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Brooks v. Allstate Insurance Co.

United States District Court, S.D. Mississippi, Eastern Division

June 12, 2014

RITA R. BROOKS, Plaintiff,


KEITH STARRETT, District Judge.

This matter is before the Court on the Defendant Allstate Insurance Company's Motion for Summary Judgment [8]. Having considered the submissions of the parties, the record, and the applicable law, the Court finds that the motion should be granted in part and denied in part.


The Plaintiff Rita R. Brooks ("Brooks" or "Plaintiff") seeks insurance benefits from Allstate Insurance Company ("Allstate") under Renters Insurance Policy No. 9 31 967186 02/04 (the "Policy") in this action. Brooks is the named insured under the Policy, covering Brooks' personal property located at 76 Old McIntosh Road, Collins, Mississippi, 39428 (the "Subject Property"). The Policy was in effect on December 31, 2009, when the residence at the Subject Property was heavily damaged and rendered uninhabitable by a fire.[1] At that time, Brooks leased the Subject Property from Mack Daniels, and lived at the Subject Property with her four children. Brooks subsequently asserted a loss claim under the Policy. On May 10, 2010, Allstate denied Brooks' claim. Allstate advised Brooks that it was exercising its right to cancel the Policy because she had made material misrepresentations regarding the age, value, and existence of items allegedly lost in the fire.

On April 4, 2013, Brooks filed suit against Allstate in the Circuit Court of Covington County, Mississippi. ( See Compl. [1-1 at ECF p. 4].) Brooks alleged that Allstate breached its contractual obligation to provide benefits under the Policy. Brooks further claimed that Allstate's denial of coverage was without any factual or legal basis, and was so egregious as to constitute an independent tort. The Complaint demands compensatory damages for Allstate's alleged breach of the insurance contract and punitive damages for Allstate's purported bad faith denial of coverage.

On May 7, 2013, Allstate removed the proceeding to this Court. ( See Notice of Removal [1].) Subject matter jurisdiction is asserted on the basis of diversity of citizenship under Title 28 U.S.C. ยง 1332.

On March 5, 2014, Allstate filed its Motion for Summary Judgment [8]. Allstate argues that it is entitled to summary judgment on the entire case because Brooks' actions violated the "Concealment Or Fraud" provision of the Policy. Allstate alternatively argues that Brooks' bad faith claim is due to be dismissed because it possessed an arguable basis for denying coverage, and because there is no evidence that it engaged in conduct justifying an award of punitive damages. In response, Brooks "agrees to withdraw or dismiss the claim for bad-faith denial of her insurance claim and punitive damages." (Pl.'s Resp. to Mot. for SJ [12] at p. 1.) Brooks, however, extensively opposes Allstate's request for summary judgment pursuant to its concealmentmisrepresentation defense.


A. Standard of Review

Federal Rule of Civil Procedure 56 provides that "[t]he court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a). "Where the burden of production at trial ultimately rests on the nonmovant, the movant must merely demonstrate an absence of evidentiary support in the record for the nonmovant's case.'" Cuadra v. Houston Indep. Sch. Dist., 626 F.3d 808, 812 (5th Cir. 2010) (quoting Shields v. Twiss, 389 F.3d 142, 149 (5th Cir. 2004)). However, "if the movant bears the burden of proof on an issue, either because he is the plaintiff or as a defendant he is asserting an affirmative defense, he must establish beyond peradventure all of the essential elements of the claim or defense to warrant judgment in his favor." Fontenot v. Upjohn Co., 780 F.2d 1190, 1194 (5th Cir. 1986). If the movant meets his burden, the nonmovant must go beyond the pleadings and point out specific facts showing the existence of a genuine issue for trial. Cannata v. Catholic Diocese of Austin, 700 F.3d 169, 172 (5th Cir. 2012) (citation omitted). "An issue is material if its resolution could affect the outcome of the action.'" Sierra Club, Inc. v. Sandy Creek Energy Assocs., L.P., 627 F.3d 134, 138 (5th Cir. 2010) (quoting Daniels v. City of Arlington, Tex., 246 F.3d 500, 502 (5th Cir. 2001)). "An issue is genuine' if the evidence is sufficient for a reasonable jury to return a verdict for the nonmoving party." Cuadra, 626 F.3d at 812 (citation omitted).

The Court is not permitted to make credibility determinations or weigh the evidence. Deville v. Marcantel, 567 F.3d 156, 164 (5th Cir. 2009) (citing Turner v. Baylor Richardson Med. Ctr., 476 F.3d 337, 343 (5th Cir. 2007)). When deciding whether a genuine fact issue exists, "the court must view the facts and the inferences to be drawn therefrom in the light most favorable to the nonmoving party." Sierra Club, Inc., 627 F.3d at 138. However, "[c]onclusional allegations and denials, speculation, improbable inferences, unsubstantiated assertions, and legalistic argumentation do not adequately substitute for specific facts showing a genuine issue for trial." Oliver v. Scott, 276 F.3d 736, 744 (5th Cir. 2002) (citing Sec. & Exch. Comm'n v. Recile, 10 F.3d 1093, 1097 (5th Cir. 1993)).

B. Allstate's Concealment-Misrepresentation Defense

The Policy states in pertinent part:

Concealment Or Fraud
This policy is void if it was obtained by misrepresentation, fraud or concealment of material facts. If it is determined that this policy is void, all premiums paid will be returned to you since there has been no coverage under this policy.
We do not cover any loss or occurrence in which any insured person has concealed or misrepresented any material fact or circumstance.

(Policy [10-1 at ECF p. 27].) Insurance policy provisions precluding insureds from engaging in concealment are reasonable and enforceable under Mississippi law. See Clark v. Aetna Cas. & Sur. Co., 778 F.2d 242, 245 (5th Cir. 1985) (citing Taylor v. Firemen's Fund Ins. Co., 306 So.2d 638, 644 (Miss. 1975)).[2] "In Mississippi, for an insurance company to defeat a policy on the basis of a concealment' clause, it must establish that statements by the insured were (1) false and (2) material and (3) knowingly and wilfully made." Id. (citing Watkins v. Cont'l Ins. Cos., 690 F.2d 449 (5th Cir. 1982)). The insurer must prove these elements by a preponderance of ...

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