American Nat'l Prop. & Cas. Co. v. Felix, No. 3:16-CV-147, 2018 WL 1747697 (W.D. Pa. Apr. 11, 2018)
When a fire destroyed defendant Daniel Felix’s home, he sought coverage under his American National homeowner’s insurance policy. Felix’s claim raised several red flags—the foremost being that Felix’s previous home had burned down in similar circumstances less than three years earlier, resulting in a claim to American National for which he received more than $400,000. American National accordingly referred the claim to its Special Investigation Unit for handling.
In his latest claim, Felix identified over $1,000,000 in losses, including nearly $270,000 in lost contents. Included in the itemized list of hundreds of personal items appended to Felix’s Proof of Loss, and of particular relevance to the lawsuit, were a pair of 1.5 carat diamond stud earrings and a brown Louis Vuitton purse. In two Statements Under Oath, Felix affirmed that the information provided in his Proof of Loss, including the itemized list, was accurate. During its investigation, however, American National found that Felix’s claimed loss of the earrings and purse did not add up. In particular, Felix’s claim that the earrings and purse were destroyed in the fire was contradicted by his ex-fiancée, who told American National that she had those items in her possession, and who produced a series of post-fire text messages from Felix questioning her about the purse’s whereabouts and pressuring her to send photographs.
In light of the information provided by Felix’s ex-fiancée, and relying on the policy’s fraud provision, which voided the entire policy if, before or after a loss, any insured willfully concealed or misrepresented any material fact, American National denied Felix’s claim in full, finding that Felix’s statements that the purse and earrings had been destroyed in the fire were material misrepresentations. American National then filed a two-count complaint alleging civil insurance fraud and seeking a declaration that the policy was void under Pennsylvania law. In response, Felix filed counterclaims, including a claim for bad faith denial of coverage. American National moved for partial summary judgment on the bad faith claim.
In response to the motion for partial summary judgment, Felix argued that American National failed to conduct a reasonable investigation because it failed to determine whether Felix had lost a white, as opposed to a brown, Louis Vuitton purse and diamond hoop, as opposed to stud, earrings in the fire before denying his claim—an argument he made for the first time during discovery in the lawsuit.
The court rejected Felix’s argument, finding that American National could not be faulted for failing to inquire about items, i.e. a white purse and hoop earrings, that it did not know existed, that were not included in the Proof of Loss, and that Felix never mentioned in his Statements Under Oath. The court concluded that imposing such a burden on insurers would needlessly increase costs of investigating insurance claims and that if Felix “was absolutely certain” he lost a “white purse” and “diamond hoop earrings” in the fire, he should have conveyed that information to American National during their investigation into his claim. The district court accordingly granted American National’s motion for partial summary judgment, finding that no reasonable jury could conclude the insurer failed to conduct a reasonable investigation or that it lacked reasonable basis for denying the defendant’s claim.
