An insurer was justified in denying coverage for the alleged theft of an automobile where the insured made numerous misrepresentations about the price he paid for the car, pre-existing damage, repair of the damage and when he last saw the car prior to the alleged theft. ( Hodjat v. State Farm Mutual Automobile Insurance Company (2012) WL 5077907)
Facts
Allen Hodjat owned a used car business. He and his wife purchased a damaged BMW, which they intended to repair and sell.
The Hodjats purchased an automobile insurance policy from State Farm Mutual Automobile Insurance Company. The policy required that they cooperate with State Farm in any claim and provided that “[t]here is no coverage under this policy if you or any other person insured under this policy has made false statements with the intent to conceal or misrepresent any material fact or circumstance in connection with any claim under this policy.”
Mr. Hodjat reported the car stolen, and State Farm conducted an investigation into the alleged theft. Mr. Hodjat and his wife submitted several statements regarding the theft and condition of the car. For example, when he first reported the theft, Mr. Hodjat told State Farm that he purchased the car for $65,000. Later, however, in an affidavit of loss, the Hodjats stated they purchased the car for $28,000. Still later, in a recorded statement, Mr. Hodjat claimed they paid between $26,000 and $27,000. Meanwhile, the title documents for the car showed a sale price of $25,000 to $25,199.
During the course of the investigation, Mr. Hodjat’s description of the condition of the car also changed dramatically. In the recorded statement, he told State Farm that the car was drivable at the time he purchased it, but later he stated that it was not drivable and had to be towed to his business. In addition, during the course of the investigation, Mr. Hodjat made inconsistent statements regarding how much it cost to repair the car, providing estimates ranging from $1,800 to $5,040 to $8,000.
Mr. Hodjat’s description of when he last saw the car and when he discovered the theft also changed each time he spoke with State Farm and the police.
State Farm requested that the Hodjats submit various records. The Hodjats submitted some, but not all, of the requested records.
State Farm retained an attorney to examine the Hodjats under oath and to provide a legal opinion regarding coverage. The attorney ultimately recommended that State Farm deny the claim on the grounds the Hodjats had failed to cooperate in the investigation and had made material misrepresentations regarding their claim.
State Farm denied the claim and the Hodjats filed suit. State Farm moved for summary judgment on the grounds that the Hodjats had misrepresented numerous facts in connection with the claim. The Hodjats opposed the motion, asserting that State Farm had manipulated the facts, hired dishonest investigators and had relied on unreasonable legal advice to deny the claim. However, the Hodjats failed to provide any actual evidence to support their assertions. Thus, the trial court entered summary judgment in favor of State Farm. The Hodjats appealed.
Holding
The Court of Appeal affirmed, finding that, pursuant to the terms of the policy, there was no coverage for the Hodjats’ claim. The Court noted that Mr. Hodjat misrepresented the purchase price of the car, the extent of the prior damage to the car, where he had the car fixed, the amount of money he paid to have it fixed, and the last time he saw the car before it was stolen. In summary, the Court stated: “Every detail of the Hodjats’ claim – from the condition of the car to the cost of the repairs to the discovery of the theft – was riddled with inconsistencies.” Thus, per the express terms of the policy, there was no coverage.
Comment
This case contains a very detailed discussion of the numerous inconsistent statements the insureds made at different points in time. Seemingly, it was the sheer volume of inconsistencies which ultimately led the both the trial court and Court of Appeal to conclude that, as a matter of law, the insureds had intentionally concealed and misrepresented material facts.