Richard Rose v. State Farm Fire & Cas.Co.
766 F.3d 532
| 6th Cir. | 2014Background
- Plaintiff Richard Rose's Ohio house burned on January 7, 2009; cause was inconclusive and investigation did not specifically find arson.
- Rose held a State Farm homeowner’s policy and a Personal Articles Policy (two Rolexes); he claimed substantial losses and State Farm assigned an investigator, Rob Raker.
- In a recorded statement (Jan. 20, 2009) Rose discussed prior lawsuits and judgments; he disclosed a multi-million dollar judgment involving Fifth Third Bank and provided the bank attorney’s contact, but gave responses that State Farm later characterized as misleading about other suits and tax liens.
- State Farm denied coverage invoking the policies’ Intentional Acts and Concealment/Fraud clauses, then Rose sued for breach of contract and bad faith; the district court granted summary judgment to State Farm, finding Rose’s statements intentionally misleading and policies void.
- On appeal, the Sixth Circuit reviewed de novo whether Rose intentionally misrepresented material facts and whether triable issues of fact remained as to concealment; the court found a genuine dispute on intent and reversed and remanded.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Rose intentionally concealed or misrepresented material facts about his financial/legal history during the recorded statement | Rose argues he voluntarily disclosed major liabilities (e.g., Fifth Third judgment), provided attorney contact, and did not intend to mislead; many matters were business-related or managed by others | State Farm contends Rose failed to disclose multiple tax liens and judgments and gave misleading answers about lawsuits outside Gallia County, so concealment voids the policies | Reversed: a genuine issue of material fact exists as to Rose’s intent; summary judgment for State Farm on concealment was improper |
| Whether the policies are therefore void such that breach-of-contract remedy is unavailable | If no intentional concealment, policies remain enforceable and breach claim may proceed | If intentional concealment is proved, policies are void and no coverage exists | Because intent is disputed, policies cannot be declared void as a matter of law at summary judgment; remand for further proceedings |
| Whether Rose abandoned his bad-faith claim on appeal | Rose says bad-faith was argued insofar as it depended on contract validity and was included in appeal statement | State Farm asserts Rose failed to brief bad-faith and thus abandoned it | Court exercised discretion to consider bad-faith; because contract validity is remanded, bad-faith summary judgment is also reversed and remanded |
| Standard of review for Rule 59(e) challenge to summary judgment | Rose contends de novo review applies when Rule 59(e) challenges summary judgment | State Farm relied on the district court's denial | Court applies de novo review to summary-judgment aspects of Rule 59(e); Rose’s Rule 59(e) appeal denied as moot after reversal |
Key Cases Cited
- Brannam v. Huntington Mortg. Co., 287 F.3d 601 (6th Cir. 2002) (summary-judgment review is de novo)
- Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574 (U.S. 1986) (nonmovant evidence must be viewed in light most favorable on summary judgment)
- Trzcinski v. Am. Cas. Co., 953 F.2d 307 (7th Cir. 1992) (insurer must prove intentional concealment or misrepresentation of material fact to void policy)
- Jonathan Pepper Co. v. Hartford Cas. Ins. Co., 520 F. Supp. 2d 977 (N.D. Ill. 2007) (denial of summary judgment where prior omissions could be innocent or forgotten)
- Baymon v. State Farm Ins. Co., [citation="257 F. App'x 858"] (6th Cir. 2007) (insurer may void policy when insured admits knowing, material false statements about financial status)
- CSS Publ’g Co. v. American Econ. Ins. Co., 740 N.E.2d 341 (Ohio Ct. App. 2000) (intent to conceal is a question for the factfinder where concealment is disputed)