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Bolton v. State Farm Fire & Casualty Co.

United States District Court, N.D. Ohio, Western Division

November 6, 2017

EARNEST BOLTON, SR., et al., Plaintiffs,


          James R. Knepp II United States Magistrate Judge


         On December 28, 2015, Plaintiffs Earnest and Georgia Bolton (“Plaintiffs”) filed a complaint against Defendant State Farm Fire & Casualty Company (“Defendant”) in the Lucas County, Ohio Court of Common Pleas. (Doc. 1-1, at 7-14). The complaint asserts breach of contract, bad faith, and unfair trade practices. Id. On January 26, 2016, Defendant removed the case to this Court. (Doc. 1). Jurisdiction is proper under 28 U.S.C. § 1332. The parties consented to the undersigned's exercise of jurisdiction in accordance with 28 U.S.C. § 636(c) and Civil Rule 73. (Doc. 15). The case is before the Court on Defendant's Motion for Summary Judgment (Doc. 24), to which Plaintiffs responded (Docs. 27 & 28), and Defendant replied (Doc. 29). For the reasons stated below, Defendant's motion is granted and the case is dismissed with prejudice.


          This case arises out of a residential fire on January 1, 2015. Plaintiffs owned the residence-a duplex located at 362 Boston Place, Toledo, Ohio 43610 (“the property”)-and Defendant supplied an insurance policy. Plaintiffs had owned the property outright since 2008 when they completed the terms of a Land Contract. (Earnest Bolton Affidavit, Doc. 27-1, at 1) (hereinafter “Bolton Aff.”).

         The Fire

          In the early morning hours of January 1, 2015, the property caught fire. (Bolton Aff., Doc. 27-1, at 1).

         At the time of the fire, the property was leased to Monique Davis and Roy Armstrong, both relatives of Plaintiffs. (Bolton Aff., Doc. 27-1, at 1). On the evening prior to the fire (December 31, 2014-New Years' Eve), Plaintiffs hosted a party for family and friends at their home in Maumee on Welsford Court. Id. Davis and Armstrong, as well as their children, planned prior to the party to stay overnight at Plaintiffs' home in Maumee. Id. This was because alcohol would be consumed at the party, and family members anticipated staying up late to ring in the New Year. Id.

         Plaintiffs were awakened during the early morning hours of January 1, 2015 and informed the property had caught fire. Id. Following the fire, Plaintiffs made a claim under their insurance policy with Defendant. Id. at 1-2.; Lonnie Johnson Declaration, Doc. 24-2, at 2 (hereinafter “Johnson Declar.”).

         The Policy

          State Farm issued Rental Dwelling Policy 95-BL-W652-6 to Plaintiffs, insuring the property located at 362 Boston Place, Toledo, Ohio 43610. (Johnson Declar., Doc. 24-2, at 1); (Policy, Doc. 24-3). This Policy had been in place since approximately 1998. (Bolton Aff., Doc. 27-1, at 1). The Policy provided conditions, including, inter alia:

2. Your Duties After Loss. In case of a loss to which this insurance may apply, you shall see that the following duties are performed:
a. give immediate notice to us or our agent, and in case of theft, vandalism, or malicious mischief, also to the police;
b. protect the property from further damage or loss, make reasonable and necessary repairs required to protect the property, and keep an accurate record of repair expenditures;
c. prepare an inventory of damaged personal property showing in detail, the quantity, description, actual cash value and amount of loss. Attach to the inventory all bills receipts and related documents that substantiate the figures in the inventory;
d. as often as we reasonably require:
(1) exhibit the damaged property;
(2) provide us with records and documents we request and permit us to make copies; and
(3) submit to examinations under oath and subscribe the same;
e. submit to us, within 60 days after the loss, your signed, sworn proof 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;
(3) other insurance which may cover the loss;
(4) changes in title or occupancy of the property during the term of this policy;
(5) specifications of any damaged building and detailed estimates for repair of the damage;
(6) an inventory of damaged personal property described in 2.c.;
(7) records supporting the fair rental value loss.

(Policy, Doc. 24-3, at 7). The Policy also provided additional duties, including:

3. Duties After Loss. In case of an accident or occurrence, the insured shall perform the following duties that apply. You shall cooperate with us in seeing that these duties are performed:
a. give written notice to our agent as soon as practicable, which sets forth:
(3) names and addresses of any claimants and available witnesses;
*** c. at our request, assist in:
(4) securing and giving evidence and obtaining the attendance of witnesses.

(Policy, Doc. 24-3, at 10). Moreover, the Policy provided that the insured must “comply with the provisions of this policy” (Policy, Doc. 24-3, at 4), and that “[n]o action shall be brought unless there has been compliance with the policy provisions” (Policy, Doc. 24-3, at 7). Finally, the Policy provided certain exclusions, including that Defendant would not cover loss due to intentional acts by the insured. (Policy, Doc. 24-3, at 8) (“If you or any person insured under this policy causes or procures a loss to property covered under this policy for the purpose of obtaining insurance benefits, then this policy is void and we will not pay you or any other insured for this loss.”).

         Defendant's Investigation

         First, Plaintiff avers he and his wife never “willfully refuse[d] to cooperate . . . or in any way attempt[ed] to hinder or obstruct” Defendant's investigation of the fire. (Doc. 27-1, at 3).

         Upon receiving Plaintiff's claim, Defendant began an investigation. (Johnson Declar., Doc. 24-2, at 2). Defendant retained Tom Bensen, an Origin and Cause expert. Id. Through Bensen's investigation, Defendant discovered an accelerant (gasoline) was used to start the fire, and therefore determined the cause of the fire to be arson. Id. at 3. Defendant's investigation also revealed that, in its belief, Plaintiffs had some financial issues which may have been motive for causing the fire. Id. Defendant noted: 1) Plaintiffs had previously filed for bankruptcy; 2) the residence occupied by Plaintiffs at the time of the fire was in foreclosure; and 3) property taxes on the Property were delinquent at the time of the fire. Id.

         Plaintiff Earnest Bolton explains that while Plaintiffs resided at the Welsford Court residence at the time of the fire, that residence “had been surrendered through the Bankruptcy proceeding.” (Doc. 27-1, at 3). Additionally, Plaintiffs' bankruptcy discharge effective May 14, 2014 granted them a discharge on all debts. (Bolton Aff., Doc. 27-1, at 3). At the time of the fire, Plaintiff had “very little debt from any source”, and “minimal other debt” but did owe “the approximate amount of less than $6, 000” in real estate taxes on the Property. (Doc. 27-1, at 3).

         Due to the results of its initial investigation, Defendant then deployed its Special Investigative Unit (“SIU”). Id. That unit determined that several “indicators of potential fraud were present, including prior bankruptcies, an incendiary fire, the timing and nature of the Fire, and current financial problems.” Id. At that point, Lonnie Johnson, a Claim Representative with the SIU became involved. Id. at 2-3.

         Defendant then sent the first in a series of letters to Plaintiffs at Johnson's direction. Id. at 3. The January 8, 2015 letter contained a reservation of rights and informed Plaintiffs that Defendant had questions about the nature of the fire and whether certain provisions of the policy had been violated. (Doc. 24-4). That same day Defendant sent Plaintiffs a letter requesting that they comply with the “Duties After Loss” provisions of the Policy. (Doc. 24-5). Upon receipt of a notice of representation from Plaintiffs' counsel, Defendant sent a reservation of rights letter to counsel on January 21, 2015. (Doc. 24-6); (Johnson Declar., Doc. 24-2, at 4).

         On February 5, 2015, Defendant sent a letter to Plaintiffs' counsel reiterating questions of coverage, and attempting to schedule a date and time for Earnest Bolton's recorded statement. (Doc. 24-7).

         On March 3, 2015, Johnson took Earnest Bolton's recorded statement. (Doc. 24-8).

         On March 5, 2015, Defendant sent a letter to Plaintiffs' counsel stating Defendant was “continuing its investigation” and had been “unable to resolve these questions of coverage.” (Doc. 24-9, at 2). The letter also noted “There is a question whether there has been a breach of policy condition ‘Your Duties After Loss.'” Id. The letter informed Plaintiffs that Defendant had retained Attorney Michael Manahan “for the purpose of obtaining Mr. and Mrs. Bolton's Examination Under Oath” pursuant to the policy. Id. at 2-3. The letter stated: “You should be aware that your failure to comply with these policy duties could be considered a breach of the terms and conditions of the policy contract and could result in the denial of any policy benefits that may otherwise be payable.” Id. at 3. On March 6, 2015, Johnson called Plaintiffs' counsel to explain the March 5 letter. (Johnson Declar., Doc. 24-2, at 5).

         On March 27, 2015, Manahan sent a letter to Plaintiffs, through counsel, confirming the dates and times for the Examinations Under Oath. (Doc. 24-10, at 1). Defendant also requested Plaintiffs “produce the tenants of 362 Boston Place, Monique Davis, Roy C. Armstrong, Jr., and Earnest Bolton, Jr., for examination under oath.” Id. The letter also listed specific documentation Plaintiffs were requested to bring to the Examinations, including, inter alia: (1) phone call/text records from landline or cellular telephones from December 29, 2014 though January 5, 2015; (2) contact information for “any and all persons that can confirm your whereabouts on the date of loss, including their current address and phone number”; (3) copies of local, state, and federal personal income tax returns for 2011-2013; (4) copies of monthly bank statements from 2012 to present; (5) any records kept on behalf of any business in which Plaintiffs are owners or part owners from 2012 to present; and (6) all bankruptcy pleadings for the past five years. (Doc. 24-10, at 5-7). Finally, the letter noted: “These requests are conditions of your policy of insurance. You should be aware that your refusal to cooperate in the production of documents, answering of questions under oath, etc., will be considered a breach of the terms and conditions of the contract of insurance and will result in the denial of any policy benefits that may be available.” Id. at 7.[1]

         On April 22, 2015, Defendant conducted both Plaintiffs' Examinations Under Oath. See Docs. 24-11 & 24-12; Bolton Aff., Doc. 27-1, at 2.

         On May 8, 2015, Manahan wrote Plaintiff's counsel reiterating Defendant's request for document production, and noting “[w]hile State Farm thanks your clients for the documentation that they have produced to date, additional documentation that State Farm demanded is still outstanding.” (Doc. 24-14, at 2). The letter listed specific documentation requested, including: (1) copies of call/text detail for cell phones in Plaintiffs' names for December 31, 2014 through January 2, 2015; (2) “[a]ny and all records relating to the formation of the Bolton Adult Family Home”, including financial records; (3) copies of utility bills from January 2014 through January 2015 for 6126 Wellsford [sic] Court, 362 Boston Place, and 1416 North Cove; (4) call detail from a landline phone number for December 31, 2014 and January 1, 2015; and (5) copies of federal, state, and local income tax returns for 2013 and 2014. Id. at 2-4. The letter again stated failure to produce documentation might result in denial of the claim based on a breach of the cooperation agreement. Id. at 4-5.

         Manahan sent a second letter on behalf of Defendant on June 5, 2015, reasserting the document requests in the May 8, 2015 letter and extending the deadline for production to June 19, 2015. (Doc. 24-15). The letter contained similar language noting failure to comply could result in a denial of the claim for failure to cooperate. Id. at 5.

         Johnson avers Plaintiffs “did not produce any documents or information in response to these requests.” ...

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