Summary
granting the defendant's motion to strike portions of an affidavit in part because it failed to show how the affiant obtained personal knowledge
Summary of this case from Gray v. Sage Telecom, Inc.Opinion
Civil Action No. 3:02-CV-2306-D.
April 30, 2004
MEMORANDUM OPINION AND ORDER
In this removed action, plaintiff Olivia Gibson ("Gibson") sues defendant Liberty Mutual Group ("Liberty Mutual") on contractual and extracontractual claims arising from Liberty Mutual's refusal to pay a theft loss claim made under a homeowner's policy. Liberty Mutual moves for summary judgment, contending that it has established that the theft was committed by Gibson's estranged husband, a named insured, and thus excluded from coverage. Because Liberty Mutual has demonstrated that it is entitled to summary judgment on this basis, the court grants the motion and dismisses this action by judgment filed today.
I
Gibson is an 80-year old who resided in Oklahoma City, Oklahoma with her husband until his death in 1967. Following his death, she obtained insurance on the residence from Liberty Mutual, which issued a Deluxe Homeowners' Policy (the "Policy"). In 1971 Gibson married Jared Harris ("Harris"), approximately 16 years her junior, and they resided in the insured residence. Title to the house remained in the names of Gibson and her late husband, and she was the named insured under the Policy.
Although the evidence must be viewed favorably to the nonmovant and all reasonable inferences must be drawn in favor of the nonmovant, see Clift v. Clift, 210 F.3d 268, 270 (5th Cir. 2000), as the court explains in this opinion, some evidence on which Gibson relies is inadmissible and must be stricken. Accordingly, where evidence is material and is subject to the court's decision to strike it, the court has noted Gibson's allegation in the background facts portion of the opinion, but has not accepted it as true.
According to the record, Harris is now deceased.
Gibson was diagnosed with dementia in September 1998, a diagnosis that was confirmed by a second physician in October 1998, who also diagnosed serious heart problems. The day following the second doctor visit, Harris telephoned Liberty Mutual and changed the name of the insured on the Policy from Olivia Gibson to Olivia Harris. In November 1998 Harris telephoned Liberty Mutual and added himself as a named insured under the Policy. According to Gibson, Harris made these changes without her or her children's instructions, approval, or signature. After Harris refused to attend to Gibson's medical needs and another physician confirmed her dementia and suggested the possibility that she was suffering from intentional or unintentional arsenic poisoning, her son, Bennie Ray Gibson ("Bennie"), took her into his home in Texas to live under his care.
He also changed the amount of the deductible.
Harris also added his name to Gibson's checking accounts and depleted most of a trust fund created by her deceased husband's employer, for which she was the beneficiary.
Bennie is Gibson's guardian and has a statutory durable power of attorney to act on her behalf because her dementia has resulted in a limited mental capacity.
Bennie later returned to Oklahoma City and found Harris, himself in very poor health, residing in the house. After making a cursory examination of the dwelling, Bennie departed. In August 1999 Gibson served divorce papers on Harris, who had begun living in government housing sometime during the summer. Absent notice that Harris had vacated the home and a response to the divorce petition, Bennie traveled to the Oklahoma City residence in September 1999 and discovered that Harris was no longer residing there. He found that several items were missing and that other items still in the house had been damaged and moved around. Bennie filed a police report and made a claim under the Policy. Bennie returned to the house in October 1999 to retrieve the remainder of Gibson's belongings. He discovered the back door broken down and an open window. He noticed large tire tracks at the rear of the dwelling and found that several other items of property were missing or damaged. Bennie again contacted the police and Liberty Mutual. In April 2000 Liberty Mutual denied the claim.
As the court notes infra at § III(B), Gibson's lawsuit is based on the first loss reported in September 1999, not the second loss reported in October 1999.
Gibson sues Liberty Mutual to recover on claims for breach of contract, breach of the duty of good faith and fair dealing and violations of the Texas Deceptive Trade Practices-Consumer Protection Act ("DTPA"), Tex. Bus. Com. Code Ann. §Sec; 17.41-17.826 (Vernon 2002), Tex. Ins. Code Ann. art. 21.21, § 4 (Vernon Supp. 2004), and the prompt payment of claims provisions of Tex. Ins. Code Ann. art. 21.55, § 6 (Vernon Pamp. Supp. 2004). Liberty Mutual moves for summary judgment, contending that because Gibson's theft claim is excluded from the Policy, it cannot be liable on any of the grounds alleged. Liberty Mutual relies on evidence that Harris was a named insured under the Policy during the relevant time period and that he committed the theft in question.
Liberty Mutual moves for summary judgment on a breach of contract claim. Although the court has found no indication in Gibson's state court petition that she is suing for breach of contract, because Liberty Mutual assumes that she is, and since Gibson has addressed breach of contract in her summary judgment response, the court will assume that she is suing on this basis as well.
Liberty Mutual also moves to strike parts of Gibson's summary judgment evidence. The court will address the pertinent parts of that motion in its discussion of the merits. To the extent the court need not consider the motion, it is denied as moot.
II
Liberty Mutual maintains that Gibson cannot recover under the Policy — and, in turn, cannot recover on any extracontractual claim — because Harris was a named insured during the relevant period, and he stole or converted Gibson's property. It reasons that because the Policy excludes coverage for loss caused by theft committed by an insured and by loss arising out of acts committed by or at the direction of an insured and with an intent to cause loss, her claim was properly denied.Gibson maintains that Liberty Mutual should never have added Harris to the Policy without her approval, that she clearly intended that she be the only named insured, and that Harris should not have been a named insured and was improperly added. Gibson asserts that the losses most likely occurred when Harris was no longer a member of her household, because he moved from the dwelling sometime during the summer of 1999, she filed for divorce in July 1999, and the first break-in and theft was reported in September and the second occurred between September 27 and October 17, 1999. She posits that because Harris was not residing in the dwelling, his conduct would not have triggered the Policy exclusion had he not been erroneously added as an insured.
Gibson also contends that, assuming Harris was an insured under the Policy, there remains a genuine issue of material fact whether he was responsible for the loss, that is, whether the loss arose out of his actions or directions, with intent to cause a loss. She argues that the evidence on which Liberty Mutual relies to support its motion — notes from a Liberty Mutual employee who spoke to Bennie at the time of the claim and an application that Bennie filed for guardianship of Gibson — merely show that he was suspicious of Harris and do not establish that Harris was responsible. Gibson asserts that Bennie does not know who is in fact responsible for the loss and lacks proof that Harris is the responsible party. She points to Bennie's statement in a recorded interview with an investigator, and in the notes of a Liberty Mutual employee, regarding the October 1999 break-in, in which he said he did not know who was responsible and doubted that Harris was because he was too sick and weak to break down the door. Gibson also asserts that Harris denied taking the property. And she cites Kentucky law for the proposition that it does not violate public policy or the policy terms to permit an innocent spouse to recover. Gibson argues that Liberty Mutual lacked a reasonable basis to deny her claim absent conclusive evidence that Harris contributed to or was responsible for the loss.
III
Under Oklahoma law, the burden of establishing an exclusion from coverage under an insurance policy is on the insurer. See, e.g., Sec. Mut. Life Ins. Co. v. Hollingsworth, 459 P.2d 592, 599 (Okla. 1969) (holding that where evidence showed that decedent died from hazard included in policy, burden was on insurer to prove that death resulted directly or indirectly from circumstance that was excluded from policy coverage). The same is true under Texas law. See Tex. Ins. Code 21.58(b) (Vernon Pamp. Supp. 2004). Because Liberty Mutual will have the burden at trial of proving that Gibson's claim falls within one or more Policy exclusions, to obtain summary judgment, it "must establish `beyond peradventure all of the essential elements of the . . . defense.'" Bank One, Tex., N.A. v. Prudential Ins. Co. of Am., 878 F. Supp. 943, 962 (N.D. Tex. 1995) (Fitzwater, J.) (quoting Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986)).
Although Liberty Mutual issued the Policy to an Oklahoma insured for an Oklahoma dwelling, both parties rely primarily on Texas law in briefing this motion. Gibson specifically relies on Texas law to argue the legal effect of an ambiguous Policy, see P. Mem. at 5, and for principles of contract construction and interpretation, id. at 6. (As noted, she also presents a public policy argument under Kentucky law.) Because Oklahoma and Texas law appear consistent in this respect, the court need not engage in an extensive choice-of-law analysis.
Liberty Mutual recognizes that it has the burden of proving the applicability of a policy exclusion. See D. Br. at 4.
A
Liberty Mutual has introduced the Policy in evidence, and the declaration page shows that Harris was a named insured during November 4, 1998 to November 4, 1999. See D. App. 35. It has thus demonstrated that, if Harris committed the theft reported in September 1999, he was an insured under the Policy.
Under the facts alleged, it is possible, of course, that the theft occurred at sometime between March 1999 and September 1999 (the interval between Bennie's visits to the dwelling). This possibility is immaterial, however, because Harris was a named insured during this entire period.
Gibson contends that Liberty Mutual should never have added Harris to the Policy without her approval, that she clearly intended that she be the only named insured, and that Harris should not have been a named insured and was improperly added. To support the factual premise of this argument, she cites only Bennie's affidavit. See P. Mem. at 6 n. 58 (citing P. App. 3). Bennie avers that he
learned that on November 4, 1998, [Harris] called Liberty Mutual and added himself as a listed insured, over the phone, to my mother's homeowner's policy. These changes were made without any verbal or written instruction, approval, or signature from my mother. [Harris] did not have the legal capacity at the time to make such changes to my mother's policy.
P. App. 3.
Liberty Mutual moves to strike this part of Bennie's affidavit on the ground that "[t]hese statements contain legal conclusions, and information that is clearly not within the personal knowledge of [Bennie]." D. Mot. to Strike at 2. The court agrees. Fed.R.Civ.P. 56(e) requires that "opposing affidavits shall be made on personal knowledge" and "shall set forth such facts as would be admissible in evidence[.]" Hearsay is inadmissible unless it falls within an exception to the hearsay rule. Fed.R.Evid. 802. Gibson has not responded to Liberty Mutual's motion to strike and thus has failed to show how evidence concerning what Bennie "learned" can be anything but hearsay, or to show how Bennie obtained personal knowledge that Gibson had not instructed Liberty Mutual to make the change or had not approved it. Bennie's assertion that Harris lacked legal capacity is an inadmissible legal conclusion from a lay witness. See Fed.R.Evid. 701.
Accordingly, Liberty Mutual has established that Harris was a named insured during the policy period in which the theft loss occurred.
B
The next question presented is whether Liberty Mutual has established beyond peradventure that Harris committed the theft.
Liberty Mutual appears to rely on the following evidence to establish that he did: (1) adjuster notes that recount Bennie's belief that Harris took the property, see D. Br. at 2 n. 5 (citing D. App. 44-46); (2) Bennie's sworn petition for the appointment of a guardian, filed in Oklahoma District Court, in which he averred that he should be appointed guardian of Gibson's person and estate because, inter alia, Harris "removed all of [Gibson's] personal property and jewelry valued at over $5,000.00[,]" id. (citing D. App. 50); and (3) Gibson's assertion in her petition in this case that she had brought to Liberty Mutual's attention her "claim that approximately $35,000 of her personal property had been stolen and/or converted by [Harris][,]" id. at 3 (citing P. Pet. at 2, ¶ III).
As noted, this case was removed from state court, and Gibson's operative pleading is her "petition."
Gibson argues that the notes of Bennie's statements to Liberty Mutual and the guardianship application merely show that he was suspicious of Harris and do not establish that Harris was responsible. She cites Bennie's affidavit testimony that he does not know who is responsible for the loss and lacks proof that Harris is responsible. Gibson also relies on Bennie's statement in a recorded interview with a Liberty Mutual investigator, and on notes taken by a Liberty Mutual employee who spoke to Bennie on October 5, 1999, in which he said that he did not know who was responsible and doubted that Harris was responsible for the second break-in because Harris was too sick and weak to break down the door. Gibson also cites Bennie's affidavit testimony that Harris denied taking any of Gibson's property. Gibson argues that Liberty Mutual lacked a reasonable basis to deny her claim absent conclusive evidence that Harris contributed to or was responsible for the loss.
She cites Kentucky law to argue that it does not violate public policy or the policy terms to permit an innocent spouse to recover. Absent any indication that Kentucky law controls or that Oklahoma or Texas law dictates that she recover under an innocent spouse theory, the court need not address this contention. Cf. D. Rep. Br. at 5 (acknowledging that Texas recognizes innocent spouse doctrine, but only concerning arson).
In his affidavit, Bennie avers:
I initially suspected that [Harris] may have been involved in the first burglary but I do not know who committed the theft of my mother's property. I have no actual proof that [Harris] is responsible for the loss of my mother's property. I never suspected that [Harris] was any way involved with the second burglary, as he would have been too physically weak to break the door down and remove the items and he did not own a truck. I have no knowledge of who is in fact responsible for the loss of my mother's property. The items stolen and damaged were items that were my mother's separate property, some of which [Harris] may never have known about. If [Harris] did in fact steal, convert, or destroy any of my mother's property he did so without her knowledge or approval. [Harris] denied taking any of my mother's property. [Harris] died in November of 2000.
P. App. 3.
Liberty Mutual moves to strike as hearsay Bennie's assertion that Harris denied taking the property. See D. Rep. Br. at 3; D. Mot. Strike at 1-2. Concerning his statement that he does not know who is responsible and was only suspicious of Harris, Liberty Mutual points out that this assertion "is directly opposite of the statements he previously made under oath on his petition for appointment as [Gibson's] guardian." D. Rep. Br. at 3. Finally, Liberty Mutual contends the affidavit testimony directly contradicts statements Bennie made to Liberty Mutual on October 5, 1999.
Liberty Mutual also relies on evidence submitted in a reply appendix, but the court ordered the appendix stricken and so has not considered the contents of that appendix.
The court may set to one side the question whether there is a fact issue concerning Harris' responsibility for the second theft, which Bennie reported in October 1999. As Liberty Mutual points out in its reply brief, Gibson's lawsuit is based only on the loss reported in September 1999. See P. Pet. at 2 (alleging that "[u]pon returning in September of 1999, however, [Bennie] observed the house to be condemned with all of [Gibson's] possessions missing[,]" and omitting in any other part of the petition any reference to the loss reported in October 1999).
It can be inferred from the record that Gibson did not sue on the second loss because all her personal property that is the subject of her Policy claim was taken in the first incident. See D. Rep. Br. at 5 (citing P. Pet. at 2).
The court now turns to the September theft. The court agrees with Liberty Mutual that Bennie's assertion that Harris denied taking the property must be stricken as inadmissible hearsay. This leaves as evidence Bennie's statements that he initially suspected Harris but does not know who committed the theft, that he lacks proof of Harris' responsibility and knowledge of who is responsible, and that Harris may never have known about some items stolen and damaged.
Moreover, because Liberty Mutual has established that Harris was an insured at the time in question, it is irrelevant whether, as Bennie asserts, Harris stole, converted, or destroyed Gibson's property without her knowledge or approval.
As Liberty Mutual correctly observes in its reply brief, Bennie swore under oath in an Oklahoma District Court document — a petition for the appointment of a guardian — that one reason he should be appointed guardian of Gibson's person and estate was because Harris had "removed all of [Gibson's] personal property and jewelry valued at over $5,000.00." D. App. 50. In other words, in March 1999 — six months before he reported the theft — Bennie swore that Harris had already removed all of Gibson's personal property and jewelry. "[A] nonmovant cannot defeat a motion for summary judgment by submitting an affidavit which directly contradicts, without explanation, his previous testimony." Albertson v. T.J. Stevenson Co., 749 F.2d 223, 228 (5th Cir. 1984); see Doe ex rel. Doe v. Dallas Indep. Sch. Dist., 220 F.3d 380, 386 (5th Cir. 2000) (collecting cases that hold that nonmoving party cannot manufacture dispute of fact merely to defeat summary judgment motion). Gibson has not made a sufficient effort in her summary judgment response — nor has Bennie in his affidavit — to explain why Bennie would make the unqualified, sworn assertion in a document intended to cause a court to grant him guardianship over his mother and her estate that Harris had removed all her personal property and jewelry if he only "suspected" that Harris committed the theft and in fact lacked personal knowledge or proof that Harris was responsible.
Moreover, in the petition she filed in this case, Gibson alleges: `[Gibson] brought a claim to her insurance company's attention, [Liberty Mutual], claiming that approximately $35,000 of her personal property had been stolen and/or converted by [Harris]." P. Pet. at 2. This is a binding judicial admission. See, e.g., Sweet Jan Joint Venture v. FDIC, 809 F. Supp. 1246, 1248 n. 2 (N.D. Tex. 1992) (Fitzwater, J.) (holding that allegation in amended complaint that each plaintiff had executed written guaranties of promissory note was binding judicial admission).
The court recognizes that an admission made in a superseded pleading is considered to lose its binding force and to have value only as an evidentiary admission. See White v. Arco/Polymers, Inc., 720 F.2d 1391, 1396 n. 5 (5th Cir. 1983). Here, however, Gibson has never amended her petition.
Accordingly, the court holds that Liberty Mutual has established beyond peradventure that the loss in question arose out of an act committed by Harris, and that it is not liable for breaching the Policy.
IV
The court now turns to Gibson's extracontractual claims. Liberty Mutual maintains that because it properly denied Gibson's claim, it had a reasonable basis to do so and therefore cannot be held liable on any extracontractual cause of action asserted. In her only response to Liberty Mutual's motion, Gibson argues:
[Liberty Mutual] had no reasonable basis to deny Plaintiff's claim. As clearly shown above, there is no conclusive evidence to suggest that Mr. Harris contributed to or was responsible for the loss to Plaintiff and therefore, no conclusive evidence to support Defendant's denial of claim. As such, Plaintiff's bad faith claim, DTPA claim, Texas Insurance Code violation claim, and prompt payment of claims tort are not barred. At the very least, whether or not the claim was reasonably denied should be an issue presented to the trier of fact.
P. Mem. at 8. Because Liberty Mutual has defeated contractual liability by establishing that the loss in question arose out of an act committed by Harris, an insured under the Policy, it follows that Liberty Mutual had no reasonable basis to deny Gibson's claim. Liberty Mutual is thus entitled to summary judgment on these causes of action as well.
* * *
For the reasons assigned, Liberty Mutual's motion for summary judgment is granted, and this action is dismissed by judgment filed today.
SO ORDERED.