The motor home was insured under a motor home policy issued by Progressive Casualty Insurance Company. The policy included comprehensive coverage with an agreed value of $63,000 and a zero deductible. 

Progressive's investigation of the claim

After communication with the local sheriff's office, Progressive assigned investigation of the claim to Rita Sharma, a member of Progressive's special investigations unit.

As part of its investigation, Progressive obtained cell phone records from phones belonging to Young; his wife, Anna Young; and his son, John Young III. These records showed that on November 10, 2014, at 4:03 a.m., the cell phone belonging to Young's son used the cell phone tower that was the closest to the canal where the motor home had been recovered. 

Both Young and his son participated in examinations under oath administered by Progressive as part of its investigation into Young's theft claim. Young stated that he believed his son's cell phone was in the vicinity of the canal because it had been inadvertently left for the weekend in a truck belonging to Young's customer, Ed Amaral.

Key testimony

Young's son, however, testified that he didn't have any reason to believe he did not have his phone during that time, and also that he could not think of anyone else who would have made calls from his cell phone during that time.

Subsequent analysis of cell phone records revealed that Young's son's cell phone was used on November 7, 8, 9, and 10 in Modesto, California, and near Young's home in Ceres, California. 

On July 9, 2015, Progressive denied coverage for the claim, contending that Young had made material misrepresentations during the investigation of the reported theft claim.

Insured sued Progressive for breach of contract

Young sued the insurer for breach of contract.

Progressive moved for summary judgment, arguing that Young had made a material misrepresentation regarding the theft claim — namely, that he lied to Progressive about his son's cell phone being in Amaral's truck during the time the motor home was sunk in the canal — voiding coverage under the policy and negating his breach of contract claim.

The Progressive policy provided:

FRAUD OR MISREPRESENTATION

We may deny coverage for an accident or loss if you or a person seeking coverage has concealed or misrepresented any material fact or circumstance or engaged in fraudulent conduct, in connection with the presentation or settlement of a claim. 

Knowingly made a false statement

The district court granted the motion.

In its decision, the district court found that Young had knowingly made a false statement about the location of his son's phone at the time of the alleged theft. As the district court explained, that phone made a call on Monday, November 10, at 4:03 a.m. and used the cell tower nearest the canal where the motor home was found.

The court pointed out that Young had stated during his examination under oath that the phone had been left in his customer's truck, but that his son had stated that he had no reason to believe he did not have his phone over the weekend or that anyone else would have made a call from it, and that cell phone records showed the phone repeatedly communicated with cell towers around Young's son's home throughout the weekend preceding the theft. 

Related: Using technology to take a bite out of fraud

Additionally, the district court added, the false statement was material. It reasoned that whether Mr. Young's son was in the vicinity of the sunken motor home at the time of its theft was "directly relevant to establishing that the motor home had indeed been stolen or if it had been intentionally sunk by its owner." According to the district court, a reasonable insurer "would attach significant importance to that fact in evaluating whether coverage was appropriate."

The district court concluded that because the "undisputed facts" showed that Young had misrepresented a material fact during his insurance claim, coverage under the policy was voided, and because coverage was voided, Young could not succeed on a claim for breach of contract.

The case is Young v. Progressive Cas. Ins. Co., No. 1:16-CV-01198-DWM (E.D. Cal. June 6, 2017).

Steven A. Meyerowitz, Esq., is the director of FC&S Legal, the editor-in-chief of the Insurance Coverage Law Report, and the founder and president of Meyerowitz Communications Inc. Email him at [email protected].