The U.S. Court of Appeals for the Sixth Circuit has found that the insurer is not obligated to pay claims submitted by a meat retailer that suffered robbery, vandalism, and a fire, due to suspicions of fraud from the insurer. The case is Meat Town Inc. v. Sentinel Insurance Co. No. 19-2351, 2021 U.S. App. LEXIS 9515 (6th Cir. Mar. 30, 2021).
Meat Town, a grocer and butcher, filed claims with Sentinel Insurance Co., a Hartford Unit, for losses that arose from a break-in, robbery, and vandalism that occurred after-hours on November 10, 2015. During this incident, thirteen tons of meat were allegedly stolen. A second incident occurred later, in December 2015, in which the premises were set on fire.
Meat Town never reopened for business after the initial vandalism event and was in the process of being evicted when the arsonist set fire to the building.
The store owner claimed that there were over $485,000 in losses and damages from the damages and almost $475,000 lost due to the fire.
The insurer became suspicious that the claims were fraudulent and initiated an investigation into the claims, which revealed that the claims were fraudulent leading to the denial of both claims.
The insurance policy in this case voids all coverage if the insured conceals or misrepresents material facts concerning its claim; e.g., commits fraud. Under Michigan law, to effectuate such a provision, the insurer must prove that the claim was (1) knowingly false or made in reckless disregard for the truth, and (2) material, such that the insured intended to induce the insurer to act upon it.
During the trial, Sentinel produced evidence showing that the vendors had not yet delivered the meat that was allegedly stolen by the vandals in the initial incident, and Meat Town failed to produce evidence to create a "genuine dispute of material fact" that the meat had not been delivered.
The court considered Sentinel more credible and construed the facts in favor of the insurer. The court found 2-1 for the insurer.
The dissenting opinion stated that "a general issue of material fact remains about whether Meat Town's misrepresentations were intentional and reckless."
Editor's Note: The court found that the lower court's findings in favor of Sentinel was appropriate after reviewing the facts of this case and finding that Sentinel showed that the thirteen tons of meat that was allegedly stolen had not yet been delivered. This argument might not have worked if the insured had presented some evidence that the meat had, in fact, been delivered.