In Neidenbach v. Amica Mutual Ins. Co., the Neidenbachs alleged that a fire caused significant damage to their house and personal property. They contend the insurance company refused to pay the claim whereas Amica concluded that the policy was void because of material misrepresentations made during the claim process.
The Amica policy contained a concealment or fraud provision that no coverage was provided to insureds before or after a loss, if the insureds intentionally concealed or misrepresented material facts, engaged in fraudulent conduct, or made false statements regarding the insurance. In October 2012, either one or two fires occurred at the insureds’ property which caused substantial damage to the house and personal property. The Neidenbachs submitted a sworn statement in proof of loss (POL) to Amica claiming a total loss to their house and garage. They sought limits totaling over $600,000 damage to their house, garage, and contents. Attached to the POL was an inventory of the personal property with values assigned. About one year before the fire, the Neidenbachs filed for Chapter 13 bankruptcy and in their petition, declared under penalty of perjury that they jointly owned only $7,000 worth of household goods and furnishings. The Neidenbachs did not dispute that they did not accumulate $255,500 worth of personal property between the date the bankruptcy petition was filed and the POL was submitted.
Before Amica made its final coverage determination, the Neidenbachs filed suit in State Court and Amica removed the case to Federal District Court in St. Louis. After the close of discovery, Amica moved for summary judgment based in part on the concealment or fraud provision and the trial court determined that the policy was void as a matter of law and granted summary judgment to Amica. The insureds appealed.
In its opinion, the 8th Circuit Court of Appeals discussed the intentional misrepresentation issue and disagreed with the insureds’ contention that they used different methods of valuing their property in the POL and the bankruptcy petition. The Neidenbachs also argued that they were required to list only some items of personal property on their personal property tax return and that therefore their bankruptcy petition did not include all of their personal property; however, they produced no evidence showing what items of personal property were omitted, allegedly, on their personal property tax return.
Lastly, the insureds argued that because they claim their property suffered a total loss, they were legally entitled to seek policy limits. The appellate court determined that under Missouri law, where an insured’s personal property is totally destroyed, the measure of damages is the “value fixed at the date of the policy less depreciation from that date to the time of the fire.” The insureds bear the burden of proof that no depreciation occurred. The trial court, however, noted that the Neidenbachs did not present any evidence that they valued their personal property based on their policy limit and, in fact, the total value listed in the POL far exceeded the policy limit so that contention was unpersuasive to the court on appeal.
While the parties agree that in Missouri, where an insured breaches an insurance policy for misrepresentation as to one class of coverage, such misrepresentation may void the entire policy, even if the policy would otherwise be severable. There are Missouri state court cases reaching the opposite conclusion, however. The 8th Circuit noted that absent an intervening opinion by a state court, the 8th Circuit is bound by a prior panel’s interpretation of state law.
Finally, the 8th Circuit found that the concealment and misrepresentation provisions of the policy were unambiguous as referring to the entire policy and not just to the personal property coverage. They found that an ordinary person of average intelligence purchasing a policy with that language would understand the phrase “this policy” to refer to the entire policy. Therefore, the 8th Circuit concluded as a matter of law that because the insureds’ intentionally made material misrepresentations on the POL, that their entire insurance policy is void.
Judgment for Amica was affirmed.
By Kent M. Bevan of Dysart Taylor