Gwin et al v. Liberty Mutual Insurance Co et al

Filing 28

MEMORANDUM RULING re 12 MOTION for Summary Judgment filed by Liberty Personal Insurance Co. Signed by Judge Robert G James on 8/17/2017. (crt,Crawford, A)

UNITED STATES DISTRICT COURT
WESTERN DISTRICT OF LOUISIANA
MONROE DIVISION

BRANDON GWIN AND AMIE GWIN

CIVIL ACTION NO. 16-1222

VERSUS

JUDGE ROBERT G. JAMES

LIBERTY MUTUAL INSURANCE
COMPANY AND USAA INSURANCE
COMPANY

MAG. JUDGE KAREN L. HAYES

RULING
This is a dispute over homeowner’s insurance benefits. Defendant Liberty Personal
Insurance Company (“Liberty”) issued a homeowner’s insurance policy to Plaintiffs Brandon Gwin
and Amie Gwin, effective March 12, 2016, to March 12, 2017. However, on July 6, 2016, Liberty
rescinded the homeowner’s insurance policy for alleged misrepresentations by the Gwins. The
Gwins subsequently brought suit against Liberty.
Pending is Liberty’s Motion for Summary Judgment [Doc. No. 12]. For the following
reasons, the Motion for Summary Judgment is GRANTED.
I.

FACTS AND PROCEDURAL HISTORY
The Gwins owned a home located at 187 Sonny Road, Monroe, Louisiana. On May 16,

2015, Garrison Property and Casualty Insurance Company (“Garrison”) issued a policy of
homeowner’s insurance, bearing policy number GAR 01563 68 28 90A, to Brandon Gwin for the
Sonny Road home.1
1

Garrison is a subsidiary of its parent company, USAA Casualty Insurance Company, and
was improperly identified in the original petition as USAA Insurance Company. Garrison has
also filed a Motion for Summary Judgment [Doc. No. 17], which the Court will address
separately.

Effective December 16, 2015, Garrison cancelled the policy it issued for non-payment.2
On or about March 10, 2016, record rainfall in the Monroe region caused widespread
flooding. The Gwins evacuated their home that day.
The following day, March 11, 2016, Amie Gwin contacted Garrison about the
homeowner’s policy to ensure that the Gwins were covered for damage other than flooding. Mrs.
Gwin told the representative during the call that the home was flooded or was going to flood. It
is undisputed that she was told by a representative that the Garrison policy was cancelled in
December 2015. It is also undisputed that she was informed that USAA and all its subsidiaries
(including Garrison) were unable to re-write similar coverage on the Sonny Road property
because of the “unrepaired damage,” which was “not cosmetic,” after Mrs. Gwin had disclosed
the current or imminent flooding situation. [Doc. No. 12-1, Exh. 5].
The same day, Mrs. Gwin called Liberty seeking to obtain a homeowner’s insurance
policy. As part of the application process, Mrs. Gwin was required to provide certain
information. When asked, she knowingly and falsely denied having any homeowner’s policy
cancelled, declined, or non-renewed in the past year.3 In fact, she told the representative that her
Garrison Policy did not expire until August 31, 2016, which was not true.
According to Liberty’s transcript of the call, Mrs. Gwin also failed to disclose that her

2

The Court will address the circumstances of cancellation and whether the cancellation
was effective in its ruling on the Garrison Motion for Summary Judgment. For purposes of this
Ruling, the Court limits its review of the facts on the Garrison policy to those pertinent to
Liberty’s Motion for Summary Judgment.
3

Mrs. Gwin testified that she “didn’t want to say our policy had been cancelled when I
didn’t believe that it was cancelled because I didn’t want that to hinder (the application).” [Doc.
No. 12-1, Exh. 1, p. 94].
2

home had flooded, even when asked if the area was prone “to flood or earthquakes.” [Doc. No.
12-1, Exh. 8(A) at Liberty-1559].4 Mrs. Gwin claims that she did disclose this information, but
has no evidence other than her recollection. During the call, Mrs. Gwin also denied, despite the
known damage from flooding, that she was “doing any sort of construction or remodeling” or
that there were any “physical conditions . . .[at the home] that can cause injuries like broken
windows, uneven walkways, along those lines[.]” [Doc. No. 12-1, Exh. 8(A), at Liberty-1560].
After the telephone call, Brandon Gwin electronically signed a written application that
also answered “no” to the question whether he had ever had a homeowner’s policy cancelled,
declined, or non-renewed; denied that the home was “[u]nder construction” or “[u]ndergoing
significant renovation or remodeling,” and denied that there were “any physical conditions . . . in
need of repair which clearly present a likelihood for injury[,]” such as “[p]orch or deck without
adequate rails or supports, severely broken walkways, unfenced swimming pools, trampolines,
etc.” [Doc. No. 12-1, Exh. 8(A), at Liberty-161; Exh. 1, at 79:10-17, 72:13-73:24 & 78:22-79:9].
The Liberty application Mr. Gwin signed contained the following warning:
[I]t is agreed that this form and the answers provided by you to questions asked as
part of the application process shall be the basis of the contract should a policy be
issued. In the event that any material misrepresentations, omissions,
concealment of facts and/or incorrect statements are made by or on behalf of
the insured during the application process, we may exercise whatever legal
remedies may be available to us under the laws and regulations of this state.
[Doc. No. 12-1, Ex. 8(B), at Liberty-162 (emphasis added)].
Liberty issued homeowner’s insurance policy no. H3F-298-106767-70 (“the Policy”) to

4

Mrs. Gwin disingenuously replied that she “live[s] in Louisiana so flooding, yeah, it
could be a possibility” when, in fact, flooding was the current reality at her home. [Doc. No. 121, Exh. 8(A), at Liberty-1559].
3

the Gwins, effective March 12, 2016, to March 12, 2017. The Policy contains a provision on
concealment or fraud:
2. Concealment Or Fraud
a.

Under Section I – Property Coverages,
(1) With respect to loss caused by fire, we do not provide coverage to the
“insured” who, whether before or after a loss, has:
(a) Intentionally concealed or misrepresented any material fact or
circumstance;
(b) Engaged in fraudulent conduct; or
(c) Made false statements relating to this insurance.

[Doc. No. 12-1, Exh. 7, at Liberty-33]. At the time the Policy issued, the home was unoccupied
and had flooded. According to Mrs. Gwin, the water level in the house eventually reached four
or five feet.
According to the Director of Complex Loss Issues for Liberty Mutual Group, Inc., if the
Gwins had informed Liberty that their Garrison policy had been cancelled for non-payments of
premiums or that their home was already flooded or flooding was imminent, Liberty would have
rejected their application. [Doc. No. 12-1, Exh. 8].
Six weeks after the Policy issued, on April 25, 2016, the Gwins’ property was completely
destroyed by fire, and they submitted a claim for the loss.5
Liberty investigated the Gwins’ claim and learned that they may have made
misrepresentations in the application process. To investigate further, Liberty took examinations
under oath of Brandon and Aimee Gwin on June 14, 2016. During her examination, Mrs. Gwin
admitted that she gave Liberty false information about her prior homeowner’s policy with

5

The Gwins’ home was also burglarized twice before the fire.
4

Garrison, although she claimed that she did tell Liberty that her home was flooded or flooding.6
She did not have evidence or proof to refute the transcript Liberty provided, other than her own
recollection.
On July 6, 2016, Liberty informed the Gwins that it was rescinding the Policy because of
their material misrepresentations.
On July 14, 2016, the Gwins filed a Petition in the Fourth Judicial District Court for the
Parish of Ouachita, State of Louisiana, asserting that Liberty wrongfully denied their claim and
rescinded the Policy. The Gwins seek to recover the limits of their Policy of $210,800, for
damage to their home, $79,000 for damage to personal property, and penalties and attorney’s fees
for Liberty’s alleged bad faith. Liberty removed the case to this Court on August 26, 2016.
On May 5, 2017, Liberty filed the instant Motion for Summary Judgment [Doc. No. 12],
arguing that it had properly rescinded the Policy because of the Gwins’ material
misrepresentations.
On May 8, 2017, a Notice of Motion Setting [Doc. No. 13] issued setting an opposition
deadline of 21 days after the issuance of the notice. Although the deadline would normally have
fallen on May 29, that date was a federal holiday, so the deadline for opposing the Motion for
Summary Judgment was May 30, 2017.
On June 2, 2017, three days late, the Gwins filed an opposition memorandum without
6

In their Petition, the Gwins allege that “Mrs. Gwin answered the questions about her
application truthfully. She advised that although water had not entered their home, it was rising
fast enough that flooding was inevitable.” [Doc. No. 1-2, Petition, ¶ 9]. However, the Petition
appears to be unverified, and the transcript indicates otherwise. Mrs. Gwin admitted at her
deposition that the transcript of the call was accurate. [Doc. No. 12-1, Exh. 8, Amie Gwin Depo.,
pp. 66-67]. She later “[a]greed” with Liberty’s counsel that she did not tell its representative that
the “house was already flooded or soon would be flooded.” Id. at p. 70.
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seeking leave of Court. [Doc. No. 19]. The Gwins contend that Liberty failed to prove their
intent to deceive or that their alleged breach increased the moral or physical hazard under the
Policy with regard to their failure to disclose the cancellation of their Garrison policy. They deny
that there was any misrepresentation with regard to construction or remodeling.
On June 12, 2017, Liberty filed a reply memorandum. [Doc. No. 21]. Liberty contends
that the Court should not consider the Gwins’ untimely opposition. Alternatively, even if the
Court does consider the opposition memorandum, Liberty argues that it is entitled to summary
judgment because it properly rescinded the Policy based on two separate, intentional
misrepresentations.
II.

LAW AND ANALYSIS
A.

Standard of Review

Under Federal Rule of Civil Procedure 56, summary judgment “should be rendered if the
pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no
genuine issue as to any material fact and that the movant is entitled to judgment as a matter of
law.” FED. R. CIV. P. 56(c)(2). The moving party bears the initial burden of informing the court
of the basis for its motion by identifying portions of the record which highlight the absence of
genuine issues of material fact. Topalian v. Ehrmann, 954 F.2d 1125, 1132 (5th Cir. 1992). A
fact is “material” if proof of its existence or nonexistence would affect the outcome of the lawsuit
under applicable law in the case. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). A
dispute about a material fact is “genuine” if the evidence is such that a reasonable fact finder
could render a verdict for the nonmoving party. Id.
If the moving party can meet the initial burden, the burden then shifts to the nonmoving
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party to establish the existence of a genuine issue of material fact for trial. Norman v. Apache
Corp., 19 F.3d 1017, 1023 (5th Cir. 1994). In evaluating the evidence tendered by the parties,
the Court must accept the evidence of the nonmovant as credible and draw all justifiable
inferences in its favor. Anderson, 477 U.S. at 255. However, “a party cannot defeat summary
judgment with conclusory allegations, unsubstantiated assertions, or only a scintilla of evidence.
Thus, Summary Judgment is appropriate if a reasonable jury could not return a verdict for the
nonmoving party.” Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir.
2007)(citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248(1986)).
B.

Timeliness of the Gwins’ Opposition

Liberty is correct that the Gwins filed an untimely opposition memorandum without leave
of Court. However, the Court finds that the striking of such memorandum or declining to
consider it is too great a penalty for a three-day delay in filing. Counsel for the Gwins does not
have a history of failing to comply with the Court’s orders, nor is there any prejudice to Liberty
by such a short delay. Accordingly, the Court will consider the entire record in ruling on the
instant Motion for Summary Judgment. However, counsel is aware of the process for obtaining a
short extension and has done so in the past. Counsel is cautioned that he is always expected to
comply with notices of motion setting, and his failure to do so in the future could result in
sanctions.
C.

Motion for Summary Judgment

Liberty moves the Court for summary judgment arguing it properly rescinded the Policy after
learning that the Gwins lied about the cancellation of their Garrison policy, that flooding had or
would begin shortly in their home, that they failed to disclose that they had evacuated the home, and
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that renovations or construction would be necessary. The Gwins respond, first, that Liberty analyzed
their claims under the wrong statute. While the Gwins admit that Mrs. Gwin had been informed
about the cancellation of the Garrison policy, she denies that she believes that it was properly
cancelled, and, therefore, she had not deceived Liberty. Even if her statement and that of Mr. Gwin
on the application are considered misrepresentations, under application of the statute on fire policies,
they argue that the misrepresentation did not increase the moral or physical hazard under the Policy.
Finally, they argue that they anticipated flooding, but they could not know at the time they applied
for the Policy as to whether they would need construction or renovation, and, therefore, they did not
make misrepresentations to Liberty in this regard. In reply, Liberty argues that it has applied the
correct statute for homeowner’s policies, but acknowledges that the case law is somewhat unclear.
Even if the statute cited by the Gwins is applicable, however, Liberty argues that the standard under
that statute is even less favorable, and it properly rescinded the Policy under either standard.
As a federal court is sitting in diversity, the Court applies the substantive law of Louisiana,
the forum state. See, e.g., Holt v. State Farm Fire & Cas. Co., 627 F.3d 188, 191 (5th Cir. 2010)
(citing Erie R. Co. v. Tompkins, 304 U.S. 64 (1938)).7
First, the Court considers the two statutes cited by the parties. Louisiana Revised Statute
860(A) provides in pertinent part: “no oral or written misrepresentation or warranty made in the
negotiation of an insurance contract, by the insured or in his behalf, shall be deemed material or
defeat or void the contract or prevent it attaching, unless the misrepresentation or warranty is made
with the intent to deceive.” Louisiana Revised Statute 22:1314(A) provides:

7

The parties do not dispute that Louisiana law governs this case, as the contract was
formed in this state.
8

No policy of fire insurance issued by any insurer on property in this state shall
hereafter be declared void by the insurer for the breach of any representation,
warranty, or condition contained in such policy or in the application therefor. Such
breach shall not allow the insurer to avoid liability unless such breach: (1) exists at
the time of the loss, and be such a breach as would increase either the moral or
physical hazard under the policy; or (2) shall be such a breach as would be a violation
of a warranty or condition requiring the insurer to take and keep inventories and
books showing a record of his business.
The Louisiana Supreme Court has observed that fire insurance policies and homeowners
policies are “separate and distinct . . . although both policies insure against the peril of fire.” Landry
v. La. Citizens Prop. Ins. Co., 2007-1907 (La. 5/21/08), 983 So.2d 66, 74 n.10. “The Louisiana
Legislature has specifically recognized a difference between a fire insurance policy and a
homeowners’ policy by defining them separately in La. R.S. 22:6[.]” Id. Thus, the Landry dicta
suggests that the Louisiana Supreme Court would find that the application of § 22:1314 is limited
to fire policies, not homeowner’s policies which insure against the peril of fire.
Further, although the Gwins point out that § 22:860(B) (recently applied by this Court in a
prior case) is applicable only to life, annuity, and health and accident insurance, § 22:860(A) has no
such limitation. Subsection A, by its plain language, applies to any insurance contract, obviously
including a homeowner’s policy. See, e.g., Katl v. Chevalier, 2015-1028 (La. App. 3 Cir. 3/23/16),
188 So.3d 449, 455 (“We have previously held that in interpreting this statute, an insurer has the
burden of proving whether an insured made material misrepresentations sufficient to rescind the
automobile insurance policy.”) (citing Abshire v. Desormeaux, 07-626 (La.App. 3 Cir. 11/7/07), 970
So.2d 1188, writ denied, 08-226 (La.4/4/08), 978 So.2d 326). The general rule in subsection A is
then further excepted for certain types of policies: (1) the life, annunity, and health and accident
insurance policies addressed in subsection B and (2) policies “of fire insurance” addressed in §§

9

22:1314 and 1315.
On the other hand, there is no controlling authority as to which statute should be applied.
In decisions prior to Landry, Louisiana courts, including the Louisiana Supreme Court, have “not
been loathe to extend the application of [§ 22:1314]” and have applied it to policies “covering fire
and property damage.”8 Graham v. Milky Way Barge, Inc., 824 F.2d 376, 381-82 (5th Cir. 1987).
Finally, the Louisiana Supreme Court’s comments in Landry are merely dicta. The Landry Court
assumed arguendo that the questionable statute9, which provided a method of computation of loss
for fire policies, did apply to a homeowner’s policy since the parties did not raise the issue, and the
Court would have reached “the same result whether the statute applies or does not apply.” 983 So.
2d 66 at 74-76.
After careful review, the Court declines to reach this issue and finds that under application
of either statute, La. Rev. Stat. § 22:86010 or La. Rev. Stat. 22:1314,11 Liberty is entitled to summary
judgment. Under § 22:860, to void coverage on grounds of misrepresentation, the insurer must show
that (1) the insured made a false statement in his application for the insurance policy, (2) the false
statement was made with the intent to deceive, and (3) the false statement materially affected the
acceptance of the risk by the insurer or the hazard assumed. Wohlman v. Paul Revere Life Ins. Co.,
980 F.2d 283, 285-86 (5th Cir. 1992) (citing Coleman v. Occidental Life Insurance Co. of N.C., 418

8

See, e.g., Grice v. Aetna Cas. & Sur. Co., 359 So.2d 1288 (La. 1978); Rodriguez v.
Northwestern Nat. Ins. Co., 358 So.2d 1237 (La. 1978); Lee v. Travelers Fire Ins. Co., 219 La.
587, 53 So.2d 692 (1951).
9

The statute at issue was formerly numbered La. Rev. Stat. § 22:695.

10

This statute was formerly numbered La. Rev. Stat. § 22:619.

11

This statute was formerly numbered La. Rev. Stat. § 22:692.
10

So. 2d 645, 646 (La.1982); Clark v. Golden Rule Ins. Co., 887 F.2d 1276, 1281 (5th Cir. 1989)).
In order for Liberty to show the Gwins’ intent to deceive, strict proof of fraud is not required; rather,
intent can be determined from the surrounding circumstances indicating that the Gwins knew their
representations were false and recognized that they were material. Willis v. Safeway Ins. Co. of
Louisiana, App. 2 Cir.2007, 42,665, p. 7 (La.App. 2 Cir. 10/24/07); 968 So.2d 346, 350. A
misrepresentation is material if the truth would have resulted in the insurer not issuing the policy of
insurance or issuing the policy at a higher rate. Abshire v. Desmoreaux, 2007-626, p. 9 (La.App. 3
Cir. 11/7/07); 970 So.2d 1188, 1196.
The Court finds that Mrs. Gwin orally made false statements and Mr. Gwin made false
statements in writing when they denied and/or failed to disclose that the Garrison policy had been
cancelled and not renewed.12 Likewise, they made false statements when they failed to disclose the
fact that their house was flooded or imminently flooded as a “physical condition . . . in need of
repair” that “can cause” or “clearly presented a likelihood for” injury.13 While the home was not

12

Mrs. Gwin’s affidavit does not create an issue of fact for trial. [Doc. No. 19, Exh. 5].
While she explains the circumstances of the alleged cancellation of the Garrison policy and why
she disagrees that the policy was properly cancelled, it is an undisputed fact that she was
informed by the Garrison representative that the policy had been cancelled prior to her statements
otherwise to Liberty. Likewise, Mr. Gwin’s belief that Mrs. Gwin “had good reason to doubt”
the policy had been properly cancelled fails to raise a genuine issue of material fact for the same
reason. [Doc. No. 19, Exh. 6].
13

Mrs. Gwin’s affidavit also fails to create an issue of fact with regard to the disclosure of
flooding. “It is well settled that this court does not allow a party to defeat a motion for summary
judgment using an affidavit that impeaches, without explanation, sworn testimony.” S.W.S.
Erectors, Inc. v. Infax, Inc., 72 F.3d 489, 495 (5th Cir. 1996) (citation omitted); Love v. Motiva
Enterprises LLC, No. 08-30996, 2009 WL 3334610, at *2 (5th Cir. Oct. 16, 2009) (“[A]n
affidavit in opposition to summary judgment that contradicts without explanation deposition
testimony is properly disregarded.”). While she says that she “did not conceal the fact that flood
waters were rapidly approaching my home, nor was I asked a question that would have required a
statement to that effect,” her deposition testimony and her admission with regard to the transcript
11

currently under construction or renovation, and, thus, the Court cannot say, as a matter of law, that
the Gwins falsely answered “no” to questions about construction and renovation, they were aware
of the requisite physical condition that they failed to disclose. This failure to disclose is more blatant
when viewed in the context of Mrs. Gwin’s deflection that they live “in Louisiana, so flooding, yeah,
it could be a possibility” when it was reality at the time of the conversation.
These false statements were also material in that Liberty would not have issued the Policy
had it known of the cancellation or the flooding. Although Mrs. Gwin is “sure” that she informed
the Liberty representative of flooding, the transcript of her telephone call, which she admits is
correct, clearly shows otherwise.14
Finally, Liberty has produced sufficient evidence, based on the circumstances, for the Court
to find, as a matter of law, that the Gwins had the intent to deceive in order to obtain insurance.
Specifically, at the time that Mrs. Gwin spoke with a Liberty representative, she had just learned that

of the telephone call provide otherwise. [Doc. No. 19, Exh. 5]. The Court will disregard her
contradiction of her sworn testimony.
14

In this regard, the Court does not disregard Mrs. Gwin’s belief, but considers that she
may simply be recalling her earlier conversation with the Garrison representative on what was
obviously a stressful day. However, her emphatic recollection cannot create a genuine issue of
material fact for trial when she has produced no evidence to show that the transcript was
incomplete or otherwise inaccurate.
“When opposing parties tell two different stories, one of which is blatantly contradicted
by the record, so that no reasonable jury could believe it, a court should not adopt that version of
the facts for purposes of ruling on a motion for summary judgment.” Scott v. Harris, 550 U.S.
372, 380 (2007); see also Orr v. Copeland, 844 F.3d 484, 491 (5th Cir. 2016) (quoting same).
Although the Scott case relied on a video of a police chase, the Court finds the principal
applicable here. Mrs. Gwin does not question the reliability of the transcript after reviewing it
along with the actual recording of her telephone call with the Liberty representative, but, yet, tries
to raise a genuine issue of material fact for trial that contradicts that record.

12

their Garrison policy had been cancelled and would not be reissued, and she was aware that this
information could cause problems in obtaining a new policy.15 Therefore, under the standard to §
22:860, Liberty is entitled to summary judgment in this matter.
Moreover, the Court would reach the same result if La. Rev. Stat. § 22:1314 applies to a
homeowner’s policy insuring against the peril of fire. Under § 1314, Liberty could declare the Policy
void for the Gwins’ “breach of a representation, warrant or condition contained in such policy or in
the application therefor” if the breach “exist[ed] at the loss, and [was] such a breach as would
increase either the moral or physical hazard under the policy[.]” La. Rev. Stat. § 22:1314(A). To
meet the showing of an increased physical hazard, the insurer must demonstrate that there is “an
increase in the potential for the insured peril by [the] change in the physical circumstances
surrounding the insured property[.]” 15 LA. CIV. L. TREATISE, INS. L. & PRAC. § 10: 330. The case
law does not appear to require that there must be a specific link between the hazard and the loss
itself. See id. at §§ 10:326-328.
In this case, both the application and the Policy warned against the applicant/insured’s
misrepresentation of material facts, concealment or failure to disclose such facts, and the making of
incorrect or false statements. While the Gwins’ false statements regarding the cancellation of their
Garrison policy could not be said to increase the physical hazard, their failure to disclose the physical
condition of their property–that it was flooding or would imminently flood– and that they had
evacuated did increase the physical hazard, including lossese that actually occurred in this case of
burglary and fire. See Doucette v. La. Citizens Coastal Plan, 12-52 (La. App. 5 Cir. 5/22/12), 96
15

Mr. Gwin’s affidavit in which he offers his opinion that Mrs. Gwin did not “intend to
deceive” Liberty is not evidence and does not create a genuine issue of material fact for trial.
[Doc. No. 19, Exh. 6].
13

So.3d 1236-1239-40. Accordingly, the Court finds that Liberty is also entitled to summary judgment
under application of this statute .
III.

CONCLUSION
While the Court recognizes the unfortunate predicament in which the Gwins found

themselves, there is no genuine issue of material fact for trial that they made misrepresentations to
Liberty which legally permitted it to rescind the Policy and deny coverage. Thus, for the foregoing
reasons, Liberty’s Motion for Summary Judgment is GRANTED, and the Gwins’ claims against this
Defendant are DISMISSED WITH PREJUDICE.
MONROE, LOUISIANA, this 17th day of August, 2017.

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