T h e H o n o ra b le A rth u r L . A la rc ó n , S e n io r C irc u it J u d g e fo r t h e U n ited S ta te s C o u rt o f A p p e a ls fo r th e N inth * C i rcui t , s i t t i ng by desi gnat i o n.

NOT RECOMMENDED F OR PUBL I CATI ON

File Na me: 08a0594n.06 Filed: Oc tober 2, 2008 No. 07-5855 U N IT E D S T A T E S C O U R T O F A P P E A LS F O R T H E S IX T H C IR C U IT ONE B EACON I

NSURANCE COMPANY, Plaintiff-Appellee , v. GERARD J OHN CHIUSOL O and ORI ON F ARMS, L L C, De fe nd ants -A

pp e lla nts
. )

) ) ) ) ) ) ) ) ) ) ON APP EAL

FROM THE U

NI TED S T ATES DI STRI CT COURT FOR THE EASTERN DI STRI CT OF KENTUCKY OPI NI ON

Be for e : D AU G HTREY , G ILM AN , a nd A LA RC ÓN , C ir c uitJudg e s. * RONALD LEE GILMAN, Cir cuit Judge. Ge ra rd JohnChi us olo ow ns a

ho rse far m in P ar i s , Ke n tu ck y . He fi l eda c l ai m wi t h On e B ea co n I n s u ra n ce C o mp an y , t h e p ro v i d er o f c o v er age for pr operty

loss on the farm, a fter a

fire de stroy ed one of t he horse barns. Suspecting arson, One Be acon la unched an investig ation. I t concluded that the fire ha d been sta rted by Chiusolo hi mself. After ref using to c over the loss, One Bea con filed a declaratory -judg ment action in fede ral c ourt that
so ug ht a ru lin g re g ard ingits c ov e ra g e re sp on sib ili tie s. The district cour

t gr anted summary

judgme nt to One B eac on, h o l d i n g that Chiusolo had (a) failed to re turn a proof -of- loss form within the t ime period re quired by the policy , and (b) made materia l misreprese ntations on the policy application, thus barr ing c overa g e as a matter of law. For the re asons set for

th below, we AF F IRM the judg ment of the district cour t.2 I. BACKG ROUND Chiusolo bo u gh t a horse f arm in Paris, Ke ntucky

on May 6, 2003 in order to br eed thoroug hbred r ace horses. He had pre viously lived in Be rnar dsville, New J erse y , wher e he ow ned a construc tion business. On the same day that Chi u s o l o p u rc h as ed the farm, he a pplied for a

n insurance policy

throug h an independe nt a g ent, J ohn Galloway , that would cover any proper ty losses on the fa rm. Chiusolo contends, and One B eac on does not deny , that Galloway filled in all of the in f o r mati o n o n th e p o li c y a

p p li c a ti o n , w h ic h Ch iu s o lo s im p ly s ig n e d

. G a ll o w ay

c h e c k e d “ y e s ” n e xt to the following statement on the a pplication: Th e de sc ri be d insure d p re mis e s are the on ly pr e mis e s w hic h th e a

pp lic ant o r s po us e o wn s , re n t s , operates as a f arm or r anch, or

maintains as a r esidenc e other than business proper

ty . I f no, explain. He a lso c hec ke d “ Y” fo r “ y e s” be sid e the ite m “ MA I N D WEL L I

NG .” Con tr ary

to t he se repr esentations, however, Chiusolo reta ined a lar g e home in N ew J erse y and spent only half of the y e ar, a t mo st, in K e ntu c ky duri ngth e rel evan t per iod . A nd e ve n w he n Ch ius olo wa s p re se nt i n Kentuc ky , h e d id

n o t a c tu a ll y

s ta y o nth e in s u r e d

p r o p e rty ; h e in s te a d

r e n te d a h o u s e o na d

ja c ent proper ty due to ong oing r enovations of the f arm house. Whether Chiusolo re sided full-time in the fa rm ho us e wa s im

po rt ant t o O ne B e a c on ’s e va luatio n o f t he ri sk ass um ed beca

us e se a so na lly occupie d proper

ties pose a g reater risk of f ire a nd theft. B a se d o nt h e i n f

o r m a t i o nc o n t a i n e d

i nt h e a p p l i c a t i o n , O n e B e a c o ni s s u e d a p r op e rt y ins ur anc e po lic y

to C hiu so lo d

/b/ a Or ion F arm s, L L C. (C hiu so lo is the so le ow ne r o f O ri on F a rm s, L L C, w hic h is also an ap pe lla nt in this a c tio n. Th is opi nio n will re fe r to the a pp e lla nts c oll e c tiv e ly as Chiusolo.) T he policy at issue in this l awsuit was a rene wal of the orig inal one-y ear policy and
was e ffe ctive fr om May

6, 2004 to Ma

y 6, 2005. One Be acon presumably based its renewa l of the3

policy on the orig inal 2003 application bec ause no r enew al ap p l ication has be en included in the
rec ord or discusse d in One B eac on’s brief s. On the eve ning of

October 30, 2004, approximately 18 months after Ch i u s o l o b oug ht the far m, a fire broke out in the olde r of two hor se bar ns on the proper

ty . Chiusolo t estified that, on the day of the fir e, his far

mhand had left the pre mises betwee n 2:00 p.m. and 4:00 p.m., after w hich the g ates to the farm’s driveway wer e locked. Around 5:45 p.m., Chiusol o visited the far m to perfor

m his routine night watch. He parked his rente d car at t he barn, che cked on the horses, a nd then drove a utility car t to the farmhouse . When Chiusol o later ope ned the door to let h i s dog s out, he saw a fire in the distanc e and dr ove his pickup truck to the horse barn. Fire trucks had a lrea dy arr ived on the sce ne by

the time Chiusolo got there . He a ssumes that the firefig hters cut throug h the locks on the g ate. The fire c ompletely destroy ed the ba

rn, burningwith such intensity that t h e woode n portions of the bar

n wer e re duced to c harc oal and meta l rods in the stall doors melted. On Novembe r 1, 2004, Chiusolo noti fied One Be acon of the fire and pursue d a cla im for
c ov e ra g e un de r t

he po lic y . H e so ug ht t

he $3 64 ,0 00 po li cy li mit

fo r l os s o f t

he ho rs e ba

rn a nd its contents. DuringOne B eac on’s s ubsequent investigation of the claim, it reta ined the ser vices of two
s ep ar at e a rs o ni n v es t i gat o rs , J o h n L o gd o n an d Al ex Ah ar t , t o ex am i n e th e si t e o f t h e f i re . Al t h o u gh L og don’s conclusions ar e uncle ar f rom the re cord, A hart de termined “ within a rea sonable de g ree of
sc ie n ti f ic c e rta in ty” th a t th e f

ir e w a s in te n ti o n a ll y s e t. I n f a c t, Ch iu s o lo to ld aOne B eac on inv e s ti g a to r

th a t o f f ic e r s o f th e K e n tu c ky

St a te Po li c e

— a f

te r c o n d u c ti n g th e ir

o w na r s on investigation—thought that he had se t the fire, ba sed in part on a police dogaler

ting to the smell of
acc eler ants in the barn.4

The policy imposed cer

tain duties on Chiusolo i n connec tion with the investigation, such a s
su bmi tti nga

c omp le te inv e nto ry

of dama g e d g oo ds , p ro vid ing a c c e ss t o f

in anci al r e c or ds , participating in an e x amination under oath, and sending a sworn pr oof of loss within 60 day s of One B e a c on ’s re qu e st. Whe the r C hiu so lo c omp lie d w ithso me of the se du tie s, su c h a s p ro vid ingtim e ly
acc ess to f

inancial rec ords, is disputed by the par ties. The one thingthat is clear , howeve r, is that Chiusolo di d not return the r equire d proof- of-loss form first reque sted by One B eac on on Dec ember 21, 2004 until March 10, 2005—almost three wee ks af t er the 60-day

deadline ma

ndated by the p o l i c y. One B eac on filed a pe tition for a dec laratory judgme nt in the United States District Court for the Easter n District of Ke ntucky in Ma y 2005, seekinga ruling that it had no obligation to provide
cover ag e for Chiusolo’s cla ims in connec tion with the horse- barn fire. I n its subsequent motion for
su mma ry jud g me nt, On e B e a c on

argue d th a t it

wa s e nti tle d to a decla

ra tor y jud g me nt b e c a

us e Chiusolo (1) intentionally burned the barn, ( 2) made materia l and/or fr audulent misrepr esentations in h is i ns ur a nc e a

pp lic a tio n, (3 ) fa ile d to pro du c e re qu e ste d fin anc ia l doc ume nts , an d ( 4) fa ile d to timely submit a sworn proof of l o s s . T h e district cour t issued a memora

ndum opinion and order g r an ti n g s u mm ar

y ju d g me n t t o O n e B e a c o nin Ju n e 2007. On e Be ac on In s. Co. v . Ch ius olo , No. 5:05-201-JMH, 2007 U.S. Dis t. L EXI S 43298, at *12 (E.D. Ky
. J une 13, 2007). Although it found that g enuine issues of material fa ct exist ed as to whe ther Chiusolo intentionally burned the barn a

nd

w h e t h e r h e f

a i l e d t o p r o d

u c e f i n an c i a l d o c u m e n t s , i t h e l d t h a t C h i u s o l o h a d ma te ri a lly misrepre sented on the policy application that the farm was his only residenc e and that he had f ailed to return a

proof- of-loss form within 60 day s of One B eac on’s re quest. I d. a t *9 -1 0. Th is t ime ly appea l followed.5 II. AN AL YSI S A. Stand ard of review We reviewde novo a district c ourt' s g rant of summar y judgme nt. Int'l Union v. Cummins , Inc. , 434 F.3d 478, 483 ( 6th Cir. 2006). Summ ary judgme nt is prop er wh ere no g enuine issue of

ma te ri a l f a c t e xists and

the mov ingpa

rt y is en tit le d to judg me nt as a ma tte r of law. F e d. R. C iv. P. 56 (c ). I n c on sid e ri nga

mot ion fo r s umm ary

jud g me nt, the dis tr ic t c ourt mus t c on str

ue a ll r e a so na

ble infere nces in f

avor of the nonmoving pa rty
. Matsushita Elec. Indus. Co. v. Zenith Radio Corp. , 475 U.S. 574, 587 (1986). The centr al i ssue i s “whe ther the evidenc e presents a suff icient disag ree ment to require submissi on to a jury or whe ther it is so one-sided that one pa rty must prevail as a

matter of law.” Anderson v. Liberty Lobby, I nc. , 477 U.S. 242, 251-52 (1986). Id. B. The Declar atory Judgm ent Ac t and f ederal j urisdi ction As a thr e sh old mat ter, w e wi ll b ri e fl y a dd re ss C hiu so lo’ s a sse rt ion that th e fi lin g of

thi s action in fe dera l court by One B eac on repr esents a misuse of the Dec laratory

J udg ment Act, 28 U. S.C. § 2 20 1. Spe c if

ic a lly , Ch ius olo ma int a ins that in sure rs sh ou ld n ot b e perm it ted to f ile decla ratory judgme nt actions reg arding insurance cover ag e in f eder al cour

t. One B eac on responds by pointing out that Chiusolo did not raise this issue in the cour t below. I n g ener al, we a

re unw illing to c on side r a

n a rgume nt n ot r a ise d in

the dis tr ic t c ourt

and pr e se nte d f

or the fi rs t ti me on

a pp e a l. United States v. Ellison , 462 F.3d 557, 560 ( 6 t h Cir. 2006). But c halleng es to the district court’ s subject-matter

jurisdiction are not waived by a failure to r aise them below, and can be ra ised “at any time in the same civil a ction, even initially at the hig hest appe llate instance .” Kontrick v. Ry an , 540 U.S. 443, 455 (2004).6

Chiusolo’s arg ument has there fore not been wa ived. He none theless m isconstrues the nature of the De c larator

y Judg me nt A c t, w hic h p ro vid e s in re le va nt p art a s f oll ow s: I n a ca se of a ctual contr oversy within its jurisdiction . . . , an y co u rt of the United States, upon the filing of

an appr opri at e p l eading , may decla re the rig hts and other leg al relations of any interested party seeking such declaration, whether or not further re lie f i s o r c ou ld b e so ug ht. 28 U. S
. C
. § 2201(a) . The De clar atory J udg ment Act does not provide an indepe ndent basis for jurisdiction. Rather, it prov i d es cour ts with discretion to fashion a re medy in case s where fede ral jurisdiction alrea dy

exis ts. Hey don v. Me diaOne of Southeast Mich., I nc. , 3 27 F .3 d 4 66 , 4 70 (6 th C i r . 2 0 0 3 )

. In t h i s c a s e , t h e j u r i s d i c t i o no f t h e d i s t r i c tc o u rtt o h e ar O n e B e a c o n ’ s d e c l ar a t o ryjudgme nt action prope rly arose out of diversity

jurisdiction pursuant to 28 U.S.C. § 1332. C. The sum m ar y-

ju dgm e nt de c isi on was notbas e d on “ ne w cl aim s” Chiusolo nex t argues that the c ase should be r emande d beca use the issu es o n which the dis tr ic t c ourt

g ra nte d s umm ary

jud g me nt ( ma te ri a l mi sr e pres ent ati on and un tim e ly pr oo f o f l os s)
wer e alleg edly not raised in One Bea con’s action for a decla ratory judgme nt. On the assumption that One B eac on first raise d these a rg uments in its summary -judg ment brief, Chiusolo contends that they constituted an “unf

air surpr ise” a

nd should not have bee n ruled on by the district court. We conclude that Chiusol o’s ar g ument is without m erit. To start with, the asser tion that One B e a c on did no t in c lud e these ul ti mat ely dis po sit ive iss ue s in

its su it f or a de c larator

y jud g me nt i s ina c c ur a te . Ru le 8( a ) o f t he F e de ra l Ru le s o f C iv il P roce dure re qu ir e s o nly a “ sh or t and pla in statement of the claim showing that the pleade r is entitled to relief.” A plaintiff must simply “g ive the def endant f air noti ce of what the plaintiff' s claim i s and the gr ounds upon which it rests.” Conley v. Gibson , 355 U.S. 41, 47 (1957). The complaint must c ontain either direc t or infere ntial alleg ations7

w i t h r e s p e c tt o a l l m a t e r i a l e l e m e n t s n e c e s s ar y t o s u s t a i na

r e c o v e r y u n d e r s o m e v i a

b l e t h e o r y. Allard v. W

eitzman ( In re De Lorean Motor Co.) , 991 F.2d 1236, 1240 ( 6th Cir. 1993). One Bea con satisfied these requireme nts in its alleg ations of m ater ial misrepre sentation and

a dil a tor y pr oo f o f l os s. Para g ra

ph15 of the a me nd e d c omp la int

re a ds a s f

oll ow s: Chiusolo s tated on the a

pplication that [t he fa

rm] was the only

p ro p er t y which he ow ne d, re nte d, op e rate d a s a fa rm , or ma int a ine d a s a

re sid e nc e . H ow e ve r, in r e a lity Chiusolo also owned a ver y larg e home in B erna

rd s ville, New Jersey

subject to a mor tg a g e of $1 ,7 00 ,0 00 . O ne B e a c on fi rs t le arn e d o f C hiu so lo’ s N e w Je rs e y ho me afte r the fir e. F ur the r, Para g ra

ph24 state s th a t O ne B e a c on se e ks a c ov e ra g e de c laratio n a s to “ wh e the r C hiu so lo has complied with ce rtain duties and c onditions as required by the Policy

. . . .” These por tions of the a me nd e d c omp la int

su pp ly su ff ic ien t no ti ce of

the iss ue s th a t w e re ult imate ly ru le d u po n in summary judgme nt to satisfy

the fe dera l courts’ libera l pleading standard. Finally , these issues we re discusse d in depth in One B eac on’s brief in support of its motion for summary

judgme nt. Chiusol o subsequently had ever y opportunity to r equest that the cour t defe r a ruling on the s ummary -judg ment motion and order f urther disc overy

as provided by

Rule 56(f) of the Fe dera l Rules of Civil P ro ce d u re . Bu t h e did not do so. His claim of surprise is theref ore without merit. See Campbe ll v. Int’l Paper Co. , 138 F. App’ x 794, 797 (6th Cir. 2005) (de clining to hear a cla im on appeal that wa s disclosed for the first time i n a re sponse to summary judgme nt be c a us e the a pp e lla nt did no t ra ise the iss ue un de r R ule 56 (f )) ; se e als o Ellison , 462 F.3d 557 at 560 (stating that this court will ge nera lly decline to c onsider an argument not r aised befor e the district court). D . The di strict court’ s grant of su m m ary judgm ent t o On e Be a con was proper8

Th e po lic y c on ta ins the fo llo wi ng pr ov isi on un de r t he he a din g “ Dutie s In T he Ev e nt O f L os s Or Da mag e”: You must see that the f

ollowing a

re done in the event of

loss of damag e to Covere d P r o p e rt y:

. . . h. Se nd us a sig ne d, sw or n p ro of of los s c on ta ini ngthe inf

or ma tio n w e re qu e st t o inv e sti g a te the cla im

. You mus t do thi s w ith in 6 0 d ay s a ft e r o ur re qu e st. We w ill su pp ly y ou wi th t he ne c e ssa

ry fo rm s. One B eac on sent a letter

to Chiusolo, dated De cembe r 21, 2004, cle arly specify ing that the proof- ofloss form “should be re turned t o u s within 60 day s of our re quest or F ebrua ry 19, 2005.” The
c omp any re ite rate d th e re qu e st a

nd the F e br ua ry 19 du e date via a dd iti on a l lett e rs se nt t o Ch ius olo
on the 7th a

nd 27th of J anuar

y 2005. Despite these reminder s, Chiusol o failed to timely submit t he fo rm . Ins te a d, he c omp le te d a nd sig ne d the pr oo f of los s on Ma rc h 3, 20 05 , and did no t ma il it t o One B eac on until March 10, 2005. Chiusolo failed to address the proof-of -loss issue in any way at t he district cour t level. On appea l, he adva

nces va rious fac tual arguments reg ardingthe timing of his re ceipt of O ne B eac on’s reque st for the proof

of loss, but does not ultim ately dispute that he wa s awa re w ell befor e the Fe bruar y 19, 2005 deadline that One B eac on had made its re quest for the document on Dec ember 21, 2004. Chiusolo’s ar g uments on this issue have been waived by his failure to ra ise them below. See In re Hood , 319 F.3d 755, 760 (6th Cir. 2003) (ar g uments not raised be low are g ener ally waived on appea l). Even a bsent such a w aiver , Chiusolo would clearly lose on the merits of this issue. Counsel fo r C hiu so lo a sse rt e d d

ur ingor a l argume nt t

hat Ch ius olo re c e ive d n o n oti c e of On e B e a c on ’s re qu e st for a wri t t en p ro o f o f loss until J anuar y 6 or 7, 2005. B ut that stil l would not help him, si nce9

Ch i u s o lo’ s su

bmi ssi on of the pr oo f- of

-l os s f or m po stm ark e d o n M arc h 1 0 w ou ld h a ve be e n unti me ly even if we a cce pted J anuar

y 7 as the star

t date for the 60-da y deadline. Notice pr ovisions such as t he poli cy ’s proof-of-loss clause are gene rally enfor cea ble under Kentucky law. See, e .g., American Ce ntennial Ins. Co. v. W iser , 712 S.W .2d 345, 346 (Ky

. Ct. App. 1986). We are awa

re that the Kentucky

Supreme Court, in Jones v . Bituminous Casual ty Corp. , 821 S.W .2d 798 (Ky . 1991), adopte d an ex ception to this g ener al rule. It held that an insurer cannot de ny
cove r a g e d

u e to an in s u r e d ’ s u n ti me ly c o mp li an c e w it h a n o ti c e p r o v is io n u n le s s th e in s urer can prove that it s uffe red substantial pre judice fr om the delay

. Id. at 802-803. The insurance policy addre ssed in Jones was for worke rs’ c ompensation cove rag e; whethe r Jones applies to all ty pes of insurance is not entirely settled. Com

pa re Hi sc ox De dic ate d Co rp . M

e mb e r Ltd

. e xre l. Underwriting Syndicates 33 v. W ilson , 2 46 F . Su

pp . 2 d 6 84 , 6 93 -6 94 (E .D . K y . 2 00 3) (d e c lin ingto
a p p l y J on es in the specializ ed conte x t of equine insura nce) , with Ky . A sso c iat e d G e n. Con trs
. Self-Insurers' Fund v. Old Republic Ins. Co., No. 3:06CV-62-R , 2008 U.S. Dist. L EXI S 13178, at

* 3 1 -3 2 (W

. D. Ky
. Fe b

. 2 1 , 2 0 0 8 ) ( d i s t i n gu i s h i n g Hiscox and statin g that J

on es “re mains the standard in Ke ntucky

for notice issues under insura nce policie s”). We nee d not addre ss the applicability

of the Jones exception, however , beca use C hiusolo failed to raise it—either dire ctly or i n d i re ct ly —in the district court or on a ppeal. See I

n re Hood , 3 1 9 F
. 3 d a t 7 6 0 ( h o ld ing tha t arguments not raised be low are g ener ally waived on a

ppeal)

. Be cause we a

re a ffirming the district court’s g rant of summary judgme nt to One Be acon on the proof- of-loss i ssue, we find no need to addre ss Chiusolo’s other a ssertions of er ror r eg ardingthe district court’s de cision. E. One Beacon’s disagreem ent with p ortions of the di strict court’ s opin ion10

As a fina l point, we note that One B eac on devotes a substantial portion of its response brie f to the argument t hat the district cour t should have g rante d it summ ary judgme nt on the additional g ro un ds that Ch ius olo vo ide d c ov e ra g e by (a ) int e nti on a lly sta rt ing the fi re , and

(b ) f a ili ngto t ime ly pr od uc e the fi na

nc ia l r e c or ds re qu e ste d o f h im. Chi us olo re pli e s th a t th e se issues are i mpr op e rl y befor e us bec ause O ne B eac on did not file a cr oss-appe al. We ag ree . “This cour t has held that the filing of a notice of

cross-a ppeal is jurisdictional wher e an appellee wishes t o attack pa rt of a f inal judgme nt in order to enla

rg e his rig hts or to reduc e those of his adversa ry .” Francis v. Clark Equip. Co. , 993 F.2d 545, 552 ( 6th Cir. 1993). One B eac on’s ar g uments are just such an attempt to attack the district court’s de nial of summary judgme nt on these additional g rounds. Due to the la ck of a
cr o s s -appeal, these a

rg uments cannot be considere d. Nor do they need to be in light of our aff irmance on the untimely

proof- of-loss issue.

III . C ON CL USI ON For all of the re asons set for

th above, we AF F IRM the jud g me nt o f t he dis tr ic t c ourt
.