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Sentry Insurance, A Mutual Company v. Katherine Rice

July 20, 2011


The opinion of the court was delivered by: Sue E. Myerscough, United States District Judge.


Wednesday, 20 July, 2011 04:10:22 PM Clerk, U.S. District Court, ILCD


This cause is before the Court on the Motion for Summary Judgment (Motion) (d/e 23) filed by Plaintiff Sentry Insurance, a Mutual Company. In the Motion, Plaintiff argues Defendant Katherine Rice concealed and misrepresented numerous material facts in her personal property claim, which voids all coverage under the insurance policy. For the reasons that follow, Plaintiff's Motion is DENIED.


On October 18, 2006, a fire occurred at Plaintiff's home located at 214 S. Paul Street, Springfield, Illinois (the subject property). At the time of the fire, the subject property was covered by a homeowner's policy issued by Defendant to Plaintiff (the Policy). Plaintiff lived in the subject property with her six children, ages approximately 3 to 20.

A. Background Facts

The Policy provided a limit of liability in the amount of $145,250 for personal possessions. For personal possessions, the Policy provided in relevant part as follows:

For losses to your personal possessions . . . we have the option to repair or replace your property. We'll pay the cost of repair or replacement of your damaged personal possessions or a loss to articles described in a schedule attached to this policy without deduction for depreciation unless specifically described below. We'll pay the smallest of the following amounts: # Replacement cost at the time of loss; # The actual cost you incur to repair the personal possession; # Any special limits on certain property described in this policy; # The limit of coverage shown on the declarations page or on an attached schedule.

When the cost of repair or replacement for the damaged property is more than $500, we will pay replacement cost less depreciations until actual repair or replacement is completed. (Emphases in original.)

The Policy defines "you" and "your" to include (1) the person whose name appears on the declaration page; (2) anyone under the age of 21 or anyone under the age of 25 who is unmarried and a full-time student; and (3) "your relatives, if a resident of your household." (Emphases in original.)

In December 2006, Defendant submitted to Plaintiff a 39-page Personal Property Inventory Form (Inventory) with a cover sheet. The Inventory listed the items of property Defendant believed were a total loss, the age of the property, and the current replacement cost for each item of property. The total estimated replacement cost of all the items listed by Defendant was $409,515.79. On the cover sheet, Defendant indicated that the prices listed were approximate amounts, that some prices might be slightly higher or slightly lower, and that she was unable to value certain items. Defendant also indicated that she had additional contents that were a loss, but she was concluding her Inventory.

Defendant also completed a Sworn Statement in Proof of Loss (Proof of Loss) dated December 23, 2006. In the Proof of Loss, Defendant completed blanks on a preprinted form. In paragraph 7, which read, "The whole loss and damage was . . ." Defendant wrote: "Property $102,437.71, contents 145,250." In paragraph 8, which read "The amount (less Ded. of $) claimed under this policy is $," Defendant wrote "1,750.00" for the deductible and "unknown at this time" for the amount claimed under the Policy.

In January 2009, Plaintiff filed a Complaint for Declaratory Judgment. Plaintiff alleged Defendant was barred from recovery under the Policy because she violated two Policy provisions by : (1) failing to cooperate and comply with her responsibilities in the claim and investigation; and (2) intentionally concealing and/or misrepresenting material facts or circumstances, engaging in fraudulent conduct, dishonest or criminal conduct, or making false statements surrounding the fire loss, the claim presented, and the insurance. Defendant filed a Counterclaim alleging breach of contract and vexatious refusal to pay. Defendant also alleges that as a result of Plaintiff and Plaintiff's agents' actions, Plaintiff has waived the right to contest Defendant's claim for monies due under the Policy.

B. The Motion for Summary Judgment In March 2011, Plaintiff filed the Motion at issue herein. The

Motion is based on the "Concealment Or Fraud" provision of the Policy:

Concealment Or Fraud

This entire policy will be void with respect to all persons insured under this policy if, whether before or after a loss, any person insured under this policy has: # Intentionally concealed or misrepresented any material fact or circumstance; or # Intentionally caused a loss; or # Engaged in fraudulent, dishonest[,] or criminal conduct; or # Made false statements; relating to this insurance.

The Policy also contains the following Endorsement:

The following is added to the Concealment Or Fraud section: The Concealment Or Fraud Condition does not apply once the policy has been in effect for one year or one policy period, whichever is less.

However, we may cancel or non-renew this policy in accordance with the terms of the Cancellation or Renewal provisions of the policy.

Plaintiff asserts the undisputed facts demonstrate Defendant intentionally concealed and misrepresented numerous material facts in her claim, which voids all coverage under the insurance policy. Plaintiff also seeks judgment as a matter of law on Defendant's counterclaim.

Specifically, Plaintiff argues the evidence demonstrates Defendant misrepresented her personal property contents claim. Plaintiff asserts that it was impossible that Defendant accumulated more than $409,000 worth of personal property between her 2001 bankruptcy filing--which listed personal property totaling $650--and the date of the fire. Plaintiff also points to Defendant's March 2005 divorce proceedings, during which Defendant listed no household goods or furniture on her financial affidavit. Plaintiff also asserts that given Defendant's income--$37,755 in adjusted gross Income in 2004 and $5,547 in adjusted gross income in 2005-- and her banking ...

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