In Neidenbach v. Amica Mutual Insurance Company
, Dale and Kim Neidenbach filed a claim with their insurance company arising out of a fire in 2012. They that alleged they sustained a total loss to their home and personal belongings. The claim sought damages of approximately $375,000.00 to the dwelling and garage and personal property losses of approximately $262,500.00. Following this fire, Amica advanced the insureds a prepaid Visa card with $10,000.00 credit and also a check for $5,000.00, both for emergency expenses. Amica also expended money and resources for the investigation, adjustment, and evaluation of the insureds’ claim.
Approximately six months after the fire occurred, the plaintiffs filed suit seeking to recover policy proceeds. Amica hired experts to defend the suit, including origin and cause investigators, engineers to perform scientific testing and other investigators to determine if the fire was intentionally set or not.
Amica filed a Motion for Summary Judgment alleging that the insureds made gross misrepresentations following the fire when they submitted their proof of loss. The insureds had filed for bankruptcy about a year prior to the fire and in that bankruptcy, swore under oath that their home had a value of $300,000 and that they owned only $7,000.00 worth of household goods, furs, jewelry, firearms, and other personal property. The Court determined that Amica was entitled to judgment as a matter of law because the insureds knowingly or willfully concealed or misrepresented to Amica the nature and value of their personal property, which amounted to material misrepresentations that voided the policy. As a result, the court agreed with Amica that under Missouri law, it was entitled to recover all amounts previously paid under the policy by way of advance payments. The Court ruled that Amica was entitled to recover from the insureds the undisputed amount that Amica paid to or on behalf of the insureds before it learned the fraud and concealment provision in the policy had been violated.
In a second Motion for Summary Judgment Amica also requested an award of attorney fees and expenses. Amica contended that the intentional misconduct or fraud by a party was a special circumstance which justified an award of attorney fees under Missouri law. The trial court noted however that Missouri law has not recognized fraud or misconduct in a declaratory judgment action as a special circumstance that would justify an award of fees.
The court determined that the issue of whether the fire was intentionally set or caused by arson was never litigated or determined. The Court found there were no special circumstances that would warrant an award of attorney fees or expenses in this case to Amica.
Amica also argued in its Second Motion for Summary Judgment that as a result of the misrepresentations and voided policy, the company should not be required to make payments to the mortgagee. The Court found that Amica did not meet its burden on that allegation and declined to order that the insurance company be indemnified by the insureds as to any future claims made by the mortgagee.
In sum, the District Court agreed with Amica that under Missouri law, it was entitled to recover amounts previously paid under the policy for additional living expenses, board up costs and other emergency expenses. As to Amica’s claim for attorney fees and other investigatory expenses, Amica’s Motion was denied however. Missouri State Courts recognize three limited exceptions that allow for an award of attorney fees in a declaratory judgment action, those being:
1. Where the result of a breach of duty involves the “wronged party in collateral litigation,”
2. Where the Court finds a need to “balance benefits” of litigation, and
3. Where the declaratory judgment plaintiffs (policy holders) claim is clearly baseless under published case law.
The trial court determined that this claim did not fall under any of the three recognized exceptions and therefore no attorney fees would be awarded to Amica. This trial court ruling came from the U.S. District Court for the Eastern District of Missouri.
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