Opinion
No. 483558
September 27, 2005
MEMORANDUM OF DECISION
The plaintiffs allege that the defendant insurer breached a homeowner's insurance policy by refusing to provide them with coverage for a loss caused by a fire. The principal issue raised by the defendant is whether the plaintiffs violated the "concealment or fraud" provision of their homeowner's policy, thereby forfeiting coverage.
The facts, undisputed for purposes of the defendant's motion, reflect that on October 31, 2002, a fire occurred on the property of the plaintiffs, Ruben Parrilla and Yolanda Nieves Parrilla (Nieves Parrilla). The plaintiffs, who are husband and wife, made a claim under their homeowners insurance policy with the defendant, Travelers Insurance Company, for the personal property they maintain was destroyed in the fire.
According to the policy, an insured's duties after a loss include, inter alia, the duty to "PREPARE AN INVENTORY OF DAMAGED PERSONAL PROPERTY SHOWING IN DETAIL THE: (1) QUANTITY; (2) DESCRIPTION; (4) AMOUNT OF LOSS . . . g. SUBMIT TO US, WITHIN 60 DAYS AFTER WE REQUEST, YOUR SIGNED, SWORN STATEMENT OF LOSS WHICH SETS FORTH, TO THE BEST OF YOUR KNOWLEDGE AND BELIEF: (1) THE TIME AND CAUSE OF LOSS; (2) INTEREST OF THE INSURED AND ALL OTHERS IN THE PROPERTY INVOLVED AND ALL ENCUMBRANCES ON THE PROPERTY . . . (6) AN INVENTORY OF DAMAGED PERSONAL PROPERTY . . ."
The defendant provided the plaintiffs with a proof of loss form and directed them to complete the form. Nieves Parrilla filled out two proof of loss forms, one for personal property worth $3,793.32 that was located on the plaintiffs' property and another for personal property worth $7,770 that was stored in a barn on an adjoining property owned by her mother. The defendant took the examination under oath (EUO) of both plaintiffs, as permitted by the policy, and subsequently denied the plaintiffs' claim under the concealment or fraud provision of the insurance policy. The plaintiffs then brought this action against the defendant for failure to pay them for their losses pursuant to the policy.
The defendant denies that it breached the policy and has filed special defenses for misrepresentation and fraudulent concealment in which it alleges that the plaintiffs violated the policy's concealment or fraud provision.
The defendant moves for summary judgment on the ground that the evidence establishes that the plaintiffs violated the concealment or fraud provision of the policy and it was therefore not required to cover their alleged losses. That provision of the policy provides that: "[t]he entire policy will be void if, whether before or after a loss, any insured has: a. intentionally concealed or misrepresented any material fact or circumstance; b. engaged in fraudulent conduct; or c. made false statements relating to this insurance." The defendant argues that this provision of the policy applies because the plaintiffs misrepresented the ownership of some of the property they included in their claim, exaggerated the value of some of the other property they claimed to have lost, and misrepresented the method they used to value their property. Additional facts will be set forth as necessary.
"Practice Book [§ 17-49] provides that summary judgment shall be rendered forthwith if the pleadings, affidavits and any other proof submitted show that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law . . . In deciding a motion for summary judgment, the . . . court must view the evidence in the light most favorable to the nonmoving party . . . The party seeking summary judgment has the burden of showing the absence of any genuine issue [of] material facts which, under applicable principles of substantive law, entitle him to a judgment as a matter of law . . . and the party opposing such a motion must provide an evidentiary foundation to demonstrate the existence of a genuine issue of material fact." (Internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., 259 Conn. 527, 549-50, 791 A.2d 489 (2002).
"An insurer who raises this special defense [of concealment or misrepresentation] must prove only that the insured wilfully concealed or misrepresented a material fact with the intention of deceiving the insurer . . . Unlike a party asserting a cause of action for common-law fraud, an insurer who raises the special defense of concealment or misrepresentation does not have to prove that the insurer actually relied on the concealment or misrepresentation or that the insurer suffered injury . . . [I]n the case of an insurance contract, the consequence of the alleged concealment or misrepresentation is the forfeiture of a contractual benefit, and therefore the burden of proof normally applicable to contractual claims, the preponderance of the evidence standard, should control." (Citations omitted.) Rego v. Connecticut Ins. Placement Facility, 219 Conn. 339, 346-47, 593 A.2d 491 (1991).
I
The defendant first argues that the plaintiffs misrepresented the ownership of certain of the personal property for which they made a claim. Specifically, the defendant asserts that some of the property the plaintiffs listed in their proof of loss (POL) belonged to Ruben's adult daughter, Runetsky Parrilla, that the plaintiffs claimed that they owned the property, and that they concealed Runetsky Parrilla's interest therein.
The following additional facts are necessary to the resolution of this claim. Runetsky Parrilla, who was twenty-three years old at the time of the loss, is Ruben's daughter. Prior to January 2002, she was living elsewhere. In or around January 2002, she moved back with her father and step-mother in New Haven, and stored some of her personal property in the barn. It appears that she could not find suitable work in the New Haven area. One or two months before the fire, she went to Boston, Massachusetts. At the time of the fire, she was living in Boston with friends and still seeking employment.
The POL submitted by the plaintiffs stated in relevant part as follows:
To the Travelers Insurance Company of ____ At the time of loss, by the above indicated policy of insurance you insured Yolanda C Nieves-Parilla against loss by fire to the property described under Schedule "A" according to the terms and conditions of said policy . . .
3.Title and Interest: At the time of the loss the interest of your insured in the property described herein was Insured No other person or persons had any interest therein or incumbrance thereon except: No Exceptions
The POL was signed as follows:
"s/Yolanda C. Nieves-Parilla Insured"
All of the above language, except the underlined words, was contained in the pre-printed form that the defendant provided to the plaintiffs.
The court disagrees with the defendant's assertion that Nieves Parrilla's statements in the POL establish that there is no genuine issue of material fact that the plaintiffs misrepresented that Nieves Parrilla owned property that was actually owned by Runetsky, and that the plaintiffs deliberately concealed Runetsky Parrilla's interest in the property from the defendant.
Notably, the POL does not explicitly state that Nieves Parrilla was "the owner" of the property or even "an owner." It merely states that she was insured, and that "the interest of your insured in the property described herein was Insured . . ." Nieves Parrilla signed the POL as "insured." While the most likely reading of the document may be that Nieves Parrilla was representing herself as the owner of the property, on summary judgment it is not the function of the court to determine what is likely but rather, whether there is a genuine issue of material fact. Greenberg v. Puerto Rico Maritime Shipping, 835 F.2d 932, 936 (1st Cir. 1987). "[T]he trial court's function is not to decide issues of material fact, but rather to determine whether any such issues exist." (Internal quotation marks omitted.) Middlesex Mutual Assurance Co. v. Vaszil, 89 Conn.App. 482, 493, 873 A.2d 1030 (2005). "In deciding a motion for summary judgment, the trial court must view the evidence in the light most favorable to the nonmoving party." (Internal quotation marks omitted.) Buell Industries, Inc. v. Greater New York Mutual Ins. Co., supra, 259 Conn. 550. The statements in the POL can just as easily be viewed by a reasonable trier as representations by Nieves Parrilla that she was an insured and that only an insured of the defendant had an interest in the property that was lost.
Moreover, there is a genuine issue of material fact as to whether Runetsky, in fact, was an insured under the policy. The policy defined the term "insured" to mean "you and the following residents of your household: a. your relatives . . ." Runetsky is Ruben's daughter, and he is a named insured on the policy. Therefore, the question of whether Runetsky Parrilla was an additional insured turns on whether she was a resident of his household. "Whether a person is a resident within a household must be determined on the factual circumstances in each case." Schratwieser v. Hartford Casualty Ins. Co., 44 Conn.App. 754, 758, 69 A.2d 1283, cert. denied, 241 Conn. 915, 696 A.2d 340 (1997). Whether a person is a resident of a particular household is a function of several criteria, including, "the intent of the individual; the frequency of contact between the individual and other household inhabitants; the frequency with which the individual spends time at the household; the maintenance of a separate residence for the individual; whether the individual is emotionally and financially capable of establishing and maintaining a residence independent of the household; the location of personal belongings; the location of and address used for personnel and business records; the address at which mail is received; and the address used for formal purposes such as voting, licenses, and income tax filings." Remington v. Aetna Casualty Surety Co., 240 Conn. 309, 315, 692 A.2d 399 (1997); see also Middlesex Mutual Assurance Co. v. Walsh, 218 Conn. 681, 686-87, 590 A.2d 957 (1991). At the time of the fire, she was living with friends in Boston and looking for employment. However, she had left many items of her personal property in the plaintiffs' home. While there is evidence that she had "moved out," there is also evidence that she was "in the process of transition." In addition, there is evidence that the plaintiffs did not know whether Runetsky Parrilla would be returning to their home. The status of her employment search and her intentions regarding her residence as of October 31, 2002, while not controlling, are not disclosed in the evidence.
This is not a case in which the evidence clearly establishes that a person who otherwise would be an insured has established a new residence away from the family home. At the time of the loss, Runetsky had been living with friends for only one or two months and was looking for employment, the prospects for which are not disclosed by the evidence. While residency may sometimes be determined by the record and resolved as a question of law, here, as in Schratwieser v. Hartford Casualty Ins. Co., supra, 44 Conn.App. 754, it may not. It is a question of fact and remains unresolved.
In addition, it is significant that in her EUO, excerpts of which were submitted by the defendant, Nieves Parrilla readily, indeed almost spontaneously, mentioned that several of the items listed on the POL loss did not belong to her, but to Runetsky Parrilla. "On summary judgment, a witness's testimony must be viewed as a whole and in context. See Nolan v. Borkowski, 206 Conn. 495, 507, 538 A.2d 1031 (1988); Acampora v. Asselin, 179 Conn. 425, 427, 426 A.2d 797 (1980)." Bauco v. Hartford Fire Ins. Co., Superior Court, judicial district of Fairfield at Bridgeport, Docket No. CV 00 0375290 (March 3, 2004) ( 36 Conn. L. Rptr. 799, 802).
In order to prevail on this special defense, the defendant is bound to prove "that the insured wilfully concealed or misrepresented a material fact with the intention of deceiving the insurer." (Emphasis added.) Rego v. Connecticut Ins. Placement Facility, supra, 219 Conn. 346. The penalty of forfeiture of insurance benefits for fraud "does not apply [w]here the false [representation] was not intentionally false, or [where] the false [representation was] not intentionally so, but made through mistake or an opinion honestly entertained . . ." (Internal quotation marks omitted.) Aetna Casualty Surety Co. v. Pizza Connection, Inc., 55 Conn.App. 488, 496, 740 A.2d 408 (1999). "A material fact is wilfully concealed or misrepresented if the insured knew it was untrue when it was made . . . A mere honest mistake . . . will not forfeit payment under the policy." (Citations omitted.) Bauco v. Hartford Fire Ins. Co., supra, 36 Conn. L. Rptr. 804; sec also Davis-Scofield Co. v. Reliance Ins. Co., 109 Conn. 686, 689, 145 A. 42 (1929) ("The fraud or false swearing by an insured after a loss which will bar recovery for the loss is the intentionally false swearing. Where the false swearing was not intentionally false, or the false statement not intentionally so, but made through mistake or an opinion honestly entertained, neither falls within the term `fraud or false swearing' as used in this provision."). A reasonable trier could find that Nieves Parrilla's EUO testimony viewed as a whole, bespeaks an absence of wilfulness or intention to deceive.
Moreover, in her affidavit in opposition to the defendant's motion, Nieves Parrilla states: "At the time of the fire and presenting the claim to Travelers, I believed that Runetsky Parrilla was an insured under our policy as she was my husband's daughter and she had resided with us during the policy period." In general, an insured does not necessarily defeat an insurer's motion for summary judgment based on the defense of concealment or fraud merely by filing an affidavit asserting what she believed or intended at the time of the alleged concealment or fraud. Here, however, the evidence before the court indicates that there is an ambiguity in the proof of loss, including a question of fact as to whether Runetsky Parrilla was a resident of the plaintiffs' household at the time of the loss. This ambiguity, together with Nieves Parrilla's affidavit and her testimony at the EUO lead the court to conclude that the defendant has not sustained its burden of proving that no issues of fact exist as to whether the plaintiffs wilfully misrepresented or concealed a material fact with the intention of deceiving the defendant by including Runetsky Parrilla's personal property in the proof of loss.
II
The defendant next claims that the plaintiffs exaggerated the value of the lumber that was allegedly destroyed in the fire.
A line item in the schedule attached to the proof of loss states: "Wooden beams (2x4s and 4x8s) Building Supplies." The adjoining columns, labeled "Unit 5" and "Total 5," both state "$1,500." In her deposition, Nieves Parrilla stated that she did not know what kind of wood or how much wood was destroyed, and expressly deferred to her husband on these matters. In his deposition, Ruben testified that he purchased these items, ten 2x4s and four 4x8s (sheets of plywood), and that he probably paid less than $1,500 for them.
Another column labeled "Qty" is for the quantity of items lost. For every other item there is a numerical figure in this column. For "Wooden beams (2x4s and 4x8s) Building Supplies," however, the letters "ls" appear. The court is unable to determine what, if anything, this signifies.
An insured is held to a truthful statement as to value in his proof of loss. 5A J. Appleman J. Appleman, Insurance Law Practice § 3589. As a leading treatise states: "Over-valuation of the insured property raises a presumption of fraud . . . and such presumption becomes conclusive where it is shown that the difference between the amounts claimed in the proof of loss and those actually proved to have been destroyed are grossly disparate and the explanation tendered is so unreasonable or fantastic that it is inescapable that fraud has occurred." G. Couch on Insurance, (3d Ed. 1999) § 197:22. "Ordinarily, where it appears from the evidence that there was an overestimate of value, the determination of whether the insured acted honestly and in good faith in making such valuation, or intended to defraud the insurer is a question of fact for the jury . . . On the other hand, the question whether overvaluation constitutes fraud may in some cases be a matter of law, as where the disparity between the value as given and the actual value is so great as plainly to evince an intent to defraud, where the discrepancy or error in valuation is so slight as to negate the existence of fraud, where there is no direct evidence that the insured padded the losses, or where there is no room for reasonable persons to differ." Id.
There is no evidence as to what the actual value of the lumber was at the time of the loss and "[i]t is obvious that this court cannot take judicial notice of the market price of [lumber] at [any particular] date . . ." Towne v. St. Anthony Dakota Elevator Co., 8 N.D. 200, 208, 77 N.W. 608 (1898); see Connecticut Code of Evidence § 2-1. For this reason, the defendant has not sustained its burden of proof that the value the plaintiffs ascribed to the lumber and building supplies on the POL violated the concealment or fraud provision of the policy.
III
The defendant next claims that the plaintiffs misrepresented the method that Nieves Parrilla used to arrive at the $1,500 figure for lumber, as stated in the proof of loss. In her EUO, the following exchange occurred:
Q. How did you come up with the fifteen hundred dollar value?
A. Again, we went to Lowe's, Home Depot and just started pricing stuff. We didn't bargain shop. We just put down the price as is.
However, in her deposition a year and a half later, the following exchange occurred:
Q. Okay. How did you come up with the value of $350 per lawn mower?
A It was an estimate. Most of the items on here — I should say, all of the items on here with prices are estimates.
Q. All right.
A. Ruben and I did not go to the store and get actual prices for any of these. We — it was a roundabout figure —
Q. Okay.
A. — on these items.
Q. You didn't go to a store?
A. We did not go to a store.
Q. Okay. Did you ever tell anyone in connection with this submission of this claim that you did go to the store to price some of these items?
A. No. Just some of the items that we have now in our house that are similar to, you know, some of these items — if you know, if we went to Pier One or something like that resembled a tablecloth or placemats.
And I'm in Wal-Mart a lot so a lot of the prices, when you're a mom and a housewife, you tend to retain certain prices. So those are when those prices came about, a lot of these prices, so.
Q. But just so the record is clear, did you not specifically go out after the loss and go do pricing?
A. Itemizing pricing, no.
(Emphasis added.)
In the affidavit Nieves Parrilla submitted in opposition to the defendant's motion, she further states:
9. That I have no working knowledge of the cost of lumber material and the estimates provided for the lumber were based upon my recollection of similar items that I had seen previously at Home Depot or Lowe's.
10. That I am presently unsure if I actually went to Home Depot to find out pricing for lumber prior to submitting our claim to Travelers.
In support of the motion, the defendant submitted the affidavit of Adam Warren, one of its unit managers, in which Warren averred that in his experience, statements of fact made by an insured in an EUO are germane and relevant to a claim investigation and that "[w]hen such statements of fact are made falsely, they have the potential to affect the attitude and action of Travelers in investigating the claim, as well as the potential to mislead, discourage or deflect an investigation, because Travelers utilizes such statements to conduct its claims investigations . . ."
As previously observed, "[a]n insurer who raises this special defense [of concealment or misrepresentation] must prove . . . that the insured wilfully concealed or misrepresented a material fact with the intention of deceiving the insurer." (Emphasis added.) Rego v. Connecticut Ins. Placement Facility, supra, 219 Conn. 346. Notwithstanding the unit manager's affidavit, the court is not persuaded that the matter of whether Nieves Parrilla derived the prices for the lost items before the loss or after the loss is a material issue of fact within the context of the special defense of misrepresentation and fraudulent concealment. As this court recently explained, "the materiality requirement is satisfied if the false statement concerns a subject relevant and germane to the insurer's investigation as it was then proceeding." (Internal quotation marks omitted.) Bauco v. Hartford Fire Ins. Co., supra, 36 Conn. L. Rptr. 803-04, quoting Fine v. Bellafonte Underwriter's Ins. Co., 725 F.2d 179, 183 (2d Cir. 1984), cert. denied, 469 U.S. 874, 105 S.Ct. 233, CT Page 13197 83 L.Ed.2d 162 (1984).
In Fine v. Bellafonte Underwriter's Ins. Co., supra, 725 F.2d 184, the court noted that "[f]alse sworn answers are material if they might have affected the attitude and action of the insurer. They are equally material if they may be said to have been calculated either to discourage, mislead or deflect the company's investigation in any area that might seem to the company, at that time, a relevant or productive area to investigate." The test for "materiality of the misrepresentation is determined by the objective standard of its effect on a reasonable insurer." (Internal quotation marks omitted.) Bauco v. Hartford Fire Ins. Co., supra, 36 Conn. L. Rptr. 804, n. 6. "The materiality of a misrepresentation is a mixed question of law and fact that under most circumstances should be determined by the trier of fact . . . However, materiality can be decided as a matter of law if reasonable minds could not differ on the question." (Internal quotation marks omitted.) Id., 804.
Obviously, not every statement by an insured to an insurer is material. Mosely v. National Bankers Life Ins. Co., 66 N.M. 330, 334, 347 P.2d 755 (1959). Here, reasonable minds could differ as to whether Nieves Parrilla acquired knowledge of the price lumber (or other items) by visits to stores before the loss or after the loss was objectively relevant to the defendant's investigation of the plaintiffs' claim.
IV
Finally, the defendant makes a sweeping claim that it is absolved from liability because Nieves Parrilla testified in her EUO that she and Ruben spent time "pricing" the items that had been destroyed, testimony that the defendant claims she contradicted in her deposition. However, no less than a dozen times in her EUO, Nieves Parrilla testified or indicated that the value she ascribed to an item was only an estimate. See EUO of Yolanda Nieves Parrilla, September 11, 2003, pp. 47, 52-59. The court is not persuaded that the defendant has met its burden on establishing that no genuine issue of fact exists as to whether Nieves Parrilla's statements regarding the methods she used to estimate the worth the items were wilful and material misrepresentations, given commonplace nature of the items, the ease with which the defendant could ascertain the price range of such items, and the lack of any showing that the price the plaintiffs ascribed to these items was very far from the mark.
For all of the foregoing reasons, the defendant's motion for summary judgment is denied.
BY THE COURT
Bruce L. Levin
Judge of the Superior Court