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Proctor v. GEICO General Insurance Co.

United States District Court, E.D. Kentucky, Central Division, Lexington

January 2, 2019




         Lawrence Proctor claims that he was involved in an accident involving his truck and fifth-wheel recreational vehicle in January 2015. After the accident, Proctor submitted an insurance claim to GEICO to compensate him for damages to his RV. After investigating the claim, however, GEICO denied coverage because GEICO concluded that the damage to the RV claimed by Proctor preexisted the accident in January 2015. As a result, Proctor brought this lawsuit for breach of contract and bad faith. But Proctor made a misrepresentation of material fact pertaining to the purchase price of the RV that permitted GEICO to deny coverage under the insurance policy. As a result, GEICO is entitled to judgment as a matter of law.

         I. Factual and Procedural Background

         Plaintiff Lawrence Proctor claims that he was involved in a single-vehicle accident on January 6, 2015, in Mount Vernon, Kentucky, involving his truck and 2003 Keystone Challenger RV. [DE 1-1 at 6]. On the Initial Loss Report, Proctor described the accident using the following narrative:

I was turning into a [s]ervice station when a “DRUGGIE” walked out in front of me. I veered off the road to keep from hitting the man with my truck and my RV [f]ifth[-]wheel [t]railer. I went down into a Catch basin alongside the road. This basin was approximately 6 feet deep and was very rough. I needed a wrecker to get pulled back onto hard surface. The rear stabilizers [were] pushed back and folded over twisting all of the metal and ruining the stabilizers. The Skirting [alongside] the door was twisted and mangled. The plastic end caps were [shaken] loose and lost. The spare tire is carried underneath the belly of the RV. It may be damaged. The three slides were dislodged, and are sitting disoriented in the RV. All three slides are now sitting at an angle to the RV. I have attempted to tighten the slides up to prevent air leakage, I reside in this 37[-]foot RV and it has been cold outside.

[DE 41-1 at 3, Pg ID 464; see DE 41-2 at 1, Pg ID 487].[1] After the accident, the vehicle was extracted from the catch basin by Throughtruck, a towing company. [DE 49-3]. There were no witnesses to the collision and no police report was filed after the accident.

         On January 17, 2015, Proctor submitted a claim to his insurance carrier, GEICO. [DE 41-1]. The GEICO insurance policy provides the following measures of liability for insurance claims, (1) “[T]he actual cash value of the stolen or damaged property at the time of the loss, ” or (2) “[T]he amount necessary to repair the damaged property to its pre-loss condition.” [DE 41-3 at 10, Pg ID 498 (emphasis omitted)]. The policy also states that

Coverage is not provided to any person who knowingly conceals or misrepresents any material fact or circumstance relating to this insurance:
(a) at the time of application; or
(b) at any time during the policy period; or
(c) in connection with the presentation or settlement of a claim.

[Id. at 28; Pg ID 516].

         After Proctor filed the insurance claim, Chris Cirillo, a Senior Field investigator, investigated the claim on behalf of GEICO. [DE 41-4 at 1, Pg ID 521]. According to Cirillo, a search of the RV's title and claims history revealed that the RV was salvaged in June 2013. [Id. at 1, Pg ID 522]. Additionally, Cirillo claims that, prior to Proctor's purchase of the RV, Shelter Insurance Company identified the RV as a total loss and that the RV was listed for sale at a public auction by Copart, Inc. [Id. at 1-2, Pg ID 522-23]. Proctor does not deny the accuracy of this information but asserts that other than Cirillo's search of the title and claims history, the other material cited in support of this factual statement is inadmissible evidence. [DE 49 at 2, Pg ID 725].

         According to GEICO, photographs of the RV that were used when it was previously listed for sale by Coparts, Inc., indicate that the damage claimed by Proctor preexisted the accident on January 6, 2015. [See DE 41-1 at 4, Pg ID 465; DE 41-4 at 5-9, Pg ID 525-29]. Cirillo claims that he located the photographs using a Google cache search on January 29, 2015, and that copies were taken from, an auto auction website. [DE 41-4 at 2, Pg ID 522].

         Proctor does not dispute that his RV was previously sold by Coparts, Inc., but argues that the photographs and documents allegedly obtained from Coparts are unauthentic and inadmissible.[2][DE 49 at 2-3, Pg ID 725-26]. Proctor has also provided an affidavit of Jim Bowman who states that he sold the 2003 Keystone Challenger RV to Proctor and that it had been salvaged because of water damage. [DE 49-5 at 1, Pg ID 772]. Bowman also asserted that he had repaired the RV and that the RV had no exterior damage when Bowman sold it to Proctor. [Id.].

         On January 30, 2015, Cirillo took photographs of Proctor's RV and conducted a recorded interview with Proctor. [See DE 41-4 at 2, 11-46, Pg ID 522, 531-66]. In the interview, Cirillo identified himself as a representative of GEICO insurance company. [Id. at 20, Pg ID 540]. Additionally, Proctor affirmatively indicated that he was aware that the interview was being recorded. [Id. at 21, Pg ID 541]. Proctor stated that he had owned the RV since December 2013 and bought it from a man in Berea, Kentucky. [Id. at 25, 37 Pg ID 545, 557]. Furthermore, Proctor gave a lengthy narrative of the accident. [Id. at 26-31, Pg ID 546-51].

         Then, Cirillo asked Proctor how much money he paid for the RV, to which Proctor responded, “I don't really remember. I take a lot of medicine.” [Id. at 37, Pg ID 557]. Cirillo responded by saying, “We're going to need to find out . . . . Or you can tell me if you remember.” [Id.]. Proctor replied, “16 something. I don't know what it was. I don't know who I can find out from.” [Id.]. Cirillo asked, “16 what, thousand?” [Id.]. Proctor replied, “Yeah.” [Id.].

         Later, Cirillo asked Proctor about the condition of the RV when Proctor purchased it. [Id. at 39, Pg ID 559]. Proctor stated that he had done some work on the RV “[b]ut it was in decent condition.” [Id.]. Next, Cirillo asked, “Was any of this damage on there before?” [Id.]. Proctor responded, “No.” [Id.].

         Additionally, Cirillo asked Proctor about any repairs that he had made after he purchased the RV. [Id. at 41, Pg ID 561]. Proctor responded that he had made minor cosmetic changes with the electricity, had worked on the slides, and had gotten a new hydraulic pump. [Id. at 41-43, Pg ID 561-63].

         Subsequently, GEICO denied Proctor's claim. Initially, GEICO sent two letters in February 2015, one to Proctor and another to his previous attorney, making a reservation of rights under the contract because Proctor “may have breached condition 13 in Part V” of his contract dealing with fraud and misrepresentation. [DE 41-11 at 1-4, Pg ID 646-49]. Then, on June 15, 2015, GEICO sent a letter to Proctor denying his claim because after investigation, GEICO determined that the claimed damages were “pre-existing damages” that “occurred before the RV was listed on the policy.” [Id. at 5, Pg ID 650].

         Proctor filed a lawsuit alleging breach of contract and bad faith in violation of the Kentucky Unfair Claims Settlement Practice Act (“UCSPA”) in Kentucky state court on June 1, 2017. [DE 1-1 at 5-9]. In the state court complaint, Proctor asserted that “The Keystone RV had a market value of approximately $6, 000.00 immediately prior to this damage.” [Id. at 6]. GEICO answered in the state court action on June 22, 2017. [Id. at 10-15].

         The state court record indicates that GEICO served interrogatories on Proctor. In response to an interrogatory, Proctor stated that

The approximate value of the RV pre-accident was likely between $10, 000 and $12, 000, based upon the purchase price paid by the Plaintiff ($7, 000.00) and the additional improvements made by the Plaintiff (installation of a hydraulic pump at about $3, 500.00, repair of A/C and furnace at about $750.00, and various small repairs and upgrades to the interior).

[DE 1-3 at 4]. Additionally, Proctor admitted that he was seeking to recover damages in excess of $75, 000. [Id. at 10]. As a result, GEICO removed the matter to this Court pursuant to 28 U.S.C. §§ 1441 and 1446. [DE 1].

         On May 30, 2018, a deposition was held where Proctor testified about the condition of the vehicle at the time of purchase and the purchase price.[3] Initially, it appears that Proctor was confused about the date he purchased the RV. [See DE 49-1 at 1-3, Pg ID 741-43]. Proctor explained that he takes prescription medications, specifically Warfarin and Lyrica, that affect his memory. [Id. at 3, Pg ID 743]. Still, Proctor indicated that he could understand and accurately respond to the questions during the deposition. [Id. at 3-4, Pg ID 743-44].

         During the deposition, Proctor testified that he looked at the RV twice before purchasing it but did not have it inspected or appraised. [DE 41-10 at 2-4, Pg ID 635-37]. Proctor also asserted that he was not aware that the RV was damaged by a fire in 2013 until after the accident in January 2015. [Id. at 2, Pg ID 635]. Additionally, Proctor testified that he purchased the RV for $7, 000 but claimed that the RV had a book value of “23 or 25 [thousand]” at the time of purchase. [Id. at 4, Pg ID 637]. Finally, Proctor testified that he learned about the RV's salvaged title when completing the registration paperwork. [Id.].

         Proctor was also asked about improvements that he made to the RV during the deposition. Proctor was asked,

Now, in your answers to interrogatories, you said you - and I asked you this earlier - I said, [d]id you ever install a hydraulic pump? And you said, No.
Now, I'm looking at your answers to interrogatories, and you say you installed a hydraulic ...

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