Cline v. Allstate Ins. Co., No. 6:13-CV-182-HAI, 2014 WL 7074973 (E.D. Ky. Dec. 15, 2014).
After Denial of Claim for Loss from Fire on Basis of Exclusion for Criminal or Intentional Acts, Insurer wins Cross-Motions for Summary Judgment where Insureds Cited no Applicable Law, Failed to Plead Facts with Specificity, and Mischaracterized Deposition Testimony.
While away from home, Plaintiffs Allen and Marsha Cline lost their house and personal belongings to a fire. Defendant Allstate Insurance Company performed an investigation and denied the Plaintiffs’ homeowners insurance claim pursuant to the exclusion for “intentional or criminal acts of or at the direction of any insured person” and an exclusion for concealment or misrepresentation of material fact or circumstance by any insured. Allstate’s investigation showed that the Plaintiffs had the motive and the opportunity to rid themselves of their home, and that the failure of their working alarm system supported the conclusion that the fire was set with input from the Plaintiffs.
After denial of the claim, Plaintiffs and Defendant filed cross-motions for summary judgment. The court disposed of Plaintiffs’ arguments that (1) they did not commit civil arson or fraud, (2) they were entitled to punitive damages, and (3) that Allstate was liable under the applicable insurance policy. Plaintiffs’ motion was entirely deficient; it failed to cite any applicable law in support of their arguments, and did not provide any part of the policy at issue.
Defendant’s motion argued that Plaintiffs failed to establish bad faith. The court noted that under Kentucky law, Plaintiffs must prove that (1) the insurer must be obligated to pay the claim under the terms of the policy; (2) the insurer must lack a reasonable basis in law or fact for denying the claim; and (3) the insurer either knew there was no reasonable basis for denying the claim or acted with reckless disregard for whether such a basis existed. Allstate claimed that Plaintiffs failed to establish elements two and three in support of their claim, but the court found that an analysis of element three was sufficient to grant summary judgment to Defendant.
Plaintiffs contended that malice and recklessness were evidenced by a purported intentional misrepresentation by Scott B. Griffin, a private investigator who conducted an investigation into certain aspects of the loss caused by the fire. Mr. Griffin concluded that the Cline’s son-in-law may have set the fire at their direction. Plaintiffs claimed that in support of his ultimate conclusions, Mr. Griffin mischaracterized a statement of Tammy Depoty, a roommate of their son-in-law. Another Allstate employee failed to verify Mr. Griffin’s statement; Plaintiffs claimed that this failure established the “malice and reckless disregard” necessary for their bad faith claim.
The court found that first, Plaintiffs did not specifically identify the claimed “intentional misrepresentation” made by Mr. Griffin. Second, Plaintiffs also claimed that Ms. Depoty later denied relaying information regarding the fire to Mr. Griffin; however, the court’s analysis of the deposition transcript showed that Ms. Depoty merely stated she did not remember what she told Mr. Griffin. As Plaintiffs failed to demonstrate any evidence of bad faith, Defendants were entitled to summary judgment on that claim.
The court likewise granted summary judgment to Allstate on the Plaintiffs’ Kentucky Unfair Claims Settlement Practices Act (“UCSPA”) claim. “A cause of action for a violation of the UCSPA may be maintained only where there is proof of bad faith of an outrageous nature.” Plaintiffs had vaguely asserted that Defendant “failed to follow up on all leads and thoroughly investigate this matter before making a decision to deny the claim” and therefore acted in bad faith, but offered no evidence supporting that argument. Finally, Allstate was also granted summary judgment on the cause of the fire, as Plaintiffs provided no evidence in their response to rebut Allstate’s arguments on that issue.
