Am. Nat'l Prop. & Cas. Co. v. Felix

399 F.Supp.3d 324

AMERICAN NATIONAL PROPERTY AND CASUALTY COMPANY, Plaintiff and Counterclaim-Defendant,

v.Daniel J. FELIX, Defendant and Counterclaimant.

Case No. 3:16-cv-147

United States District Court, W.D. Pennsylvania.

Filed July 10, 2019

Bryan M. Shay, Richard L. McMonigle, Jr., Post & Schell, P.C., Philadelphia, PA, for Plaintiff and Counterclaim-Defendant.

Christopher J. Regan, Tyler J. Smith, Bordas & Bordas, PLLC, Wheeling, WV, Douglas J. Olcott, Bordas and Bordas, PLLC, Pittsburgh, PA, for Defendant and Counterclaimant.

MEMORANDUM OPINION

KIM R. GIBSON, UNITED STATES DISTRICT JUDGE

Before the Court are post-trial motions that the parties filed following a jury verdict in this case rendered on December 4, 2018. (ECF No. 218.) Defendant-Counterclaimant Daniel J. Felix filed two post-trial motions — a Motion to Alter Judgment to Include Prejudgment and Post-Judgment Interest (ECF No. 219) and a Motion to Alter Judgment to Add Costs Pursuant to Rule 54(d) (ECF No. 220). Plaintiff and Counterclaim-Defendant American National Property and Casualty Company ("ANPAC") filed a Motion to Alter Judgment, Motion for Judgment as a Matter of Law, and Motion for New Trial (ECF No. 223). The Court held oral argument on these Motions on May 2, 2019. (See ECF No. 260.) These Motions are fully briefed (see ECF Nos. 224-29, 232-33, 255) and are ripe for disposition.

I. Background

A. Factual Background¹

This case arises from ANPAC's denial of Felix's claim under his ANPAC homeowner's insurance policy (the "Policy") after a fire destroyed his home in 2016.

1. The Policy

At the time of the January 23, 2016 fire, Felix's home and its contents were insured under ANPAC homeowner's insurance policy number 37-H-778-98P. (ECF No. 169 ¶¶ 2-3.) All premiums were paid and the Policy was in effect on January 23, 2016. (Id. ¶ 3.) The Policy's major provisions provided coverage for loss of dwelling, loss of personal property, and loss of use. (ECF No. 51-1 at 8.)

The Policy also contained a "Fraud" provision, providing:

Section I and Section II – Conditions

...

2. Concealment or Fraud. This entire policy shall be void if, whether before or after any loss, any insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of any insured therein, or in case of any fraud or false swearing by any insured relating thereto.

(ECF No. 51-1; ECF No. 47 ¶ 3; ECF No. 57 ¶ 3.) At trial, ANPAC's counsel referred to this provision as the "honesty provision." (ECF No. 239 at 16:20.)

2. The Fire at Felix's Home and Subsequent Insurance Claim

Felix owned a property located at 975 Frankstown Road in Sidman, Pennsylvania. (ECF No. 169 ¶ 1.) In 2013, a fire entirely destroyed Felix's home located at that property.² (ECF No. 52 ¶¶ 27, 46, 49; ECF No. 54 ¶¶ 27, 46, 49.) The 2013 fire was caused by an electrical failure. (ECF No. 52 ¶ 24.) Felix's home was insured by an ANPAC homeowner's insurance policy, and ANPAC paid Felix $426,000 to cover his losses. (Id. ¶ 27.) Using the insurance proceeds from the 2013 fire, Felix built a new home on the property in 2014, which was eventually destroyed in the 2016 fire. (Id. ¶¶ 28-33.)

After the 2013 fire, Felix built a one-family home on the property. (ECF No. 51-1 at 8.) On January 23, 2016, Felix's home and its contents were destroyed by another fire. (ECF No. 149 ¶ 1.) On January 25, 2016, Felix notified ANPAC of the fire at his home. (ECF No. 239 at 29:22-30:20.) Felix submitted a claim for about $1,074,000 in losses comprising of $744,000.00 in dwelling replacement costs, $60,000.00 in loss of use, and $270,000.00 in loss of contents. (ECF No. 51-3 at 32.) ANPAC requested that Felix submit a Sworn Statement in Proof of Loss ("Proof of Loss") detailing the possessions destroyed in the fire. (ECF No. 52 ¶ 35; ECF No. 54 ¶ 35.)

3. ANPAC's Investigation After the 2016 Fire

ANPAC initially assigned the investigation into the 2016 fire to Martin Van Dyke, a large-loss specialist in ANPAC's claims department. (ECF No. 239 at 30:12-18, 33:20-22.) Eventually, ANPAC's claims department referred Felix's claim to the special investigations unit ("SIU"), where it was assigned to SIU investigator Kip Mathena. At trial, Mathena and Cory Campbell — a claims adjuster in ANPAC's property department — testified extensively about ANPAC's post-fire investigation.³ (See ECF Nos. 239-41, 244.)

Initially, ANPAC investigated the cause of the fire.⁴ (See ECF No. 52 ¶¶ 41-43.) ANPAC hired outside investigators and corresponded with the Pennsylvania State Police during its cause-and-origin investigation. (Id. ¶¶ 40-44, 52-59.) No criminal charges were filed against Felix. (See ECF No. 188.) In April of 2016, ANPAC's outside investigator submitted a cause-and-origin report which indicated that the cause of the fire was "undetermined." (ECF No. 52 ¶ 74; ECF No. 54 ¶ 74.)

During the investigation into the fire's cause, Felix submitted a Proof-of-Loss form detailing the contents of his home which were destroyed in the fire. (Id. ) The Proof-of-Loss form requires the insured to provide a quantity, description, and actual cash value of the items. (Id. at 13:11-12.) It also requests evidence to "support ownership" of the items through documentation like receipts, invoices, and credit-card statements. (Id. at 13:18-22.)

In February of 2016, Mathena requested that Felix submit to an examination under oath with Pittsburgh-based attorney Joseph Hudock. (Id. at 43:15-19, 44:1-10.) ANPAC hired Hudock as local counsel to assist in the handling of Felix's claim. (ECF No. 52 ¶ 50; ECF No. 54 ¶ 50.) Felix attended the examination under oath on March 30, 2016. (ECF No. 240 at 30:1-3.)

During the statement under oath, Hudock questioned Felix about various items on his Proof-of-Loss form. (ECF No. 246 at 6:21-7:10.) Felix confirmed that the fire destroyed a Louis Vuitton purse. (ECF No. 52 ¶ 68; ECF No. 54 ¶ 68.) Felix stated that he purchased the Louis Vuitton purse for Kelly Madison, his ex-fiancée, but that she had returned it to Felix after their relationship ended. (ECF No. 52 ¶ 68; ECF No. 52 ¶ 68.) Felix also confirmed that he lost a pair of 1.5 carat earrings in the fire.⁵ (ECF No. 52 ¶ 63(a); ECF No. 54 ¶ 63(a).)

As ANPAC investigated Felix's claim, it was contacted by Ron Madison, the father of Felix's former fiancé. (ECF No. 240 at 63:15-19.) Ron Madison contacted Mathena several times. (Id. at 67:16-17.) After multiple conversations between Ron Madison and Mathena, Ron Madison informed ANPAC (through Mathena and Hudock) that two items on Felix's Proof-of-Loss form — a Louis Vuitton purse and a pair of diamond stud earrings — were not actually destroyed. (Id. at 70:11-24.) Ron Madison informed Hudock that his daughter, Kelly, still had a Louis Vuitton purse and diamond earrings that Felix had given her for Christmas. (ECF No. 243 at 10:5-12:2.)

On his Proof-of-Loss form, Felix stated that he purchased the earrings from Littman Jewelers for $1,906.94, that he used a credit card to purchase the earrings, and that he had a receipt from the purchase. (ECF No. 51-3 at 40.) Felix stated that he purchased the purse from a Louis Vuitton store for $1,358, that he used a credit card to purchase the purse, but that he did not have a receipt. (Id. at 53.)

ANPAC then investigated whether Felix misrepresented that the Louis Vuitton purse and diamond earrings were destroyed in the fire. On May 31, 2016, Ron Madison sent pictures of the Louis Vuitton purse and earrings to ANPAC. (ECF No. 240 at 73:3-9.) Attorney Hudock spoke with Kelly Madison and verified that the Louis Vuitton purse and diamond earrings were in her possession. (Id. at 74:20-24.) Around that time, ANPAC arranged for Hudock to conduct a second examination under oath. (Id. at 73:20-23.) Mathena obtained text messages between Felix and Kelly Madison where Felix inquired about the whereabouts of the Louis Vuitton purse.⁶ (Id. at 80:21-25.) Finally, Mathena requested that Hudock review case law to see whether ANPAC could deny Felix's insurance claim based on misrepresentations about the Louis Vuitton purse and diamond earrings. (Id. at 75:4-12; 78:15-20.)

During the investigation, Felix submitted a supplemental Proof-of-Loss form claiming that an additional $66,000 worth of property was destroyed in the fire.⁷ (ECF No. 240 at 55:5-9; ECF No. 244 at 15:1-16.) ANPAC hired a vendor, Enservio, to value the contents of Felix's home that were destroyed in the fire.⁸ (ECF No. 244 at 17:19-25.) ANPAC hired another vendor called Summit Claims Services LLC to inspect the damage to Felix's home and estimate the cost to replace his home.⁹ (Id. at 64:20-67:1.)

Cory Campbell also testified about "loss of use" after the fire. (ECF No. 244 at 9:8-13.) "Loss of use" is the term for the living expenses that an insured incurs after a property is destroyed. (Id. ) ANPAC paid Felix $30,000 as an advance for living expenses while ANPAC processed his fire-loss claim. (Id. at 54:18-55:22.) ANPAC also offered Felix $3,310 per month, which was based on the fair market value for a rental dwelling and furnishings near Sidman, Pennsylvania.¹⁰ (Id. at 109:18-23.) Felix did not accept ANPAC's offer. (Id. at 57:18-58:10.)

4. ANPAC Denies Felix's Claim

By May 31, 2016, ANPAC had determined that Felix engaged in misrepresentation and false swearing by falsely claiming that certain property was destroyed in the fire. (Id. at 79:17-19.) Then, on June 10, 2016, Attorney Hudock sent a letter to ANPAC summarizing Felix's second examination under oath. (Id. at 84:13-19.) In that letter, Hudock stated that "[b]ased on Pennsylvania law, which follows the majority view that a single fraudulent material misrepresentation can void the entire policy, I believe ANPAC ... is within its rights to deny this entire claim."¹¹ (Id. at 85:9-13.)

About a week after receiving Hudock's June 10 opinion letter, ANPAC's Claims Committee "decided that the misrepresentations presented in Mr....