Maldonado Investments, L.L.C. v. State Farm Fire &
16-31206
| 5th Cir. | Nov 20, 2017Background
- Maldonado Investments owned Olive Street Bistro in Shreveport; State Farm issued a commercial fire policy covering buildings (Coverage A) and business personal property (Coverage B) for Feb 26, 2013–Feb 26, 2014.
- A September 30, 2013 fire destroyed the restaurant; Shreveport investigators concluded the fire was intentionally set.
- State Farm denied the insurance claim January 21, 2014 under the Policy’s Dishonesty Exclusion (which excludes losses from dishonest/criminal acts by insureds or employees, but excepts acts of destruction by employees).
- An employee, Carl Dollar, later entered an Alford plea in state court to arson with intent to defraud; the plea did not establish that Dollar sought a financial benefit for himself or another.
- Maldonado sued State Farm; district court granted summary judgment for State Farm, ruling (1) the Endorsement (Employee Dishonesty) only modified Coverage B and (2) Maldonado failed to raise a genuine dispute that the Endorsement’s elements (intent to cause loss and obtain financial benefit) were met. Maldonado appealed.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the Employee Destruction Exception to the Dishonesty Exclusion creates coverage | Employee Destruction Exception applies and establishes coverage | Dishonesty Exclusion bars coverage; district court did not consider Exception because plaintiff framed dispute around Endorsement | Waived on appeal (plaintiff failed to raise below); court declines to consider it for first time on appeal |
| Whether the Endorsement (Employee Dishonesty) negates the Dishonesty Exclusion for Coverage B | Endorsement makes Dishonesty Exclusion inapplicable and creates coverage for business personal property | Endorsement applies only to Coverage B and its elements are unmet here | Endorsement does not create coverage because Maldonado failed to show a genuine dispute that Dollar intended financial benefit required by the Endorsement |
| Whether Dollar’s Alford plea creates a genuine fact dispute about Endorsement elements | Alford plea establishes or raises factual dispute that Dollar intended financial benefit (and thus creates coverage under Endorsement) | Alford plea did not establish the Endorsement’s elements; plea lacked factual colloquy showing intent to obtain financial benefit | Alford plea insufficient to raise genuine dispute; speculation is inadequate to defeat summary judgment |
| Whether appellate court should address a pure legal question (Employee Destruction Exception) despite waiver | Plaintiff urges consideration because it is pure law and to avoid miscarriage of justice | Defendant opposes; factual disputes (e.g., managerial status) exist and plaintiff offered no good cause for waiver | Not considered: issue not pure law, factual disputes exist, and no miscarriage-of-justice showing |
Key Cases Cited
- Hefren v. McDermott, Inc., 820 F.3d 767 (5th Cir. 2016) (summary judgment standard review)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986) (genuine dispute standard for summary judgment)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (1986) (view inferences in light most favorable to nonmovant)
- Keelan v. Majesco Software, Inc., 407 F.3d 332 (5th Cir. 2005) (issues not raised below are waived on appeal)
- Coastal States Mktg., Inc. v. Hunt, 694 F.2d 1358 (5th Cir. 1983) (exceptions to waiver when pure question of law or to avoid miscarriage of justice)
- Likens v. Hartford Life & Acc. Ins. Co., 688 F.3d 197 (5th Cir. 2012) (speculation cannot defeat summary judgment)