The Sixth Circuit reversed the district court's order granting summary judgment to State Farm based upon the insured's alleged concealment of the truth when questioned about a fire that destroyed his home. Rose v. State Farm Fire & Cas. Co., 2014 U.S. App. LEXIS 17312 (6th Cir. Sept. 8, 2014).
A fire destroyed the insured's home. He reported the loss to State Farm, who assigned Rob Raker to investigate the claim. Coverage was denied because State Farm contended that the "Intentional Acts" and "Concealment or Fraud" conditions of the homeowner's policy were violated.
The insured sued State Farm. The district granted summary judgment to State Farm after finding that some of the answers the insured gave to Raker were misleading and material. The court determined that the insured failed to identify multiple tax liens and judgments when questioned about his financial status.
The Sixth Circuit reversed. In order for State Farm to rely on the concealment provision, the insured must have intentionally concealed or misrepresented a material fact. False statements alone were not enough. In response to an open-ended question, the insured volunteered that a suit was on-going between himself and a bank. The insured offered to let Raker talk to the attorney handling the case.
It was true that in the years leading up to the fire, dozens of tax liens had been filed against the insured. But Raker never asked the insured directly about tax liens. Further, an accountant handled all of the insured's finances and taxes. Finally, although there were several lawsuits that had been filed against the insured over the years, State Farm had the burden of establishing that the insured intentionally gave inaccurate answers. The insured was forthcoming in disclosing a multi-million dollar judgment. Therefore, a jury might reasonably conclude that he had little motive to conceal the existence of other, relatively minor legal debts.