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Thompson v. State Farm Fire and Cas. Co., 34 F.3d 932, 30 Fed.R.Serv.3d 62, 41 Fed. R. Evid. Serv. 156

Facts

E.G. and Betty Thompson owned a rental property that was destroyed by an intentionally set fire. After filing a claim with State Farm, the Thompsons were subjected to an investigation regarding their financial condition and potential motives for the fire. During this process, they made statements about imminent sales of their jewelry business and stock, which were later found to be misleading. The jury ultimately ruled in favor of State Farm, leading to the Thompsons' appeal.

Thompsons ascribed the killing of the purported sale to Morris' having made direct contact with Orville Munson (“Munson”), the owner of the Tah–Mels real estate (but not of the business). Munson testified at trial that he had sold the Tah–Mels business to Thompsons in 1984 but had retained the land and building in which the business was conducted.

Issue

Did the district court err in its jury instructions and evidentiary rulings, and was the jury's verdict in favor of State Farm supported by the evidence?

The Court of Appeals, Shadur, Senior District Judge, sitting by designation, held that: (1) jury was properly instructed on fraud; (2) evidence that insured suffered from epileptic seizures and took medication for that condition was excludable; (3) testimony regarding fire's point of origin was irrelevant; (4) charged conduct of insured was not sufficiently extreme and outrageous to permit recovery for intentional infliction of emotional distress; and (5) limiting each side's closing argument to 20 minutes was not abuse of discretion.

Rule

Under Oklahoma law, a fire insurance policy is void if the insured has willfully concealed or misrepresented any material fact or circumstance concerning the insurance or the subject thereof.

Oklahoma requires that the following provision (Okla.Stat.Ann. tit. 36, § 4803.G (West 1994)) be included in every fire insurance policy (id. § 4803.A and .B): Concealment, fraud. This entire policy shall be void if, whether before or after a loss, the insured has willfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto.

Analysis

The court found that the jury was properly instructed on the law of fraud and that the Thompsons' statements regarding the imminent sale of their business and stock were material misrepresentations. The evidence presented at trial supported the conclusion that the Thompsons had intentionally misled State Farm, which justified the jury's verdict in favor of the insurer.

From that perspective the jury was surely entitled to conclude (an understatement if there ever was one) that as of the time of Thompsons' September 11, 1991 examination there was no party interested in buying the Tah–Mels business and the real estate in which it was carried on for any amount, let alone for the $700,000 to $750,000 that Thompsons recounted to Sands.

Conclusion

The Court of Appeals affirmed the judgment for State Farm, concluding that the jury's findings were supported by the evidence and that the district court did not err in its rulings.

Affirmed.

Who won?

State Farm Fire & Casualty Company prevailed in the case because the jury found that the Thompsons had made material misrepresentations regarding their financial situation, which voided their claim under the insurance policy.

State Farm Fire & Casualty Company prevailed in the case because the jury found that the Thompsons had made material misrepresentations regarding their financial situation, which voided their claim under the insurance policy.

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