Mastowski v. American National Property and Casualty Company, 2:15-cv-01893

Background

On August 29, 2014 the Mastowskis’ home in Superior, AZ burned; they were away on an overnight trip to Nevada when fire was discovered and nothing of value was reported stolen.
American National opened a claim for ~$103,000, retained investigators and an appraiser, and after a ten‑month investigation its retained counsel concluded the fires were incendiary and that the Mastowskis likely had intentional involvement and a financial motive.
The insurer denied the claim in a June 23, 2015 letter citing arson/intentional act and material noncooperation; the claimants sued for breach of contract and bad faith (removed to federal court).
Key investigatory points: fire origin in multiple locations, no chemical accelerants detected, no contemporaneous signs of forced entry reported by first responders, some inconsistencies in the insureds’ statements, and circumstantial indicia of possible financial stress.
Plaintiffs’ later private investigator (examined property >1 year later) reported possible forced entry; plaintiffs also retained an expert who recommended fire modeling which American National did not perform.
Court considered cross‑motions on summary judgment and motions to exclude experts; it granted summary judgment for defendant on bad faith and punitive damages and denied summary judgment as to breach of contract; it excluded the plaintiffs’ late photo expert and limited defendant’s expert on credibility comments.

Issues

Issue	Plaintiff's Argument	Defendant's Argument	Held
Breach of contract — applicability of intentional‑acts exclusion	Mastowskis: insurer not entitled to rely on intentional‑acts exclusion because denial letter did not cite the precise exclusion; also factual dispute whether they committed arson	American National: denial letter expressly cited "intentional act of arson" as primary basis; exclusion applies if insured intentionally caused loss	Denied summary judgment for defendant on breach — factual dispute remains whether intentional‑acts exclusion applies (insurer bears burden to prove exclusion)
Bad faith	Mastowskis: insurer acted unreasonably, relied on flimsy/cumulative evidence, over‑demanded documents, failed to pursue alternative leads and did not do fire modeling	American National: investigation was thorough, claim was fairly debatable given multiple indicia pointing to insureds, denial was reasonable	Granted summary judgment for defendant — insurer’s denial was reasonably debatable and investigation was not shown to be unreasonable or conscious misconduct
Punitive damages	Mastowskis: seek punitive if bad faith proven	American National: punitive requires bad faith plus evil mind; no bad faith shown	Granted for defendant — punitive damages unavailable because no bad faith or evidence of an "evil mind"
Expert admissibility (Andler photo/forced‑entry opinion)	Mastowskis: photo shows forced entry undermining insurer’s no‑forced‑entry findings	American National: photo taken >1 year later lacks foundation, relevance, and is unreliable; risk of jury confusion	Andler excluded — opinion unreliable, speculative, and prejudicial; photo evidence given little probative value
Expert admissibility (Plitt on claim‑handling standards)	Mastowskis: Plitt should be limited from saying "equality of consideration" inapplicable and from opining on witness credibility	American National: offers Plitt to explain good‑faith standard	Court limited Plitt — excluded any testimony about witness credibility or jury‑type interpretations; otherwise reservation without prejudice

Key Cases Cited

Anderson v. Liberty Lobby, 477 U.S. 242 (summary judgment standard; genuine issue for trial)
Celotex Corp. v. Catrett, 477 U.S. 317 (moving party’s burden on summary judgment)
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (nonmoving party must present specific facts)
Tolan v. Cotton, 134 S. Ct. 1861 (view evidence in light most favorable to nonmoving party)
Keggi v. Northbrook Property & Cas. Ins. Co., 199 Ariz. 43 (insurer bears burden to prove applicability of policy exclusion)
Wells Fargo Bank v. Arizona Laborers, Teamsters & Cement Masons Local No. 395 Pension Trust Fund, 201 Ariz. 474 (implied covenant of good faith and fair dealing)
Rawlings v. Apodaca, 151 Ariz. 149 (insurer’s duty and fair‑debatability standard)
Zilisch v. State Farm Mut. Auto. Ins. Co., 196 Ariz. 234 (bad faith requires subjective and objective components)
Nardelli v. Metro. Group Property & Cas. Ins. Co., 230 Ariz. 592 (bad‑faith elements)
Milhone v. Allstate Ins. Co., 289 F. Supp. 2d 1089 (fair‑debatability as factor in bad‑faith analysis)
Deese v. State Farm Mut. Auto. Ins. Co., 172 Ariz. 504 (investigation sufficiency)
Tritschler v. Allstate Ins. Co., 213 Ariz. 505 (punitive damages standard in insurance bad‑faith)
Kumho Tire Co. v. Carmichael, 526 U.S. 137 (Daubert/Kumho gatekeeping for expert testimony)
Daubert v. Merrell Dow Pharm., 509 U.S. 579 (expert admissibility standards)