Cell Phone Records Support Insurer’s Denial Based on Fraud

When insurers investigate insurance claims and suspect that something about the claim is not quite right, they often assign special investigation units evaluate whether the claim lacks merit or is otherwise fraudulent. In Young v. Progressive Casualty Insurance Company,¹ a federal district court in California recently upheld an insurer’s denial of its insured’s claim for the theft of his motor home based on the policy’s fraud and misrepresentation provisions. The court’s decision was based primarily on the cell phone records of the insured’s son.

On Monday, November 10, 2014, Young claimed that his motor home was stolen. Local law enforcement found the motor home in a nearby canal where it had been submerged. When found, the motor home was missing license plates and its vehicle identification number. The steering wheel was found to have been tied (presumably to make sure the motor home would drive straight), and a pole had been jammed against the accelerator.

The motor home was insured under a motor home policy issued by Progressive Casualty Insurance Company. After Young submitted an insurance claim for the theft, the insurer communicated with the local sheriff’s office and then assigned its special investigation unit to investigate the claim.

As part of its investigation, the insurer obtained cell phone records from phones belonging to the insured, his wife, and his son. The records demonstrated that on November 10, 2014, at 4:03 a.m., the cell phone belonging to the insured’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. 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 a customer of the insured. The insured’s son, however, testified that he did not have any reason to believe he did not have his phone during that time and could not think of anyone who would have made calls from his cell phone during that time.

On July 9, 2015, the insurer denied coverage for the claim, contending that the insured had made material misrepresentations during the investigation of the reported theft claim. Young filed suit against Progressive for breach of contract and bad faith.

The insurer moved for summary judgment, arguing that the insured had made a material misrepresentation regarding the theft claim. Progressive argued that the insured lied about his son’s cell phone being in a customer’s truck during the time the motor home driven into the canal, and that the misrepresentation voided coverage under the insurance policy.

The Progressive policy provided in material part

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.

Oddly, Young did not file an opposition to the motion for summary judgment.

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. The court’s rationale was:

“Here, the undisputed facts show Young knowingly made a false statement about the location of his son’s phone at the time of the alleged theft. That phone made a call on Monday, November 10, at 4:03 a.m. and utilized the cell tower nearest the canal where the motor home was found. (Doc. 19-2 at ¶ 11.) Young stated during his Examination Under Oath that the phone had been left in his customer Ed Amaral’s truck, (Doc. 19-20 at 10), but his son Young III stated 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, (Doc. 19-21 at 7-8), and cell phone records show the phone repeatedly communicated with cell towers around Young III’s home throughout the weekend preceding the theft, (Doc. 19-2 at ¶ 16.)

Additionally, the false statement was material. Whether Young III was in the vicinity of the sunken motor home at the time of its theft is directly relevant to establishing that the motor home had indeed been stolen or if it had been intentionally sunk by its owner. A reasonable insurer would attach significant importance to that fact in evaluating whether coverage was appropriate.

Because the undisputed facts show Young misrepresented a material fact during his insurance claim, coverage under the Policy was voided, and because coverage was voided, Young cannot succeed on a claim for breach of contract.

I find it odd that the insured did not file an opposition to the summary judgment motion. From reviewing the docket, it does not appear that the insured’s counsel withdrew from representing the insured. One can only speculate why no opposition was filed, however based solely on the evidence set out in the court order, the outcome seems to be correct.
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¹ Young v. Progressive Cas. Ins. Co., No. 1:16-CV-01198-DWM (E.D. Cal. June 6, 2017).