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A federal district court in California has upheld an insurancecompany's denial of its insured's claim for the theft of his motorhome, based in large part on his son's cell phone records.

Motor home stolen?

On Monday, November 10, 2014, John Cordell Young, Jr., said his1961 GMC "diesel pusher" motor home was stolen.

Law enforcement recovered the motor home from a canal where ithad been submerged that same day. The motor home was missing itslicense plates and its vehicle identification number tag.

The steering wheel had been tied to keep the motor home drivingstraight, and a pole had been wedged against theaccelerator.

The motor home was insured under a motor home policy issued byProgressive Casualty Insurance Company. The policy includedcomprehensive coverage with an agreed value of $63,000 and a zerodeductible. 

Progressive's investigation of the claim

After communication with the local sheriff's office, Progressiveassigned investigation of the claim to Rita Sharma, a member ofProgressive's special investigations unit.

As part of its investigation, Progressive obtained cell phonerecords from phones belonging to Young; his wife, Anna Young; andhis son, John Young III. These records showed that on November 10,2014, at 4:03 a.m., the cell phone belonging to Young's son usedthe cell phone tower that was the closest to the canal where themotor home had been recovered. 

Both Young and his son participated in examinations under oathadministered by Progressive as part of its investigation intoYoung's theft claim. Young stated that he believed his son's cellphone was in the vicinity of the canal because it had beeninadvertently left for the weekend in a truck belonging to Young'scustomer, Ed Amaral.

Key testimony

Young's son, however, testified that he didn't have any reasonto believe he did not have his phone during that time, and alsothat he could not think of anyone else who would have made callsfrom his cell phone during that time.

Subsequent analysis of cell phone records revealed that Young'sson's cell phone was used on November 7, 8, 9, and 10 in Modesto,California, and near Young's home in Ceres,California. 

On July 9, 2015, Progressive denied coverage for theclaim, contending that Young had made materialmisrepresentations during the investigation of thereported theft claim.

Insured sued Progressive for breach of contract

Young sued the insurer for breach of contract.

Progressive moved for summary judgment, arguing that Young hadmade a material misrepresentation regarding the theft claim— namely, that he lied to Progressive about his son's cellphone being in Amaral's truck during the time the motor home wassunk in the canal — voiding coverage under the policy andnegating his breach of contract claim.

The Progressive policy provided:

FRAUD OR MISREPRESENTATION

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We may deny coverage for an accident or lossif you or a person seeking coverage has concealedor misrepresented any material fact or circumstance or engaged infraudulent conduct, in connection with the presentation orsettlement of a claim. 

Knowingly made a false statement

The district court granted the motion.

In its decision, the district court found that Young hadknowingly made a false statement about the location of his son'sphone at the time of the alleged theft. As the district courtexplained, that phone made a call on Monday, November 10, at 4:03a.m. and used the cell tower nearest the canal where the motor homewas found.

The court pointed out that Young had stated during hisexamination under oath that the phone had been left in hiscustomer's truck, but that his son had stated that he had no reasonto believe he did not have his phone over the weekend or thatanyone else would have made a call from it, and that cell phonerecords showed the phone repeatedly communicated with cell towersaround Young's son's home throughout the weekend preceding thetheft. 

Related: Using technology to take a bite out offraud

Additionally, the district court added, the false statement wasmaterial. It reasoned that whether Mr. Young's son was in thevicinity of the sunken motor home at the time of its theft was"directly relevant to establishing that the motor home had indeedbeen stolen or if it had been intentionally sunk by its owner."According to the district court, a reasonable insurer "would attachsignificant importance to that fact in evaluating whether coveragewas appropriate."

The district court concluded that because the "undisputed facts"showed that Young had misrepresented a material fact during hisinsurance claim, coverage under the policy was voided, and becausecoverage was voided, Young could not succeed on a claim for breachof contract.

The case is Young v. Progressive Cas. Ins. Co., No.1:16-CV-01198-DWM (E.D. Cal. June 6, 2017).

Steven A. Meyerowitz, Esq.,is the director of FC&S Legal, the editor-in-chief of theInsurance Coverage Law Report, and the founder and president ofMeyerowitz Communications Inc. Email him at [email protected].