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Borchardt v. State Farm Fire and Casualty Co.

United States District Court, D. Minnesota

August 16, 2017

TODD BORCHARDT, MICHELE BORCHARDT, DANIELLE SHAVER, and DILLON BORCHARDT, Plaintiffs,
v.
STATE FARM FIRE AND CASUALTY COMPANY, Defendant.

          Brian F. Murn and Charles J. Lloyd, LIVGARD & LLOYD, PLLP, for plaintiffs.

          Tony R. Krall, Leah A. Indrelie, and Lehoan T. Pham, HANSON LULIC & KRALL, LLC, for defendant.

          ORDER

          Patrick J. Schiltz United States District Judge

         In September 2014, a fire destroyed the home of plaintiffs Todd and Michele Borchardt and their adult children, plaintiffs Danielle Shaver and Dillon Borchardt (collectively, “the Borchardts”). The Borchardts submitted a claim to their homeowners insurer, defendant State Farm Fire and Casualty Company (“State Farm”). State Farm denied coverage after concluding that the Borchardts either set the fire themselves or arranged for someone else to do it. The Borchardts deny that they played any role in causing the fire. That dispute will be settled at trial.

         This matter is before the Court on State Farm's motion for partial summary judgment. State Farm asks this Court to rule that Shaver is not entitled to coverage for the loss of her personal property because she lied when being interviewed by State Farm after the fire. For the reasons that follow, the Court denies State Farm's motion.

         I. BACKGROUND

         A fire destroyed the Borchardts' home late on the evening of Friday, September 12, 2014. The Borchardts were deeply in debt at the time; in fact, the electricity to their home had been cut off several days earlier. Just hours before the fire was started, the Borchardts had left their home to spend the night at a nearby hotel. ECF No. 1 Ex. A ¶ 6; ECF No. 74 (“Murn Aff.”) Ex. 1 at 23:1034-42; Murn. Aff. Ex. 5 at 3. The Borchardt home was insured by State Farm; all four members of the family were named insureds under the policy.

         On September 16, 2014, the remains of the home were inspected by law- enforcement officers and State Farm representatives. Among those participating in the inspection were Doug Noah (an expert hired by State Farm) and Jim Onken (an adjuster employed by State Farm). Murn Aff. Ex. 5 at 2; Murn Aff. Ex. 4 at 98:13-99:4. Noah ultimately concluded that the fire had been intentionally set in the basement of the home sometime between 11:00 pm and midnight on September 12. Murn Aff. Ex. 5 at 5; Murn Aff. Ex. 4 at 107:9-14.

         Shaver was interviewed by Onken on September 24, 2014. Murn Aff. Ex. 1; ECF No. 65-1 (“Pham Aff.”) Ex. 1. State Farm alleges that, in the course of that interview, Shaver told two lies. First, Shaver told Onken that she had not smoked in the basement of the home on the day of the fire. Pham Aff. Ex. 1 at 10:451-53, 11:458-60. Second, Shaver told Onken that, the “[l]ast [she] remember[ed], ” she had locked the basement door. Murn Aff. Ex. 1 at 13:561; see also Id. at 37:1673-75 (“Q: Okay and the best of your knowledge the last time that you can remember you locked the door? R: Yes sir.”).

         After this lawsuit was filed, Shaver was deposed, and at her deposition she admitted that she had, in fact, smoked in the basement at about 2:00 pm on the day of the fire; she also admitted that she had lied when she told Onken otherwise. Pham Aff. Ex. 3 at 40:3-22. Moreover, Shaver arguably changed her statement regarding the basement door, now testifying, “I thought it was [locked], but I don't know.” Id. at 22:9. In response to leading questions from State Farm's counsel, Shaver admitted that she had lied to Onken about whether the back door was locked, even though her deposition testimony was arguably consistent with her statement to Onken. Id. at 21:12-17.

         Shaver later submitted a “correction sheet” with respect to her interview with Onken. See Murn Aff. Ex. 2. On that correction sheet, Shaver again stated that she had smoked a cigarette in the basement on the day of the fire, and Shaver explained that she had been scared to admit that fact to Onken. Shaver also asserted that she thought she had locked the basement door, but it was possible that she had not. Id.

         As noted, Shaver was a named insured under the homeowners policy that covered the Borchardt home. That policy contained a “Concealment or Fraud” provision, which limited coverage as follows:

         Concealment or Fraud.

         With respect to any occurrence or loss caused by fire, we do not provide any ...


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