State Farm Fire & Casualty Co. v. Cedric Flowers
2017 U.S. App. LEXIS 7400
| 5th Cir. | 2017Background
- In April 2012 Cedric Flowers applied for and received a homeowner’s policy from State Farm for a house in Courtland, Mississippi; Cedric was not the legal owner at application (property had been quitclaimed to relatives who took a construction loan).
- A fire damaged the house on July 17, 2012; State Farm later discovered Cedric was not the owner and sued for a declaratory judgment that the policy was void ab initio for material misrepresentation.
- State Farm moved for summary judgment after discovery; the district court granted the motion and declared the policy void.
- Appellants (Cedric and Renee Flowers and Renee’s adult children) did not dispute non-ownership or that ownership was material to underwriting, but argued there was no evidence Cedric willfully misrepresented ownership and pointed to deposition testimony casting doubt on whether he told the agent he owned the property.
- Cedric had admitted in his answer and in responses to requests for admission that he told the agent he was the owner and that the application stated he was the owner; the district court treated those as judicial admissions and found no genuine dispute of material fact.
- The Fifth Circuit reviewed de novo and affirmed, holding the misstatement was material and judicial admissions eliminated any factual dispute about whether Cedric stated he owned the property; intent (willfulness) was irrelevant to rescission.
Issues
| Issue | State Farm's Argument | Flowers' Argument | Held |
|---|---|---|---|
| Whether the policy can be voided for a material misrepresentation of ownership | Cedric misrepresented ownership; ownership was material to issuance; policy may be voided | No genuine dispute that Cedric misrepresented? He argues lack of evidence he stated he was owner | Held: Yes; policy void ab initio for material misrepresentation — no factual dispute Cedric stated he owned the property |
| Whether insurer must prove intent/willfulness to void policy | Misstatement need not be willful; materiality controls | Flowers argued he reasonably believed he owned property and any misstatement was not intentional | Held: Intent is not required; whether intentional, negligent, or mistaken is irrelevant under Mississippi law |
| Whether Cedric’s deposition creates a genuine factual dispute about what he told the agent | Judicial admissions (answer and RFA responses) establish he told agent he was owner | Deposition contradicts prior admissions and suggests agent assumed ownership | Held: Prior admissions are binding judicial admissions; deposition cannot resurrect a disputed fact already admitted |
| Appropriateness of summary judgment | No genuine dispute of material fact; clear-and-convincing evidence of material misstatement and its materiality | Argues factual disputes preclude summary judgment | Held: Summary judgment affirmed — no actual controversy on material misstatement and materiality |
Key Cases Cited
- Prudential Ins. Co. of Am. v. Estate of Russell, 274 So. 2d 113 (Miss. 1973) (insurer may avoid policy induced by material misrepresentation)
- Fidelity Mut. Life Ins. Co. v. Miazza, 46 So. 817 (Miss. 1908) (insured’s positive statements material to risk must be true)
- Carroll v. Metro. Ins. & Annuity Co., 166 F.3d 802 (5th Cir. 1999) (misstatement of material fact allows insurer to rescind policy)
- Sanford v. Federated Guar. Ins. Co., 522 So. 2d 214 (Miss. 1988) (materiality judged by probable effect truthful answers would have had on insurer)
- Brewster v. Bubba Oustalet, Inc., 231 So. 2d 189 (Miss. 1970) (fraud allegations require clear and convincing proof)
- McCreary v. Richardson, 738 F.3d 651 (5th Cir. 2013) (pleading statements can constitute binding judicial admissions)