UNPUBLISHED

UNITED STATES COURT OF APPEALS

FOR THE FOURTH CIRCUIT

RAYMOND A. HUBERTS,

Plaintiff-Appellant,

v. No. 96-1560

THE TRAVELERS INDEMNITY COMPANY,

Defendant-Appellee.

Appeal from the United States District Court

for the Eastern District of Virginia, at Alexandria.

Albert V. Bryan, Jr., Senior District Judge.

(CA-95-976-A)

Argued: January 29, 1997

Decided: May 20, 1997

Before HALL and LUTTIG, Circuit Judges, and

BUTZNER, Senior Circuit Judge.

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Vacated and remanded by unpublished per curiam opinion.

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COUNSEL

ARGUED: Harlan Lee Weiss, KIVITZ & LIPTZ, L.L.C., Chevy

Chase, Maryland, for Appellant. Edward Hutton Starr, MAYS &

VALENTINE, Alexandria, Virginia, for Appellee. ON BRIEF: Brian

R. Greene, KIVITZ & LIPTZ, L.L.C., Chevy Chase, Maryland, for

Appellant. Mary Catherine Zinsner, MAYS & VALENTINE, Alexandria, Virginia, for Appellee.

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Unpublished opinions are not binding precedent in this circuit. See

Local Rule 36(c).

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OPINION

PER CURIAM:

In this diversity action to enforce the terms of an insurance contract

providing coverage for property loss, Raymond A. Huberts, the

insured, appeals the district court's grant of summary judgment to

Travelers Indemnity Company. Because a genuine issue of material

fact remains to be resolved, we vacate the judgment below and

remand the case for trial.

I.

A.

This case concerns a manuscript of a biographical work entitled

The Lisa Rohn Case - Revisited. Huberts, a literary novice, began

composing the book sometime after he was forcibly returned to the

United States from El Salvador in April 1992 to face indictment on

two counts of passport fraud. Huberts and Rohn had been partners in

a massive credit card scam in the mid-1980s, for which each was

eventually imprisoned. The pair had become romantically involved,

and two daughters were born of the union.

Shortly following her release from federal confinement in 1991,

Rohn murdered her fiance, Roger W. Paulson, who had contacted the

authorities upon discovering that Rohn (who had assumed a false

identity) was again involved in criminal activity. The case engendered

considerable notoriety, becoming fodder for supermarket exposes and

a made-for-TV movie.

Huberts completed the manuscript in August 1994, a few months

after moving with his daughters into a rented cottage in Boyce, Virginia. He subsequently mailed the manuscript to Janus Publishing Co.

in London, England, to be appraised.

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At about the time that he completed the manuscript, Huberts

obtained a renter's policy for the cottage from Fireman's Fund; that

policy provided loss coverage for another work (the Furnace manuscript) that he had previously completed and submitted for appraisal.

Awaiting the appraisal of the Rohn manuscript, Huberts procured two

more renter's policies for the cottage. One was issued by Travelers

through AAA Insurance Agency of Orlando, Florida; the other was

issued by the United States Automobile Association (USAA).

By letter dated October 21, 1994, Janus informed Huberts that it

had appraised the Rohn manuscript at $185,000. Huberts wrote to

AAA and USAA, seeking to extend the existing policies to cover the

Rohn manuscript. Before writing to USAA, Huberts applied to State

Farm for another renter's policy, specifically requesting insurance for

the manuscript. AAA, USAA, and State Farm each informed Huberts

that it could not provide the coverage that he sought.

Huberts finally insured the manuscript through First Virginia Insurance Services Agency, which, like AAA, is an agent for Travelers.

The manuscript was covered pursuant to a renter's policy, the fourth

actually issued for the cottage. Huberts stored the manuscript in a

small safe in the cottage, along with the floppy computer disks upon

which the word processing file was stored.

Travelers issued the policy on December 23, 1994, after Steve

Atwell of First Virginia had taken Huberts's application over the telephone. Question No. 10 on the application inquired of the prospective

insured whether any insurance had been "declined, cancelled or nonrenewed." According to Atwell, Huberts answered that question "No."

Huberts, however, steadfastly denies that Atwell ever asked the question.

B.

In the late afternoon of May 5, 1995, at the conclusion of an overnight trip to Washington, D.C., Huberts, his children, and his sister

returned to the cottage to discover that it had been ransacked. The

perpetrator(s) had cut the telephone line outside the cottage, pried

open the rear door, and smashed the computer console for the burglar

alarm. The door to the safe stood wide open, and all of its contents

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-- including the Furnace and Rohn manuscripts, the accompanying

computer disks, and miscellaneous notes and audiotapes -- had been

removed. Huberts drove to a pay telephone and contacted his alarm

service provider, which, in turn, reported the incident to the county

sheriff's office.

Huberts told the investigating deputy that he had written the combination to the safe in an address book that he had kept in a drawer of

his computer desk. The address book had been taken, but the computer and other items of pecuniary value had not been disturbed. A

private detective whom Huberts asked to inspect the crime scene prepared a report, in which he opined that the intruders may have stolen

the manuscripts and the other contents of the safe in the hope of

destroying information that could clear Rohn of Paulson's murder.

Huberts notified his insurers of the incident a couple of days later.

Firemen's Fund paid the full $150,000 appraisal value of the Furnace

manuscript. Travelers, however, refused to settle Huberts's claim for

the loss of the Rohn manuscript, prompting this action, filed in the

district court on July 20, 1995. Travelers filed a counterclaim for

rescission, asserting misrepresentation and fraud.

During discovery, Travelers asked the district court to compel

Huberts to produce his computer's hard drive so that another copy of

the manuscript might be extracted therefrom. Huberts responded that

he had not saved the word processing file to the hard drive, and that,

in any event, the hard drive and motherboard had been replaced after

the computer was struck by lightning during an electrical storm in

July 1995.

Each side moved for summary judgment, submitting memoranda

and other materials in support of their respective motions. The district

court denied Huberts's motion and granted Travelers' cross-motion,

ruling that

[o]n his application for insurance, plaintiff answered in the

negative when asked whether he had ever had"any insurance declined, cancelled, or non-renewed." . . . The court

concludes that the question . . . is not ambiguous and is

obviously material to the risk taken by defendant when it

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issued the policy. Plaintiff's answer to the question was

clearly false and was made with knowledge of its falsity.

Op. of March 15, 1996 (emphases supplied). The court subsequently

denied Huberts's motion for reconsideration. Huberts appeals.

II.

A.

Under Virginia law, an insurer is entitled to rescind an insurance

contract if it can clearly prove that the insured has, in applying for

coverage, misrepresented a fact material to the risk at the time it was

assumed. Va. Code Ann. § 38.2-309 (Michie 1994); St. Paul Fire &

Marine Ins. Co. v. Jacobson, 48 F.3d 778, 780 (4th Cir. 1995) (citing

Time Ins. Co. v. Bishop, 425 S.E.2d 489, 491 (Va. 1993)); Mutual of

Omaha Ins. Co. v. Dingus, 250 S.E.2d 352, 355 (Va. 1979). If a misrepresentation is proved to have been made, its materiality to the risk

assumed is a question of law to be determined by the court. Harrell

v. North Carolina Mut. Life Ins. Co., 213 S.E.2d 792, 794 (Va. 1975).

The district court concluded, based on the record before it at summary judgment, that Huberts's failed earlier attempts to procure coverage for the Rohn manuscript would have been material to the risk

assumed by Travelers, i.e., either to its decision to issue the policy in

the first instance, or to its determination of the premium to be

charged. The court's conclusion finds support in the deposition testimony of E. James Long, Jr., an underwriter for Travelers, who

asserted that the company would have declined Huberts's application

had it known of the prior rejections.

Travelers' entitlement to rescission, however, depends not only on

the materiality of Question No. 10 to its decision to insure the manuscript or to the premium to be charged, but also on the threshold issue

of misrepresentation -- whether the question was asked of Huberts,

and, if so, whether Huberts answered falsely. The question of whether

a misrepresentation was made, if disputed by the insured, is ordinarily

one for the jury. United States Fidelity & Guaranty Co. v. Haywood,

177 S.E.2d 530, 532 (Va. 1970). If a jury could reasonably resolve the

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issue in favor of the insured, summary judgment for the insurer is precluded. Fed. R. Civ. P. 56(c) (summary judgment appropriate only in

the absence of a genuine issue of material fact); Anderson v. Liberty

Lobby, Inc., 477 U.S. 242, 248 (1986) ("[S]ummary judgment will not

lie if the dispute about a material fact is "genuine," that is, if the evidence is such that a reasonable jury could return a verdict for the nonmoving party.").

The issue of Huberts's alleged misrepresentation is hotly disputed.

Indeed, at his deposition, Huberts flatly denied that Atwell ever asked

him Question No. 10. For the purposes of summary judgment,

Huberts's testimony must be taken as true. Anderson, 477 U.S. at 255

("The evidence of the non-movant is to be believed, and all justifiable

inferences are to be drawn in his favor."). The district court nevertheless "found" (1) that the question was asked, (2) that Huberts

answered it "No," and (3) that Huberts's answer was knowingly false.

The bases for these three "findings" are not apparent from the district court's memorandum opinion, but it may have misunderstood

Huberts to have conceded the first two points in documents that he

submitted to the court. For example, Huberts contended in the memorandum accompanying his own motion for summary judgment that

"Travelers made no effort to explain the meaning or intent of the

question. . . ." On another occasion, as part of a formal stipulation of

facts, Huberts agreed that "Travelers never explained to [him] what

`any insurance declined' meant[.]"

To the extent that the district court may have relied on the above

contentions (or any of the others that Travelers has identified in its

brief) in support of its decision, its reliance was misplaced. As a prelude to the contentions in the memorandum accompanying his motion

for summary judgment, it was clearly stated that"Mr. Huberts denies

Atwell asked if any insurance had been declined, canceled or nonrenewed. However, for the sake of this Motion , Mr. Huberts assumes

the truth of Mr. Atwell's representations." Plaintiff's Memorandum of

March 1, 1996, at 6 n.4 (emphasis supplied). In light of this unequivocal caveat, it is plain that the subsequent contentions purported to

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amount to a concession were instead merely an acknowledgment of

the potential materiality of the issue in dispute. 1

We note also that, strictly speaking, none of the contentions

advanced by Huberts in support of his motion for summary judgment

or elsewhere are necessarily inconsistent with his testimony that

Atwell omitted Question No. 10 entirely. For instance, it is manifest

that if the question were never asked, then it certainly was never

explained.

In light of the record before us, we can only conclude that the district court, in ruling on the motion for summary judgment, resolved

a genuinely disputed, material fact in favor of the movant. That, of

course, it may not do.2

B.

Travelers argues in the alternative that we may affirm the district

court's judgment on the ground that Huberts's claim was fraudulent

as a matter of law.3 Though the circumstances surrounding the ransacking of the cottage would appear suspicious to all but the terminally naive -- particularly in view of Huberts's background -- we

believe that the question of his claim's veracity is best left for the

jury.

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1 See Cram v. Sun Ins. Office Ltd. , 375 F.2d 670, 673-74 (4th Cir.

1967):

Neither party, by moving for summary judgment, concedes the

truth of the allegations of his adversary other than for purposes

of his own motion. A movant may contend that under his theory

of the case, no substantial issue of fact exists, while under the

adversary's theory factual questions are in issue.

2 We express no opinion as to the correctness of the district court's conclusion that, if Huberts answered Question No. 10 in the negative, that

answer was, as a matter of law, knowingly false.

3 We do not understand Travelers, by arguing in the alternative, to have

conceded that the district court's rationale in support of its grant of summary judgment was incorrect.

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III.

The judgment below is vacated, and the case is remanded for trial.4

VACATED AND REMANDED

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4 Our disposition of the case on the ground that the district court

improperly resolved a genuine issue of material fact in favor of Travelers

renders it unnecessary to address the other arguments that Huberts has

advanced in support of his position.

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