At trial, State Farm identified items on the Borchardts' proof of loss statement that it argued were material misrepresentations. One of those items was Ms. Borchardt's wedding ring. State Farm asserted that she valued her jewelry in a bankruptcy petition prepared in 2000 or 2001 at $50 but that on the proof of loss statement to State Farm she claimed her wedding ring was worth $2,000.

State Farm also pointed out that:

• Ms. Borchardt testified at trial that the family owned one non-functioning lawnmower, but the proof of loss statement listed two lawnmowers – one that was 12 years old and one that was 17 years old with no notation that either was non-functioning.
• The proof of loss statement contained 13 televisions, of which four were flat screens, but Ms. Borchardt testified they owned 10 televisions, of which two were flat screens.
• The Borchardts listed 1,000 DVDs on their loss statement but their teenage son testified during a deposition that the family owned an estimated 100 DVDs.
• Although the Borchardts claimed that two laptop computers were destroyed, the Borchardts' daughter testified that she only owned one.
• On the statement, six food dehydrators were mistakenly listed instead of one six-shelf food dehydrator.
• Even though Mr. Borchardt had pawned all of his firearms many years earlier, he included on the loss statement a number of accessories for firearms, including ammunition, eight pairs of head sets, a cleaning kit, padded carrying cases, and a hard-sided case.

State Farm also argued that the Borchardts' claim for $1,500 in food; $500 in liquor; and $500 in tea and coffee was implausible given the Borchardts' dire financial circumstances, particularly when Ms. Borchardt borrowed $200 from her parents to buy milk and food for the family in the summer of 2014. Given the family's financial circumstances, State Farm also questioned the loss of 14 pairs of sunglasses, including multiple pairs of designers sunglasses valued at $135, $150, and $190.

The jury determined that the inaccuracies on the Borchardts' proof of loss statement were enough to establish a willful intent to defraud State Farm by concealment or misrepresentation of a material fact or circumstance relating to the insurance claim.

The U.S. District Court for the District of Minnesota entered judgment awarding no damages to the Borchardts (but awarding $9,927.50 in damages to their teenage son for his insurance claim).

The Borchardts moved for judgment as a matter of law, arguing that no reasonable juror could have found the misrepresentations about their personal property were material.

The district court found there was sufficient evidence to allow a reasonable juror to conclude that the Borchardts overstated the value of items lost in the fire by thousands of dollars and, therefore, that no expert was required to explain to the jury that fraudulent statements of this magnitude would be material to an insurer.

The Borchardts appealed, arguing that the jury did not have a legally sufficient basis to return a verdict in State Farm's favor because State Farm had presented no evidence on the issue of materiality.

The Eighth Circuit's Decision

The Eighth Circuit affirmed.

In its decision, the circuit court pointed out that the Borchardts admitted at trial to misrepresenting a number of items they claimed were lost in the fire. As examples, the Eighth Circuit continued, they submitted 10 times the number of DVDs that their teenage son testified in his deposition were inside the home, they submitted a claim for two flat screen televisions that did not exist, they submitted a claim for two lawnmowers when they owned only one non-functioning mower; State Farm cast doubt on the plausibility of the Borchardts' claim for $2,500 in food, liquor, coffee, and tea; and Ms. Borchardt was unable to explain why she valued her wedding ring at an amount 50 times more than she valued all of her jewelry in a bankruptcy petition filed approximately 13 years earlier.

On this record, the Eighth Circuit ruled, there was “ample evidence for a reasonable jury to find that the Borchardts' misrepresentations were material – that is, they were substantial enough to matter to a reasonable insurer.”

The Eighth Circuit emphasized that it was “apparent from the record” that the jury did not presume materiality. It pointed out that, while deliberating, the jury asked the court, “Is there a specified amount State Farm considers to be a 'small amount'. ex. % or dollar amount,” and the court responded, “As Instruction No. 13 explains, State Farm has the burden of proving that any concealment or misrepresentation was 'material' – that is, 'sufficiently substantial to matter to a reasonable insurer.' You must rely on your own recollection of the evidence in deciding whether State Farm carried its burden.”

The Eighth Circuit said that it assumed that the jury followed the court's instructions, weighed the evidence and credibility of the witnesses, and carefully reached the verdict that it did. It concluded that, viewing the evidence in a light favorable to the verdict, the record contained sufficient evidence to sustain the jury's finding of material misrepresentations and that the material misrepresentations regarding the personal property lost in the fire “voided their right to recover at all under the policy.”

The case is Borchardt v. State Farm Fire and Casualty Co., No. 18-2610 (8th Cir. July 29, 2019). Attorneys involved include: For Todd Borchardt, Michele Borchardt, Danielle Shaver, Plaintiffs – Appellants: Adam Christopher Hagedorn, Charles J. Lloyd, Livgard & Lloyd, Minneapolis, MN. For State Farm Fire and Casualty Company, Defendant – Appellee: Tony Raymond Krall, Katherine A. McBride, Meagher & Geer, Minneapolis, MN; Joseph Francis Lulic, Brownson & Norby, Minneapolis, MN.