Editor's note: Steven A. Meyerowitz, Esq., is a director of FC&S Legal. FC&S and PC360 are both owned by Summit Professional Networks.

A federal district court in Michigan has ruled that a homeowners insurance policy was void where the insured sought coverage for property allegedly stolen from him that he had not said he owned several years earlier when he had entered bankruptcy.

The case

On December 10, 2012, close to midnight, while driving home from the Gold Coast strip club, two people allegedly robbed Alex Geller of numerous pieces of jewelry and a coat. Mr. Geller alleged that, while he was waiting at a stoplight, a car bumped his car from behind, that the driver of the vehicle that bumped his motioned for him to pull over, and that he complied. Upon exiting his car, Geller claimed that two people robbed him of the following items that he was wearing:

Item Year of Purchase Value

14 carat gold ring with 1.78 carat diamond 1995 $28,615

18 carat gold chain (weight of 149 grams) 1997 $18,500

14 carat bracelet (weight of 38 grams) 1997 $3,800

14 carat gold ring with 6 diamonds 1997 $5,500

Stud earring with 1.25 carat diamond 1991 $13,500

Ernst Benz chronograph watch 2005 $19,650

Black lambskin coat 2006 $600

On the day after the alleged robbery, Geller called his homeowner's insurance carrier, American Insurance Company (AIC), to report a claim for the stolen items. AIC directed Geller to file a police report and he allegedly did so after the call. Geller subsequently submitted a written claim for the seven items he reported as stolen.

AIC denied the claim for various reasons, including the policy's concealment or fraud provision.

Geller sued AIC, and the insurer moved for summary judgment.

The policy

The policy's concealment or fraud provision stated:

C. Concealment or Fraud–The entire policy will be void with respect to all insureds and all causes of loss if, whether before or after a loss, any insured has:
1. intentionally concealed or misrepresented any material fact or circumstance;
2. engaged in fraudulent conduct; or
3. made false statements relating to this insurance or during the presentation of a claim.

The court's decision

The court granted AIC's motion for summary judgment.

In its decision, the court explained almost a decade before the alleged robbery, on July 2, 2004, Geller had filed for bankruptcy. The court pointed out that his bankruptcy petition did not list any of the jewelry he claimed he owned prior to 2004 – the 14 carat gold ring with a 1.78 carat diamond, 18 carat gold chain (weight of 149 grams), 14 carat bracelet (weight of 38 grams), 14 carat gold ring with 6 diamonds, and stud earring with a 1.25 carat diamond. The court said that Geller listed his personal property total as “2,550.00” on the petition and that, under “furs and jewelry,” he listed “various jewelry” with a value of “50.00.” The court noted that Geller had signed the petition on the “signature of debtor” line, and that the following was written above the signature line:

I declare under penalty of perjury that the information provided in this petition is true and correct.

Moreover, the court continued, on October 13, 2004, the U.S. Bankruptcy Court for the Eastern District of Michigan issued a discharge of Geller's debt and subsequently closed the estate.

The court noted that Geller, in his examination under oath in connection with his claim against AIC, testified several times that he had lied on his bankruptcy petition:

Q. Well, it says here you had assets consisting of personal property valued in the amount of $2,550. Was that true? Was that the extent of your personal property at the time you signed that bankruptcy petition?

A. No.

…

Q. And that's a “Schedule B, Personal Property,” and if you look at number 5, it says “Books, pictures and other art objects, antiques, stamps, coins, collections or collectibles,” there is an “X” placed in the column for “none.” Is it true that when you signed this bankruptcy petition, you did not own any antiques or collectibles?

A. Not true….

…

Q. Okay. If you look at line 7 of that same page. Same page, line 7, there is a-do you see where it says “Furs and jewelry”?

A. I do.

Q. It says all your jewelry that you own was valued at $50. Is that true at the time you signed this petition?

A. No.

…

Q. If you look at the page with the page number 12 at the bottom of it, it says at the top “Schedule C, Property Claimed as Exempt.” Do you see there is an entry there for “Furs and jewelry”?

A. I do.

Q. Value of the jewelry claimed exempt, $50. Current market value of property without deducting exemptions, $50. Was that true when you signed this bankruptcy petition?

A. Not true.

The court then found that Geller's homeowner's policy was void based on false statements he had made about the extent of his personal property.

The case is Geller v. American Ins. Co., No. 13–14702 (E.D. Mich. March 10, 2014). Attorneys involved include: Attilio V. Colella, Moss and Colella, Southfield, MI, for Plaintiff; Adam P. Sadowski, D. John Travis, Gallagher Sharp, Toledo, OH, for Defendant.

FC&S Legal comment

The U.S. Court of Appeals for the Eighth Circuit is among the courts that have reached a similar conclusion. See, Liberty Mutual Fire Insurance Co. v. Scott, 486 F.3d 418 (8th Cir.2007) (holding that an insured's material misrepresentation regarding her personal property as reflected in discrepancies between an insurance proof of loss and a prior bankruptcy petition voided the insured's coverage).

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