American National Property and Casualty Company v. Moore et al

Filing 73

MEMORANDUM OPINION AND ORDER denying plaintiff American National Property and Casualty Company's 59 MOTION for Summary Judgment; vacating the 11/7/2014 54 order to the extent it conclusively deemed the requests for admission to be admitted. Signed by Judge John T. Copenhaver, Jr. on 4/8/2015. (cc: counsel of record; any unrepresented parties) (taq)

UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF WEST VIRGINIA
AT CHARLESTON
AMERICAN NATIONAL PROPERTY
AND CASUALTY COMPANY,
Plaintiff,
v.

Civil Action No. 2:14-10340

PAUL MOORE and
BARBARA NICHOLS,
Defendants.
MEMORANDUM OPINION AND ORDER
Pending is a motion for summary judgment filed January
7, 2015, by plaintiff American National Property and Casualty
Company (“American National”).

I.

Defendants Paul Moore and Barbara Nichols own a home at
38 Church Street in Blackberry City, West Virginia.

On May 30,

2013, Mr. Moore attempted to contact American National’s local
agent, Theresa Evans, by phone regarding a homeowner’s policy.
reached Ms. Evans’ assistant, Lesley Reeves.

He

Ms. Reeves asked Mr.

Moore certain pre-application questions during the telephone call.
Mr. Moore has testified that he was not asked whether he had
previously been convicted of a felony.

Ms. Reeves contends

otherwise, noting that the form she was using at the time has the
word “no” circled after the question “Been Convicted [sic] of any
type of Felony[sic][?]” (Ex. C, Pl.’s Mot. Summ. J.).
After Ms. Reeves mailed Mr. Moore and Ms. Nichols
certain policy proposals, Mr. Moore contacted her and advised they
wished to take out a policy.

Ms. Reeves prepared a formal

American National application for coverage using the information
she learned from Mr. Moore on May 30, 2013.

She mailed the four-

page, 22-question, pre-completed application to Mr. Moore and Ms.
Nichols for their signatures, attaching “sticky notes” indicating
where they were to sign, but not indicating they needed to read
the document.

Question number five on page two asked “Have you or

any member of your household ever been convicted of a felony or
drug possession.”

(Ex. D at 2, Pl.’s Mot. Summ. J.).

checked the box next to the word “No.”

(Id.).

Ms. Reeves

Mr. Moore and Ms.

Nichols signed the application and returned it.
On October 19, 2013, Mr. Moore learned of a fire at the
insured premises after being contacted by a neighbor.
was a total loss.

The home

Mr. Moore called American National’s claims

line the same day to report the fire.

Mr. Moore believed the fire

was the result of arson and noticed his fireproof safe was
missing.

On December 17, 2013, the insureds presented a Sworn

Statement in Proof of Loss in the amount of $112,500, including
2

the policy limits of $75,000 for the dwelling and $37,500 for the
personal property.
Four months after the fire, Mr. Moore and Ms. Nichols
received a February 27, 2014, letter from American National
voiding their policy.

American National had learned by

investigation that Mr. Moore was a convicted felon, having two
prior convictions for robbery.
On February 14, 2014, American National instituted this
declaratory judgment action.

It seeks an order voiding the policy

based upon what it contends was Mr. Moore’s false response
respecting his prior felony convictions.

Mr. Moore denies that he

provided any false response.
During the discovery period, on July 23, 2014, American
National asserts that it mailed its First Requests for Admission
to each of the defendants.

Defendants were obliged to respond

thereto on or before August 25, 2014.

Defendants assert they did

not learn of the requests until September 2, 2014, when their
counsel received American National’s Motion to Deem Requests for
Admission Admitted via the CM/ECF filing system.

At that time,

there were over three months remaining in the discovery period.
Counsel for defendants immediately contacted counsel for
American National.

He advised that he never received the First
3

Requests for Admission.

Defendants sought informal relief from

opposing counsel, which was apparently not forthcoming.
On September 9, 2014, defendants requested that the
United States Magistrate Judge deny the Motion to Deem Requests
for Admission Admitted.

They additionally submitted affidavits

from defendants’ counsel and his legal assistant attesting that
the First Requests for Admission were not received timely.

They

additionally moved for an extension of time to respond to the
First Requests for Admissions.
On November 7, 2014, the magistrate judge granted the
Motion to Deem Requests for Admissions Admitted.
did not notice an appeal of that order.

The defendants

The material requests for

admission, now deemed admitted, are as follows:
1. Please admit that you did not disclose to Lesley
Reeves that you were a convicted felon.
2. Please admit that when you first contacted Lesley
Reeves to obtain information regarding homeowners
insurance for the property located at 38 Church Street,
Blackberry City, West Virginia, you were still on parole
for a felony conviction.
3. Please admit when you contacted Lesley Reeves to
inquire about a homeowners insurance policy for the
property located at 38 Church Street, Blackberry City,
West Virginia she completed a “Homeowner’s Quote
Information Sheet” verbally over the phone by asking you
a series of questions, one of which was whether you or
any one in your household had ever been convicted of a
felony or drug possession.
4. Please admit that in completing The Homeowners Quote
Information sheet, Ms. Reeves asked you whether you had
4

ever been convicted of a felony, to which you responded,
“No.”
5. Please admit that “Homeowners Quote Information
Sheet” contained false information concerning your prior
felony convictions.
6. Please admit when you contacted Lesley Reeves to
advise that you and Barbara Nichols wanted to proceed
with the purchase of a homeowners insurance policy for
the property located at 38 Church Street, Blackberry
City, West Virginia, Ms. Reeves completed a “The West
Virginia Homeowners Insurance Application” verbally over
the phone by asking you a series of questions, one of
which was whether you or any one in your household had
ever been convicted of a felony or drug possession.
7. Please admit that while completing the “The West
Virginia Homeowners Insurance Application” verbally over
the phone with Lesley Reeves, you represented to Ms.
Reeves that you had NOT been convicted of any felonies
or drug possessions.
8. Please admit that the West Virginia Homeowners
Insurance Application contains false information
regarding the existence of your prior felony
convictions.
9. Please admit that when you signed the West Virginia
Homeowners Insurance Application, you knew that the
answer “no” to the question, “Have you or any member of
your household ever been convicted of a felony or drug
possession?” was false.
10. Please admit that when you signed the West Virginia
Homeowners Insurance Application, you knew that it
falsely indicated that you had not been convicted of any
felonies.
11. Please admit that The West Virginia Homeowners
Insurance Application signed by you contained an
“Application Binder Agreement” indicating that the
statements contained in the Application were true,
correct, and complete and that you, by signing the
document, understood that any insurance policy issued as
a result of that application would be based on the facts
and answers stated in the application.
5

(Ex. A, First Set of Interrogatories, Request for Admissions and
Request for Production of Documents).
In its instant summary judgment motion, American
National contends that it is entitled to judgment as a matter of
law based upon (1) the defendants’ “material misrepresentations”
in the application for insurance, namely, that Mr. Moore had not
previously been convicted of a felony, (2) the requests for
admissions deemed by the magistrate judge to have been answered in
the affirmative, and (3) defendants’ failure to adequately allege
in their counterclaim that American National acted herein with
such frequency as to indicate a general business practice in
violation of the West Virginia Unfair Trade Practices Act
(“WVUTPA”), West Virginia Code section 33-11-4(9).

II.

A.

Governing Standard

A party is entitled to summary judgment “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).

Material facts are those necessary
6

to establish the elements of a party’s cause of action.

Anderson

v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986).
A genuine issue of material fact exists if, in viewing
the record and all reasonable inferences drawn therefrom in a
light most favorable to the non-moving party, a reasonable factfinder could return a verdict for the non-movant. Id.

The moving

party has the burden of showing -- “that is, pointing out to the
district court -- that there is an absence of evidence to support
the nonmoving party’s case.”
317, 325 (1986).

Celotex Corp. v. Catrett, 477 U.S.

If the movant satisfies this burden, then the

non-movant must set forth specific facts as would be admissible in
evidence that demonstrate the existence of a genuine issue of fact
for trial.

Fed. R. Civ. P. 56(c); id. at 322-23.

A party is

entitled to summary judgment if the record as a whole could not
lead a rational trier of fact to find in favor of the non-movant.
Williams v. Griffin, 952 F.2d 820, 823 (4th Cir. 1991).
Conversely, summary judgment is inappropriate if the
evidence is sufficient for a reasonable fact-finder to return a
verdict in favor of the non-moving party.
248.

Anderson, 477 U.S. at

Even if there is no dispute as to the evidentiary facts,

summary judgment is also not appropriate where the ultimate
factual conclusions to be drawn are in dispute.

Overstreet v. Ky.

Cent. Life Ins. Co., 950 F.2d 931, 937 (4th Cir. 1991).
7

A court must neither resolve disputed facts nor weigh
the evidence, Russell v. Microdyne Corp., 65 F.3d 1229, 1239 (4th
Cir. 1995), nor make determinations of credibility.
Murphy, 797 F.2d 179, 182 (4th Cir. 1986).

Sosebee v.

Rather, the party

opposing the motion is entitled to have his or her version of the
facts accepted as true and, moreover, to have all internal
conflicts resolved in his or her favor.

Charbonnages de France v.

Smith, 597 F.2d 406, 414 (4th Cir. 1979).

Inferences that are

“drawn from the underlying facts . . . must be viewed in the light
most favorable to the party opposing the motion.”

United States

v. Diebold, Inc., 369 U.S. 654, 655 (1962).

B.

The Requests for Admission

The court first addresses the impact of the magistrate
judge’s order deeming admitted by both defendants the central
question in this action, namely, whether Mr. Moore and Ms. Nichols
materially misrepresented whether Mr. Moore had previously been
convicted of a felony.
There was at one time a split of authority respecting
whether a request for admission under Federal Rule of Civil
Procedure 36(a) could include admissions relating to factual
matters central to the dispute.

See 8B Charles A. Wright et al.,
8

Fed. Prac. & Proc. § 2256 (3d ed. elec. 2015) (“Before 1970, a
majority of the cases in point held that requests about
controversial or disputable facts were improper, although other
cases were to the contrary, and it seems fair to say that the
cases refusing to allow these requests relied in large measure on
authorities that did not support that proposition.”) (footnotes
omitted); Pickens v. Equitable Life Assur. Soc., 413 F.2d 1390,
1393–94 (5th Cir. 1969).
The law changed, however, with the 1970 amendment to
Rule 36(a).

The provision, and a companion proviso, now read as

follows:
(1) Scope. A party may serve on any other party a
written request to admit, for purposes of the pending
action only, the truth of any matters within the scope
of Rule 26(b)(1) relating to:
(A) facts, the application of law to fact, or
opinions about either; and
(B) the genuineness of any described documents.
. . . .
(5) . . . . A party must not object solely on the
ground that the request presents a genuine issue for
trial.
Fed. R. Civ. P. 36(a); Advis. Comm. Notes (“The very purpose of
the request is to ascertain whether the answering party is
prepared to admit or regards the matter as presenting a genuine
issue for trial. In his answer, the party may deny, or he may give
as his reason for inability to admit or deny the existence of a
9

genuine issue.”); 8B Charles A. Wright et al., Fed. Prac. & Proc.
§ 2256 (3d ed. elec. 2015) (“One of the 1970 amendments of Rule
36(a) resolved this conflict in the cases. It provides that a
party may not object to a request for an admission on the ground
that it presents a genuine issue for trial. The party is required
either to deny the matter or set forth reasons why it cannot admit
or deny it. An answer, rather than an objection, is now the only
proper response if a party considers that it has been asked to
admit something that it disputes.”).

It is thus no longer a

defense that a deemed admission cannot extend to central factual
issues in a case.
One might imagine, however, that the effect of Rule
36(a)(1) and (5) could result in a situation manifestly in tension
with the drafters’ desire that disputes be resolved on their
merits.

It is for that reason that Rule 36(b) was inserted:

(b) Effect of an Admission; Withdrawing or Amending It.
A matter admitted under this rule is conclusively
established unless the court, on motion, permits the
admission to be withdrawn or amended. Subject to Rule
16(e), the court may permit withdrawal or amendment if
it would promote the presentation of the merits of the
action and if the court is not persuaded that it would
prejudice the requesting party in maintaining or
defending the action on the merits. An admission under
this rule is not an admission for any other purpose and
cannot be used against the party in any other
proceeding.
Fed. R. Civ. P. 36(b).

10

The September 9, 2014, request that the magistrate judge
deny the Motion to Deem Requests for Admission Admitted was in
substance a Rule 36(b) motion.

Defendants submitted affidavits

from defendants’ counsel and his legal assistant attesting that
the requests for admission were not received.

They additionally

sought to avoid the deemed admissions “‘so as to do justice.’”
(Resp. at 3).

Indeed, the matters which were deemed admitted by

the magistrate judge involved the central factual dispute in this
litigation respecting the prior felony convictions.
Framed this way, a ruling on the matter was properly
categorized as dispositive in nature.

As such, the magistrate

judge was required to proceed by way of proposed findings and
recommendations contemplated by 28 U.S.C. § 636 and Rule 72(b).
Inasmuch as those findings and recommendations were not entered,
it is ORDERED that the November 7, 2014, order be, and hereby is,
vacated to the extent it conclusively deemed the requests for
admission to be admitted.

The matter thus remains open for

decision respecting application of Rule 36(b).1
As noted, Rule 36(b) permits withdrawal of an admission
if it would promote the presentation of the merits and would not

1

The court would, alternatively, treat the defendants’
summary judgment response as the equivalent of a motion pursuant
to Rule 36(b), without the necessity of disturbing the magistrate
judge’s order.
11

prejudice the requesting party in maintaining or defending the
merits.

Both qualifiers are established here.

If the matters

surrounding the felony conviction are deemed admitted adverse to
defendants, they would practically have no defense to the entry of
judgment pursuant to Rule 56.

The merits would not be reached.

Additionally, American National would not be prejudiced in any way
on the merits if withdrawal is permitted.

American National has

known since the outset of this action that Mr. Moore maintains he
was not asked the question respecting the felony conviction and
simply signed the prepared application.

American National has had

the benefit of fully discovering the matter.
In sum, withdrawal of the deemed admissions is
appropriate.

The First Requests for Admission are deemed without

force and effect and will not constitute evidence for any purpose
in the case.

They are thus not supportive of American National’s

motion for summary judgment.

C.

The Remaining Grounds for Summary Judgment

American National offers additional grounds for summary
judgment.

First, it asserts that defendants materially

misrepresented the facts surrounding Mr. Moore’s prior felony
conviction.

The issue, however, is fact-bound.

Defendants deny

that they were asked the question relating to the prior felony
12

conviction.

Inasmuch as a genuine issue of material fact remains

on this central issue in the case, it is not a proper ground for
disposition pursuant to Rule 56.
Second, American National notes that the application
signed by defendants, which they did not read, contains the
following certification clause: “I, the undersigned, agree that
the statements herein are made for the express purpose of inducing
the company to issue an insurance policy and these statement are
true, correct, and complete.

I understand that any insurance

policy issued as a result of this application will be based on the
facts and answers stated herein.”
J.).

(Ex. D at 2, Pl.’s Mot. Summ.

In response, the defendants contend that they had no reason

to re-read the application inasmuch as it was pre-completed based
upon the answers they had already provided to Ms. Reeves, who
indicated simply where they should sign, without requesting they
read the questions asked anew.
There is a distinguishing factor between this action and
those authorities involving enforcement of the certification
clause.

In this case, assuming the truth of the defendants’

evidentiary position, they were read an incomplete version of the
application by American National’s agent Ms. Reeves.

When later

presented with the pre-completed application by mail,
unaccompanied by any instructions to verify their prior responses,
13

but with markers indicating where to sign, they were effectively
certifying they understood the questions they were orally asked by
the agent and answered those oral questions accurately.

The

affixation of their signatures below the certification is thus not
of sufficient force to warrant judgment as a matter of law.
Finally, American National asserts that defendants have
attempted to allege a WVUTPA cause of action in their counterclaim
but without the necessary allegations to state a plausible claim.
The counterclaim rests upon the following material allegations
found in paragraphs 11 through 14 of the defendants’ counterclaim:
The . . . [insurance company’s] actions in failing to
pay the . . . [Moore/Nichols] claim is a breach of the .
. . insurance contract . . . .
That the . . . [insurance company] has a duty to
negotiate and attempt to settle the . . .
[Moore/Nichols] claim in Good Faith, as a first party
insured, under both the West Virginia Code, the Code of
State Regulations and the common law . . . .
That the . . . [insurance company] has not attempted to
effectuate a prompt, fair and equitable settlement of
the . . . [Moore/Nichols] claim when . . .
[Moore/Nichols] did not complete the application of
insurance that the . . . [insurance company] is
complaining about; rather, the . . . [insurance
company’s] agent completed the form and merely
instructed [Moore/Nichols] to “sign here.”
Therefore, . . . [Moore/Nichols] believe that the . . .
[insurance company] has breached its contract . . .
and has not acted in Good Faith in its handling of the .
. . claim and the . . . actions are oppressive,
vexatious and wanton.
(Defs.’ Counterclm. at 10-11).
14

In light of these allegations, the defendants’
counterclaim might as easily be understood as one brought pursuant
to the common law of West Virginia as opposed to the WVUTPA.

See

Hayseeds, Inc. v. State Farm Fire & Cas., syl. pt. 1, 177 W.Va.
323, 352 S.E.2d 73 (1986) (“Whenever a policyholder substantially
prevails in a property damage suit against its insurer, the
insurer is liable for: (1) the insured's reasonable attorneys'
fees in vindicating its claim; (2) the insured's damages for net
economic loss caused by the delay in settlement, and damages for
aggravation and inconvenience.”); Noland v. Virginia Ins.
Reciprocal, 224 W. Va. 372, 386, 686 S.E.2d 23, 37 (2009) (“‘The
duty at issue in a bad faith breach of insurance contract claim is
the insurance company's duty to act in good faith and deal fairly
with its insured.’”) (quoting Daugherty v. Allstate Ins. Co., 55
P.3d 224, 228 (Colo. App. 2002)).
summary disposition.

15

The claim is not susceptible to

III.

Based upon the foregoing discussion, it is ORDERED that
the motion for summary judgment be, and hereby is, denied.
The Clerk is directed to transmit copies of this written
opinion and order to all counsel of record and any unrepresented
parties.
ENTER: April 8, 2015

John T. Copenhaver, Jr.
United States District Judge

16