Mendez v. Nationwide Property and Casualty Insurance Company
Filing
67
MEMORANDUM OPINION. Signed by Judge Alexander Williams, Jr on 9/28/2012. (nss, Deputy Clerk)
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MARYLAND
SOUTHERN DIVISION
RAYMOND MENDEZ,
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Plaintiff,
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v.
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Case No. 10-cv-02266-AW
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NATIONWIDE PROPERTY AND
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CASUALTY INSURANCE CO.,
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Defendant.
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MEMORANDUM OPINION
Plaintiff Raymond Mendez (“Mendez”) filed this case against Nationwide Property and
Casualty Insurance Company (“Nationwide”) on June 2, 2010, based on Nationwide’s refusal to
pay Mendez under a homeowner’s insurance policy for losses sustained in a fire. Pending before
the Court is Nationwide’s Motion for Summary Judgment on Mendez’s breach of contract claim.
Doc. No. 40. The Court has reviewed the parties’ briefs and exhibits and concludes that no
hearing is necessary. See Loc. R. 105.6 (D. Md. 2011). For the reasons articulated below,
Defendant’s Motion will be DENIED.
I. FACTUAL AND PROCEDURAL BACKGROUND
The following facts are drawn from the parties’ briefs and attached exhibits and are
undisputed, unless otherwise noted. On June 3, 2008, Defendant Nationwide issued
homeowner’s insurance policy No. 52 19 HO 888334 (the “Policy”) to Plaintiff Raymond
Mendez for his property located at 105 Stan Fey Drive in Upper Marlboro, Maryland. Doc. No.
40-4, B00002. The Policy was in effect when a fire engulfed Mendez’s home on June 15, 2009.
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Id.; Doc. No. 2, ¶¶ 5, 9. The Policy included the following disclaimer under the heading
“CONCEALMENT OF FRAUD”:
This policy does not provide coverage for all insureds if you or any other insured,
either before or after the loss, has:
(1) Intentionally concealed or misrepresented any material fact or circumstance;
or
(2) committed any fraud or made false statements relating to such loss.
Doc. No. 40-4, B00036.
Soon after the fire, Mendez employed his son, Amilcar Mendez (“Amilcar”), to assist
him with drafting inventories and placing values on lost or destroyed items, as Amilcar had
personal knowledge of the home’s contents and the value of the personal property. Mendez and
his son were told by Nationwide’s agents to list items of identical or similar quality and value as
those lost in the fire, and that “time was of the essence” in submitting the claims. Doc. No. 53-3,
¶ 11; Doc. No. 53-5, ¶¶ 2, 6–7. Mendez avers that he was suffering kidney failure and was
physically unable to do the inventory by himself given his weakened condition. See Doc. No.
53-3, ¶¶ 18–19. Nationwide disputes this claim, citing Mendez’s own affidavit, deposition
testimony and responses to interrogatories suggesting that he was in satisfactory physical
condition and was preparing part of the inventory himself. See Doc. No. 57, at 6–7. Mendez
also avers that at the time the inventories were being prepared, he believed his son’s personal
property was covered by the Policy. Doc. No. 53-3, ¶ 17.
Within weeks of the fire, Mendez submitted three binders to Nationwide containing
images of the personal property he was claiming was lost or destroyed. See Doc. Nos. 40-7 and
40-8; Doc. No. 42, C00039, 150:9–21. Mendez also submitted typed lists to Nationwide
containing items of personal property destroyed in the home, the location of the items in the
home, the costs of replacing the items, and the retailers from which replacement items could be
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purchased. Doc. No. 44, E00032–50. Although he received help from his son in preparing these
inventories, Mendez acknowledges that he personally reviewed them prior to submitting them to
Nationwide. Doc. No. 42, C00039, 150:6–151:13; Doc No. 53-3, ¶ 19. On November 3, 2009,
Mendez formally filed a claim under the Policy for $1,299,000.00 based on losses sustained in
the fire. Doc. No. 44, E00001. At some point after he submitted the inventories, Mendez sought
return of the binders so he could verify their accuracy, but Nationwide refused access, telling
him an investigation was being conducted. Doc. No. 53-3, ¶ 10. Mendez claims that Nationwide
cut off all communication with him and his family within two or three weeks of the fire, and
effectively ignored him until his November 30, 2009 Examination Under Oath (“EUO”). Id. ¶¶
14, 16.
Mendez filed suit against Nationwide in the Circuit Court of Prince George’s County on
June 2, 2010, alleging that Nationwide breached the Policy and acted in bad faith by failing to
compensate Mendez for his losses. See Doc. No. 2. Nationwide formally denied Mendez’s
claims in a letter dated June 11, 2010, informing him that the Policy was void due to the cause of
the fire and false statements made by Mendez during the claims process. Doc. No. 40-9, at 5.
The case was removed to this Court on August 19, 2010. The Court dismissed Mendez’s bad
faith claim on December 21, 2010, Doc. No. 11, and granted judgment in favor of Nationwide on
Mendez’s claims for physical, mental, and credit injuries on September 13, 2011, Doc. No. 23.
Only Mendez’s breach of contract claim remains.
Nationwide sent Mendez a supplemental denial letter on April 2, 2012, citing Mendez’s
false claims regarding lost or destroyed artwork, uncut diamonds, and furs as specific grounds
for the denial of coverage. Doc. No. 40-10. Nationwide bases its June 28, 2012 Motion for
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Summary Judgment, Doc. No. 40, on Mendez’s false statements regarding these items.1 Mendez
does not dispute that the initial claims regarding the artwork, uncut diamonds, and furs were
false. However, Mendez argues that he did not make false statements with knowledge that they
were false or with the purpose of defrauding Nationwide, and that the inaccuracy of the
information can be explained by lack of knowledge, inadvertence, honest mistake, or poor
judgment.
II. STANDARD OF REVIEW
Summary judgment is only appropriate “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); see also
Celotex Corp. v. Catrett, 477 U.S. 317, 323–25 (1986). The Court must “draw all justifiable
inferences in favor of the nonmoving party, including questions of credibility and of the weight
to be accorded to particular evidence.” Masson v. New Yorker Magazine, Inc., 501 U.S. 496, 520
(1991) (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986)). In ruling on a motion
for summary judgment, “[c]redibility determinations, the weighing of the evidence, and the
drawing of legitimate inferences from the facts are jury functions, not those of a judge . . . .”
Okoli v. City of Baltimore, 648 F.3d 216, 231 (4th Cir. 2011) (quoting Anderson, 477 U.S. at
255).
To defeat a motion for summary judgment, the nonmoving party must come forward with
affidavits or other similar evidence to show that a genuine issue of material fact exists. See
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). A disputed fact
1
In their briefs, the parties discuss and disagree over other matters, including the cause of the fire and Mendez’s
claims as to other lost or destroyed property, such as a Rolex watch and firearms. Nationwide’s Motion for
Summary Judgment is based on Mendez’s false statements regarding the artwork, uncut diamonds, and furs,
however, and the Court gives no consideration to these other matters.
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presents a genuine issue “if, after reviewing the record as a whole . . . a reasonable jury could
return a verdict for [the non-moving party].” Evans v. Techs. Applications & Serv. Co., 80 F.3d
954, 959 (4th Cir. 1996) (citing Anderson, 477 U.S. at 248). Although the Court should believe
the evidence of the nonmoving party and draw all justifiable inferences in his favor, a
nonmoving party cannot create a genuine dispute of material fact “through mere speculation or
the building of one inference upon another.” Beale v. Hardy, 769 F.2d 213, 214 (4th Cir. 1985).
III. ANALYSIS
A. Plaintiff’s Affidavits
The Court will begin by addressing Nationwide’s argument that Mendez’s and Amilcar’s
affidavits should be stricken and not considered in the Court’s summary judgment ruling because
they contain statements that contradict the affiants’ prior deposition testimony.2 “[A] party
cannot create a genuine issue of fact sufficient to survive summary judgment simply by
contradicting his or her own previous sworn statement (by, say, filing a later affidavit that flatly
contradicts that party’s earlier sworn deposition) without explaining the contradiction or
attempting to resolve the disparity.” Cleveland v. Policy Mgmt. Sys. Corp., 526 U.S. 795, 806
(1999). Permitting a party to do so “would greatly diminish the utility of summary judgment as a
procedure for screening out sham issues of fact.” Barwick v. Celotex Corp., 736 F.2d 946, 960
(4th Cir. 1984).
However, application of the sham affidavit rule at the summary judgment stage “must be
carefully limited to situations involving flat contradictions of material fact.” Mandengue v. ADT
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Nationwide apparently requests that the affidavits be stricken in their entirety. Even if the Court agreed that the
averments in the affidavit contradicted the affiants’ prior testimony, it would only strike the contradictory portions
of the affidavits. See, e.g., Evans, 80 F.3d at 962 (finding it appropriate for district courts to strike and disregard
portions of affidavit deemed inadmissible or improper); Parker v. Davis, 900 F. Supp. 788, 793 (D. Md. 1995)
(disregarding portion of affidavit that contradicted prior testimony).
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Sec. Sys., Inc., No. ELH-09-3103, 2012 WL 892621, at *18 (D. Md. Mar. 14, 2012). The court
in Mandengue elaborated on this important limitation of the rule:
The inconsistency between a party’s deposition testimony and subsequent
affidavit must be clear and unambiguous to justify striking the affidavit. Thus,
the non-moving party is not precluded from elaborating upon, explaining or
clarifying prior testimony elicited by opposing counsel on deposition and minor
inconsistencies that result from an honest discrepancy, a mistake, or newly
discovered evidence afford no basis for excluding an opposition affidavit.
Id. (quoting Van Asdale v. Int’l Game Tech., 577 F.3d 989, 998–99 (9th Cir. 2009) (alterations
omitted) (internal quotation marks omitted)). Although there appear to be some discrepancies
between the affidavits and Mendez’s and Amilcar’s prior testimony, the Court concludes that
these inconsistencies are not so clear and unambiguous as to require the striking of the affidavits
or portions thereof.
1. Mendez’s averments regarding the definition of “artwork”
At his deposition, Mendez stated that he owned about 15 pieces of art with an estimated
value of $10,000.00, and that by “pieces of art,” he was referring to paintings and prints. Doc.
No. 42, C00041, 161:11–17. He also stated during his deposition that these numbers would have
constituted his best estimates at the time of the fire. Id., C00040, 156:18–157:11. Nationwide
seeks to strike Mendez’s statement in his affidavit that he and Amilcar, who helped draft the
statement and inventory, had different understandings of what was encompassed within the term
“artwork.” See Doc. No. 53-3, ¶¶ 1–3. Specifically, Mendez avers that Amilcar’s letter to
Nationwide identified 60 to 65 pieces of artwork because Amilcar did not differentiate between
photographs, posters, prints, and paintings. Id. ¶¶ 1–2. The Court discerns no clear and
unambiguous contradiction between this averment and Mendez’s prior deposition testimony. If
anything, Mendez is attempting to explain the discrepancy between the initial claims and his own
deposition testimony, but there is no flat contradiction between his prior testimony and affidavit
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statements. To be sure, Nationwide may find it fruitful to ask Mendez on cross-examination why
he submitted a claim for 60 to 65 pieces of “artwork” when he only owned around 15 pieces
under his own definition of the term.3 However, the Court will not invoke the sham affidavit
rule and strike statements regarding the artwork from Mendez’s affidavit.
2. Mendez’s averments regarding the valuation of uncut diamonds
During his deposition, Mendez admitted that his claim for $30,000.00 in uncut diamonds
was a “mistake” and was “incorrect.” Doc. No. 42, C00025, 94:10–21. Mendez also stated
during his deposition that he didn’t know if the uncut diamonds were “worth anything” and that
they could have been worth “close to zero.” Id., C00025, 95:1–17. Nationwide seeks to strike
Mendez’s averment in his affidavit that the claim for $30,000.00 was his and Amilcar’s best
estimate based on what they thought was fair and honest and what they found on the Internet.
See Doc. No. 53-3, ¶¶ 8–9. Again, the Court discerns no flat contradiction between this
averment and Mendez’s prior deposition testimony. Rather, Mendez appears to be elaborating as
to how and why he submitted the claim, but he is not denying in his affidavit that the claim was
incorrect or that the diamonds could have had minimal value. Furthermore, as will be discussed
in greater detail below, Mendez’s affidavit is largely consistent with other portions of his
deposition testimony in which he attempted to explain the $30,000.00 figure. See infra Part
III.C.2. Again, Nationwide may find it fruitful to explore Mendez’s methodology and state of
mind in submitting this claim on cross-examination, but the Court will not invoke the sham
affidavit rule to strike this portion of Mendez’s affidavit.
3. Amilcar’s averments regarding the raccoon coat
Nationwide also seeks to strike the following averments from Amilcar’s affidavit:
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As is discussed in greater detail below, see infra Part III.C.1, given the language of the statement of claim as well
as other evidence in the record, there is a genuine dispute of material fact as to whether Mendez submitted the
claims for the artwork knowing that the information was false and with the purpose of defrauding Nationwide.
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8. I was mistaken when I listed a raccoon fur coat when I listed [sic] in the
inventories I submitted to Nationwide in June and July 2009. I did not know at
the time that the coat had been placed in storage.
9. I inadvertently listed the raccoon coat as a fur coat in the inventories I
submitted to Nationwide. I did not do so intentionally, although the coats have
almost the identical value.
Doc. No. 53-5, ¶¶ 8–9. In his deposition testimony, Amilcar stated that he did not know what the
coat in question was made of. Doc. No. 57-17, 31:18-19. This testimony does not flatly
contradict Amilcar’s acknowledgement in the affidavit that he mistakenly and inadvertently
listed the raccoon coat in the inventories. Nationwide also points out that Amilcar testified at his
deposition that did not know how many furs his father owned, that he never asked his father, but
that he thought he owned three. Doc. No. 57-17, 86:10-20. Again, the Court discerns no clear
and unambiguous contradiction between this testimony and Amilcar’s averments that the
inaccurate submission was mistakenly and inadvertently made.4 Nationwide is free to explore on
cross-examination with Amilcar and Mendez why inaccurate claims regarding fur coats were
submitted, but the Court will not strike these portions of Amilcar’s affidavit.5
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Even if the Court struck these portions of Amilcar’s affidavit, Nationwide would not be entitled to summary
judgment. Based on Mendez’s deposition testimony, discussed infra Part III.C.3, there is a genuine issue of material
fact as to whether Mendez made the false statements with knowledge that they were false and with the intent to
defraud Nationwide.
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Nationwide also argues that the affidavits were defective because they contained electronic signatures from the
affiants and only attorneys are permitted to electrically sign documents pursuant to the Local Rules of this Court.
See Loc. R. 102(a). However, this defect was cured when Mendez filed hand-signed affidavits on September 19,
2012. See Doc. Nos. 63 and 64.
Nationwide further argues that the affidavits are insufficient as a matter of law. Both affidavits contained
affirmations that the contents were true and correct to the best of affiants’ “knowledge, information, and belief.”
Doc. Nos. 53-3 and 53-5. Nationwide contends that these affidavits fail to comply with Rule 56 of the Federal Rules
of Civil Procedure, which provides in relevant part that “[a]n affidavit or declaration used to support or oppose a
motion must be made on personal knowledge, set out facts that would be admissible in evidence, and show that the
affiant or declarant is competent to testify on the matters stated.” Fed. R. Civ. Pro. 56(c)(4). The Court notes that
Mendez’s hand-signed affidavit contains a revised affirmation that the contents of the affidavits are based on his
“personal knowledge, information, and belief.” Doc. No. 63 (emphasis added). Regardless of the language of the
original affirmations, however, the Court has reviewed the substance of Mendez’s and Amilcar’s affidavits and
concludes that they may be considered in ruling on Nationwide’s summary judgment motion. The affidavits appear
to have been made on personal knowledge, set forth facts that would be admissible in evidence, and show that the
affiants are competent to testify.
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B. False Swearing
The Policy in this case provided, in relevant part, that Nationwide would not provide
coverage if Mendez “(1) Intentionally concealed or misrepresented any material fact or
circumstance; or (2) committed any fraud or made false statements relating to [a] loss.” Doc.
No. 40-4, B00036. To void the Policy, it must be established that Mendez engaged in “false
swearing” when he submitted his claims to Nationwide:
To constitute “false swearing” within the meaning of the contract of insurance, so
as to render the policy void, the statement so made must not only be untrue, but it
must be shown that it was knowingly and intentionally stated with knowledge of
its untruthfulness, or that it was so stated as a truth when the party did not know it
to be true, and had no reasonable grounds for believing it to be true, and was so
made with the purpose to defraud.
U.S. Fire Ins. Co. v. Merrick, 190 A. 335, 342 (Md. 1937); see also Great Sw. Fire Ins. Co. v.
S.M.A., Inc., 474 A.2d 950, 954–55 (Md. 1984). “[T[he intent to defraud is not to be presumed
and . . . all reasonable allowance [shall be made] for lack of knowledge, or sound judgment, or
for honest mistake on the part of the insured.” Great Sw., 474 A.2d at 955 (quoting Tru-Fit
Clothes, Inc. v. Underwriters at Lloyd’s London, 151 F. Supp. 136, 139 (D. Md. 1957)).
Nationwide argues, in the alternative, that under the plain terms of the Policy, it is
entitled to summary judgment if it shows that Mendez (1) made false statements related to his
loss and (2) the statements were material.6 In other words, Nationwide contends that it is not
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This two-pronged test is applicable where the insured makes false statements in his or her application for an
insurance policy. Generally, insurance contracts are voidable and the insurer need not prove intent where the
insured (1) made false statements in entering the insurance contract and (2) the statements were material. See
Clemons v. Am. Cas. Co., 841 F. Supp. 160, 165 (D. Md. 1993) (citing Erie Ins. Co. v. Ins. Comm’r of State, 579
A.2d 771, 773 (Md. Ct. Spec. App. 1993)). This test derives from “the general rule of the law of contracts,” which
provides that “when a party is induced to enter into a contract by fraud or material misrepresentation, the contract is
voidable as against the party making the misrepresentation.” Miller v. Ins. Comm’r, 521 A.2d 761, 768 (Md. Ct.
Spec. App. 1987) (emphasis added). Nationwide is not arguing in the instant case that Mendez made any material
misrepresentations in applying for the homeowner’s policy, so this two-pronged test does not apply.
Furthermore, several cases relied upon by Nationwide in its briefs are inapposite. For example, Nationwide
repeatedly cites Phillips v. Allstate Indemnity Company, 848 A.2d 681 (Md. Ct. Spec. App. 2004), but Phillips dealt
with an insured’s refusal to answer relevant, material questions during an EUO, which the court concluded was, in
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required to prove that Mendez’s false statements were made with the knowledge that they were
false and with the purpose of defrauding the insurer. Nationwide’s reading of the Policy must be
rejected under recent Fourth Circuit precedent. In Simms v. Mutual Benefit Insurance Company,
the policy at issue similarly provided that the insurer was not obligated to provide coverage for
property losses if the insured “(1) Intentionally concealed or misrepresented any material fact or
circumstance; (2) Engaged in fraudulent conduct; or (3) Made false statements.” 137 Fed.
App’x 594, 596–97 (4th Cir. 2005) (emphasis added). As in this case, the insurer in Simms
defended its denial of coverage on the grounds that the insured plaintiffs made false statements
in support of their claims. Id. at 597.
Applying Maryland law, the Simms court noted that in isolation, the term “false
statements” does not inherently indicate intent to deceive. Id. However, both “false statements”
and “false swearing” specify “an untrue utterance,” and the only difference between the
phrases— that “false swearing” occurs under oath, while there is no such requirement for “false
statements” —is of no consequence in the context of an insurance contract. See id. at 601 n.5.
The court explained:
[T]o void an insurance policy based upon an insured’s “false swearing” the
statement must have been knowingly and intentionally stated with knowledge of
its untruthfulness or with reckless disregard for its truthfulness and with the
purpose to defraud. . . . Because the law does not favor forfeitures, Hartford Fire
Ins. Co. v. Himelfarb, 355 Md. 671, 681, 736 A.2d 295, 301 (1999), such a
definition is necessary so that an insurer cannot avoid a claim simply because an
insured unintentionally provided incorrect information. Moreover, it mimics the
definition of fraud and intentional misrepresentation.
effect, a failure to cooperate that voided the policy. Nationwide’s reliance on Powell v. United States Fidelity and
Guaranty Company, 88 F.3d 271 (4th Cir. 1996), which affirmed summary judgment in favor of the insurer where
the insured refused to answer questions and provide documents during the claims process, is similarly misplaced.
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Simms, 137 Fed. App’x at 601 (footnotes omitted). The court concluded that the important
similarity between “fraud,” “intentional misrepresentation,” and “false statements” is “the
scienter requirement, and scienter must be proven by clear and convincing evidence.” Id. at 601.
Accordingly, Nationwide is required to establish that there is no genuine issue of material
fact that Mendez submitted false statements in support of his claim for coverage knowing that
the statements were false or having no reasonable grounds for believing them to be true and that
he did so with the purpose of defrauding Nationwide.
C. Genuine Issues of Material Fact Remain
Although it is undisputed that Mendez made false statements regarding his losses, there
remain genuine issues of material fact that preclude granting summary judgment in favor of
Nationwide. Nationwide has failed to establish beyond reasonable dispute that Mendez’s false
statements were made with knowledge of their untruthfulness or with reckless disregard for their
truthfulness. Nationwide has also failed to establish beyond reasonable dispute that Mendez’s
false statements were made with the purpose of defrauding Nationwide. Whether Mendez
committed false swearing in submitting his claims on the artwork, uncut diamonds, and furs
requires ascertaining his state of mind, determining the credibility of witnesses, weighing of the
evidence, and drawing inferences from the facts presented. Such functions must be performed
by the jury, not the judge. See, e.g., Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th
Cir. 1979) (“[S]ummary judgment is seldom appropriate in cases where particular states of mind
are decisive as elements of claim or defense.”); Oliff-Michael v. Mut. Benefit Ins. Co., 262 F.
Supp. 2d 602, 604 (D. Md. 2003) (“Questions of fraud are fact-specific and generally involve
dramatically opposite positions of the parties on the interpretation of the factual issues as applied
to the law. . . . [The] resolution of the issues of fact depends upon a determination of credibility,
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and [summary judgment] is not the proper stage of litigation for those credibility
determinations.”).
1. Artwork
Amilcar drafted and Mendez submitted the following statement to Nationwide as part of
his claim:
I have accumulated several collections of original and custom art over the past 30
– 35 years, most of which will never be able to be replaced due to their
originality. I have attempted to compile a list of comparable works and price
ranges. In total I owned between 60 and 65 pieces of art which were displayed
throughout my home totaling somewhere around 120k in value if I were to give
my best estimates. There are some pieces that I remember specifically and others
that I have minimal recollection of. I hope that you will find the information
provided useful and be able to come up with a reasonable reimbursement amount.
Doc. No. 44, E00051 (emphasis added). Mendez’s inventory for the value of lost artwork also
provided that the replacement cost would be $120,000.00. Id., E00037. Mendez’s contentions
with respect to the artwork changed during the course of litigation, however. In response to
Nationwide’s interrogatory requesting the identification of Plaintiff’s assets as of the date of the
fire, Mendez listed “ART” as an asset with a value of $10,000.00. Doc. No. 45, F00015–16.
During his deposition, Mendez testified as follows regarding his claims for the lost artwork:
Q [counsel for Nationwide]: What’s your best estimate as a number of pieces of art
that you were claiming against Nationwide?
A [Mendez]: One -- let me see; one, two, three, four, five, six, seven, eight, nine, ten,
eleven; roughly around, my best estimate, maybe around 15 pieces of art.
Q: Certainly below 25 pieces of art?
A: Yes.
Q: And $10,000 is your best estimate?
A: Yes.
Q: And it would have been your best estimate at the time of the fire and the time
now, correct?
A: Yes. I don’t even think I claimed a number at the time of the fire, because we weren’t
trying to, um, we was trying to find out. I think we even asked Nationwide. We didn’t
know how to do it.
….
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Q: You spent some time, sat down and really thought about it and came up with
your best number, then; correct?
A: What I did was, I looked at, um, I looked at a, I think, one of the artists online,
Weisbach. I have one of his paintings, and when I looked online, what I saw was what
some of his works were auctioned off for. Some were like, 15,000, or 20,000, some even
like 100,000, some of his work, so I used that for my best estimate.
Q: And your best estimate is that all of the artwork that was in your home had, and
I think you used the word “reasonable” value in total of being about $10,000; is that
correct?
A: Right.
….
Q: You indicated that you thought there was approximately 15 or so pieces of art in
your home, and I assume by “pieces of art,” you mean paintings; is that correct?
A: Yes.
Q: Or prints?
A: Yeah, or prints. Or prints or, yeah.
Q: Okay; but not sculpture?
A: Right.
Q: Now, with regard to those 15 prints or paintings, did any of those belong to your
son?
A: Yes.
Q: Now, approximately how many?
A: Oh, Jeez. One, two, three -- maybe about, I don't know, seven or eight.
….
Q: So roughly, total pieces of art in your home is between 20 to 25. Is that correct?
A: I would say, no more than 20.
Doc. No. 42, C00040–42, 156:18–163:15.
Mendez does not dispute that the statement he initially provided—that he owned 60 to 65
pieces of art worth $120,000.00—was false. The Court concludes, however, that a reasonable
jury could find that Mendez did not knowingly or intentionally submit false statements regarding
the artwork, that he had reasonable grounds for believing the statements to be true, or that he
lacked the requisite intent to defraud Nationwide. The statement Amilcar drafted and Mendez
submitted to Nationwide volunteered that the claim was only a best estimate and that Mendez’s
memory regarding the claimed artwork was uncertain. The statement also implicitly requested
assistance and guidance from Nationwide in coming up with a reasonable estimate. See Doc.
No. 53-3 ¶ 5. Furthermore, Mendez’s deposition testimony indicates that at the time of the fire,
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he was uncertain as to how to evaluate the value of the artwork and that he was seeking
assistance from Nationwide in doing so. See Doc. No. 42, C00040, 157:6–11. Mendez’s
uncertainty, which was apparently disclosed to Nationwide during the claims process, creates a
genuine dispute as to whether the false statements were made knowingly, without reasonable
grounds for believing them to be true, or with the purpose of defrauding Nationwide.7
Furthermore, a reasonable jury could rely on other facts in the record to support a
conclusion that the false statements were not submitted with the requisite state of mind. For
example, Mendez indicated during his EUO that he thought, at the time he submitted his claims,
that his son’s artwork would be covered by the Policy. See Doc. No. 43, D00069, 276:9–18
(stating that he included Amilcar’s artwork in his initial estimates). Furthermore, Amilcar’s
estimate regarding “artwork” included consideration of assorted pictures and knick-knacks, not
just paintings and prints. Id. ¶ 2. Amilcar even asked during his October 18, 2011 deposition
whether “artwork” included pictures on the wall, knick-knacks, or other items, before counsel for
Nationwide clarified that it meant paintings and prints. See Doc. No. 53-4, 26:10–19.
Nationwide argues that Mendez submitted the artwork claim knowing it was false given that
Mendez acknowledged at his own deposition that, at the time of the fire, he would have defined
artwork to include prints and paintings and that he only owned around 15 such items. See Doc.
No. 42, C00040, 157:6–11. The Court will not presume intent to defraud, however, and must
make reasonable allowance for honest mistake and lack of judgment, particularly given
Mendez’s medical condition, Amilcar’s participation in the claims process, and the apparent rush
7
Accordingly, even if the Court struck the relevant portions of Mendez’s and Amilcar’s affidavits, see supra Part
III.A.1, there is a genuine issue as to whether the false statements about the artwork were made with knowledge of
their untruthfulness or reckless disregard for their truthfulness and whether they were submitted with the intent to
defraud Nationwide.
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to submit claims.8 Accordingly, there is a reasonable factual dispute as to Mendez’s state of
mind when he submitted the false statements to Nationwide, and it is not the Court’s function to
resolve that dispute on a motion for summary judgment.
2. Uncut Diamonds
Mendez stated in his claim that uncut diamonds valued at $30,000 were lost in the fire.
Doc. No. 44, E00049. Mendez also submitted a document titled, “Loose Diamond Crystals –
Natural Diamond Crystals 2.00-4.99 Carats,” containing images of uncut diamonds. Doc. No.
40-6, H00003. At his EUO, Mendez testified that he lost two large, uncut diamonds in the fire,
that the diamonds were from Africa, that Mendez received them as gifts from his brother, and
that they were worth only about $4,500.00 or $5,000.00. Doc. No. 43, D00062–64, 248:21–
253:5. When asked why he listed $30,000, Mendez answered, “Well, if you go to replace those
ones he brings from Africa.” Id., D00064, 253:2–5. As with the artwork, Mendez’s position
with respect to the diamonds changed during the course of litigation. In response to
Nationwide’s interrogatory regarding his assets at the time of the fire, Mendez listed “Uncut
Diamonds Gems,” but left blank the value of the diamonds. See Doc. No. 45, F00015–16.
During his deposition, Mendez testified as follows:
8
Nationwide argues generally that Mendez improperly attempts to put the onus on his son and undesignated “private
adjusters” for the false statements and that the assistance he may have obtained from others is not factually or legally
relevant as to whether Mendez made false statements. Nationwide is correct insofar as there is no factual dispute in
this case that Mendez submitted false statements to Nationwide. However, that Amilcar (or possibly others) played
a role in preparing the inventories is unquestionably relevant to whether Mendez knew that the inventories were
false, had reasonable grounds for believing them to be true, or intended to defraud Nationwide in submitting the
claims.
Nationwide also accuses Mendez of improperly injecting his medical condition into the record as an excuse for
providing false information to Nationwide. Again, Mendez’s medical condition is undoubtedly relevant to his state
of mind at the time the false statements were submitted to Nationwide. The fact that Mendez was suffering from
kidney failure may have, for example, contributed to mistakes or lack of judgment in submitting the false claims.
Furthermore, the Court’s consideration of Mendez’s medical condition in assessing his state of mind in no way
alters the Court’s previous determination that Mendez is not entitled to recover contractual damages from
Nationwide on his physical injuries. See Doc. No. 23.
15
Q [counsel for Nationwide]: Okay. But that -- and you understand that you are
claiming that gems having a value of approximately $30,000 were lost in the fire.
A [Mendez]: And that was a mistake.
Q: That was a mistake?
A: Yes, it was.
Q: It’s incorrect information -A: Yes.
Q: -- that you gave us? Strike that. It was incorrect information that you gave to
Nationwide, correct?
A: Yes.
Q: What was the correct information that you should have given to Nationwide?
A: I’m not really sure. What it was, it was a gift that I had got from Africa, from my
brother, which was, which was, it was a diamond, but it was, it probably wasn’t, I don't
know what it would be worth, to be honest with you, but it had, you know, it was
different colors or whatever. It’s not anything that you would probably -- well, I take it
back. In this country they would probably use it to make some jewelry with it or
whatever, but the reality is, I don’t know if it was worth anything.
Q: It may have been worth close to zero?
A: It could have been. I don’t know, ’cause I never seen, you know, it was a, it was a
diamond. But, okay, let me put it this way; you know how diamonds come in different
colors? This thing had probably every color in it. So, it wasn’t, like, fully developed.
….
Q: So, at the time that you provided that information to Nationwide -- that the gems
that were destroyed in the fire had a value of approximately $30,000 -- did you
believe that information to be accurate, or did you not know?
A: I did not know.
Q: Okay. So, instead of saying, “I do not know,” you put information that it was
worth approximately 30,000; is that correct?
A: That’s correct.
Q: Why did you do that?
A: Well, my son did it, and he did it based on what the stone looked like, and he found, I
didn’t even know that you, that there was actually a market for that out there. He found it
on the Internet.
…
Q: Let me ask you, sir; at the time that this information was submitted to
Nationwide, the information which you now say is incorrect, at the time you
submitted it to Nationwide, did you know that it might be incorrect?
A: No.
Q: You thought it to be correct?
A: Yes, at the time.
Q: What steps did you take to make a determination as to whether it was correct?
A: Um, just based on what we were told. We went to the Internet. We found something
that looked similar to it, and we put it down.
….
Q: Sir, at the time, then, you had no idea what these diamonds were worth, at the
time that you submitted it to Nationwide. Is that correct?
16
A: That’s correct.
Q: And that’s at the time you submitted Exhibit 17 to Nationwide; is that correct?
A: Now, what are we talking about? The whole thing, or just the 30,000?
Q: Just the $30,000.
A: That’s correct.
Doc. No. 42, C00025–26, 94:10–101:6.
As with the artwork, Mendez does not dispute that the information he initially provided—
that he lost uncut diamonds worth $30,000.00—was false. However, it is a question for the jury
as to whether Mendez submitted the false statement with knowledge that it was false, with
reckless disregard for the truth, or with the intent to defraud Nationwide. Throughout his
deposition, Mendez admitted that he was unsure of the value of the diamonds, but that the initial
$30,000 claim was his and Amilcar’s best estimate as to the value of the stones, and that he
thought the estimate may have been correct. Amilcar testified that the estimate he helped his
father submit to Nationwide was based on past conversations with Mendez in addition to online
research. See Doc. No. 53-4, 68:12–75:12. Mendez acknowledges that their approach “may
have not been the best method” and that “one could even argue that this method of valuation
lacked good judgment,” but that this does not make the claim fraudulent. Doc. No. 53, at 15–16.
The Court agrees with Mendez. Nationwide essentially asks the Court to infer from Mendez’s
and Amilcar’s testimony that the $30,000.00 valuation constituted a reckless disregard for the
truth, and that Mendez must have intended to defraud Nationwide based on his submission of the
claim. This determination must be left to the jury based on its evaluation of the witnesses’
credibility and its weighing of the evidence.
3. Furs
In the inventory submitted to Nationwide, Mendez claimed that two furs were lost in the
fire: the first was listed as a black mink coat valued at $5,495.00, and the second was listed as a
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red fox fur jacket valued at $2,495.00. Doc. No. 44, E00036. Mendez also submitted a
photograph of a woman wearing two furs and a retailer’s listing of a red fox fur jacket. Id.,
E00030; Doc. No. 40-8, J00001. As with the other items, Mendez’s position regarding the furs
changed in the course of litigation. At his EUO, for example, Mendez testified that the second
coat, initially listed as a red fox fur, was in fact a raccoon coat. Doc. No. 43, D00076, 301:20–
304:18. Later, at his deposition, Mendez acknowledged that the raccoon coat actually belonged
to his son and was not destroyed in the fire:
Q [counsel for Nationwide]: Was this fur destroyed in the fire?
A [Mendez]: Um, the brown one was not. A black one was.
Q: There’s two furs in these pictures?
A: Yes.
Q: Okay. So which one do you contend was destroyed in the fire?
A: The black one.
….
Q: Any of the coats that we have been discussing up to this point in time, were any
of them your son’s coats?
A: Yes.
Q: Which ones were your son’s coats?
A: The raccoon.
Q: And that raccoon was a coat that you made a claim against Nationwide for,
correct?
A: Correct.
Q: And there’s only one raccoon coat, correct?
A: Correct.
Q: And if you made a claim against Nationwide for the raccoon coat, was that just
an error that you made?
A: It was a error, it was a error that he made, because what happened was, he didn’t know
that the coat was in storage at the time of the fire.
….
Q: And let me make sure; there was no, you never owned a natural red fox fur
jacket; is that correct?
A: That’s correct.
Q: Instead, you owned a raccoon coat?
A: Correct.
Q: Actually, your son owned the raccoon coat, correct?
A: Correct.
Q: And you were aware that this information, which is Exhibit Number 19, was
submitted to Nationwide, correct?
A: Correct.
18
Q: And that you never pulled it from the materials that you had, which was
submitted to Nationwide, correct?
A: That’s correct.
Q: And you never told anyone in your Examination Under Oath that the raccoon, it
was really a raccoon coat and the raccoon coat was actually in storage; is that
correct?
A: That’s correct.
Q: Did you know it at the time that you went to your Examination Under Oath?
A: No.
Q: When did you learn that the raccoon coat was in storage?
A: I got a call from Adrianna Furs, um, whew, it was after that. It was during either the
spring or the summer, around May or June, and I had owed them some money, and I had
forgotten about it, and that was when we found out.
Q: And that raccoon coat was your son’s coat, correct?
A: Correct.
Q: Why, sir, did you make a claim for a loss of this fur coat, the raccoon coat?
A: Um, ’cause I forgot about it. I mean, really, I forgot about it.
Q: Sir, why were you making a claim against Nationwide for your son’s raccoon
coat?
A: Well, he put it, he put it all together. Like I said, Nationwide never explained anything
on how to do this, other than they said it was replacement cost. They told us that, um,
they know everything had gotten destroyed. They told us to go to the Internet, find things
that pretty much looked like what we had.
Q: Are you aware, sir, today, that you cannot make a claim for your son’s coat?
A: Um, am I aware today? If that’s what you’re telling me, yes.
Doc. No. 42, C00028–32, 108:15–124:11.
As with the artwork and uncut diamonds, Mendez does not dispute that he provided false
information to Nationwide regarding the furs. Again, however, there is a genuine issue as to
whether Mendez made the statements knowing that they were false or with reckless disregard of
the truth and whether he acted with the purpose of defrauding Nationwide. Mendez continues to
claim, as he did in his deposition testimony, that he and Amilcar were honestly mistaken in
identifying the raccoon coat as a red fox fur coat and that they honestly forgot that the raccoon
coat was in storage at the time of the fire. See Doc. No. 53-3, ¶¶ 6–9. Mendez also argues,
consistent with his deposition testimony, that although the raccoon coat belonged to his son, he
thought he could claim it under the Policy at the time he submitted the inventories to
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Nationwide. It will be the jury’s function, not the Court’s, to determine Mendez’s state of mind
at the time he submitted the false statements.
IV. CONCLUSION
For the foregoing reasons, Defendant’s Motion for Summary Judgment will be DENIED.
A separate Order will follow.
___September 28, 2012____
Date
/s/
Alexander Williams, Jr.
United States District Judge
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