy limits. (Doc. 20-7 at 69:21-70:3.) Defendant's contents adjustor, Ashley Sikes, testified that he had no reason to dispute the items Plaintiffs listed in their inventory or the valuations Plaintiffs assigned to their lost personal property. (Doc. 20-13 at 18:21-19:1.) He further testified that Plaintiffs' inventory was a fair representation of what he would have expected to be in the home at the time of the fire, (Id. at 18:17:20), and that it would have been unreasonable to consider the value of Plaintiffs' personal property to be $4,000. (Id. at 22:19-22.) Nevertheless, Defendant's Special Investigative Unit (“SIU”) analyst, Debra Hatfield, repeatedly confirmed that Plaintiffs' claim was denied because of the company's belief that judicial estoppel applied. (Doc. 20-1 at 34:12-13, 35:7-12, 37:7-16, 38:4-10.) In fact, when asked to identify Plaintiffs' alleged material misrepresentation in the proof of loss, Ms. Hatfield responded that “the material misrepresentation is—relates to the judicial estoppel as far as the difference in what [Plaintiffs] told us.” (Id. at 33:21-23.) Likewise, when questioned what laws Plaintiffs allegedly violated, Ms. Hatfield responded “judicial estoppel.” (Id. at 56:17:21.) Finally, Defendant's SIU supervisor, Michael Simpson, who made the final decision to deny the insurance claim, agreed that “there was nothing that [Plaintiffs] claimed that wasn't in the house or that was grossly overvalued,” and that, “[b]ut for the bankruptcy filing and what [Plaintiffs] swore to in the bankruptcy filing,” Plaintiffs' claim would have been covered under the Policy. (Doc. 20-5 at 28:14-23.) Like Ms. Hatfield, Mr. Simpson confirmed that the “claim was denied solely because of the material misrepresentation in the bankruptcy filing in 2011 as it relates to [Plaintiffs' personal property].” (Id. at 30:3-7; see also Doc. 20-1 at 30:5-10 (stating that there was no reason to deny the claim “other than the amount of the contents that were submitted to the bankruptcy court and the value of the contents as submitted to [Defendant]”).)
On March 7, 2013, Plaintiffs commenced this action, alleging that Defendant breached the Policy and acted in bad faith, in violation of O.C.G.A. § 33–4–6
, by refusing Plaintiffs' demand for payment.5 (Doc. 1.) On May 19, 2014, the Parties cross-moved for summary judgment on the following issues: (1) whether Plaintiffs' claim is barred by judicial estoppel; (2) whether Plaintiffs made materially misrepresentations in connection with the submission of their insurance claim such that they are entitled to no recovery; and (3) ...
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