Thorne v. Member Select Insurance Company

Filing 52

OPINION AND ORDER denying 40 Motion for Reconsideration filed by plaintiff David Thorne. Defendant Member Select is ordered to supplement its discovery responses within 20 days. Signed by Senior Judge James T Moody on 9/22/14. (efc)

UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION
DAVID THORNE,
Plaintiff,
v.
MEMBER SELECT INSURANCE
COMPANY,
Defendant.

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No: 2:09 CV 87

OPINION and ORDER
This matter is before the court on plaintiff David Thorne’s (“Thorne”) “Motion for
Reconsideration” (DE #40) in which he requests the court to reverse its decision which
granted summary judgment to defendant MemberSelect Insurance Company
(“MemberSelect”) on Thorne’s claim for bad-faith denial of coverage for a fire that
destroyed his house. Although no mention of a “motion for reconsideration” is made in
the Federal Rules of Civil Procedure, they are well-known in practice and serve a
useful—but limited—purpose. “It is well established that a motion to reconsider is only
appropriate where a court has misunderstood a party, where the court has made a
decision outside the adversarial issues presented to the court by the parties, where the
court has made an error of apprehension (not of reasoning), where a significant change in
the law has occurred, or where significant new facts have been discovered.” Broaddus v.
Shields, 665 F.3d 846, 860 (7th Cir. 2011), overruled on other grounds by Hill v. Tangherlini, 724
F.3d 965, 967 n.1 (2013).
Thorne argues that two items constituting new evidence have come to light which
now at least create issues of fact requiring that a jury decide whether Member Select acted

in bad faith. The standard applicable to bad faith claims in Indiana, as summarized in the
court’s prior order on summary judgment, bears repeating:
A claim for bad faith is not generated by every erroneous
denial of an insurance claim. [Erie Ins. Co. v.] Hickman, 622
N.E.2d [515] at 520 [Ind. 1993]. Insurers may dispute a claim in
good faith, erroneously deny a claim, fail to diligently
investigate a claim, or even breach a contract without
committing an act of bad faith. Id.; Allstate Ins. Co. v. Hennings,
827 N.E.2d 1244, 1250 (Ind. Ct. App. 2005). Bad faith does not
exist when an insurer rests its coverage decision upon a
rational basis. Masonic Temple Ass’n of Crawfordsville v. Ind.
Farmers Mut. Ins. Co., 779 N.E.2d 21, 29-30 (Ind. Ct. App. 2002);
Patel v. United Fire & Cas. Co., 80 F. Supp. 2d 948, 958 (N.D. Ind.
2000); Colley, 691 N.E.2d at 1261 (insurer not liable for bad faith
if it denies liability with a rational, principled basis for doing
so).
In sum, as this court, speaking through the Hon. Theresa
L. Springmann, J., has explained, “a successful bad faith claim
is composed of an objective element (such as the lack of a
reasonable basis to deny a claim) and a subjective element
(such as the knowledge of the lack of a reasonable basis to
deny a claim).” Balzer v. Am. Family Ins. Co., 805 F. Supp.2d
618, 624-25 (N.D. Ind. 2011). To succeed on a bad faith claim at
trial, a plaintiff must produce evidence establishing that there
was no reasonable basis to deny the claim and that the insurer
knew that there was no reasonable basis. Id.
(DE #34 at 12.) This is the standard which determines whether Thorne’s “new evidence”
merits reconsideration of the court’s previous ruling.
First, in its prior ruling the court’s reasoning in part was based on the fact that
MemberSelect’s claims investigator, Keith Quintaville (“Quintaville”) found it suspicious
that Thorne refused to consent to a credit check or to release his cellular phone records.
Thorne has now reviewed a recorded interview (which had been requested earlier in
discovery but not received) in which Quintaville informed Thorne that he was not a
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suspect and that he was not obligated to produce those items (“I would be requesting, and
again, you know this is entirely up to you…”). (DE #40 at 9; DE #40-13 at 1.) Thorne
argues both that it was not suspicious for him to act consistently with Quintaville’s advice,
and that it was deceptive for Quintaville to give that advice then consider action in
accordance therewith as suspicious.
Member Select argues that the recorded conversation is not new evidence Thorne
can now rely on, and that it makes no difference anyway. Obviously, Thorne knew (or
should have remembered) that he had given a recorded statement to Quintaville, and so
his attorney could have obtained it in time to respond to Member Select’s motion for
summary judgment. Reconsideration need not turn on that, however, because the
statement simply makes no difference. When the statement quoted above from Thorne’s
brief is read in context (Thorne’s Ex. K, DE #40-13), it is clear that the entire interview was
contentious, that Quintaville made it clear that he wanted the information, and that
Thorne would not provide it. For example, shortly after the quoted statement, Quintaville
reiterates “Okay, now I’m requesting that if I send you forms to sign for us to pull credit
check and we would like copies of your cell phone bills for the month of February, January
and February [sic], would you provide those?” (DE #40-13 at 3.) Thorne responds: “No,
not at this time. I’m tired of proving I’m innocent.” (Id.) Thus, there is no reason to secondguess Quintaville’s belief that Thorne’s refusal to cooperate was suspicious. Along with all
of the other information available to Member Select, such as the fire’s suspicious origin,

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this “new evidence” provides no additional evidence of bad faith and no reason to
reconsider the court’s prior ruling.
Thorne’s second piece of new evidence is the third page of the Town of Griffith’s
Police Department’s investigative report (DE #40-14), authored by a Detective Mance,
which Thorne accuses Member Select’s counsel of deliberately withholding during
discovery. He draws this conclusion because that page mentions Thorne’s refusal to take a
polygraph exam—which Quintaville also thought suspicious—and that page of the report
appears to be the only place Quintaville could have garnered that knowledge, since
Quintaville does not recall talking to the police,1 Thorne did not mention the refusal during
his interview with Quintaville, and it is not mentioned anywhere else in all of the
documents Thorne’s counsel has reviewed. Thorne argues that with page three of the
report at its disposal, Member Select misrepresented the facts to the court to obtain
summary judgment because “MemberSelect, could not in good conscience represent to
David [Thorne] and the Court that the Griffith Police found David or Scott’s [Thorne’s
brother] activities suspicious – for Griffith Police Detective’s investigation found David
was in Valparaiso about the time of the fire and Scott was home with his parents the entire
evening – and thus could not have lit the fire.” (DE #40 at 10.)
Member Select’s response is multi-faceted. It asserts that this third page is not new
evidence, because the police report was a public document which it had no duty to

This is Thorne’s characterization, but Quintaville was actually somewhat
equivocal. He stated twice that he was unsure whether he did, or did not, speak to
anyone in the Police Department. (DE #46-2 at 2-3, dep. pages 21-22.)
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disclose and which Thorne himself could have obtained at all times—just as he ultimately
did—and so his lack of due diligence precludes him from using the document for
reconsideration now. It asserts that the third page reveals nothing new, the substance of
the information therein was already known, and speculates2 that Detective Mance and
Quintaville must have spoken before Mance faxed his report to Quintaville in April 2008,
so Mance could have mentioned Thorne’s refusal to take a polygraph during that
conversation. Last, it asserts that it never had the third page of the document produced by
Thorne, and never saw it until Thorne’s attorney provided it, and so neither intentionally
failed to disclose it nor made misrepresentations based on the information contained
therein.
As to that last point, MemberSelect attaches to its response as Exhibit A a fax dated
April 18, 2008, from Detective Mance to Quintaville, consisting of Mance’s report, but
without the disputed third-page information.3 (DE #41-1.) The information added to the
third page that Thorne points to now is titled “supplemental narrative” and is dated June
24, 2009: in other words, it did not yet exist when Mance faxed his report to Quintaville. In
addition, formatting differences between the report faxed to Quintaville and the one
obtained by Thorne’s counsel (the first three lines of the third page of

“Speculate” is Thorne’s characterization, but it could also be said this is a
reasonable inference. It is unlikely that Mance would have spontaneously sent a fax to
Quintaville without being asked to do so.
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To be clear, MemberSelect did produce a report with a third page. The third
page which Thorne obtained has additional information added to the third page.
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Quintaville/MemberSelect’s copy, DE #41-1, are moved to the bottom of page 2 on
Thorne’s copy, DE #40-14), also show the report was later updated by Mance. Finally,
MemberSelect’s counsel affirm that after receiving the supplemental page from opposing
counsel, they diligently searched their files and determined they had never seen it before.
In his reply Thorne does not reassert his charge that MemberSelect/its counsel
intentionally4 withheld the document, and the court accepts MemberSelect’s explanation.
Simply put, the fact that MemberSelect never had, or relied on, Mance’s
supplemental report, is a dispositive reason why it is not evidence that MemberSelect
acted in bad faith, making reconsideration unwarranted. Recognizing this, Thorne takes an
entirely new tack in his reply memorandum:
MemberSelect’s claim that it did not possess the third page of
the Griffith Police Investigation, but had knowledge of the
facts outlined therein, presents two new material evidential
concerns. One, if Keith Quintaville did have a conversation
with Detective Mance and learned of the polygraph
information, as MemberSelect speculates in their response to
Plaintiff’s Request to Reconsider, Keith Quentavalle [sic]
would have recorded such conversation in his investigation
file. David [Thorne] has diligently requested the entirety of
MemberSelect’s investigation file, and no mention of any such
conversation is recorded in the disclosed documentation to
date – indicating a portion of the investigation file was not
disclosed during discovery. Two, MemberSelect has admitted
the information contained in the third page of the Griffith
Police Report is not new to MemberSelect. If the knowledge

Thorne does assert that Quintaville’s lack of recollection of ever having spoken
with the police, along with no indication of his having done so appearing in his
investigative notes, means “the logical deduction is still that MemberSelect possessed
the third page of the Police Report or has yet to reveal portions of Mr. Quintaville’s
investigation file.” (DE #46 at 8.) The court discusses this further, infra.
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that Scott Thorne was with his parents the entire evening
preceding the fire was known to MemberSelect, how did
MemberSelect in good faith deny David’s claim and claim to
this Court it believed Scott lit the fire at David’s direction? If
MemberSelect possessed the knowledge that David Thorne
was in Valparaiso, as shown on an ATM video, shortly after
the emergency 911 call came in regarding the fire, how did
MemberSelect in good faith deny David’s claim and claim to
this court that perhaps David had lit the fire at his Griffith
home?
(DE #46 at 1-2.)
Taking the second assertion first—that MemberSelect could not in good faith deny
the claim if it already knew that Scott Thorne (plaintiff’s brother) was at home, and that
ATM video showed David Thorne in Valparaiso—when MemberSelect moved for
summary judgment it acknowledged that Quintaville knew that Scott Thorne maintained
he was with his parents at the time of the fire (DE #14 at 14); and that according to David,
after being notified of the fire he stopped at an ATM in Valparaiso on the way there, which
he could prove from banking records. (Id. at 9.) Thorne’s argument now is that the
supplemental police report confirms those facts and proves that neither of the Thorne
brothers could have been involved with starting the fire; thus, Quintaville/MemberSelect’s
knowledge of that confirmation makes the claim denial an act of bad faith.
This interpretation of the supplemental narrative on the third page of the report is
unwarranted. Not only does the supplemental narrative conclude that “[d]ue to the
current level [of] evidence and absence of any witnesses, charges have not yet been
possible in this case,” (DE #40-14 at 4), the information therein proves nothing. Although
Scott Thorne’s father confirmed Scott was at his parent’s house, the report does not rule
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out that the father fabricated that information to protect Scott (and David). Although ATM
video confirms David Thorne was at an ATM in Valparaiso after he was notified his house
was burning, just as he stated, Thorne has not shown that Quintaville/MemberSelect knew
that it would have been impossible for Thorne to set the fire himself then have time to
drive to the ATM (and neither does the court know that now). In addition, the report does
not rule out the possibility that Thorne had the fire set by some third person other than
Scott, acting at Thorne’s direction, even though he told MemberSelect no one else had
access to the house. Given all the other information at Quintaville’s disposal showing that
the fire had been intentionally started by someone, and David and Scott’s statements under
oath that they were the only persons with keys and that the house had been locked and
secure, MemberSelect still had reasons to be suspicious even if it knew everything in the
supplemental narrative. Therefore, that supplement does not show that there is a question
of fact as to whether MemberSelect acted in bad faith.
Thorne’s second point is that MemberSelect’s position indicates it has not
produced its entire investigative file during discovery, which is shown by the fact that
Quintaville had to learn about the polygraph refusal from somewhere, and that
somewhere is not shown in the file produced; and more specifically, that if Quintaville did
learn the information from Mance in a conversation requesting a faxed copy of the police
report, that conversation should be documented in a chronological case summary that
Quintaville mentioned during his deposition, but which has not been produced. (DE #46-2

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at 3 (dep. pages 23-24)). Essentially, Thorne requests to re-open discovery before going to
trial. (DE #46 at 6.)
That would be unwarranted. The fact is, all of this information was at Thorne’s
disposal when he responded to the motion for summary judgment; that is, he had a file
showing no source for Quintaville’s knowledge that Thorne had refused to take a
polygraph; and Thorne knew that Quintaville had mentioned a chronological case
summary which had not been produced.5 A motion for reconsideration is not a vehicle for
raising arguments which could have been made earlier, Cincinnati Life Ins. Co. v. Beyrer, 722
F.3d 939, 956 (7th Cir. 2013), and that is the case here. More importantly, Thorne has not
even hypothesized what might be revealed through additional discovery which would
negate all of the suspicious circumstances surrounding the fire and establish the Thornes’
non-involvement, and so make MemberSelect lack a rational basis for denying the claim.
Thus, the court will not reconsider its ruling on bad faith.6

This assumes such a document can be produced. Quintaville was not positive.
He thought that it was a “data file” that perhaps could be printed, but that he would
have to talk to his information technology department to find out. (DE #46-2 at 3 (dep.
pages 23-24)).
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However, the court will order MemberSelect to supplement its discovery by
producing, within 20 days, the chronological case summary mentioned by Quintaville,
or an affidavit by a person with knowledge explaining why such a document cannot be
produced. The chronological summary might confirm that Quintaville spoke with
Mance, tending to confirm MemberSelect’s assumptions. Even if it does not, it is
difficult to imagine any new information that it might contain casting doubt on
MemberSelect’s rational basis for denying the claim.
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As to this last point—that there are so many suspicious circumstances giving
MemberSelect a rational basis to deny the claim that it is difficult to conceive of any
information that might change that result—Thorne has one final argument, made in a
footnote in his opening brief, (DE #40 at 11 n.3), but expanded upon in his reply:
MemberSelect makes the argument only David and Scott had
access to the property and no sign of a break-in was evident.
...
The Donan Engineering report and pictures indicate the
west facing patio door was nothing but a hole in the wall after
the fire was extinguished. (DE 14-8, Pg. 4) Furthermore, the
Fire Marshall’s report (DE 14-6, Pg. 3), relied on by Quintavalle
[sic], admits the house was “OPEN” when the fire department
arrived. How MemberSelect could assert as a fact to this Court
that no sign of a break-in was evident when one of the access
doors and frame was completely destroyed during the fire,
and the Fire Marshall indicated the house was “OPEN” is a
misrepresentation of the facts MemberSelect had available
when they denied David’s claim and when they submitted
documents to the Court claiming no material facts in dispute.
(DE #46 at 9-10.)
The “Donan Engineering report” states “[a]n opening for a patio door reveals
extensive fire damage around it (Photographs 6 and 7).” (DE #14-8 at 4.) Thorne hasn’t
pointed out where in the record those photos are, and the court cannot find them.
Assuming, however, that they do show that the patio door post-fire was nothing but a hole
in the wall, that could be all that is meant by the Fire Marshall noting that the house was
open when the fire department arrived. Moreover, MemberSelect’s argument on summary
judgment was based on the fact that during their examinations under oath, both David
and Scott testified that they saw no signs of a break-in and that the police never advised

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them of a break-in, and that Scott, the last person who had been present at the house in
early February or even closer than that to the date of the fire,7 testified that it was locked
and secure when he left. (DE #14 at 11; DE #14-3 at 7, 9 (dep. page 22; 30-31).)
These facts remain undisputed and show that MemberSelect had a rational basis for
denying the claim and could, in good faith, make the argument that it did make on
summary judgment. Moreover, the Donan Engineering report and the Fire Marshall’s
report were both available to Thorne at the time he responded to MemberSelect’s motion,
and all that he is doing now is making–or rehashing–an argument he could have made
then, which is an improper basis for reconsideration. Cincinnati Life Ins. Co., 722 F.3d at 956.
Thorne’s “new” evidence, and the inferences he makes therefrom, do not show the court
that a question of a fact exists as to whether MemberSelect acted in bad faith.
Accordingly, plaintiff Thorne’s motion for reconsideration (DE #40) is DENIED.
Defendant MemberSelect is ORDERED to supplement its discovery responses within 20
days by producing either the chronological case summary mentioned by Quintaville in his
deposition, or an affidavit by a person with knowledge stating that such document does
not exist and/or cannot be produced (with an explanation why it cannot be produced.)
SO ORDERED.
September 22, 2014
s/James T. Moody_____________
JUDGE JAMES T. MOODY
UNITED STATES DISTRICT COURT

Although Scott stated in his examination under oath that he moved out in early
February, he also testified in his deposition that he was there a couple of days before the
fire occurring on February 24. (DE #24-6 at 3 (dep. p. 18).)
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