Simon et al v. State Farm Fire and Casualty Company
Filing
31
ORDER AND REASONS denying 13 Motion for Summary Judgment. Signed by Judge Martin L.C. Feldman on 11/6/2014. (caa)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF LOUISIANA
MINDY SIMON, wife of/and
TROY LEPINE
CIVIL ACTION
v.
NO. 14-940
STATE FARM
FIRE AND CASUALTY COMPANY
SECTION "F"
ORDER AND REASONS
Before the Court is State Farm Fire and Casualty Company's
motion for summary judgment.
For the reasons that follow, the
motion is DENIED.
Background
This litigation arises from an insurance coverage dispute that
pits the insured's claim (that over $250,000 worth of high end
electronic devices were irreparably destroyed during a lightning
storm) against the insurer's defense that the plaintiffs made
material misrepresentations and submitted fabricated documents in
support of their claim, thereby voiding the policy.
Mindy Simon, a homemaker, and Troy Lepine, a satellite TV
installer, own a house located at 2746 Bayou Lours Court in
Marrero, Louisiana, where they live with their two children.1 On
the evening of June 6, 2013 there were thunderstorms in Marrero.
1
The Lepine's reported income from their federal tax
records from 2009 to 2012 is as follows: 2009: $42,761; 2010:
$42,808; 2011: ($9,983); 2012: $59,414.
1
Mr. and Mrs. Lepine were watching television in the living room
while their children were playing video games in the son's bedroom
when they heard what "sounded like a bomb"; a bolt of lightning had
struck their house.2
In addition to causing structural damage to
their house, the electricity surge damaged personal property,
including appliances and the family's extensive collection of
electronic devices.
The next day, Mrs. Lepine contacted their homeowners insurer,
State Farm Fire and Casualty Company, to report that the house had
been struck by lightning.
At that time, the Lepine's house was
insured under State Farm's homeowners insurance policy, which
provided $259,000 in dwelling coverage and $194,250 in personal
property coverage.
Lightning is a covered peril under the policy,
which also provides:
2.
Concealment or Fraud
b.
We do not provide any coverages under this
policy for you or any other insured if you or
any other insured under this policy, whether
before or after the loss, has intentionally
concealed or misrepresented any material fact
or circumstance relating to this insurance.
Mrs. Lepine orally reported to State Farm that lightning struck
their house and destroyed nearly all of the electrical systems and
equipment in their house, including their air conditioning system,
2
State Farm assumes for the purposes of the motion for
summary judgment that lightning struck the Lepine's house. Indeed,
State Farm paid the Lepines $12,425 in benefits after the lightning
strike.
2
their security system, and their appliances and media electronics.
In particular, the Lepines claimed that they had several hundred
thousand dollars worth of high-end electronics in their house at
the time of the storm, which they claimed were destroyed and
required replacement.
After receiving notice of the loss, State Farm opened a claim
and
initiated
adjustment.
On
June
11,
2013,
an
independent
adjuster, Albert Vaughan & Associates, inspected the Lepine's
house.
On August 23, 2013, Brian Ditta, a licensed electrician,
inspected the Lepine house and inspected the electronics, outlets,
switches, and the breaker panel; he issued a letter report and
invoice in the amount of $525.00.3
an
Thereafter, State Farm tendered
$12,435 in benefits to the Lepines for the damaged air conditioning
unit and for a garage door.4
A total of $193,700 of coverage
3
Mr. Ditta's letter lists items that he checked, which he
found would not "power up". The Ditta letter does not indicate
whether the items that would not power up could be repaired, or
whether they were destroyed. Nor does the Ditta letter opine as to
the value of the items he inspected. In fact, the Ditta letter
directed the Lepines to "Refer to Audio Video Company" for many of
the listed items.
The Lepines underscore that Mr. Ditta stated in an
affidavit:
While in the Lepine home, I observed a large
volume of electronics, including x-boxes in
each room, a television in each room, three to
four computers, a printer, a scanner, a big
screen projector, a surround sound system and
security equipment.
4
Of this amount, $11,910 was tendered under Coverage A dwelling. The remaining $525 was tendered under Coverage B –
3
remained available under the Lepine's personal property coverage.5
After being notified of the claim, State Farm repeatedly
advised the Lepines that they needed to prepare a personal property
inventory form (PPIF), a standard proof of loss requirement that
documents the damaged items and lists the age and value of each.
A few months later, the Lepines complied;6 they submitted the PPIF
to State Farm on September 18, 2013 as part of their proof of loss.
A snapshot of the Lepine's 22-page PPIF:
Room
Total Value Per Room
Non-Electronics
1.
Foyer
$315.98
$15.98
2.
Hall Bathroom
$115.98
$115.98
3.
Home Office
$15,195.92
4.
Master Bedroom
$4,519.74
5.
Master Bath
$1,089.98
6.
Master Closet
$107,859.98
7.
Daughter's Room
$5,540.47
8.
Son's Room
$7,220.39
9.
Family Room
$30,407.92
$2,999.99
10. Kitchen
$1,049.47
$549.38
11. Laundry Room
$605.99
$596.00
personal property.
5
But no additional benefits under the policy were paid to
the Lepines. Rather, State Farm's adjustment of the claim revealed
"significant anomalies in the Lepine's claim"; after undertaking an
investigation, State Farm ultimately cancelled the Lepine's policy.
6
State Farm contends that it took the Lepines four months
to submit the PPIF. The Lepines suggest that compiling a PPIF took
time, given their extensive collection of electronics.
4
12. Theater Room
$73,228.77
13. Game Room
$14,251.88
14. Garage
$1,193.74
15. Side Yard
$750.00
16. Patio
$800.00
Total
$264,146.21
$543.74
$4,821.07
Thus, according to the PPIF, the Lepines had $264,000 in
damaged personal property; of that amount, approximately $260,000
worth was home electronics.
Accompanying the PPIF, the Lepines
also submitted receipts purporting to show purchase history and
price. Based on the receipts submitted in support of their PPIF,
the majority of electronics were purchased from two companies,
Bayou
Audio
Sales
and
Diversified
Security
Systems,
totaling
$272,305.78 in a six month time frame summarized in part as
follows:
November 1, 2010
Diversified Security $65,739.38
November 26, 2010
Diversified Security $27,194.17
January 2, 2011
Bayou Audio Sales
March 21, 2011
Diversified Security $33,875.63
April 8, 2011
Diversified Security $70,383.00
May 13, 2011
Diversified Security $25,306.13
$49,807.47
Also in support of their proof of claim, the Lepines submitted a
damage assessment purportedly prepared by Bayou Audio.
The report
concluded that "All of this system damage was due to a massive
energization – most likely a lightning strike!!!" According to the
5
Bayou Audio report, on July 26, 2013, Bayou Audio technicians spent
14 hours assessing the home electronics and charged $1,310.00 for
the inspection.
The technicians documented 93 items, but did not
suggest whether these items were repairable or needed to be
replaced.
The report also failed to assign any value for any of
the listed items.
State Farm attempted to contact Bayou Audio to determine
repair or replacement value of the listed items.
But when State
Farm attempted to contact Bayou Audio and Diversified Security at
the telephone numbers and addresses listed on the receipts, neither
number worked and neither company was (or had been) located at the
listed addresses.7 State Farm investigated further.
But Google
searching the companies' names, telephone numbers, or addresses
failed to turn up a hit on either company.
Neither the Louisiana
Secretary of State nor the Louisiana Department of Revenue nor the
Jefferson Parish Sheriff's Office, Bureau of Revenue and Taxation
has any records, filings, or other papers regarding either company.
The Bureau's director confirmed that the address listed for Bayou
7
The receipts show:
Bayou Audio Sales and Service
2601 Barataria Blvd.
Marrerro, LA 70072
504-328-7512
Diversified Security Systems
2001 Williams Boulevard
Kenner, LA 70056
985-773-9989
6
Audio is presently the location of a Family Dollar store, which has
operated
there
since
2005
and
that
the
address
listed
for
Diversified Security is presently the location of a restaurant
called La Azteca, which has operated there since 2008.
State Farm
informed the Lepines that it could not reach Bayou Audio; Mrs.
Lepine told State Farm that she attempted to reach Bayou Audio as
well but was unable to do so.
On October 9, 2013 the Lepines then submitted a new damage
evaluation report, this one purportedly prepared by a company
called DTS
The DTS report indicated that technicians came to the
Lepine's house, inspected all of their electronics, and found that
they "malfunctioned".8
To replace the destroyed electronics, the
DTS report estimated, would cost more than $258,370.50.
This was
the first report that provided a value estimate on replacing the
damaged electronics.
When State Farm contacted DTS, the owner
advised that the owner's technician, Josh Ducros, prepared the
report. Later, DTS's owner contacted State Farm and explained that
Ducros admitted to him that he never went to the Lepine's house,
nor did he inspect anything (nor did anyone from DTS).
8
In particular, the report stated:
While on premise technicians observed the
following equipment to be malfunctioned from
what appears to be a massive lightning strike.
This quote will be used as an estimate to
replace all equipment and install the camera
system and alarm. All other equipment will be
based on an hourly wage for install.
7
Ducros
himself called State Farm and admitted the same; he told State Farm
that Mr. Lepine gave him a list of what was allegedly damaged and
that he (Mr. Ducros) wrote what Mr. Lepine asked him to write in
the report.
After learning this, State Farm contacted the Lepines and
informed them of its investigation into the DTS report.
The
Lepines consented to an inspection of the electronics by State
Farm, which occurred on October 26, 2013.9
However, the inspection
did not resolve any outstanding issues because Mr. Lepine had
previously discarded most of the electronics in a "construction
dumpster" near his house.10
The circumstances surrounding the Lepine's claim for personal
property damage prompted State Farm to schedule the Lepines for
examinations under oath in December 2013.11
State Farm questioned
9
The Lepines submit that they had begged State Farm to
inspect their electronics collection previously during the course
of State Farm's adjustment of their claim.
10
During his examination under oath, Mr. Lepine stated
that he threw away most of the damaged equipment about "five weeks
after we sent the list in and talked to the reps" because:
A lot of it is discarded because we had a big
pile in the back next to the pool table and
the kids were playing on it. We got one of
the iPads that was smashed because my son
being ADHD, he's kind of all over the place.
I have – my daughter hurt her leg climbing on
some of the stuff to get to other things.
11
In connection with the insureds' duties after a loss,
the insurance contract provides, among other duties such as
preparing an inventory of damaged property substantiated by
8
the Lepines regarding the documents submitted with their proof of
loss and probed for independent confirmation of (what State Farm
considers to be) their extravagant electronics purchases (including
a receipt dated November 1, 2010 from Diversified Security for a
$65,739.38
purchase
and
one
dated
April
8,
2011
showing
a
$70,383.00 purchase). To no avail. Mr. Lepine explained during his
examination under oath that he did not have any cancelled checks or
credit card statements confirming the purchases because he had
purchased the entire collection of home electronics with cash. Nor
was there any bank statement to corroborate withdrawals of cash for
the purchases; rather, Mr. Lepine stated that, over the years, he
had saved over $200,000 in cash that he kept in a safe in his
house.
Because neither State Farm nor the Lepines have been able
to contact Diversified Systems or Bayou Audio, the company receipts
and statements made by Mr. Lepine during his examination under oath
that
he
bought
most
of
his
home
electronics
from
these
two
companies is the only evidence that either company ever existed.12
State Farm also asked the Lepines during their examinations
under oath about the circumstances leading up to the creation of
receipts and related documents, that the insured must "as often as
we reasonably require...submit to...examinations under oath...."
12
As for Diversified Systems, Mr. Lepine stated that he
never went to the storefront, but that he researched online the
items he ordered from Diversified. As for Bayou Audio, Mr. Lepine
stated that "I met them at lunch at Jake's" and, later, after they
inspected the damage and gave him the report, he could not find
them.
9
the DTS report.
Mr. Lepine explained that the DTS report was
prepared by a former colleague, Josh Ducros.
Mr. Lepine said that
Mr. Ducros was supposed to come to his house to inspect the damaged
security equipment but that their schedules conflicted.
On Mr.
Ducros' invitation, Mr. Lepine went to Mr. Ducros' house and gave
him a copy of the Bayou Audio damage assessment report, which Mr.
Ducros essentially copied and emailed to Mr. Lepine.
Mr. Lepine emphasized that Mr. Ducros was supposed to come to
his house to inspect the damage but he never did.
Mr. Lepine
further explained that he is "bad with" email and that he did not
realize that Ducros had emailed him the DTS report; rather, his
wife, who often checks his email, saw the report and, without
discussing it with Mr. Lepine, emailed it to State Farm. According
to Mr. Lepine, it was only after Mr. Ducros called him a few days
later, complaining that he (Mr. Lepine) had gotten his friend
company (DTS) in trouble, that Mr. Lepine claims he realized that
Mr. Ducros had emailed him the report and that his wife had
forwarded it to State Farm.
Mr.
Lepine
continued
his
explanation,
under
oath.
He
testified that he told Mr. Ducros that his damage estimate was
wrong, but that Mr. Ducros was not willing to take the time to
correct it.
Mr. Lepine stated that he asked Mr. Ducros why he (Mr.
Ducros) falsely reported that technicians came to the house and
inspected the electronics.
Mr. Lepine also stated that, when they
10
first met, Mr. Ducros told him that he (Mr. Ducros) wanted to
"screw the insurance company", but that Mr. Lepine responded that
he (Mr. Lepine) was not interested in screwing the insurance
company, only in getting the replacement value for his damaged
personal property.
Mrs. Lepine corroborated her husband's version
of the story; it was she that submitted the DTS report to State
Farm.
Mr. Lepine revealed during his examination under oath that he
had exchanged text messages with Mr. Ducros concerning the DTS
report.
The text messages between Mr. Lepine and Mr. Ducros
concerning the DTS report:
•
•
•
•
•
•
•
•
•
Mr. Lepine asked for Mr. Ducros' "help with this insurance
mess";
Mr. Ducros texted Mr. Lepine his (Mr. Ducros') email address,
stating "Give me a list of everything you need with prices and
I will get a bill made."
Mr. Lepine planned to visit Mr. Ducros at Mr. Ducros' house,
and did visit him, on September 27, 2013, at which time he
gave Mr. Ducros the Bayou Audio report.
Mr. Lepine continued to text Mr. Ducros to check on the status
of the report he was preparing and he asked when it would be
completed.
Mr. Ducros asked Mr. Lepine questions about some of the items
on the Bayou Audio report and Mr. Lepine sent Mr. Ducros
screen shots of internet pricing information for certain
items.
On October 3, 2013 Mr. Ducros asked for Mr. Lepine's email;
Mr. Lepine told Mr. Ducros to match the same contact
information (his wife's name and phone number).
That same day, Mr. Ducros asked Mr. Lepine if he had received
the DTS report he emailed. Mr. Lepine confirmed "[i]t just
came through."
Mr. Lepine texted Mr. Ducros that he would look over the
report "with in the hour", to which Mr. Ducros responded that
he would not be able to make any changes until "tomorrow."
Later that evening and over the next several days, Mr. Lepine
tried to follow up with Mr. Ducros, asking him if he had time
11
•
•
•
•
•
to talk, sending Mr. Dcuros screen shots of internet pricing
for electronic equipment, and stating "Did you type this from
your house or the shop? Because I am not familiar enough to do
what we talked about and she's not gonna be around lol".
Finally, after hearing no response from Mr. Ducros, on October
7, 2013 Mr. Lepine texted "Sorry I feel like a pest so I just
wanna let you know that I'm gonna submit it as is. I don't
wanna cause any stress. I apreciate (sic) the help, I'm just
ready for all of this to be over!"
[The DTS report was emailed to State Farm from Mrs. Lepine's
email address on October 9, 2013.]
After Mr. Ducros inquired "How's it going with the insurance
company" on October 11, 2013, Mr. Lepine asked Mr. Ducros "No
clue yet lol.... Did they call you?"
On October 14, 2013, Mr. Lepine texted Mr. Ducros "Let me know
if they call you, I'm about to stir the pot. We paid cash", to
which Mr. Ducros inquired, "What you mean you paid cash". Mr.
Lepine responded, "You rather me say something else? For the
assessment, the 12 hours to text everything.... They should be
calling you today they need to verify items are damaged and on
repairable". Mr. Ducros replied, "No thats (sic) fine."
That same afternoon, Mr. Ducros texted Mr. Lepine, "Dude they
know the other 2 businesses don't exist. If you don't have the
stuff you threw away there is nothing we can do with that. You
got my boy's business in a tight spot right now." Mr. Lepine
responded:
As far as the other 2 companies not existing I had no
idea but how do I have you friends company in a tight
spot, y'all know that I'm not buying anything from
y'all....
I just wanna make sure that you know that I have proof
that we have pictures of the few pieces of equipment I
had tossed. I know no to get rid of anything else until
this is over. I never been through any of this before, I
sorry wasting your time.
State Farm first discovered these text messages during Mr. Lepine's
examination under oath on December 18, 2013.
Thereafter, Josh
Ducros submitted to an examination under oath on January 22, 2014,
at which time he testified that there was never a plan for him to
go to the Lepine's house to inspect any electronics; rather, Mr.
Lepine told him to use the Bayou Audio report to prepare a similar
12
report.13
Mr. Ducros also confirmed that Mr. Lepine asked him to
change the report to increase the replacement values on some items;
that Mr. Lepine told him he was going to submit the DTS report as
is; that Mr. Lepine told him that, when State Farm called, he
should tell State Farm that he inspected the electronics, which
were damaged and non-repairable.
On March 6, 2014 the Lepines sued State Farm in state court,
alleging breach of contract and breach of duty of good faith and
fair dealing; they seek to recover the $193,700 remaining under
their policy in personal property coverage, as well as statutory
penalties and attorney's fees.
On March 28, 2014, State Farm sent
a Notice of Cancellation to the Lepines, declaring their insurance
policy void as of the date of the lightning strike, June 6, 2013.
State Farm removed the lawsuit, invoking this Court's diversity
jurisdiction.14
State
Farm
now
seeks
summary
relief
on
its
affirmative defense that Mr. Lepine's material misrepresentations
voided the insurance policy.
I.
Federal Rule of Civil Procedure 56 instructs that summary
13
Counsel for plaintiff takes issue with the fact that she
was not present for Mr. Ducros' examination under oath.
14
On July 9, 2014 the Lepines filed a first amended
complaint, in which they allege, in addition to breach of contract,
"negligent and intentional infliction of emotional distress and the
cost of the higher premium for new insurance resulting from [the]
illegal cancellation [of the State Farm policy]."
13
judgment is proper if the record discloses no genuine issue as to
any material fact such that the moving party is entitled to
judgment as a matter of law.
No genuine issue of fact exists if
the record taken as a whole could not lead a rational trier of fact
to find for the non-moving party.
See Matsushita Elec. Indus. Co.
v. Zenith Radio., 475 U.S. 574, 586 (1986).
A genuine issue of
fact exists only "if the evidence is such that a reasonable jury
could return a verdict for the non-moving party."
Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
The Court emphasizes that the mere argued existence of a
factual dispute does not defeat an otherwise properly supported
motion.
See
id.
Therefore,
"[i]f
the
evidence
is
merely
colorable, or is not significantly probative," summary judgment is
appropriate.
Id. at 249-50 (citations omitted).
Summary judgment
is also proper if the party opposing the motion fails to establish
an essential element of his case.
477 U.S. 317, 322-23 (1986).
See Celotex Corp. v. Catrett,
In this regard, the non-moving party
must do more than simply deny the allegations raised by the moving
party.
See Donaghey v. Ocean Drilling & Exploration Co., 974 F.2d
646, 649 (5th Cir. 1992).
Rather, he must come forward with
competent evidence, such as affidavits or depositions, to buttress
his claims.
Id.
Hearsay evidence and unsworn documents that
cannot be presented in a form that would be admissible in evidence
at trial do not qualify as competent opposing evidence.
14
Martin v.
John W. Stone Oil Distrib., Inc., 819 F.2d 547, 549 (5th Cir.
1987); Fed.R.Civ.P. 56(c)(2).
Finally, in evaluating the summary
judgment motion, the Court must read the facts in the light most
favorable to the non-moving party.
Anderson, 477 U.S. at 255.
II.
A.
At
issue
is
whether
State
Farm,
invoking
the
material
misrepresentation provision of the insurance contract, has carried
its burden on its affirmative defense and is therefore entitled to
judgment as a matter of law.15
shows
that
the
plaintiffs
State Farm contends that the record
presented
State
Farm
with
false,
fabricated documents in an attempt to inflate their proof of loss;
that, when confronted about the fabricated receipts and reports
during their examinations under oath, the plaintiffs testified
dishonestly
concerning
the
circumstances
surrounding
their
submission of the fabricated documents. These facts, State Farm
submits, trigger the material misrepresentation clause, voiding the
insurance policy.
The plaintiffs counter that the plaintiffs had
no intent to defraud State Farm, the inconsistency between Mr.
Ducros and Mr. Lepine's testimony is a question of fact precluding
summary judgment, any alleged misrepresentation regarding the DTS
estimate is immaterial to their claim, and that State Farm is
15
What is not presently in dispute: whether lightning
struck the plaintiffs' house, causing covered damage; whether the
plaintiffs possessed valuable electronics that were damaged.
15
contractually obligated to pay the policy limits of their contents
coverage claim, which is an amount less than their actual loss.
Simply put, the plaintiffs submit that State Farm wants to avoid
paying the plaintiffs' claim.
B.
Louisiana recognizes and enforces misrepresentation clauses
such as the one in the Lepine's State Farm policy.
See, e.g.,
Mamco, Inc. v. American Employers Ins. Co., 736 F.2d 187, 189-90
(5th Cir. 1984)(Wisdom, J.)(applying Louisiana law).
When an
insurer invokes the material misrepresentation clause of its policy
as an affirmative defense to liability, the insurer bears the
burden of proving that the insured violated the policy provision.
See Cousin v. Page, 372 So.2d 1231, 1233 (La. 1979); see also Roach
v. Allstate Indemnity Co., No. 09-1110, 2011 WL 4402575, at *2
(M.D.La. Sept. 20, 2011)(Vance, J.).
To succeed on its affirmative defense to avoid coverage under
a policy, the insurer must prove three elements: (1) the insured
made false statements; (2) the false statements were made with the
actual intent to deceive; and (3) the misstatements materially
affected the risk assumed by the insurer. See Cousin, 372 So.2d at
1233; see also Darby v. Safeco Ins. Co. of America, 545 So.2d 1022,
(La. 1989); see also Dean v. State Farm Mut. Auto. Ins. Co., 975
So.2d 126, 132 (La. App. 4 Cir. 2008).
State Farm submits that the Lepines made false statements when
16
they submitted the fabricated DTS report as proof of their claim,
that they then misrepresented the circumstances of how and why the
report was submitted to State Farm during their examinations under
oath, and that the text messages between Mr. Lepine and Mr. Ducros
reveal that the DTS report was fabricated with the intent to
deceive State Farm. The record supports State Farm's submission on
false statements and intent.
As to the first element of its affirmative defense, the record
confirms that State Farm has carried its burden in proving that the
Lepines made false statements to State Farm in support of their
claim.
There is no genuine dispute regarding the fact that Mr.
Lepine gave Mr. Ducros an extensive list of electronics (by way of
a prior report from a company that indisputably vanished without a
trace) and supplied some pricing information so that Mr. Ducros
would generate a report purporting to independently estimate the
value of the electronics so that Mr. Lepine could give the report
to State Farm in support of his insurance claim.
Nor is there any
dispute that Mr. Ducros never went to the Lepine house for the
purposes of independently investigating the status of the list of
items Mr. Lepine supplied to him.
Moreover, there is no dispute
that, whether or not Mrs. Lepine ultimately emailed the report to
State Farm, Mr. Lepine knew that he had received, in his email
inbox, the DTS report; the record reveals that Mr. Lepine texted
Mr. Ducros that he would be submitting it to State Farm "as is."
17
And the Lepines indeed submitted the DTS report to State Farm "as
is" shortly after Mr. Ducros emailed it to Mr. Lepine.16 Mr. Lepine
told Mr. Ducros that, if State Farm asked, he was to say that Mr.
Lepine paid him cash "[f]or the assessment[,] for the 12 hours to
test everything" even though Mr. Ducros in fact never went to Mr.
Lepine's house to inspect the electronics.
The plaintiffs submit nothing to controvert the evidence
showing that the DTS report, insofar as it purported to be an
assessment/estimate from the company DTS, was a fabricated document
that the Lepines submitted to State Farm in support of their
claim.17
The Court finds, as a matter of law, that State Farm has
proved the first element of its affirmative defense: the Lepines
made false statements in support of their insurance claim.18
16
The Lepine's email transmitting the DTS report stated
"Attached is the Assessment/Estimate from D.T.S. on the security
system and electronics."
17
They suggest, limply, that the DTS report was "only an
estimate" and the text messages and examinations under oath reveal
nothing more than a misunderstanding.
18
Mrs. Lepine's own testimony fails to raise a fact issue
as to State Farm's position that the DTS report is a false
statement submitted to State Farm: even Mrs. Lepine suggested under
oath that she would not have submitted the report if she had known
that there had been no home assessment. Even if the Court indulges
Mrs. Lepine's testimony that she sent the DTS estimate after
finding it in her husband's email and that she did not discuss it
with her husband before she sent it, this does not change the fact
that the fabricated report was sent to State Farm and that the
record shows that Mr. Lepine knew he had received report and also
knew that State Farm had received the report and he told Mr. Ducros
(after telling him "I'm going to stir the pot") to lie to State
Farm by telling them that Mr. Lepine paid him cash for the
18
These same record facts also point toward intent. But proving
intent on a paper record is trickier.
Mindful that "a party's
state of mind is inherently a question of fact which turns on
credibility," this Court "must be vigilant to draw every reasonable
inference
from
the
evidence
in
the
record
in
a
light
most
flattering to the nonmoving party." See International Shortstop,
Inc. v. Rally's, Inc., 939 F.2d 1257, 1265 (5th Cir. 1991).
It is
"[b]ecause of the difficulties inherent in proving that a person
acted with the intent to deceive," that the Louisiana Supreme Court
has observed that "courts have lightened somewhat the insurer's
burden by considering the surrounding circumstances in determining
whether the insured knew that representations made to the insurer
were false":
Intent to deceive must be determined from surrounding
circumstances indicating the insured's knowledge of the
falsity of the representations made in the application
and his recognition of the materiality of his
misrepresentations, or from circumstances which create a
reasonable assumption that the insured recognized the
materiality.
See Darby, 545 So.2d at 1026 (quoting Cousin, 372 So.2d at 1233).
State Farm submits that the plaintiffs testified dishonestly
regarding the DTS report and that the text messages are smoking gun
evidence of the plaintiffs' intent to deceive. The plaintiffs deny
that they had any intent to deceive State Farm and submit that fact
assessment and that his assessment revealed that the electronics
were not capable of being repaired.
19
issues respecting intent preclude summary judgment.
The Court
finds that there is no genuine dispute as to whether Mr. Lepine
intended to pass off the DTS report as an independent assessment or
estimate in support of his insurance claim.19 The text messages
between him and Ducros confirm, in real time, that Mr. Lepine knew
when he had received the DTS report; they also show that he
attempted to send more pricing information to Ducros so that he
would change the report to reflect internet screen shot pricing of
certain electronic devices; and that Mr. Lepine told Mr. Ducros to
tell State Farm that Mr. Lepine paid Mr. Ducros cash for "the
assessment, the 12 hours to test everything" (even though it is
undisputed that Ducros never performed an assessment); Mr. Lepine
also told Ducros to "verify [that] items are damaged and non
repairable" even though Mr. Ducros had no independent knowledge of
that fact.20 Although the Court is forbidden from both weighing the
19
The plaintiffs attempt to frame the intent element as
a credibility dispute. But the Court need not resort to credibility
determinations (and, thus, defer to the fact finder at trial)
where, as here, there is uncontroverted evidence in support of
State Farm's defense, which also establishes that Mr. Lepine lied
under oath.
20
That Mr. Lepine testified, falsely, in his examination
under oath does not change what the text messages establish. Mr.
Lepine testified that he did not know that Ducros emailed him the
report; he did not review the report; he did not submit the report
to State Farm; he had no idea his wife had sent it; and he was
waiting for Mr. Ducros to come by the house to do the post-report
assessment. The text messages, ironically discovered during his
examination under oath, belie Mr. Lepine's testimony. The text
messages show that: Mr. Lepine told Mr. Ducros to lie about whether
he came to the house to do an assessment (and about the non20
evidence and making credibility determinations on summary judgment,
the Court finds that State Farm has carried its burden in showing
that -- whether Mr. Lepine technically submitted the report to
State Farm or whether Mrs. Lepine did -- Mr. Lepine knew that the
DTS report that had been submitted to State Farm was fabricated and
he
nevertheless
intended
to
pass
off
the
report
assessment or estimate of his damaged electronics.21
as
a
true
There is no
genuine issue of material fact concerning Mr. Lepine's intent to
deceive State Farm in passing off an "assessment/estimate" that
estimated
the
replacement
value
for
his
electronics
at
over
when
the
$250,000.
Turning
to
the
misrepresentation
"'materiality'
final
concerns
simply
element,
the
embodies
value
the
materiality:
of
an
insured's
understanding
that
loss,
the
misrepresentation concerns a fact that significantly affects the
rights or obligations of the insurer."
Bennett v. Allstate Ins.
Co., 950 F.2d 1102, 1106 (5th Cir. 1992)(citing Mamco, Inc. v. Am.
repairability of his electronic equipment, which Mr. Ducros never
observed); Mr. Lepine knowingly supplied Ducros with the value of
allegedly inspected items; Mr. Lepine knowingly passed of the DTS
report as a genuine assessment by an independent third-party
company in support of his insurance claim.
21
Although the plaintiff points to Mrs. Lepine's testimony
that she sent the DTS report to State Farm, that fact (whether or
not true and credible) is not material given that Mr. Lepine knew
that State Farm had the DTS report, which was created by Ducros at
Mr. Lepine's insistent and with Mr. Lepine's input only, and not
after an independent assessment.
21
Emp'rs Ins. Co., 736 F.2d 187, 190 n.6 (5th Cir. 1984)).
State
Farm
does
not
dispute
that
the
Lepines
had
more
electronics than the average family, but urges the Court to
consider the surrounding circumstances in the record that show that
the Lepines grossly inflated their insurance claim and prove that
the misstatements in the DTS report materially affected the risk
assumed by State Farm.
The surrounding circumstances create a reasonable assumption
that the insured recognized the materiality of the DTS report. The
only support for the Lepines claim, in which they contend that they
paid cash for hundreds of dollars worth of electronics that were
damaged by lightning include: the Lepine's testimony and receipts
from companies that have either vanished or never existed.
Any
other evidence that might corroborate the dollar amount of their
claim is tainted: the DTS report, which was compiled from the Bayou
Audio report and not based on an independent assessment; the
inspection by State Farm failed to corroborate the purportedly high
value of the plaintiffs' claim because the electronics had been
thrown away.22
However, for State Farm to be entitled to judgment as a matter
of law on materiality, there needs to be some evidence in the
22
The plaintiffs also submit photos, presumably of their
electronics, as well as affidavits from people that have visited
their house, who presume to attest to their "extensive system of
electronics" and attest to certain specific electronics viewed
while in the Lepine's house.
22
record concerning the value of the Lepine's claim.
There is
certainly evidence in the record that would support a finding that
Mr. Lepine assisted in fabricating the DTS report (by using much of
the information from the suspicious Bayou Audio report) so that he
could deliberately misrepresent the value of his loss.
Presumably
by inflating it. However, the Court would have to conclude that no
factual controversies remain concerning the value of the Lepine's
claim; that the Lepines are simply lying about their alleged
purchases from Bayou Audio and Diversified Systems. But both sides
have submitted evidence of contradictory facts on this issue.
Thus, a genuine dispute persists concerning whether the Lepines had
approximately $250,000 worth of electronics, or whether they "only"
had $44,000 worth of electronics,23 yet tried to recover more than
their actual loss.
It will be up to the fact-finder to determine
whether or not the Diversified Security and Bayou Audio receipts
were fabricated, or were in fact receipts (from companies that
never legally operated or had a storefront) that were given to Mr.
Lepine for items he purchased from companies that simply vanished.24
23
Including the alleged purchases from Bayou Audio and
Diversified Systems, the plaintiffs supposedly had over $250,000
worth of electronics. It is for the jury to disbelieve (or not)
the Lepine's story that they had saved over $200,000 in cash and
purchased, in cash, all those electronics from companies that never
had a storefront and simply vanished.
All with the income
reflected in their tax returns.
24
Although possibly unworthy of belief, Mr. Lepine submits
that the companies existed. It will be for the jury to evaluate
all of the evidence, including Mr. Lepine's testimony concerning
23
Because factual controversies remain concerning the materiality of
the DTS report
-- fact issues that cannot be resolved except by
resort to credibility determinations and weighing the evidence -State Farm's motion for summary judgment is DENIED.
New Orleans, Louisiana, November 6, 2014
______________________________
MARTIN L. C. FELDMAN
UNITED STATES DISTRICT JUDGE
how or why he bought so much electronic equipment from two
companies in such a short period of time without ever visiting the
companies' store fronts; and how he saved so much cash over the
years (and why he spent all of it on depreciable electronic
equipment). In light of the suspicious circumstances surrounding
this case and the fact that some of Mr. Lepine's testimony has been
proven to be false, the Court might well be obliged to refer this
matter to the proper authorities depending on the result of the
trial.
24
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