___________ No. 95-2547

___________ General Casualty Insurance * Companies, * *

Appellee, * * Appeal from the United States v. * District Court for the * Eastern District of Missouri. Holst Radiator Co.; Roy Holst, * doing business as Holst * Radiator Co., * * Appellant *

___________ Submitted: April 11, 1996 Filed: July 10, 1996

___________ Before RICHARD S. ARNOLD, Chief Judge, and BOWMAN and WOLLMAN, Circui t Judges.

___________ BOWMAN, Circuit Judge.
Roy Holst filed a $215,000 claim with his insurer, General Casualty Insurance Companies, after his place of business, Holst Radiator Co., was damaged by a fire on December 28, 1992. On March 8, 1993, General Casualt y paid $70,000 on the p ortions of Holst's claim that were not in dispute at that time. Later, however, General Casualty dec ided to deny Holst's claim in its entirety becau se, inter alia , General Casualty believed that Holst failed to cooperate in the investigation of the loss and violated th e
co ncealment, misrepresentation, or fraud conditions of the insuranc e policy

. General Casualty then filed this declaratory judgment action , seeking to recover the $70,000 it had paid to Holst. General Casualt y alleged th at "the cause and origin of the fire was not how and wher e defendant Holst had claimed it to be."

### The Honorable Donald J. Stohr, United States District Judge 1 

### for the Eastern District of Missouri.
-2- Complaint at ¶ 12. In other words, General Casu alty had reason to believe that arso n may have been the cause of the fire but was prevented fro m conducting a complete investigation by Holst's failure to cooperate. Hols t then f iled a counterclaim, alleging that General Casualty breached th e insurance contract, committed fraud, and vexatio usly refused to pay on the insurance policy. Holst sought punitive damages. The District Court 1 dismissed the fraud count of Holst's counterclai m as well as the claim for punitive damages. The other issues were submitted to a jury, whic h retu rned a verdict in favor of General Casualty. The District Cour t entere d judgment on the verdict, awarding General Casualty $70,000 plu s interest.
The main issue in this appeal relates to the nature of the frau d that General Casualty was required to prove. Holst argues that General Casualt y was required to prove all of the elements of common-law fraud, as set out in state-approved jury instructions, in order to recover the $70,000 it ha d paid on the insurance contract with Holst. In particular, Holst claim s that General Casualty failed to prove that it relied on any of Holst' s allege dly fraudulent statements. Reliance is an element of common-la w fraud under Missouri law. General Casualty, on the other hand, contends that it only had to prove that Holst breached a provision of the insurance contract. According to General Casualty, the provision in question--the
con cealment, misrepresentation, and fraud provision--was violated, thu s void ing the policy, even if General Casualty did not rely on Holst' s statements.
The interpretation of the terms of a n insurance contract is a matter of state law, which we review de novo. See Pace Constr. Co. v. U.S
. Fidelity & Guar. Ins. Co. , 934 F.2d 177, 179 (8th Cir. 1991). Holst argue s that the District Court's erroneous

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interpretation of the insurance contract led it to improperly submit the issu e of fraud to the jury and to misinstruct the jury on the issue o f fraud.
The provi sion of the insurance contract at issue in this case reads as follows:

A. CONCEALMENT, MISREPRESENTATION OR FRAUD This Coverage Part is void in any case of fraud by you as i t relates to this Coverage Part at any time. It is also void if you or any other insured, at any time, intentionall y conceal or misrepresent a material fact concerning: 1. This Coverage Part; 2. The Covered Property; 3. Your interest in the Covered Property; or 4. A claim under this Coverage Part.

General Casualty Ins. Policy CCI 0126591, Commercial Property Conditions at 1. The District C ourt, by refusing Holst's proposed instruction, held that th e meaning of the word fraud in the insurance contract is not th e same as common-law fraud. We agree.

In Vita le v. Aetna Casualty & Surety Company , this Court noted th e distinction between fraud in the inducement and a fraudulent proof of loss

. 814 F.2d 1242, 1251 (8th Cir. 1987). We specifically stated that "a charg e of a fraudulent proof of loss differs from one o f fraud in the inducement, which req uires, among other elements, reliance." Id. We held tha t Misso uri Approved Instruction (MAI) 25.03 was inapplicable in case s involving a charge of fraudulent proof of loss because that instruction wa s designed for cases in which an insured is charged with fraud at the time the insured obtained coverage. Id.
The jury instruction that Holst prop osed was modeled after MAI 32.19 (1991), which is substantially similar to the instruction we

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rejected in Vitale . "Litigants are entitled to have the jury instructed
on their claims and theories if," inter alia , "the proposed instructions
are corre ct statements of the law" applicable to the case. Hoselton v

. Metz Baking Co. , 48 F.3d 1056, 1063 (8th Cir. 1995). Like Vitale , however , this case involves a fraudulent proof-of-loss charge rather than a charge of fraud in an applic ation for insurance coverage. To our knowledge, the Missouri state courts have not decided whether reliance is a necessar y element of the fraudulent proof of loss required to void an insuranc e poli cy. Thus our decision in Vitale , which applies Missouri law, i s authori tative, and the instruction proposed by Holst is not a correc t statement of the law applicable to this case. In these circumstances, th e District Court proper ly submitted the issue of fraud to the jury, despite the alleged absence o f evidence of General Casualty's reliance on Holst's statements, and properly instructed the jury on the issue of fraud.

In addi tion to the arguments on the issue of fraud, Holst contend s that the District Cou rt improperly admitted evidence that tended to prove that the insured property was overvalued. The admissibility of evidence is an issue that is c ommitted to the sound discretion of the trial court, and "we will not disturb a district court's evidentiary ruling absent a clear and prejudicial abuse of that discretion." Laubach v. Otis Elevator Co. , 37 F.3d 427, 428-29 (8th Cir. 1994).

Holst claims that evidence relating to the overvaluing of hi s property s hould not have been admitted for two reasons: (1) Missour i Revised Statutes § 379.140 (1994) specifically bars an insurer from denyin g that t he insured property was worth the full amount for which it wa s insured; and (2) General Casualty did not raise the valuation issue in its let ter denying Holst's claim under the policy. These arguments totall y miss the ma rk. The rules of law cited by Holst are directed towar d insurance companies who accept large premiums on overvalued property and then, when a claim

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made, either pay only the actual value or deny the claim in its entiret because See , 667 700, 707-08 (Mo. 1984) (en banc) (analyzing Mo. Rev. Stat

.

State ex rel. Shelter Mut. Ins. Co. v. Crouch 828 (Mo. Ct. App. 198 6) (stating that defenses to claims should be raised claim is first denied). General Casualty did not introduce th e
ence at issue to prove that it claimed that it only had to pay th actual value of the p roperty or to prove that it had denied Holst's claim

he had overvalued the property. The evidence was introduced a s ntial proof that Holst had a motive to commit arson. In thes circumstances, the ev idence was obviously relevant and wholly admissible. Thomure v. Truck Ins. Exch. 781 F.2d 141, 142 (8th Cir. 1986). The District Court did not abuse its discretion by a that the insured property was overvalued.

Holst has raised several other issues in this appeal, and we hav e reviewed his arguments. We find them to be without merit, and

to set aside the jury's verdict in favor of General Casualty. the judgment of the District Court is affirmed.

Attest:

CLERK, U. S. COURT OF APPEALS, EIGHTH CIRCUIT.