NO MATERIAL MISREPRESENTATION BY INSURED AS TO PLACE OF RESIDENCE WHEN THE MEANING OF “RESIDENCE” CAN ENCOMPASS MULTIPLE LOCATIONS AS A MATTER OF LAW (Middle District)

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The homeowner insured’s amended complaint asserted a breach of contract claim after the carrier denied coverage for a fire loss. The original complaint included a bad faith count that was dismissed without prejudice. The insured did not pursue that bad faith claim in his amended complaint. A summary of the earlier decision can be found here. The court had also rejected an earlier motion for judgment on the pleadings, a summary of which can be found here.

The insurer sought summary judgment on the amended breach of contract claim. Among other grounds for summary judgment, the insurer claimed there was “no duty to cover losses under the Policy” because the insured and his mother made misrepresentations of material facts relevant to coverage.

The policy only provided coverage if the insured resided at the property. The insurer asserted both that the plaintiff did not reside at the property, and made misrepresentations of material facts as to residence, ownership and the property’s condition. The insured took the position he did reside at the property and made no such misrepresentations.

Magistrate Judge Mehalchick conducted a thorough analysis of Pennsylvania case law on the meaning of “residence”, and applied that case law to the detailed facts in the case. She concluded, “[k]eeping in mind that the term ‘residence’ carries a more transitory meaning than the term ‘domicile,’ the record evidence is sufficient to allow a reasonable jury to conclude that Plaintiff resided at the Property at the time of the fire.” Thus, summary judgment was denied on the basic coverage issue.

Alternatively, the insurer sought summary judgment for material misrepresentation on the basis that the mother and son’s statements that he resided with the mother must have been false, if he in fact resided at the property.  Put another way, the carrier argued that there was no coverage because the insured did not reside at the premises. If he did reside at that premises, however, there would still be no coverage because the insured and his mother made false statements that he did not reside at the premises.

“For an insurance carrier to avoid coverage due to misrepresentation, the insurer must establish that the insured’s representation: (1) was false, (2) was made with the knowledge that the representation was false when made or was made in bad faith, and (3) was material to the risk being insured.” Moreover, “[t]he insurer must show that the insured made the misrepresentation with a deliberate intent to deceive.”

There were sworn and unsworn statements from the insured and his mother indicating that plaintiff resided with his mother at certain times, while also sleeping over at the property during other times.  The insurer attempted to construe these statements to mean the insured and his mother told the carrier that the insured did not reside at the property, which was false if he did in fact reside at the property, as pleaded in the amended complaint.

The court found the insurer failed to establish that the mother and son knowingly made false statements that he did not reside at the property, and failed to show such statements were made with a deliberate intent to deceive.

“Defining and determining the term ‘reside’ is a complicated endeavor. … [The insurer] identifies no record evidence that the [insured and his mother] knew the meaning of ‘reside.’ …  It is unknown if the [insured and his mother] even knew that an individual could simultaneously reside at two locations.”

Thus, statements that his mother’s home was the insured’s full time residence, rather than the property at issue, is not definitive because it is unclear that the insured or his mother knew that to be false. As such, there would also be no intent to deceive.

Moreover, as stated above, it remains for the jury to decide if the insured resided at the property. Thus, the insurer could not even establish at this point whether any alleged misrepresentation about the insured’s residence was false.

Therefore, summary judgment was denied on the issue of material misrepresentation.

Date of Decision: November 16, 2020

Bloxham v. Allstate Insurance Company, U.S. District Court Middle District of Pennsylvania No. 3:19-CV-00481, 2020 WL 6710427 (M.D. Pa. Nov. 16, 2020)

 

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