United States District Court, E.D. California
ORDER DENYING DEFENDANT’S MOTION FOR SUMMARY
JUDGMENT
JENNIFER L. THURSTON UNITED STATES MAGISTRATE JUDGE
Halonda
and Jarvis Naff contend Defendant State Farm General
Insurance Company wrongfully cancelled their insurance policy
and denied their claim following a house fire that caused the
loss of personal property. State Farm argues its actions were
proper and seeks a declaration of rights in its counterclaim,
and seeks summary judgment pursuant to Rule 56 of the Federal
Rules of Civil Procedure. (Doc. 31) For the following
reasons, Defendant’s motion for summary judgment is
DENIED.
I.
Undisputed Facts[1]
On
December 26, 2012, the home owned by Jarvis and Halonda Naff
at 331 Donna Avenue in Bakersfield, California, caught fire
and burned. (JSF 9) The contents of the home were totally
lost. (PSF 17) The Naffs had in place a homeowner’s
policy issued by State Farm. (JSF 8; Doc. 6-1 at
2-51)[2] The policy provided coverage in the amount
of $154, 300 for the dwelling, $15, 430 for the dwelling
extension and $115, 725 for personal property. (Id.;
PSF 6) The policy included the following condition:
2.
Concealment or Fraud.
This policy is void as to you and any other insured, if you
or any other insured under this policy has intentionally
concealed or misrepresented any material fact or circumstance
relating to this insurance, whether before or after a loss.
(JSF 8; Doc. 6-1 at 43, emphasis in original)
After
the fire, Plaintiffs hired David Coston to do repair work on
the home. (PSF 14) Mr. Avery “asked David Coston to
have an inventory prepared identifying the contents of the
house.” (PSF 15; Coston Depo. 24:8-24) “Pursuant
to Mr. Avery’s direction . . . Coston asked Sharon
Endlsey to go through everything and to document every item
that [she] saw which had been destroyed in the fire.”
(PSF 18) Ms. Endley went to the home and listed every item
that she could recognize, prepared an inventory and gave it
to Mr. Avery. (PSF 20, 25) Thomas Collier, who worked for
State Farm’s Special Investigations Unit,
“determined the [total] value of the property on the
Endsley list … was approximately $147, 815.18.”
(PSF 43)
On May
29, 2013, Plaintiffs gave State Farm “an inventory of
personal property they claim was damaged and destroyed . . .
and requested financial compensation for the damaged personal
property.” (JSF 10) Mrs. Naff completed an inventory
form that requested information for each item claimed, such
as where it was purchased, the age, and “today’s
repair cost/replacement cost/amount of loss (without
tax).” (PSF 27) The Naffs claim that each item on Mrs.
Naff’s inventory was in the home at the time of the
fire. (JSF 11) They deny that they knowingly misrepresented
the age or value of any item on the inventory. (JSF 12; JSF
13) The reported total value of items on Mrs. Naff’s
inventory form that they owned at the time of the bankruptcy
petition was approximately $26, 000. (See JSF 14-40)
In June
2013, Mrs. Naff gave a recorded statement to Mr. Collier.
(PSF 34) Mrs. Naff “indicated she had felt overwhelmed
by the entire process… and been confused in regard to
how to complete certain columns including the columns for
where purchased, age, and ‘today’s repair
cost/replacement cost/amount of loss.” (Id.)
Mr. Avery and Mr. Collier directed Mrs. Naff to provide a new
inventory form. (PSF 35)
On
August 13, 2013, “Plaintiffs submitted a revised loss
inventory to State Farm.” (JSF 41) Mrs. Naff reported
she was advised “to be more accurate on how long she
had the items” prior to submitting the second
inventory. (JSF 43) Mrs. Naff asserts she “remove[ed]
some items that had been found in storage, combin[ed] items,
and correct[ed] certain information that she was confused
by.” (PSF 36) Plaintiffs maintain “each item on
the August 13, 2013 inventory was in the home at the time of
the fire.” (JSF 44) Plaintiffs deny they
“knowingly misrepresented the age of even one item,
” and “deny that they knowingly overvalued even
one item” on the August inventory. (JSF 45-46) The
reported total value of items that Mrs. Naff indicated were
aged three years or more on the August inventory was
approximately $18, 000. (See JSF 47-54, 60-66,
68-76, 78-84; DSF 55-58, 67, 77, 85-86)
During
the investigation, State Farm learned that the Naffs had
filed Chapter 7 Bankruptcy.[3](DSF 1; Doc. 32-4 at 3) On the
voluntary petition, the Naffs “declare[d] under penalty
of perjury that the information provided in this petition is
true and correct.” (DSF 2; Doc. 31-4 at 6) On the
“Schedule B” form, the Naffs were directed to
“list all property of the debtor of whatever
kind.” (Id. at 14) Plaintiffs indicated they
had $300.00 in a bank account; $3, 000 in “[h]ousehold
furnishings including electronics and appliances; $500.00 in
“[c]lothing and wearing apparel;” $500.00 in
jewelry; and $2, 000.00 in “[f]irearms and sporting
equipment including photographic equipment.”
(Id.)
On
December 4, 2015, Mr. Collier telephoned Mrs. Naff and told
her State Farm had completed its investigation and was
denying the claim for the personal property losses. (Doc.
31-6 at 99) The information was further detailed in a letter
dated December 5, 2015:
Our
investigation revealed you intentionally concealed and/or
misrepresented material facts when presenting your claim to
State Farm. As a result, we must regretfully, void your
Homeowners Policy as of the date of the loss, December 26,
2012, and deny your claim. Below, we provide examples of some
of the information you intentionally misrepresented and/or
concealed when making your claim.
• On June 18, 2013, you contacted Claim Representative
Michael Avery and inquired about a payment for your patio
cover. Information in your claim file, as well as images
available on-line, did not reveal you had a patio cover at
your home when the fire occurred on December 26, 2012.
You met with Claim Representative Avery at your home later
that day and described a patio cover of approximately 20 feet
by 20 feet. You claimed the patio cover was badly damaged as
a result of the fire.
In your subsequent recorded statements with Claim
Representative Tom Collier, you and Mr. Naff indicated you
did not make a claim for a patio cover, and explained a patio
cover was not damaged at your home as a result of the fire.
You made false representations about a patio cover to Claim
Representative Avery in an effort to obtain payment from your
Homeowners Policy for a loss you did not sustain.
• On May 30, 2013, you presented an inventory of
personal property damaged by the December 26, 2012 fire at
your home. In his recorded statement, Mr. Naff indicated some
mistakes may have been made, and the loss inventory you
submitted for your claim should be revised.
You submitted a revised loss inventory to State Farm on
August 15, 2013. The replacement cost of the personal
property claimed on the new loss inventory was approximately
one half of what you claimed in the May 30, 2013 loss
inventory.
At the time of your examination under oath, you explained the
inventory of damaged personal property you submitted on May
30, 2013 was the accurate assessment of your personal
property loss. Despite Mr. Naffs acknowledgement some
mistakes may have been made in the May 30, 2013 inventory,
and your subsequent submission of a significantly revised
loss inventory, you testified your initial loss inventory was
accurate.
As you know, your general contractor, Image Builders, made an
inventory of the personal property at your residence premises
after the fire. State Farm compared the inventory of damaged
personal property you submitted for your claim on May 30,
2013 with the inventory prepared on site by your contractor.
Your inventory of damaged personal property included numerous
items not found at your home by your contractor. The
replacement cost you claimed to State Farm for items your
contractor did not observe at your home following the fire
was nearly $112, 000.00.
State Farm must, regretfully, conclude you intentionally
concealed and misrepresented material information when making
your personal property claim based on the differences in the
inventory you originally submitted, your revised loss
inventory, and the inventory prepared by Image Builders.
(Doc. 31-6 at 99-100) State Farm indicated in the letter that
the above list was “not meant to be an exhaustive
description of each and every concealment and/or
misrepresentation you made.” (Id. at 100)
State Farm indicated the claim was also denied because Mrs.
Naff “did not comply with [the] duties after a loss as
described in the Homeowners Policy”-which included
providing documentation in support of the claim.
(Id.) Finally, State Farm indicated it did
“not intend, by this letter, to waive any policy
defenses in addition to those stated…and reserve[d]
its right to assert additional policy defenses at any
time.” (Id. at 101)
Plaintiffs
filed a claim with the Department of Insurance, and received
a “right to sue” on December 15, 2014. (Doc. 1-2
at 8) Accordingly, Plaintiffs initiated this action by filing
a complaint in Kern County Superior Court on February 19,
2015, alleging State Farm is liable for: (1) a breach of the
duty of good faith and fair dealing, (2) breach of contract,
(3) intentional infliction of emotional distress, and (4)
negligent ...