Greer et al v. State Farm Fire And Casualty Company, No. 1:2010cv03090 - Document 50 (D. Or. 2011)
Court Description: Order granting defendant's Motion for Summary Judgment 35 and defendant is awarded $213,210 on its counterclaim. Ordered & Signed on 12/21/11 by Judge Owen M. Panner. (kf)
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Greer et al v. State Farm Fire And Casualty Company Doc. 50 IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF OREGON JERRY GREER and JENNIFER GREER, No. 1:10-cv-03090-PA Plaintiffs, ORDER v. STATE FARM FIRE AND CASUALTY CO. , Defendant. PANNER, J. Plaintiffs Je against de and Jennifer Greer ing this action State Farm Fire and Casua breach of a urance policy_ State Farm moves for summary judgment on its counterclaim, a was voided contract to their claim for that the policy Greers submitted a State Farm's motion r y Co., claiming construction acement costs. I grant surrmary judgment. BACKGROUND State Farm is covering their an insurance policy to the Greers e Phoenix, Oregon its contents. 1 - ORDER Dockets.Justia.com In September 2008, fire destroyed the Greers' house. In March 2009, the Greers filed a claim with State Farm for damage to the house and its contents. In November 2009, State Farm determined that the fire triggered coverage under the policy. State Farm found the actual cash value of the Greers' burned house was $257,385. In addition to paying the cash value of the burned house, State Farm paid $66,921 for lost contents, and $23,635 for additional living expenses. The policy covered replacement costs, requiring that State Farm "pay the cost to repair or replace with similar construction and for the same use on the premises shown in the Declarations, the damaged part of the property . the following: . subject to (3) to receive any additional payments on a replacement cost basis, you must complete the actual repair or replacement of the damaged part of the property within two years after the date of loss, and notify us within 30 days after the work has been completed." In December 2009, State Farm notified the Greers that to receive replacement costs, they would need to " [c]omplete the actual repair or replacement of the damaged part of the property within two years of the date of loss." State Farm wrote, "Without waiving the above requirements, we will consider paying replacement benefits prior to actual repair or replacement if we determine repair or replacement costs will be incurred because repairs are substantially under way or you present a signed contract acceptable to us." In February 2010, the Greers purchased a house in 2 - ORDER Jacksonville, Oregon. told State Farm that because the Jacksonville house was smaller than the intended to build an addition. r deadl house, they The Greers sought to recover the cost of the remodeling under coverage, and they Phoen policy's replacement sted an extension of the for c iming replacement benefits. icy's twoState Farm agreed to extend the deadline from September 2010 to the end November 2010. The Greers fil this action in September 2010. claimed that although State Farm not id the accepted coverage, it had 1 amount due them under t policy. claim On October 6, 2010, to support replacement costs, Jerry Greer sent State Farm an apparently b construction contract to remodel the Jac though Justin onville house. construction contract appeared to sen, the president of a Raven Woodwor ,Greer had in ng signed by ral contractor called ct forged Olsen's signature on the contract. Olsen later testifi at a deposition t he had refus the Greers' proposed contract because it was not to s cific enough about the s materi s to be used, the The proposed contract ns of remodeling project, yment schedule, and other details. so included higher ove Olsen would have charged, and omitt and profit legal requirements such as warranty information. At his ition, Greer admitted signature on the contract. warned him a fo 3 ORDER ing Olsen's Greer testified that when Olsen contract would invalid, Greer replied, j l I I j I 1 "well, I have got to have a signed contract." was resented by an attorney, he did not tell attorney that he had forged the signature. After receiving the apparently val remodeling contract, 11 Scott, a claim adjuster for State Farm, requested more information about the scope of the project. submitt 1 Although Greer After the Greers additional documentation, State Farm paid them for replacement costs. Scott stat , "I made the replacement cost i payments totaling $213,210.38 because I believed at that time 1 that Plaintiffs had entered into a binding contract wi I i I I i Ravenwoodwor with the two ar and three month deadl submitting a claim for replacement costs." calculat for State Farm the replacement cost payment by adding the apprai value of the new house to the cost of the remodel project as stated in the fraudulent contract, and subtracting the actual value payment for the burned house. I STANDARDS The court must grant summary judgment if there are no genuine issues of material entit and the moving to judgment as a matter of law. 56(c). If the moving issues of mater 1 pleadings and designate rty is Fed. R. Civ. P. rty shows that there are no genuine the nonmoving y must go beyond the s showing an issue for trial. Celotex Corp. v. Catrett, 477 U.S. 317, 322-23 (1986). DISCUSSION I. The Greers' Fraud Voids the Policy A. The Policy State Farm's policy provides that an insured's 4 - ORDER voids t policy: ~srepresentation Concealment, 3. or Fraud this entire policy will be void: a. have will material if, whether before or after a loss, you ly concealed or misrepresented any or circumstance concerning: (1) this insurance or the s (2) your interest ect of it; or it; or b. In the case of any false swearing by you relating to this insurance. B. Legal Standards The insurer bears void a policy. burden of proof when to See Eslamizar v. Am. States Ins. Co., 134 Or. App. 138, 143, 894 P.2d 1195, 1198 (1995). insurance poli because of fraud, the the insured willfully conceal To vo insurer relied on the ( 3). An a fire urer must show or misrepresented a material fact, that the misrepresentation was mater 7 42 . 2 08 (1), see srepresentation. 1, and that t Or. Rev. Stat. § surer must show fraud by preponderance of the evidence. 295 Or. 398, 400, 667 P.2d 494, 495 (1983) (rejecting c and convincing standard) . C. Plaintiffs' Submission of a Fraudulent Document Voids the Policy The Greers' submission of the fraudulent contract voids the policy. It is undisputed that Jerry Greer forged a contractor's signature to obtai~ State Farm has shown it rel on the forged ded to pay replacement costs. 5 - ORDE? payments from State Farm. co~tract when it See Eslamizar, 894 P.2d at 1199 (reliance may include offering coverage, calculating risk, or incurring additional investigation expenses) . The Greers argue that an insured's misrepresentation should not void the policy if the misrepresentation was made after the insured filed a lawsuit against the insurer. The Greers cite American Paint Service Inc. v. Home Insurance Co., 246 F.2d 91, 94 (3rd Cir. 1957). There, the court held that an insured's allegedly false testimony during a trial over coverage could not support voiding the insurance policy: "When settlement fails and suit is filed, the parties no longer deal on the non-adversary level required by the fraud and false swearing clause." Id. at 94. The rationale of American Paint does not apply here, however. The Greers submitted the forged contract not as part of the adversarial process but instead while working with State Farm to obtain payment under the policy. Unlike the insurer in American Paint, State Farm had not denied liability when the insured committed fraud. The Greers argue that the forged contract was not material to State Farm's decision. The Greers characterize the forged contract as a "misrepresentation made during settlement negotiations." Whether or not the Greers submitted the forged contract as a negotiating tactic, State Farm has shown it relied on the contract in deciding to pay replacement costs. The Greers argue that State Farm waived the policy's deadline for completing construction. Although State Farm did grant the Greers an extension of the two-year deadline, State Farm expressly denied in writing that the extension was a waiver of the deadline. 6 - ORDER Nor is there waiver by conduct. wr i Or. Rev. Stat. waivers t § 742.222. Waivers must be in The statutory requirement in writing supersedes recognition of oral wa common law's rs or waivers by conduct. See Moore v. Mutual of Enumclaw Ins. Co., 317 Or. 235, 243, 855 P.2d 626, 631 (1993). In any event, evidence the Greers State Farm's conduct not pre cated an ent to waive ine. The Greers contend that State Farm breached the contract by unreas obli y delaying ion to meet Greers' cIa yment, reI deadline ng them of their r seeking lacement costs. , however, are based not on any al but rather on the amount of State Farm's payments. over timing of D. yments cannot excuse State Farm Is Entitled to the Replacement Cost Payment rged contract. to pay replacement costs. the amount it paid reliance Because the Greers' submission of a rged contract voided the II. A dispute fraud here. State Farm paid the Greers replacement costs on the delay licy, State Farm had no obligation State Farm is entitled to recover replacement costs. Other Claims The Greers concede ir claim for additional 1 expenses. Because the fraudulent contract voided t not address t par~ies' sputes over t policy, I value of Greers' personal property. CONCLUSION Defendant's motion 7 - ORDER r summary judgment (#35) is granted. Defendant is awarded $213,210 on s count aim. IT IS SO ORDERED. DATED s Z--/ day of De r, 2011. I U.S. DISTRICT JUDGE 8 - ORDER
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