Crowe v. Trustgard Insurance Company
MEMORANDUM OPINION & ORDER: Defendant Trustgard's motion for summary judgment 198 is DENIED. Signed by Judge Karen K. Caldwell on 2/10/15.(LC)cc: COR
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF KENTUCKY
CIVIL ACTION NO. 5:12-CV-240-KKC
MEMORANDUM OPINION AND
TRUSTGARD INSURANCE COMPANY,
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This matter is before the Court on a motion for summary judgment brought by
defendant Trustgard Insurance Company. (DE 198). Trustgard contends that the evidence
in the record demonstrates that plaintiff Lisa Crowe voided her homeowner’s insurance
policy by making material misrepresentations and false statements, and therefore,
Trustgard is entitled to judgment as a matter of law. For the following reasons, defendant’s
motion will be denied.
Trustgard Insurance Company (“Trustgard”) issued a homeowner’s insurance policy
to Lisa Crowe to cover her structural and personal property located in Montgomery County,
Kentucky. (DE 198-1). Ms. Crowe was arrested in December 2009, and she remained
continuously incarcerated until September 2011. (DE 198-3). In October 2010, while
imprisoned, she renewed her homeowner’s insurance policy with Trustgard. (DE 198-1
Certified Policy at 2.) Approximately eight months later on June 29, 2011, Ms. Crowe’s
residence and its contents were completely destroyed by fire. (DE 198-7). Then, six weeks
later on August 10, 2011, Ms. Crowe’s mother, Jo Ann Lawson, reported an alleged theft
from Ms. Crowe’s barn. (DE 198-9).
Ms. Crowe initially completed a Proof of Loss statement for the fire loss on July 8,
2011, while she was still incarcerated. (DE 198-10). However, she failed to total the
contents of her inventory loss sheets, and Trustgard rejected the Proof of Loss form as
incomplete because it did not include an amount claimed. (DE 200-2 Trustgard Letter to
Crowe and Lawson Oct. 10, 2011.) Following her release from prison in September 2011,
Ms. Crowe submitted completed Proof of Loss statements with separate personal property
inventory sheets for both the fire loss and the theft loss. (DE 198-11; 198-13; 200-8; 200-27).
Ms. Crowe claimed $1,115,292.64 in the fire loss, including the value of her home and more
than $400,000.00 in personal property. (DE 200-8 Proof of Loss – Property Fire.) Regarding
the theft loss from the barn, Ms. Crowe claimed $31,550.00 in personal property. (DE 20027 Proof of Loss – Property Theft.)
Trustgard subsequently investigated both the fire loss and the theft loss and
conducted Ms. Crowe’s examination under oath. In a letter dated June 7, 2012, Trustgard
misrepresentations of material facts to Trustgard regarding the extent and value of [her]
claimed loss to contents . . . [and that] Trustgard’s investigation has revealed evidence to
support the conclusion that someone, with [Ms. Crowe’s] knowledge and at [her] direction,
intentionally caused the fire loss[.]” (DE 200-15 Trustgard Letter to Crowe June 7, 2012 at
Plaintiff filed this suit in Montgomery Circuit Court alleging breach of contract,
common law and statutory bad faith, and violations of consumer protection law for both the
fire loss and the theft loss. (DE 1-1). Trustgard removed the action to this Court, and
thereafter filed a Petition for Declaration of Rights, seeking a determination from the Court
regarding any breach of contract. The Court consolidated plaintiff’s claims and the
declaratory judgment action. (DE 29). Then, the Court ordered the breach of contract claims
bifurcated from the bad faith and consumer protection claims, and held the latter issues in
abeyance pending resolution of the underlying contractual claims. (DE 37). Arguing that
there is a lack of genuine issue of material fact as to the breach of contract claims,
Trustgard has now moved for summary judgment. (DE 198).
II. Standard of Review
Under Rule 56 of the Federal Rules of Civil Procedure, summary judgment is
appropriate where the moving party “shows that there is no genuine dispute as to any
material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P.
56(a). The moving party bears the initial responsibility of “informing the district court of
the basis for its motion, and identifying those portions of ‘the pleadings, depositions,
answers to interrogatories, and admissions on file, together with the affidavits, if any,’
which it believes demonstrates the absence of a genuine issue of material fact.” Celotex
Corp. v. Catrett, 477 U.S. 317, 323 (1986). The movant may meet this burden by
demonstrating the lack of evidence supporting one or more essential elements of the nonmovant’s claim. Id. at 322–25. Once the movant meets this burden, the burden shifts to the
non-moving party to “set forth specific facts showing that there is a genuine issue for trial.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250 (1986) (internal quotation marks
omitted). Ultimately, the court must determine “whether the evidence presents a sufficient
disagreement to require submission to a jury or whether it is so one-sided that one party
must prevail as a matter of law.” Id. at 251–52.
In evaluating the evidence, the court draws all reasonable inferences in favor of the
non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587
(1986). “A mere scintilla of evidence, however, is not enough for the non-moving party to
withstand summary judgment.” La Quinta Corp. v. Heartland Properties LLC, 603 F.3d
327, 335 (6th Cir. 2010) (internal quotations omitted).
There is no dispute that the homeowner’s insurance policy was in force at the time of
the fire loss and the theft loss. However, Trustgard contends that the homeowner’s
insurance policy is void as a matter of law because Ms. Crowe made material
misrepresentations and false statements during the investigation of her claims. (DE 198
Mot. for Summ. J. at 6). Under Kentucky law, “an insurance policy is a contract, and
insofar as it does not contravene the law any recovery against the insurance company is
governed solely by its terms.” State Farm Mut. Ins. Co. v. Fireman’s Fund Am. Ins. Co., 550
S.W.2d 554, 557 (Ky. 1977). The policy at issue in this matter provides that “[t]he entire
policy will be void if, whether before or after a loss, an insured person, has: (a) intentionally
concealed or misrepresented any material fact or circumstance; (b) engaged in fraudulent
conduct; or (c) made false statements; with regard to this insurance, including procurement
of this policy.” (DE 198-1 Certified Policy at 39.)
The fraud provision in Ms. Crowe’s policy “‘is common to most fire insurance policies
and is uniformly held valid so that it will defeat a recovery under the contract if false
statements in proof of loss were intentionally made and disclose a purpose to fraudulently
overvalue the property or include non-existent items.’” Home Ins. Co. v. Hardin, 528 S.W.2d
723, 725 (Ky. 1975) (emphasis added) (quoting World Fire & Marine Ins. Co. v. Tapp, 130
S.W.2d 848, 849–50 (Ky. 1939)). Trustgard acknowledges that intent is a necessary element
to void the policy under the material misrepresentations clause but contends that “false
statement provisions do not require a finding of intent to establish a violation that voids the
policy,” citing Interstate Insurance Group v. Musgrove, 11 F. App’x 426, 428 (6th Cir. 2001)
(unpublished). (DE 204 Reply to Mot. for Summ. J. at 2–3.) As an initial matter,
unpublished opinions are not controlling in this Circuit. See Shuler v. Garrett, 715 F.3d 185,
187 n.1 (6th Cir. 2013); 6 Cir. R. 32.1 (“Published panel opinions are binding on later
panels. A published opinion is overruled only by the court en banc.”). Further, the Court
has found nothing to suggest that the rule in Hardin is no longer in effect. The Court has
located only one Sixth Circuit decision citing to Hardin, and while it is also unpublished, it
cites Hardin with approval. See Aetna Cas. and Sur. Co. v. Ables, 849 F.2d 1472 (6th Cir.
1988) (unpublished table decision). Moreover, like the policy at issue here, the policy in
Hardin did not contain an explicit intent requirement in its “false swearing” provision,1 yet
the court stated that a finding of intent was required for a false statement to void the
insurance policy. The Court therefore finds that an insured must have intentionally made
false statements about the value of property or non-existent items in order for such a
statement to void the policy.
Trustgard’s investigation produced a bevy of evidence from which it contends Ms.
Crowe’s material misrepresentations and false statements are clear. (DE 198-4; 198-5; 1986; 198-8; 198-16; 198-18; 198-22; 198-23; 198-24; 198-25; 198-26; 198-27; 198-28; 198-29;
The homeowner’s policy at issue in Hardin provided as follows:
Concealment, fraud. This entire policy shall be void if, whether before
or after a loss, the insured has willfully concealed or misrepresented
any material fact or circumstance, concerning this insurance or the
subject thereof, or the interest of the insured therein, or in the case of
any fraud or false swearing by the insured relating thereto.
Hardin, 528 S.W.2d at 724–25 (emphasis added).
198-30; 198-31; 198-32; 198-33; 198-34; 198-35; 198-36; 198-37; 198-38; 198-39; 198-40; 19841; 198-42; 198-43; 198-44; 198-45; 198-46). For example, Trustgard argues that Ms. Crowe
made false statements regarding the value of her personal property. (DE 198 Mot. for
Summ. J. at 15–18.) While Trustgard’s conclusion is based on a reasoned consideration of
the facts, it required an assessment of Ms. Crowe’s credibility and the circumstantial
evidence surrounding the fire loss and the theft loss. For example, Trustgard’s conclusion is
based on Ms. Crowe’s financial condition at the time of the losses. (DE 198 Mot. for Summ.
J. at 9, 15.) It is also based on three affidavits of indigence executed by Ms. Crowe in
connection with her criminal case wherein she attested that she owned no personal
property of significant value. (DE 198 Mot. for Summ. J. at 9–15.) In addition, Trustgard
considered Ms. Crowe’s varying statements concerning how she calculated the values of the
claimed items. (DE 198 Mot. for Summ. J. at 14, 17.)
Although Trustgard was entitled to make these inferences and credibility
determinations in deciding whether to approve or deny Ms. Crowe’s fire loss and theft loss
claims, the Court is not permitted to do so when faced with a motion for summary
judgment. See, e.g., Biegas v. Quickway Carriers, Inc., 573 F.3d 365, 374 (6th Cir. 2009) (“In
reviewing a summary judgment motion, credibility judgments and weighing of the evidence
are prohibited.”); Lenscrafters, Inc. v. Robinson, 403 F.3d 798, 802 (6th Cir. 2005) (“A court
considering a summary judgment motion considers the facts in the light most favorable to
the nonmoving party and draws all reasonable inferences in favor of the nonmoving
party.”). Based on the evidence presented by Trustgard, the Court cannot say that
intentional fraud is the only reasonable explanation for the circumstances. It is for a jury to
determine whether Ms. Crowe intentionally made material misrepresentations or false
statements with regard to the insurance, and therefore, summary judgment is
Accordingly, for the reasons stated above, the Court HEREBY ORDERS that
defendant Trustgard’s motion for summary judgment (DE 198) is DENIED.
Dated February 10, 2015.
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