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Riley v. Liberty Insurance Corp.

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

June 21, 2019

GERALD RILEY, Plaintiff,


          James R. Knepp II United States Magistrate Judge


         Plaintiff Gerald Riley owned a single-family residence at 856 Nebraska Avenue in Toledo, Ohio, which Defendant Liberty Insurance Corporation insured. On November 18, 2016, the residence suffered severe fire damage. As a result, Plaintiff filed an insurance claim with Defendant, which it ultimately denied in May 2017. In his Complaint, Plaintiff alleged Defendant breached the insurance contract by failing to pay the amount due under the terms of the agreement. Defendant responded that it acted with reasonable justification in denying the claim on the basis that the residence did not qualify as a “residence premises” under the contract, and Plaintiff violated the “concealment or fraud” condition of coverage. The conflagration litigation reached a bench trial held February 20-22, 2019 (Docs. 109-11), followed by simultaneously-filed post-trial briefs (Docs. 112-13).

         Following review, and for the reasons contained herein, the undersigned grants judgment in favor of Defendant.

         Findings of Fact and Conclusions of Law

         As noted above, Defendant gave two reasons for denying Plaintiff's insurance claim: (1) the property did not qualify as a “residence premises” under the contract; and (2) Plaintiff violated the “concealment or fraud” condition of coverage. Thus, the first issue for the Court to decide is twofold: (1) whether the terms of the insurance contract condition recovery upon Plaintiff residing at the insured premises; and (2) if so, whether the agreement required Plaintiff reside there at the time he entered into the contract or at the time of the loss or both. If the answer to the first question is “yes”, the second issue is whether Plaintiff actually resided there during the relevant time period. Alternatively, the Court must determine whether Defendant properly denied coverage based on Plaintiff's “concealment or fraud”. The undersigned addresses these issues in turn.

         Residency Requirements Under the Contract

         Plaintiff first argues the insurance contract does not clearly and unambiguously require him to reside at the property. (Doc. 112, at 6-13). Specifically, he contends the “residence premises” language exists only to identify the insured property, and it does not mean coverage is excluded if Plaintiff did not reside there. Id. at 9. To support his position, Plaintiff emphasizes that the contract contains certain coverage “exclusions” if the home is vacant, such as, e.g., broken water pipes. Id. at 11-12. Finally, Plaintiff asserts that - even if the contract requires residency - he resided at the insured premises on the date of the loss. Id. at 14-19. Defendant counters that the language within the contract is unambiguous, even under the most generous interpretation (Doc. 113, at 8-11), and the evidence shows Plaintiff did not reside at the property at the time he entered into the contract, nor on the date of loss, id. at 4-8.

         The Ohio Supreme Court has explained that an insurance contract must be construed to give words their plain and ordinary meaning. State Farm Auto. Ins. Co. v. Rose, 575 N.E.2d 459, 461 (Ohio 1991), rev'd on other grounds, 620 N.E.2d 809 (Ohio 1993). However, if the language is ambiguous, and thus susceptible to more than one interpretation, it must be liberally construed in favor of the insured. Id.; see also Akins v. Harco Ins. Co., 815 N.E.2d 686, 693 (Ohio Ct. App. 2004) (“[A]ny reasonable construction which results in coverage of the insured must be adopted by the trial court.”), rev'd on other grounds, 830 N.E.2d 1161 (Ohio 2005). Importantly, “[u]nder Ohio law, the burden is on the insured to prove that he is entitled to coverage by showing facts sufficient to establish that his loss was within the description of the policy.” State Farm Fire & Cas. Co. v. Hiermer, 720 F.Supp. 1310, 1314 (S.D. Ohio 1988) (citing Sterling Merch. Co. v. Hartford Ins. Co., 506 N.E.2d 1192, 1199 (Ohio Ct. App. 1986) (“The burden, however, is not on the insurer, but on the insured to prove that he is entitled to coverage.”), aff'd, 884 F.2d 580 (6th Cir. 1989) (unpublished table decision)).

         The Court finds the contract language at issue clear and unambiguous. The Declarations page identifies Plaintiff by name, notes his mailing address as “856 Nebraska Ave.”, and identifies the insured location as: “[s]ame as [m]ailing address above”. See Pl. Ex. 1, at 1 (insurance contract). Following the Declarations, the contract provides a “definitions” page, which states, in relevant part:

4. “Insured location” means:
a. The “residence premises”;
b. The part of other premises, other structures and grounds used by you as a residence and:
(1) Which is shown in the Declarations; *** 8. “Residence premises” means:
a. The one family dwelling, other structures, and grounds; or
b. That part of any other building; where you reside and which is shown as the “residence premises” in the Declarations.

Id. at 5 (emphasis added). By definition here, the “residence premises” is the “insured location” shown in the Declarations - 856 Nebraska Avenue. Id. at 1. The contract then unambiguously defines the “residence premises” as a “dwelling. . . where you reside . . . and which is shown as the ‘residence premises' in the Declarations.” Id. at 5 (emphasis added). Finally, the contract identifies coverage:

         We cover:

1. The dwelling on the “residence premises” shown in the Declarations, including structures attached to the dwelling;

Id. (emphasis added).

         In cross-referencing these definitions, it becomes clear the insurance contract covers the dwelling on the residence premises, and the contract defines such as a “dwelling . . . where you reside”. Id. (emphasis added). In other words, only the residential dwelling is covered by the policy, and that can only be a place “used by you as a residence”. Id. (emphasis added). And, as noted above, Ohio courts shall give insurance contract terms their plain and ordinary meaning unless another meaning is clearly apparent from the contents of the policy. State Farm Auto. Ins. Co., 575 N.E.2d at 461. For this reason, Plaintiff's argument that “residence” is ambiguous because the contract includes specific coverage exclusions for vandalism, theft, and frozen pipes if the property is unoccupied, is unavailing. (Doc. 112, at 11-12) (citing Pl. Ex. 1, at 10-11). Although the term “residence” may be ambiguous in other contexts, there is no ambiguity where, as here, specific language clearly defines the term. Thus, the Court concludes the insurance contract language, as emphasized above, makes clear that recovery was conditioned upon Plaintiff residing at 856 Nebraska at the time of the loss.

         Plaintiff's Residency Status

         Because the insurance contract conditioned recovery upon Plaintiff residing at 856 Nebraska Avenue, the next relevant question becomes: did he really live there? Plaintiff contends that - even if the contract required residency - he resided at the insured premises on the date of the loss. (Doc. 112, at 14-19). In support, he relies on: (1) the testimony of eyewitnesses: his neighbors, Otis Williams and Dean Taylor; his father, William McCloud; and his former tenant, Ariane Stevens; and (2) the fact that utilities to the property were active at the time of the fire. Id. at 14-15. Defendant: (1) disputes Plaintiff's utility usage and the credibility of the witnesses; (2) argues their investigator, and Toledo Fire Department employees determined the home was vacant; and (3) notes that investigators were able to locate very few of the 3, 582 items Plaintiff claimed were lost in the blaze. (Doc. 113, at 6-9, 15). The Court addresses the evidence of residency below.

         Plaintiff's Representations

         As Defendant emphasizes, Plaintiff affirmatively represented 1554 Avondale Avenue in Toledo, Ohio as his residence on numerous occasions. See Doc. 113, at 6. For example, on the date of the fire, Plaintiff's driver's license reflected the Avondale address. (Trial Tr. 193: 15-18). At the time of the fire, Plaintiff's bank account was also registered to the Avondale address. (Def. Ex. 79; Trial Tr. 193: 19-22). A resignation letter dated September 8, 2016 reflected the same (Trial Tr. 193: 23-25; 194: 1), as did an employer's request for information and a Federal Employment Eligibility Verification from Plaintiff dated November 10, 2016 (eight days before the fire). (Def. Exs. 7, 8; Trial Tr. 194: 6-16). Plaintiff also never changed his mailing address, and was still receiving mail at 1554 Avondale. (Def. Ex. 105, 22: 4-24) (“Smith Depo.”). Finally, Plaintiff was on parole at the time of the fire and had the Avondale address registered with the State as his address of record. (Trial Tr. 141: 19-25; 142: 1-3). He testified that he did not tell his parole officer of any move to 856 Nebraska Avenue because he was not required to, and “[i]t wasn't none of his business.” (Trial Tr. 142: 4-6, 20). However, at her deposition, Plaintiff's mother testified he was “supposed to” report a change of address to his parole officer. (Smith Depo. 20: 13-24; 21: 1-2). Plaintiff does not address these inconsistencies in his post-trial brief. See Doc. 113.

         Fire Department Personnel Testimony

         Timothy Clapp, a Battalion Chief with the Toledo Fire Department, and 25-year firefighting veteran, took charge of the fire scene at 856 Nebraska. (Trial Tr. 587: 22-23; 588: 22-23, 25; 589: 1-9). Chief Clapp determined the structure was vacant. (Def. Ex. 61, at 1; Trial Tr. 596: 4-23). He specifically noted there were no “signs” of residency such as “furniture, appliances and stuff in the kitchen, and it just didn't look like it was habitable unless they're sleeping on the floors.” (Trial Tr. 596: 14-17). Chief Clapp spoke with a neighbor[1] who said he heard an “explosion” and called 911. (Trial Tr. 591: 9-15). This neighbor reported the home had been vacant for “quite some time”. (Trial Tr. 591: 15-17). Chief Clapp called fire investigator Denis Bembenek to the scene to investigate further. (Trial Tr. 590: 20-25; 591: 1-5).

         Denis Bembenek, an arson investigator with the Toledo Fire Department, also responded to 856 Nebraska. (Trial. Tr. 534: 6-8). Mr. Bembenek photographed the scene and canvassed the neighborhood, speaking with neighbors. (Trial Tr. 535: 3-14). Mr. Bembenek spoke with Otis Williams who again stated that the house was vacant, with people coming and going “occasionally”. (Def. Ex. 52, at 23; Trial Tr. 535: 25; 536: 1-9).

         The Court finds these witnesses are professional firefighters with many decades of experience, both in firefighting and fire investigations, between them. They are also neutral parties who thoroughly documented their observations on scene and in the hours following the blaze and accurately testified to such. For these reasons, the Court finds their testimony highly credible.

         Testimony of Neighbors and the Affidavits

         Plaintiff collected nine identical affidavits from his parents and ...

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