Opinion
Case No. C 93-3378 BAC
May 17, 1994
FINDINGS OF FACT AND CONCLUSIONS OF LAW
Pending before the court are a number of motions filed by the parties to the action. Plaintiff and counterclaim defendant Safeco Insurance company of America ("Safeco") filed a motion for summary judgment or, in the alternative, for an order specifying issues that exist without substantial controversy (submitted without oral argument on April 8, 1994). On February 7, 1994, Safeco also submitted a motion for an order specifying issues that exist without substantial controversy. Defendant Ivan Michael Bass ("Bass") has submitted a motion for summary judgment. Both parties have submitted numerous motions regarding discovery and sanctions issues.
FINDINGS OF FACT
1. Plaintiff and counterclaim defendant Safeco is a corporation organized and existing under the laws of the State of Washington, with its principal place of business in Seattle, Washington.
2. Defendant and counterclaimant Bass is a natural person and citizen of the County of Alameda, State of California.
3. The amount in controversy exclusive of interest and costs exceeds the sum of $50,000.00.
4. On or about June 3, 1990, Safeco issued to Bass a homeowners insurance policy, policy no. OA957257 ("the policy"), effective June 3, 1991 for the residence located at 924 Leo Way, Oakland, California (the "Leo Way residence").
5. With respect to fraud or concealment, the policy provided:
CONDITIONS * * *
3. Concealment or Fraud.
This policy will void if an "insured" has, before or after a loss:
a. intentionally concealed or misrepresented any material fact or circumstance; or
b. made false statements or engaged in fraudulent conduct relating to this insurance.
6. On or about October 20, 1991, the Leo Way residence was destroyed by a fire.
7. On or about October 23, 1991, Bass reported the loss to Safeco.
8. To date, the payments total at least $322,504.90.
A. Misstatements Regarding Improvements to Attic
1. in presenting his claim, Bass asserted in his examination under oath that the attic area in the Leo Way residence had been converted into a bathroom with a bathtub and shower and a bedroom.
2. Bass further asserted in his examination under oath, that the purported bedroom and bathroom were in the attic when he bought the Leo Way residence from Robert and Patricia Falconer ("the Falconers") in 1986.
3. Bass testified in his examination under oath that when he purchased the Leo Way residence, the attic included one window and that he added six additional windows between the time he purchased the Leo Way residence in 1986 and the October 20, 1991 fire.
4. Bass testified in his examination under oath that he added six skylights to the attic area between the time he purchased the Leo Way residence in 1986 and the October 20, 1991 fire.
5. Bass retained and fired contractors before ultimately submitting the plans of Anderson and Greene to rebuild his home, in his sworn statement and proof of loss.
6. The plans submitted by Anderson and Greene reflect an attic containing a bedroom with numerous windows and skylights, a bathroom with a shower, bathtub, toilet, sink and light fixtures and ceilings that are 9 feet, 6 inches tall.
7. Robert Falconer testified in his deposition that when he and his wife sold the Leo Way residence to Bass in 1986, the attic did not have any bedrooms, bathrooms or fixtures.
8. Robert Falconer testified that the tallest point in the attic was less than five feet tall and that most of the attic was only two to three feet tall.
9. The owners of the Leo Way residence prior to the Falconers, Wayne and Christine Harbert, confirmed that at its tallest point, the attic was less than five feet tall and that the attic did not include any bathroom, bedroom or any plumbing or electrical fixtures.
10. Bass's ex-wife who purchased the Leo Way residence with Bass in 1986 and lived in the home, Diane Gallo, testified in deposition that there was no stairway leading to the attic area, and that as far as she knew, there were no bedrooms or bathrooms in the attic area of the Leo Way residence.
11. Diane Gallo testified in her deposition that there were no windows or skylights in the attic area of the Leo Way residence.
12. Kenneth P. Carvalho of Buestad Construction, Inc., employed by Bass to submit a bid for rebuilding the Leo Way residence with the purported attic bedroom and bathroom, testified in deposition that the total cost of replacing the attic with the bedroom and bathroom was $29,850.00.
B. Misrepresentations Regarding Lost Personal Property
1. In or about October 1991, Bass submitted to Safeco a partial inventory, prepared with the aid of a Safeco adjuster of personal property items claimed to have been lost in the fire, which he purportedly purchased on the dates and for the amounts stated in the inventory.
2. In or about July 1992, Bass submitted to Safeco an extensive list of items of personal property claimed to have been lost in the October 20, 1992 fire ("the July 1992 list").
3. The July 1992 list included numerous items in the purported attic bedroom, called "Bedroom #2," in the amount of $32,463.00 and items in the purported attic bathroom, called "Bathroom #2," in the amount of $2,503.00.
4. Later, Bass testified that he had been unemployed since 1986.
5. At his examination under oath on May 25, 1993, Bass submitted another list of personal property items claimed to have been lost in the fire ("the May 1993 list".)
6. In the May 1993 list, Bass changed a substantial number of the dates of purchase in the inventory taken in October 1991 to pre-date 1987.
7. The May 1993 list listed no items of personal property under any heading of "Bedroom #2" or "Bathroom #2," although items were listed under "Bedroom #1" and "Bathroom #1,"
8. On or about June 2, 1993, Bass submitted a sworn statement of proof of loss in the sum of $403,262.00 of personal property claimed to have been lost in the October 20, 1991 fire ("the June 1993 sworn statement").
9. The June 1993 sworn statement specifically incorporated the July 1992 list and the May 1993 list.
10. At his deposition on February 14, 1994, Bass admitted that he knowingly misrepresented that the purported attic bedroom and bathroom contained certain items of personal property.
11. At his deposition on February 16, 1994, Bass admitted to submitting a claim of loss regarding personal property in which he knowingly and falsely claimed items of personal property that he did not have for the express purpose of obtaining additional payments from Safeco.
12. Bass testified that he falsely claimed numerous items as being lost in the fire that he did not actually have or own.
13. Bass admitted that he had no items of personal property in the purported attic bedroom or bathroom at the time of the fire.
CONCLUSIONS OF LAW
1. The court has jurisdiction over the subject matter herein and the parties to the complaint herein pursuant to 28 U.S.C. § 1332 and 2201.
2. Venue is proper pursuant to 28 U.S.C. § 1391.
3. Defendant Bass has filed a motion for summary judgment stating that plaintiff Safeco is estopped from voiding the insurance policy and has waived its right to void said policy on the grounds that it accepted policy premiums from defendant with knowledge of all facts which it contends it used as a basis to void the insurance policy. Defendant's motion is DENIED.
4. Under California law, if an insured knowingly gives false testimony as to a material fact in a claim of loss with an intent to deceive the insurer, that conduct voids the insurance policy as to the claim, and the insured is precluded from any recovery on that claim. Cummings v. Fire Ins. Exch., 202 Cal.App.3d 1407, 1418-1419 (2d Dist., 1988); Singleton v. Hartford Fire Ins. Co., 127 Cal.App. 635, 645 (3d Dist., 1932).
5. Where an insured intentionally makes a false claim of loss, the intent to deceive may be implied. Cummings v. Fire Ins. Exch., supra, 202 Cal.App.3d at 1417-1419; Baldwin v. Bankers Shippers Ins. Co. of New York, 222 F.2d 953, 954 (9th Cir., 1955); Hyland v. Millers Nat. Ins. Co., 91 F.2d 735, 743 (9th Cir., 1937),cert. denied, 303 U.S. 645.
6. The materiality of a misrepresentation with regard to a claim of loss by an insured may be determined as a matter of law. Cummings v. Fire Ins. Exchange, supra, 202 Cal.App.3d at 1417 (2d Dist., 1988).
7. in determining the materiality of an insured's misrepresentation with respect to a claim of loss, courts determine whether the misrepresentation concerns a subject reasonably relevant to the insurer's investigation, and whether a "reasonable insurer" would attach importance to the fact misrepresented. Cummings v. Fire Ins. Exchange, supra, 202 Cal.App.3d at 1416-1417 (2d Dist., 1988).
8. Where an insured claims the loss of property that he or she did not actually have or own at the time of the loss, the misrepresentation has been held to be material. Baldwin v. Bankers Shippers Ins. Co. of New York, supra, 222 F.2d at 954; Hyland v. Millers Nat. Ins. Co.,supra, 91 F.2d at 743 (9th Cir., 1937), cert. denied, 303 U.S. 645;Newman v. Fireman's Fund Insurance Company, 67 Cal.App.2d 386, 399 (2d Dist., 1944).
9. The intent to defraud the insurer is necessarily implied when the misrepresentation is material and the insured wilfully makes the misrepresentation with knowledge of its falsity. Cummings v. Fire Ins. Exch., 202 Cal.App.3d 1407, 1418-1419 (2d Dist., 1988); see also, Claflin v. Commonwealth Ins. Co., 110 U.S. 81 (1884).
10. Bass made misrepresentations of material fact with an intent to deceive Safeco with regard to his claim of loss arising out of the October 20, 1991 fire made under the policy.
11. The court finds that Bass's testimony and prior statements regarding the chronology of improvements made to his attic are not credible.
12. With respect to his personal property losses, Bass's intent to deceive is necessarily established based on his admission of his knowledge of the falsity of his statements to Safeco and on the materiality of those false statements.
13. The policy is voided as to Bass' entire claim of loss arising out of the October 20, 1991 fire.
14. Safeco is entitled to restitution from Bass of all payments made to Bass on his claim of loss arising out of the October 20, 1991 fire.
15. Safeco is entitled to restitution in the amount of $322,504.90.
16. Any stated uncontroverted fact deemed a conclusion of law is hereby incorporated as such.
17. Defendant Bass's cross-motion for summary judgment is DENIED.
18. The parties' various motions for discovery and discovery scheduling are DENIED as moot.
19. Defendant Bass's motion for protective order is DENIED as moot.
20. Plaintiff's motions for sanctions are DENIED.
21. Judgment is hereby entered in favor of plaintiff and against defendant.
22. The clerk of the court is instructed to close the file in this matter.
IT IS SO ORDERED.