Walter Thomas, Jr. v. Allstate Vehicle & Prop Ins ( 2019 )

Case: 17-60764 Document: 00514892448 Page: 1 Date Filed: 03/28/2019
IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
United States Court of Appeals
Fifth Circuit
No. 17-60764
FILED
March 28, 2019
Lyle W. Cayce
WALTER THOMAS JR., Clerk
Plaintiff-Appellant
v.
ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY,
Defendant-Appellee
Appeal from the United States District Court
for the Southern District of Mississippi
USDC No. 1:17-CV-64
Before DENNIS, OWEN, and SOUTHWICK, Circuit Judges,
PER CURIAM: *
Walter Thomas, Jr. owns a one-third share in a Mississippi construction
business. After one of the houses the company built sat on the market for four
months, Thomas purchased a house and home insurance policy with coverage
against fire loss with Allstate Vehicle and Property Insurance Company
(Allstate). Thomas was the only listed beneficiary on the policy. Thirteen days
after the policy issued, the residence was partially destroyed by fire, and
Thomas filed a claim for payment with Allstate. Allstate’s investigation
* Pursuant to 5TH CIR. R. 47.5, the court has determined that this opinion should not
be published and is not precedent except under the limited circumstances set forth in 5TH
CIR. R. 47.5.4.
Case: 17-60764 Document: 00514892448 Page: 2 Date Filed: 03/28/2019
No. 17-60764
reported that the cause of the fire was arson and “included intentional human
involvement.”
Thomas’s policy with Allstate required that, in the event of a loss, he (1)
“submit to examinations under oath” as often as Allstate reasonably required,
and (2) give Allstate “all accounting records, bills, invoices, and other vouchers
or certified copies which [it] may reasonably request to examine.” The policy
further stated that Allstate had “no duty to provide coverage” if Thomas failed
to comply with the requirements and his noncompliance prejudiced Allstate.
Thomas provided two statements that were recorded and transcribed by
Allstate insurance agents regarding the claim, and his business partners
provided statements as well. Allstate then scheduled an examination under
oath, to which Thomas initially agreed. However, Thomas balked when
Allstate requested that he bring personal financial records to the examination,
including, among other things, federal and state income tax returns for the
previous three years and bank statements from the previous year. When
Allstate requested these documents, Thomas’s counsel threatened a lawsuit for
bad faith, describing the request as “completely overbroad and burdensome.”
Thomas refused to sit for an examination, provide the requested financial
documentation, or give Allstate authorization to obtain the information from
third parties such as employers, banks, and the IRS. Allstate then sent two
letters requesting that Thomas sit for an examination under oath and provide
the requested financial documentation. Thomas agreed to provide an affidavit
attesting to his previous recorded statements and to allow access to the
damaged property, but nothing more. Allstate thereafter denied coverage
based on Thomas’s refusal to cooperate with the company’s investigation in
violation of the terms of his policy.
2
Case: 17-60764 Document: 00514892448 Page: 3 Date Filed: 03/28/2019
No. 17-60764
Thomas filed suit, alleging that Allstate breached the insurance contract
and acted in bad faith by refusing to pay for the fire damage. Allstate moved
for summary judgment, arguing that there was no genuine dispute as to the
material fact that Thomas “failed to cooperate in Allstate’s investigation” of
the fire because he (1) refused to submit to an examination under oath and (2)
refused to provide access to financial records material to whether he had a
motive to commit arson. The district court granted Allstate’s motion for
summary judgment, concluding that, under the terms of Thomas’s policy,
“there is no question that [he] had a duty to submit to an examination under
oath.” The district court also found that the financial records requested by
Allstate—including “personal financial records, records of payments made for
construction of the property, federal and state income tax records, credit card
and bank statements, a full financial statement, and personal cell phone
records for a month prior to the fire and forty-eight hours after”—were
“material to an insurer’s arson investigation” because they were related to
determining whether Thomas’s financial status might have provided him with
a motive to commit arson. Because such records were material to the arson
investigation, the district court concluded that Allstate’s requests were
reasonable.
We review the district court’s grant of summary judgment de novo.
Rogers v. Bromac Title Servs., L.L.C., 755 F.3d 347, 350 (5th Cir. 2014).
Summary judgment will be granted when “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). “In a diversity case such as this one,
we apply state substantive law”—here, Mississippi law. See Wiltz v. Bayer
CropScience, Ltd. P’ship, 645 F.3d 690, 695 (5th Cir. 2011).
3
Case: 17-60764 Document: 00514892448 Page: 4 Date Filed: 03/28/2019
No. 17-60764
The Mississippi Supreme Court has held that an examination under oath
and financial records such as those requested by Allstate are material to an
insurer’s arson investigation, as they may reveal whether the insured had a
motive to commit the arson. See, e.g., Monticello Ins. Co. v. Mooney, 733 So. 2d
802, 808 (Miss. 1999). Where arson is the cause of the underlying claim for
coverage, an insurance company’s requests for additional material financial
documents that may reveal a motive for arson by the insured are reasonable
as a matter of law. See, e.g., McPhail v. State Farm Fire & Cas. Co., 992 F.2d
325, 1993 WL 152061, at *1, *5 (5th Cir. 1993). 1 Because the district court
found that “there is no dispute that the cause of the fire was arson,” Thomas’s
argument that he cannot be compelled to turn over material financial
information fails. See Allison v. State Farm Fire & Cas. Co., 543 So. 2d 661,
663 (Miss. 1989).
Therefore, Allstate was entitled to summary judgment because Thomas
refused to submit to an examination under oath and provide financial
information material to Allstate’s arson investigation. Accordingly, the district
court’s judgment is AFFIRMED.
1 McPhail, while unpublished, is precedential because it was issued before January 1,
1996. See 5TH CIR. R. 47.5.3; Weaver v. Ingalls Shipbuilding, Inc., 282 F.3d 357, 359 & n.3
(5th Cir. 2002).
4