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Fire Foundation for Profit and Significant Misrepresentations Defeats Suit Against Insurers



Sharon Paige Richey and Tommy Richey sued car owners insurance companies, alleging breach of contract, bad faith, malicious prosecution and false imprisonment. They also sued as a result of criminal proceedings against the plaintiff after two fires in the plaintiff's home. In S Haron Paige Richey, et al. v. Auto-Owners Insurance Co. Case No. 2: 19-CV-219-KFP, U.S. District Court of the Middle District of Alabama Northern Division (October 15, 2020), the USDC decided on the insurer's proposal for summary judgment.

UNLIMITED FACTS

Plaintiffs Sharon and Tommy Richey bought a house in Montgomery, Alabama. On January 24, 2017, Mrs. Richey signed an application for insurance with the car owner and applied for homeowner insurance coverage on that property. Car owners then issued insurance.

The fires

On January 26, 2017, a fire loss damaged the home. On February 26, 2017, a second fire occurred that further damaged the home. On March 1, 2017, Lt. Peoples, an investigator at the Montgomery Fire Department, wrote a letter to car owners requesting that car owners provide a copy of all the actual information that car owners had in their file about the aforementioned fire losses. . Car owners responded to the request and provided the requested information to Lt. Peoples. Car owners supplemented their original answer twice.

Richeys was charged and arrested on two separate occasions for insurance fraud 1. degree in relation to the insurance claim filed with car owners after the fires. The original charges zero were advocated with permission to be prosecuted again, and the second set of charges was rejected. The court found the following additional undisputed essential facts: The purchase price of the home was $ 33,500, and the bond of ownership required Richeys to purchase real estate insurance in the amount of $ 32,000. Mrs. Richey ran a property insurance application from car owners two days before the first fire loss. In her application, she requested $ 135,300 in housing coverage, over $ 100,000 more than the title bond required. Car owners issued a homeowner's insurance for the property to Mrs. Richey with the requested coverage of $ 135,300.

The application for car ownership made and submitted by Mrs Richey requires an applicant to list all losses during the last five years. Mrs Richey's application contained several substantially false statements as to that she had not suffered any losses in the last five years; that she had not filed "personal bankruptcy"; Mrs Richey, in contrast to the requirement to list valuable items that are not listed.

If the application made by Sharon Richey revealed the bankruptcy and fire loss in November 2016, based on the normal practice of car owners, the policy would not have been written.

Richey's Representations After the Fire Losses

At some point between the first and second fires, Richeys provided a list of contents to car owners who identified, among other things, a $ 44,815 painting (entitled "Chess Game"), two $ 18,000 paintings, a $ 4,000 Rolex watch and eight WWE wrestling belts totaling more than $ 3,000. After the second fire, Richeys submitted a second list of contents that differed from the first, valued the chess game painting at $ 245.99 and left out the two $ 18,000 paintings, valued the Rolex watch at $ 10,000 and listed only four WWE wrestling belts for a total of about $ 65

Criminal case against Richeys

In July 2017, Richeys was charged by the Montjomery County Grand Jury with charges of insurance violations. In 2017, Richeys was charged with first-degree insurance fraud and a second set of arrest warrants was issued on October 24, 2017. Finally, on April 10, 2018, the charges against Richeys.

Other Fire Losses

Richey's claim that they were very unlucky because all four homes like Mrs. Richey owns or has previously owned has been insured and has been damaged or destroyed by fire.

Access to the home and Richey's financial situation

None of Richeys was employed at the time of the fire. Although Mrs. Richey received $ 1,200 a month in food stamps before moving to Montgomery in late 2016, she no longer received food stamps at the time of the fires. Mr. Richey received disability benefits of $ 679 per month, which was Richey's only source of income for their ten-household household. Richeys reported that their normal monthly expenses were $ 4,613.27, of which disability payments were very short. the provisions of the insurance policy: the exemption provision and the hidden or fraud provision.

In order to determine a case of arson sufficient for a summary assessment, car owners must show that (1) the fire was intentionally lit (2) the insured had a motive for committing the alleged arson; and (3) the insured either lights a fire or has it lit, as evidenced by the inexplicable surrounding circumstantial evidence implicating the insured.

Motives for committing arson can be derived from an insured's financial difficulties at the time of the fire. The undisputed evidence establishes the first part of the affirmative defense of arson for Richey's insurance claims – the second intentional fire. There is ample uncontested evidence in the minutes that the plaintiffs had motives for committing arson. The plaintiff's financial situation supports a finding of motives for committing fire. Finally, with regard to the third element, there is undisputed evidence that the second fire was caused by Richeys or by their guidance. Mrs. Richey specifically requested $ 100,000 more in insurance coverage than is required by her title bond. Two days later, the house first burned down.

Overall, the USDC concluded that the indisputable facts were sufficient to establish that the second fire was caused by Richeys or on their guidance. Therefore, all three elements for arson are supported by the protocol, which gives car owners defense against breach of contract and a basis for not paying for the policy.

Richeys violates the exceptions including concealed or fraudulent provision [19659006] In addition, the indisputable evidence shows that the plaintiff violates the hidden or fraudulent provisions of the insurance policy. Car owners denied Richey's insurance claims under this provision on the grounds that they had knowingly made many material misstatements to car owners.

For example, Richey provided two opposing evidence of loss, the first claiming $ 113,529.05 for content and an "invaluable" value for the house and the second claiming $ 24,367.86 for content and $ 135,300 for the house . The material errors submitted by the plaintiffs in their application and subsequent allegations were abundant and extensive. In view of incorrect submissions in the application. A sworn proof of loss that includes a number of non-existent objects invalidates the entire policy as a matter of law.

In this case, given the number of misrepresentations that Richeys made to car owners; the extreme discrepancies in their lists of contents, for which they gave no explanation or contradictory explanations; their acknowledgment that, although they have knowingly and knowingly completed and submitted the content lists, they do not actually know the quantity or value of many of the articles included; the fact that the contradictory evidence of loss both swore under oath; and the indisputable evidence supporting a finding of arson, the USDC found that the plaintiff's erroneous representations by law were intentional. The plaintiff violated the provision on concealment or fraud in accordance with the insurance policy and thus cannot establish a breach of the contract claim against car owners. so. It is undisputed that each of the arrest warrants was issued following a grand jury indictment, which is a probable cause. Regardless of the plaintiff's feelings regarding the underlying allegations of their arrests, the plaintiff's false imprisonment fails by law, and car owners have the right to summarize the judgment regarding this allegation.

The defendant's draft summary judgment was granted.

Richeys made a good living by filing fire insurance claims that were probably fraudulent. They seemed to live off insurance claims after all their homes seemed to be destroyed by fire soon after they were insured. They lied continuously in the application and claim stage and were properly arrested for offenses against insurance fraud and arson. Why the state of Alabama dropped the criminal charges is staggering, what the USDC found to be indisputable evidence is a fantastic violation of the obligation to prosecute insurers, as insurers are clearly not a favored victim. Car owner insurance companies and the other insurance companies in Richeys should consider applying for a refund of the money paid for compensation or expenses.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance coverage, insurance claims management, cheating and insurance companies almost equally for insurance fraudsters . He also acts as an arbitrator or mediator for insurance-related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims lawyer and more than 52 years in the insurance industry. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine / ACE Legend Award.

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