In Rose v. State Farm Fire & Cas. Co., 2014 U.S. App. LEXIS 17312 (6th Cir. Sept. 8, 2014), the Sixth Circuit Court of Appeals reversed and remanded a lower court ruling holding an insured was not entitled to coverage under a fire insurance policy because the he had provided false information regarding his financial status in the post-fire claim investigation.
Richard Rose was an Ohio homeowner whose house burned down. State Farm insured Rose through a homeowner’s policy. That policy provided no coverage if an insured “intentionally concealed or misrepresented any material fact or circumstances relating to this insurance, whether before or after a loss.” State Farm disclaimed coverage after it determined that Rose had violated this policy exclusion by failing to identify multiple tax liens and judgments against him in State Farm’s post-fire investigation (including a $4,826,595.20 judgment against Rose personally he Rose had characterized as business debt). When Rose sued for coverage, the District Court sided with State Farm, asserting that a summary judgment dismissal was warranted.
The Sixth Circuit reversed and remanded; it noted that the policy exclusion only applied where the insured intentionally concealed or misrepresented a material fact, and that an insured simply making false statements alone was not enough to void coverage. The court noted that while Rose had made several errors in reporting the adverse liens and judgments, he had not done so in a manner that demonstrated intent to conceal. The appellate court believed that Rose’s confusion regarding the substance of the multiple legal actions and tax liens levied against him was excusable in light of the fact that Rose was a non-lawyer. It further credited Rose for being forthcoming and cooperating with State Farm’s investigation, even if his cooperation had ultimately provided wrong information.
The court decided that the materiality of Rose’s omissions would need to be determined by a jury – while the fact finder could find that Rose’s statements demonstrated intent to conceal, that determination was inappropriate for decision on summary judgment, so it reversed and remanded the case.