Miller v. Great American Insurance Company, No. 2:2011cv00067 - Document 57 (E.D. Va. 2014)
Court Description: MEMORANDUM OPINION AND FINAL ORDER: granting 37 Motion for Summary Judgment; granting 56 Motion Supplement Record and Rule on Summary Judgment Motion. Copies distributed to all parties on 11/12/2014. (See infra and supra notes for specifics). Signed by Chief District Judge Rebecca Beach Smith on 11/10/2014 and filed on 11/12/2014. (bgra)
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Miller v. Great American Insurance Company Doc. 57 UNITED STATES DISTRICT EASTERN DISTRICT OF FILED COURT VIRGINIA Norfolk Division NOV 1 2 2014 CLERK, US DISTRICT COURT JOHN S. MILLER d/b/a NORFOLK, VA CHESAPEAKE CORE SUPPLY, Plaintiff, ACTION NO: v. 2:llcv67 GREAT AMERICAN INSURANCE CO., Defendant. MEMORANDUM OPINION AND This matter comes before the FINAL ORDER court on the Motion Summary Judgment and accompanying Memorandum in Support for Summary Judgment"), Defendant, American"), on respectively. Miller, Summary filed Great March ECF Nos. his Judgment ("Motion to Supplement"), American 18, 37, Insurance 2013, 38, Memorandum on ("Motion and the "Motion to Supplement the Record and Rule on Summary Judgment" the for and in and 56. Opposition March 29, 2013, Defendant filed its Reply on April 1, Company September The ECF 2013. filed by 12, Plaintiff, to No. the ("Great 2014, John S. Motion 42, ECF No. and for the 43. * The 1 On April 15, 2011, Great American filed a Motion to Stay the proceedings in this case to allow for the resolution of a criminal action against the Plaintiff in the Circuit Court for the City of Chesapeake for attempting to obtain money by false pretense, in violation of Virginia Code §§ 18.2-26 and 18.2-178. ECF No. 11. By Order of May 5, 2011, the court granted the stay. ECF No. 17. On February 22, 2013, the court lifted the stay Dockets.Justia.com Plaintiff did not file a Response to the Defendant's Motion to Supplement, and the Motion Summary Judgment ripe for for review. time For to do so has expired. and Motion the reasons to set As such, Supplement forth are below, the now the Defendant's Motion for Summary Judgment and Motion to Supplement are GRANTED. I. Factual and Procedural History A. Factual History2 The Plaintiff Chesapeake Core operated Supply (the a sole proprietorship "Business"), trading which was as located at 1751 West Road in Chesapeake, Virginia. Compl. 1H 5, 7, ECF No. 1. Chesapeake Core Supply was in the selling auto parts and scrap metals. maintained an insurance American, policy (the which provided coverage business Id. % 6. "Policy") for damage of buying and The Plaintiff issued by Great to the Business, consisting of a commercial office building and a warehouse, and after the conclusion of the Plaintiff's criminal proceedings, in which he was found guilty. ECF No. 36. On March 29, 2013, the Plaintiff filed a Motion to Reinstitute the Stay pending resolution of his appeal of his state court criminal conviction. ECF No. 40. The court granted the Motion to Reinstitute the Stay on April 19, 2013. ECF No. 47. On February 18, 2014, the Plaintiff advised the court that his appeal was denied by the Court of Appeals of Virginia, ECF No. 52, and on August 21, 2014, the Plaintiff advised the court that his appeal was denied by the Supreme Court of Virginia. ECF No. 55. Accordingly, the court LIFTS the stay issued in the Order of April 19, 2013. 2 The facts presented are undisputed except as noted. 2 to the Business personal liability limit of the Business property, $484,000 for the personal property. such coverage building, Id. Ex. having a and $106,101 for A. Loss of property through fire is a loss covered by the Policy. Id. fl 10. As part of the standard "Concealment, coverage provisions, Misrepresentation, or the Fraud" Policy included a provision under the Policy the "General Conditions" section. Id. Ex. A.3 On February Business office 12, caught fire, building and personal property. 2009, during physically its Id. damaging contents, 1 8. the both which On April 1, period, the included 2009, commercial Business the Plaintiff filed a sworn statement of Proof of Loss with Great American, which he stated the total amount of loss as $157,026, in which consisted of $121,146 in damages to the building structure and $35,880 in damages to the Business personal property. Id. Ex. B. The Plaintiff's Business personal property claim included damage to a Dyson vacuum cleaner, valued at $500, and damage to twentyfive (25) Mot. Summ. airbags, J. valued at Ex. 5. following statement: The a total of Proof of $4800. Loss See Mem. Form "Applicable in Virginia- Supp. included it is a crime the to knowingly provide false, incomplete or misleading information to an insurance company for the purpose of defrauding the company. Penalties include imprisonment, fines and denial 3 See infra at 5 for the text of this provision. 3 of insurance benefits." Compl. Ex. B.4 Upon the request of Great American, the Plaintiff was examined under oath regarding sustained from the fire. Mem. this first examination, an increase in the as amount $170,462. under oath on April 14, from the fire. received any associated Id. of loss Id. Id. fl 16. The 2010, based the Summ. J. losses he U 13. During from fire, on a new estimate for The new loss amount was Plaintiff was again examined regarding the losses he suffered U 18. At this point, payment with Supp. Mot. the the Plaintiff advised Great American of the repair of the building. documented on September 14, 2009, Great the Plaintiff had not American despite his for the numerous losses efforts to filed a Complaint in collect payment. Id. H 21. B. Procedural History On February 4, 2011, the Plaintiff this court alleging that Great American breached its insurance contract with the Plaintiff when it refused to pay him, in accordance with the Policy for the losses associated with the fire. The Complaint further repeatedly requested payment alleged that the Plaintiff under the Policy in advance of filing the Complaint. Compl. 1 21. The Plaintiff also sought the 4 The monetary amount of the fraud vis a vis the total monetary amount of the claim is not the dispositive issue. The fraud, itself, in making any part of the claim, is the issue. In other words, a claim of "just a little fraud" is not a defense or counter-argument. See infra Part III. "award of attorney's fees Great American's bad faith, and costs incurred as a result of as provided in Virginia Code § 32.8- 209." Id. H 26. Great American, March 9, 2011, in denied its Answer that the to the Complaint, Plaintiff had filed on sufficiently supported his claimed losses under the Policy, and asserted as one of its affirmative defenses that the Plaintiff: gave false testimony during his Examinations Under Oath regarding, among other things, items in the claim that were not damaged in the fire, the disposition of certain items that were claimed, [Miller's] ownership of duplicates of items that were claimed, and by inflating the value of allegedly fire damaged items in the claim. Answer H 30. breached the "Concealment, Great American argued Policy's "General that this Conditions" Misrepresentation or false testimony pertaining Fraud" to provision, the which states: This Coverage Part is void in any case of fraud by you as it relates to this Coverage Part at any time. It is also void if you or any other Insured, intentionally conceal or misrepresent a material fact concerning: (1) this Coverage Part; (2) the Covered (3) your interest in the Covered Property; Property; or (4) a claim under this Coverage Part. Id. H 29; Compl. Ex. A (emphasis added).5 5 This provision is basically the same as the standard "false swearing" provision required for fire insurance policies issued in Virginia, as provided in Virginia Code § 38.2-2105, which states: Concealment, if whether willfully fraud: before This entire policy shall be void, or after concealed or a loss, the misrepresented insured any has material Sometime in instituted an October insurance the Plaintiff's the The home of Summ. J. at 2. As of the Virginia Plaintiff's investigation yielded the recovery some of inventory submitted as part of his Mot. Commonwealth fraud investigation of claim under the Policy. from 2009, a result, the items he listed on insurance claim. the Mem. Commonwealth of the Supp. Virginia commenced a criminal action against the Plaintiff for attempting to obtain money by false pretense, in violation of Virginia Code §§ 18.2-26 and 18.2-178. The Plaintiff was subsequently indicted by a grand jury in the Circuit Court for the City of Chesapeake on February 1, 2011. Id. at 3-4. Thereafter, on April 15, 2011, Great American moved to stay the civil proceedings in this court, pending the resolution of the criminal action against the Plaintiff in the Circuit Court for the City of Chesapeake.6 The court accordingly granted the request to stay the civil proceedings, and required American to update the court periodically regarding the Great status of the criminal proceedings. Order, May 5, 2011, ECF No. 17; see also Order, Sept. 19. 12, 2011, ECF No. On February 15, 2013, after a bench trial fact or circumstance concerning this in the Circuit insurance or the subject thereof, or the interest of the insured therein, or in the case of any fraud or false swearing by the insured relating thereto. Va. Code § 38.2-2105. 6 See supra note 1. Court for the City of Chesapeake, the Plaintiff was found guilty of the felony of attempting to obtain money by false pretense in violation of Virginia Code §§ 18.2-26 and 18.2-178, fraudulent insurance claim that he submitted based on a regarding damage and losses associated with a Dyson vacuum cleaner and a number of airbags. See Mem. Supp. Mot. Summ. J. at 4-8; Mem. Opp'n Mot. Summ. J. at 2. On February 22, 2013, the court lifted the stay. ECF No. 36. On March 18, 2013, Great American filed the instant Motion for Summary Judgment and accompanying Memorandum in Support. March 20, 2013, On the Plaintiff filed a notice of appeal with the Court of Appeals of Virginia appealing his state court criminal conviction. Def.'s Mot. On March 29, 2013, & Mem. the Plaintiff Motion for Summary Judgment. Plaintiff filed a Suppl. R. Ex. Motion responded 1 at 1, ECF No. to the Defendant's ECF No. 42. On that same day, to Reinstitute 56. Stay pending the the resolution of his appeal with the Court of Appeals of Virginia. Great American replied to the Plaintiff's Response in Opposition to Summary Judgment April 9, 2013, Motion to April 15, April 19, Great Reinstitute 2013. The on April 1, American Stay, court 2013. responded and the reissued ECF to No. the Plaintiff the stay 43. On Plaintiff's replied by on Order of 2013, and required the Plaintiff to update the court periodically regarding the status of the criminal proceedings. ECF No. 47. On October 16, 2013, the Court of Appeals of Virginia found the Plaintiff's argument meritless and denied his petition for appeal. Def.'s Mot. Mem. Report, ECF Virginia Suppl. R. response No. denied Ex. to American filed a Summary the 2 at the On 52. Suppl. July R. Ex. 1 at 1; see also Status 16, 2014, Plaintiff's 1; Reports, ECF ("Motion September 12, 2014. ECF No. 56. filed any additional briefings, Def.'s Report, Nos. "Motion to Supplement Judgment" Supreme See appeal. see also Status Status the 52 Court Mot. ECF No. and 55, of Mem. 55. In Great the Record and Rule on Supplement"), on to To date, the Plaintiff has not including briefings addressing the denial of his appeal by the Court of Appeals of Virginia and by the Supreme Court of Virginia, thereby making his criminal conviction final. II. Summary judgment Standard of Review under Federal Rule of Civil Procedure ("FRCP") 56 is appropriate when the court, viewing the record as a whole and in the light most favorable to the nonmoving party, finds that there is no genuine issue of material fact and that the moving party is entitled to judgment as a matter of law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-50 (1986). "[A] t the summary judgment stage the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial." Id. at 249. A court should grant summary judgment if the nonmoving party, after adequate time for discovery, to establish the existence of an essential has failed element of that party's case, on which that party will bear the burden of proof at trial. Celotex Corp. v. Catrett, essence, the nonmovant [trier of fact] Anderson, To must 477 U.S. present 317, 323 (1986). "evidence on which the could reasonably find" for the nonmoving party. 477 U.S. defeat at 252. a motion for summary judgment, the nonmoving party must go beyond the facts alleged in the pleadings, rely instead on affidavits, depositions, show a genuine issue for trial. see also M & M Med. Hosp., In Inc., 981 F.2d 160, 163 or other evidence to See Celotex, Supplies & Serv., and Inc. (4th Cir. 477 U.S. at 324; v. Pleasant Valley 1993) ("A motion for summary judgment may not be defeated by evidence that is *merely colorable' Anderson, or 477 'is U.S. not at sufficiently 249-50). specific evidentiary support, 162 F.3d existence 795, of 802 a (4th scintilla probative.'") Conclusory statements, do not suffice, Cir. of 1998), nor evidence in Causey v. does (quoting without Balog, "[t]he support of mere the plaintiff's position." Anderson, 477 U.S. at 252. Rather, "there must be evidence on which the jury could reasonably find for the plaintiff." Id^ III. Applicable Law In a diversity suit, law and this the case choice of is Virginia. Corp. , 709 F. Supp. Co. v. Stentor Because the the See place Wright 2000) 241 Co. v. is 2010) 487, U.S. characterized an (1993)); Buchanan Inc. , 118 496-97 as Inc. , 790 F. 1995); Supp. 641 of law of the effect of the 'the law of written and Va. 67, 431 Supp. Ryder Truck Rental, 637, breach is 246 Constr. 2d 689, (citing Fuisz v. Selective Ins. Co. of Am., (4th Cir. a (1941)). Doe, v. F. Mgmt. contract see also John Deere Co., in (citing Klaxon law requires the insurance which Dragas ("Virginia insurance law applies (quoting Equip. Ins. state, 313 Co., action forum contract was made to govern the where S.E.2d 289 the (E.D. Va. Virginia choice of id. delivered.'") of Builders Mut. Mfg. instant place where the contract. law rules 2d 432, 436 Elec. contract claim, this court must apply the substantive (W.D. Va. Inc. v. 70, Equip. 692 Co. (W.D. v. Va. 61 F.3d 238, UTF Carriers, 1992) . Therefore, this court will apply Virginia law to the breach of contract claim.7 In Virginia, an insurer can avoid its obligations under a policy See, for e.g., CV-00015, either fraud Utica Mut. 2002 WL or Ins. 1162602, false Co. at v. *8 swearing Presgraves, (W.D. Va. by the insured. No. CIV.A. 5:01- May 28, 2002) (a 7 The parties do not dispute that Virginia law applies to the instant action. 10 violation of the fraud provision of a fire insurance policy results in a forfeiture of rights to recover under the policy); see also Globe 237, 240 & Rutgers (4th Cir. in Virginia on Co. v. Hogue, which the purpose Ins. 105 Va. 355, defined making a Co., v. Stallard, (setting forth the inapposite facts); court in 1934) Fire as "the 8, F.2d long-standing rule Virginia Fire 54 S.E. 68 & Marine Ins. 13 (1906) (moral fraud, corrupt motive or representation," renders a dishonest policy of insurance void). IV. Analysis The Motion Defendant for advances Summary one Judgment. argument The Defendant Plaintiff breached the "Concealment, provision of fraudulent the claim Policy,8 under when the in support alleges of its that the Misrepresentation or Fraud" the Policy, Plaintiff which submitted in a effect voids coverage under the Policy. See Mem. Supp. Mot. Summ. J. at 1. Additionally, the Defendant states that the Plaintiff's criminal conviction in collaterally the Circuit estops the Court for Plaintiff the from City of Chesapeake disputing that he committed insurance fraud against the Defendant, and that aside from the actual conviction, the evidence establishes the Plaintiff's fraud. See id. in the record at 10-12. 8 See supra note 5 and accompanying text for Great American's policy provision, and the applicable Virginia Code section. 11 At a threshold level, the court must determine the collateral estoppel effect in the instant federal action of the criminal conviction for fraud in state court. While there is recognition "that the parties in a criminal proceeding are not the same as those in a civil consequent lack of mutuality," 201 Va. 466, 472, 111 proceeding and there is Smith v. New Dixie Lines, S.E.2d 434, 438 (1959) a Inc., (rule of mutuality) , "an exception to the requirement of mutuality arises when a plaintiff direct result of attempts his to or recover her own for a harm criminal that the and conduct, is the dispositive issue in the civil action is the precise issue that the criminal conviction addressed." 467, 471, 463 S.E.2d 657, 660 Godbolt v. (1995) Brawley, 250 Va. (setting forth controlling principle, but on inapposite facts to case at bar);9 accord Kane v. Hargis, 987 conviction for civil action British S.E. legal to 323 effect attacking its from 9 Effect of 1005, resisting Dominions 314, damages F.2d (1927) of arrest recover Ins. for Co. v. where 149 15-16. 12 Va. prevented for Eagle, 82, & 111-12, 140 the by civil insured Star a avoiding from arson subsequent the (criminal collaterally estop Godbolt and factual differences discussed infra at 1993) wrong); Heller, in Cir. not another conviction admissibility Thus, (4th does (plaintiff criminal fire). 1008 is collateral action for originally to case at bar are convicted in another court for fraud, this court may consider that criminal conviction for purposes of establishing fraud in the later civil case, if the insured seeks to recover insurance proceeds from the fraud of which he was convicted. In the Circuit instant Court case, for the the City Plaintiff of Chesapeake obtain money under false pretense, §§ 18.2-26 and 18.2-178, regarding fire. the The losses Plaintiff was convicted for in attempting the to in violation of Virginia Code for filing a fraudulent insurance claim he sustained appealed his after his conviction Business to the caught Court of Appeals of Virginia and the Supreme Court of Virginia. The Court of Appeals of Virginia denied his appeal on October 16, stating that his argument was meritless, the evidence Supreme was Court insufficient of Virginia to wherein he argued that support also 2013, his denied conviction. his The appeal on July 16, 2014. This conviction is now final. See Conn. Gen. Life Ins. Co. v. (stating that defendant's 'stands The criminal 351 "once petition fully Prudential (E.D. Va. Riner, Ins. F. Supp. 2d 492, the for Virginia writ convicted Co. of of Supreme error under Am. v. 498 (W.D. Court . . 532 this court F. 2005) resolves a . that defendant law'") Virginia Tull, Va. (quoting Supp. 341, 342-43 1981)). Plaintiff conviction claims for that purposes 13 of cannot denying consider his breach his of contract claim for the act not establish because that (1) the caused his his intent conviction loss; to and deceive is (2) and not the a conviction conviction does defraud the Defendant. See Mem. Opp'n Summ. J. at 5-8. The Plaintiff's contentions are factually and/or legally incorrect under the undisputed record in this case before this court. In the arsonist's case of criminal Eagle, Star, conviction was the court admissible held in a that an subsequent recovery for damages from the insurer because the arsonist was attempting to collect proceeds from the very fire he caused. 149 Va. at 112, 140 S.E. at 323. The court reasoned that the "plaintiff should not be permitted to reopen the question and avoid the legal effect of the judgment of a conviction by a collateral attack upon it." Id_;_ 149 Va. at 100, 140 S.E. at 319. This reasoning is also applicable here. The Plaintiff in the instant case engaged in an attempt to defraud the Defendant by submitting a fraudulent insurance claim after his proceeds Business from the caught very fire. Thus, fraudulent he claim sought that he to collect submitted. Subsequently, the Plaintiff was convicted in state court for the fraud. First, doubt necessarily "Concealment, the conviction for this felony beyond a reasonable proves that Misrepresentation 14 the or Plaintiff Fraud" breached provision of the the Policy.10 Moreover, the fire, which led the Plaintiff to file an insurance claim, is not the direct cause of his inability to collect insurance proceeds; his attempt to defraud the Defendant in filing the claim is. state court Plaintiff's Fraud" conviction breach provision, of As such, for the the court may consider his purposes of "Concealment, establishing Misrepresentation which renders the Policy void, the or and bars the Plaintiff from recovering for the losses sustained by the fire. The Plaintiff may not avoid the legal effect of his criminal conviction in the instant action. In Godbolt, upon which the Plaintiff relies, the court held that a plaintiff's criminal conviction of was not the direct cause of his injury, the intentional assault and was inadmissible in civil action where the plaintiff sought to recover damages from the defendant's use of deadly force when defending against that intentional S.E.2d at may have 660. assault. The Court See Godbolt, reasoned that 250 Va. at although the 472, 463 plaintiff intentionally engaged in the assaultive behavior, he did not engage in the use of deadly force and did not consent to its use. plaintiff force. 10 See Id. The sought direct damages cause was of the the injury defendant's for which use of the deadly Id. supra note 5 and accompanying policy provision. 15 text for the applicable While the legal principle in Godbolt applies to the instant case, the case at bar is factually distinguishable. It is this undisputed factual distinction that makes the outcome different here. The plaintiff defendant's wrong, in Godbolt sought to use of deadly force, and wrongdoing. In the instant case, as is seeking to recover from not his resulted state own fraudulent insurance claim, a court felony the the plaintiff's discussed submission of a in from and thus the direct cause of damages was the defendant's Plaintiff recover above, the wrongdoing--the the effect of which conviction. Therefore, the Plaintiff's reliance on Godbolt is misplaced. Finally, action was the element necessarily conviction for fraud, of fraudulent proven which, court may consider. Thus, this civil matter is by the intent in the instant Plaintiff's criminal for the reasons stated above, the any question of fraudulent intent in eliminated by the Plaintiff's criminal conviction. Accordingly, there is no issue of intent to resolve, and summary judgment is proper. See Anderson, 50. The elements of the established for purposes criminal conviction. See claim of or defense this civil Conn. Gen. 477 U.S. at 248have already action by Life Ins. been the prior Co., 351 F. Supp. 2d at 498 ("Holding a civil trial to resolve an already answered question would be an judicial resources."). 16 unnecessary expenditure of IV. For the Supplement reasons Conclusion discussed above, the Defendant's the Record and Rule on Summary Judgment Motion to is GRANTED, as is the Defendant's Motion for Summary Judgment. The Clerk is DIRECTED to forward a copy of this Memorandum Opinion and Final Order to counsel for all parties and to enter judgment for the Defendant. IT IS SO ORDERED. /§/ _ Rebecca Beach Smith Chief . . T , fnr^ United States District Judge J2j^ REBECCA BEACH CHIEF UNITED November \D , 2014 17 SMITH STATES DISTRICT JUDGE
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