Opinion
Case No. 2:02-CV-0188S.
December 15, 2004
ORDER
I. Introduction
Plaintiff Standard Fire Insurance Company, a Connecticut corporation, brought suit against Robert Arbuckle seeking an order from this Court adjudging and declaring its rights, duties and obligation under the Homeowners Policy issued to Arbuckle, specifically to declare that Homeowners Policy void due to Arbuckle's alleged refusal to cooperate, concealment and/or fraud. On or about July 31, 2001, Arbuckle made a claim under his Homeowners Policy for theft of personal property. Arbuckle's claim alleged that in the process of moving from Orem, Utah to Plano, Texas, all of the items in his U-haul truck, including an electric vehicle on an attached trailer, were stolen from the motel parking lot where he had stopped to spend the night. Standard Fire claims that after repeated unsuccessful attempts to obtain documents from Arbuckle which could support his ownership or value of the items allegedly stolen, Standard Fire began its own investigation into the alleged theft. During their investigation, Plaintiff claims they discovered several items indicating the potential of fraud. Standard Fire therefore determined the indicia of fraud was sufficient to warrant further investigation to determine if Arbuckle may have had a motive to file a fraudulent claim. After unsuccessfully attempting to obtain financial records from Arbuckle through written requests and a secondary examination under oath, Standard Fire denied Arbuckle's claim for failure to cooperate as well as the concealment and fraud provisions of the policy.
Plaintiff has moved for summary judgment on the issue of Defendant's refusal to cooperate claiming that his refusal breached the insurance contract and that breach prejudiced Standard Fire as a matter of law.
II. Summary Judgment Standard
Under Fed.R.Civ.P. 56, summary judgment is proper only when the pleadings, affidavits, depositions or admissions establish there is no genuine issue regarding any material fact and the moving party is entitled to judgment as a matter of law. The burden of establishing the nonexistence of a genuine issue of material fact is on the moving party. E.g., Celotex Corp. v. Catrett, 477 U.S. 317 (1986). In determining whether summary judgment is appropriate, the court views all relevant facts in the light most favorable to the party opposing the motion. Summary judgment is appropriate only where the evidence "is free from doubt so that all reasonable [persons] would come to the same conclusion."Schnuphase v. Storehouse Markets, 918 P.2d 476, 477 (Utah 1996).
Whether a fact is material is determined by looking to relevant substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
III. Discussion
Standard Fire's main claim is that Arbuckle's failure to cooperate with Standard Fire's investigation was a breach of the insurance policy's cooperation clause. The applicable clause in the insurance contract between Standard Fire and Arbuckle addressing the insured's responsibilities after a loss states:
2. Your Duties After Loss. In case of a loss which this insurance may apply, you shall see that the following duties are performed:
e. Prepare an inventory of damaged personal property showing in detail the:
1. quantity;
2. description;
3. actual cash value; and
4. amount of the loss
Attach to the inventory all:
1. bills;
2. receipts; and
3. related documents that substantiate the figures in the inventory;
f. As often as we reasonable require:
1. show the damaged property;
2. provide us with records and documents and permit us to make copies; and
3. submit to examination under oath while not in the presence of any other insured and sign the same
Courts have stated that an insured has an obligation to comply with the cooperation clause and failure to do so may be a material breach of the contract causing an insured to forfeit his right to recover under the policy. See Tran. v. State Farm Cas. Co., 961 P.2d 358 (Wash. 1998); see also Weisserg v. Royal Ins. Co., 659 N.Y.S.2d 505, 507 (N.Y.App.Div. 2 1997).
The facts in this case are similar to the facts in Tran where the insured brought suit against the insurance company after the property insurer denied his theft claim for breach of the cooperation clause. The Washington court held that "[i]nsureds may forfeit their right to recover under an insurance policy if they fail to abide by provisions in the policy requiring them to cooperate with the insurer's investigation of their claim." Id. at 362. In Tran, the insured reported a burglary to the police wherein some inconsistent statements were made to the police and the insurance claims representative. Id. at 360. In addition, while completing the form to the insurance company detailing items lost and their value, the insured in Tran failed to include documents supporting his ownership of the items allegedly stolen or their value. Id. After repeated requests for the information which received no response from the insured, the insurer determined that the lack of response coupled with the contradictory statements was enough indicia of fraud for the insurer to broaden its inquiry to determine if there was a possible motive to submit a fraudulent claim. Id. The insurer, therefore, requested information supporting the value of the allegedly stolen items, in addition to business and personal financial information of the insured, which he also refused to provide. Id. at 361.
Ultimately the Washington Supreme Court concluded that the insurer had legitimate reasons for broadening its investigation into the insured's financial condition, including the insured's repeated refusal to provide the insurer with documentation supporting all of the items he claimed were stolen, and the insured's inconsistent statements. Id. at 364. The court held that given the facts, no reasonable juror could conclude that the insured cooperated in the investigation and therefore there was a breach of the cooperation clause as a matter of law. Id. at 364-365. The Washington Supreme Court further concluded as a matter of law that without the requested financial information, the insurer was unable to evaluate the validity of the insured's claim, and therefore prejudiced the insurer's ability to complete a full and legitimate investigation into the claim to determine if coverage existed. Id. at 366.
While the Tran case is not controlling, it is persuasive in the instant case. Similar to the facts in Tran, Arbuckle submitted a claim for stolen property without providing supporting documentation as to his ownership and the value of the items allegedly stolen. Further, in its own investigation, Standard Fire determined that Arbuckle had overstated the value of just a few items by over $10,000. Based on this and other inconsistencies in Arbuckle's statements, Standard Fire determined that there was enough indicia of fraud to broaden its inquiry into Arbuckle's financial condition. This court agrees. Standard Fire accordingly requested financial and business records from Arbuckle which he refused to provide himself or discuss under oath. Arbuckle's failure to cooperate with the investigation breached the cooperation clause in the insurance policy as a matter of law. Further, this breach prejudiced Standard Fire in that it impeded Standard Fire's ability to properly investigate the claim to determine if coverage existed.
This court therefore determines that viewing the evidence in the light most favorable to the non-moving party, no reasonable juror could conclude that Arbuckle cooperated in the investigation and therefore there was a breach of the cooperation clause as a matter of law. Further, Standard Fire was prejudiced as a result of this breach and thus Standard Fire is entitled to summary judgment as a matter of law. Because of this determination, the Court also concludes that there is no merit to Arbuckle's counterclaims and they are therefore dismissed with prejudice.
The Defendant has not provided evidence that further witness testimony would change the facts upon which the court bases its decision, therefore Defendant's request for continuance of summary judgment proceedings is also denied.
III. CONCLUSION
For the foregoing reasons, Plaintiff's Motion for Summary Judgment is granted.SO ORDERED.