from the United States District Court for the Northern
District of Mississippi
JOLLY, SOUTHWICK, and HIGGINSON, Circuit Judges.
STEPHEN A. HIGGINSON, Circuit Judge:
Cedric and Renee Flowers and Renee's children, Ashley and
Michael Simmons, appeal the district court's grant of
Plaintiff-Appellee State Farm Fire and Casualty Insurance
Company's motion for summary judgment. State Farm brought
this declaratory judgment action seeking to have a
homeowner's insurance policy issued by State Farm to
Cedric Flowers declared void ab initio as a result
of material misrepresentations made by Cedric Flowers in his
application for the policy. We AFFRIM.
2008, Cedric and Renee Flowers purchased a plot of land in
Courtland, Mississippi, and asked relatives Ricky and
Jennifer Scott to build a house for them on the property for
a set price. Because Cedric and Renee Flowers were unable to
obtain financing for construction of the house themselves,
they quitclaimed the property to the Scotts, who then
obtained a construction loan under their own names, using the
property as collateral. According to Cedric and Renee
Flowers, the Scotts agreed to convey the property back to
them upon completion of the construction. Amid disputes with
the Scotts over the cost and scope of construction, Renee
Flowers's adult children, Ashley and Michael Simmons,
moved into the house before construction was completed. The
Scotts eventually defaulted on the construction loan and
attempted to sell the property. In 2011, unable to obtain
financing to purchase the uncompleted home, Cedric and Renee
Flowers filed suit in state court to enjoin sale of the
April 2012, Cedric Flowers applied for and was issued a
homeowner's insurance policy with State Farm. Shortly
thereafter, during the night of July 17, 2012, a fire damaged
the insured house and its contents. After discovering Cedric
Flowers was not actually the owner of the property, State
Farm filed suit seeking a determination that the insurance
policy is void ab initio as a result of material
misrepresentations made by Cedric Flowers in his application.
Following discovery, State Farm filed a motion for summary
judgment, which the district court granted. Cedric Flowers,
Renee Flowers, Ashley Simmons, and Michael Simmons now
court reviews a district court's grant of summary
judgment de novo, applying the same standard as the district
court. Carroll v. Metro. Ins. & Annuity Co., 166
F.3d 802, 805 (5th Cir. 1999). Summary judgment is only
appropriate "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). "We resolve factual controversies in favor of the
nonmoving party, but only when there is an actual
controversy, that is, when both parties have submitted
evidence of contradictory facts." Little v. Liquid
Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).
Mississippi substantive law applies to this diversity case.
See Cox v. Wal-Mart Stores E., L.P., 755 F.3d 231,
233 (5th Cir. 2014).
Mississippi law, "[i]f the applicant for insurance
undertakes to make a positive statement of a fact, if it be
material to the risk, such fact must be true."
Prudential Ins. Co. of Am. v. Estate of Russell, 274
So.2d 113, 116 (Miss. 1973) (quoting Fidelity Mut. Life
Ins. Co. v. Miazza, 46 So. 817, 819 (Miss. 1908)). An
insurance contract "induced by misrepresentation or
concealment of material facts may be avoided by the party
injuriously affected[.]" Id. (quoting
Miazza, 46 So. at 819); see also Carroll,
166 F.3d at 805 ("Under Mississippi law, if an applicant
for insurance is found to have made a misstatement of
material fact in the application, the insurer that issued a
policy based on the false application is entitled to void or
rescind the policy."). Importantly, "[i]t is not
sufficient that [the applicant] believes [the statement]
true, but it must be so in fact, or the policy will be
avoided, provided, always, that the misstatement be about a
material matter[.]" Russell, 274 So.2d at 116
(quoting Miazza, 46 So. at 819).
materiality of a representation is determined by the probable
and reasonable effect which truthful answers would have had
on the insurer." Sanford v. Federated Guar. Ins.
Co., 522 So.2d 214, 217 (Miss. 1988). Further,
materiality is judged at the time of the misrepresentation.
Edmiston v. Schellenger, 343 So.2d 465, 467 (Miss.
1977). An insurer seeking to void an insurance contract based
on a material misrepresentation must establish the existence
of the factual misstatement and its materiality by clear and
convincing evidence. See Brewster v. Bubba Oustalet,
Inc., 231 So.2d 189 (Miss. 1970) ("It has been the
rule in this state for a long time that where fraud is
charged it must be shown by evidence which is clear and more
convincing that a mere preponderance."); see also
Carroll, 166 F.3d at 805 (applying Mississippi law);
Gardner v. Wilkinson, 643 F.2d 1135, 1136, n.3 (5th
Cir. 1981) (same).
Appellants do not dispute that, contrary to the information
contained in the application, Cedric Flowers did not own the
insured property when he applied for the State Farm
homeowner's policy in April 2012. Nor do they dispute that Cedric
Flowers's ownership of the property was material to State
Farm's decision to issue the insurance
policy. Instead, Appellants insist
that there is no evidence that he willfully misrepresented
that he was the property's owner and argue that there is
a genuine question of fact as to whether Cedric Flowers
actually told the agent who took his application that he
owned the property.
to the Appellants' description of the decision below, the
district court did not find that Cedric Flowers
"knowingly" misrepresented ownership of the
property on his application. This is because, as the district
court noted, whether the misrepresentation "was
intentional, negligent, or the result of mistake or oversight
is of no consequence." State Farm Fire & Cas.
Ins. Co. v. Flowers, No. 3:15-CV-99-SA-SAA, 2016 WL
1621997, at *2 (N.D. Miss. Apr. 19, 2016) (quoting
Republic Fire & Cas. Ins. Co. v. Azlin, No.
4:10-CV-037-SA, 2012 WL 4482355, at *6-7 (N.D. Miss. Sept.
26, 2012)); see also Russell, 274 So.2d at 116
(quoting Miazza, 46 So. at 819); Carroll,
166 F.3d at 805; F.D.I.C. v. Denson, 908 F.Supp.2d
792, 797 (S.D.Miss. 2012). Thus, we find unavailing