[author: Amal Rafiq]

John Cordell Young, Jr. put Progressive on notice of a claim for the theft of his missing motor home, which was later found submerged in a canal with a pole wedged against the accelerator. Progressive’s investigation turned up evidence of phone calls made from Young’s son’s phone near the canal. During an Examination Under Oath, Young stated that his son’s phone was in the vicinity of the canal because his son had inadvertently left the phone in the car of one of Young’s clients. During his Examination, however, Young’s son stated that he had no reason to believe his phone had been anywhere other than in his possession during the weekend of the alleged theft. Other phone records obtained by Progressive showed that the phone repeatedly communicated with cell towers around the son’s home throughout the weekend in question.

Progressive denied coverage due to material misrepresentations by Young about the location of his son’s phone, citing policy language explaining that Progressive “may deny coverage . . . if you or a person seeking coverage has concealed or misrepresented any material fact . . . .” A week later, Young sued Progressive, alleging breach of contract and breach of the covenant of good faith and fair dealing, and requesting declaratory relief. Progressive moved for summary judgment, arguing that the policy was void under California law as a result of Young’s material misrepresentations regarding the location of his son’s cell phone.

Citing California law and the policy provision relating to the denial of coverage for any misrepresentation of material fact, the court concluded that the policy was void and dismissed Young’s breach of contract claim. The court then turned to Young’s bad faith claim. Under California law, to establish a claim for bad faith a Plaintiff must show that: (1) benefits due under the policy were withheld; and (2) the reason for withholding was unreasonable. The court concluded that because Young’s policy was void he was not due any benefits and he therefore failed to satisfy the first prong of the test. The court also concluded that even if Young had satisfied the first prong of the test, his claim would still fail because Progressive’s actions were reasonable in light of the evidence supporting the conclusion that Young lied about the whereabouts of his son’s phone. The court noted that not only did Progressive diligently investigate the missing motor home, but it found evidence that may have suggested an attempt to commit insurance fraud. The court granted Progressive’s motion for summary judgment.

Young v. Progressive Casualty Insurance Co., No. 16-01198 (E.D. Cal. June 6, 2017)