Court Opinion

ID: 2716156
Source: CourtListenerOpinion
Date Created: 2014-08-08 05:00:36.827033+00
Date Added: 2024-06-11T15:05:19.507731
License: Public Domain

Case: 13-60726   Document: 00512726469     Page: 1   Date Filed: 08/07/2014

        IN THE UNITED STATES COURT OF APPEALS
                 FOR THE FIFTH CIRCUIT
                                                                  United States Court of Appeals
                                                                           Fifth Circuit
                                 No. 13-60726                            FILED
                                                                    August 7, 2014
                                                                    Lyle W. Cayce
NATIONWIDE MUTUAL INSURANCE COMPANY,                                     Clerk

                                           Plaintiff-Appellee

v.

FRED L. BAPTIST; DEBBIE BAPTIST,

                                           Defendants-Appellants

                Appeal from the United States District Court
                  for the Northern District of Mississippi

Before STEWART, Chief Judge, and WIENER and COSTA, Circuit Judges.
PER CURIAM:
      In this diversity case applying Mississippi insurance law, Defendants-

Appellants Fred L. and Debbie Baptist appeal the district court’s summary

judgment in favor of Plaintiff-Appellee Nationwide Mutual Insurance

Company (“Nationwide”). The district court held that the Baptists initially

purchased a valid homeowner’s insurance policy from Nationwide, but that

subsequent renewals of that policy were void ab initio because they occurred

after the Baptists lost ownership of their home to foreclosure.

      The parties do not dispute the relevant facts. The Baptists purchased

the Nationwide policy in October 2006. Just over two years later, in November
     Case: 13-60726       Document: 00512726469         Page: 2     Date Filed: 08/07/2014

                                       No. 13-60726
2008, they lost their home to foreclosure. They did not inform Nationwide of

the foreclosure sale, however, and they continued to occupy in the home. 1 The

Bank of New York, which had purchased the home at the foreclosure sale,

sought and obtained a judgment evicting the Baptists on December 9, 2011.

That should have caused the Baptists to vacate the home by January 13, 2012,

but it was seriously damaged by a fire or fires on December 27 and 28, 2011. It

was in conducting a post-loss investigation of the Baptists’ claims arising from

these fires that Nationwide first discovered that they no longer held title to the

property.

       After losing their home to foreclosure, but prior to Nationwide’s

discovery of that fact more than two years later, the Baptists twice renewed

their homeowner’s insurance policy, first for 2009-2010, and again for 2010-

2011, by sending Nationwide checks to cover each annual premium. In addition

to the claims relating to the December 2011 fires, the Baptists also filed post-

foreclosure claims relating to wind or hail damage, and to an unrelated fire, in

April and May of 2010, respectively.

       Nationwide filed suit in the United States District Court for the

Northern District of Mississippi seeking (1) a declaratory judgment that the

policies issued after the foreclosure sale were void and (2) recovery of payments

it made on the Baptists’ claims filed in 2010 and 2011. Seeking summary

       1 The Baptists sought to set aside the foreclosure by means of a complaint filed in the
United States District Court for the Western District of Tennessee, which that court, while
at the same time noting the possibility of a lack of jurisdiction and venue, dismissed for
failure to state a claim. Baptist v. Bank of New York Mellon, 09-2569-STA, 2010 WL 1539973
(W.D. Tenn. Apr. 16, 2010). The Sixth Circuit’s unpublished November 2011 order affirming
that dismissal is a part of our record in this appeal.
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                                        No. 13-60726
judgment, Nationwide insisted, inter alia, that the Baptists’ failure to inform

Nationwide of the foreclosure sale was a material misrepresentation sufficient

to void coverage. The District Court held that the Baptists “had no insurable

interest in the subject property at the time the renewal policies were issued[;]

the Baptists were therefore ineligible for such renewal policies[;] and[,]

consequently, the renewal policies are void.” The district court’s judgment

ordered the Baptists to reimburse Nationwide for all payments it made on

claims arising during the post-foreclosure renewal periods.                    The Baptists

timely filed a notice of appeal.

      Although the parties devote much of their briefing to whether the

Baptists maintained an insurable interest in the property sufficient to sustain

their policy’s effectiveness after the foreclosure, we need not address this issue

to conclude that the district court’s judgment must be affirmed. Our de novo

review 2 satisfies us that the district court’s ultimate conclusion was correct

because, even assuming arguendo that the Baptists maintained an insurable

interest sufficient to sustain their policy—in their personal property,

contemplated as “contents,” for example—their renewals of their policy

constituted their affirmations to Nationwide of their initial application for

insurance, material portions of which were no longer true. The Baptists’

application reflects that the home would be owner occupied, and includes both

the Baptists’ declaration that the facts stated on the application are true and

their request that Nationwide issue “the insurance and any renewals thereof

in reliance thereon.” By renewing their homeowner’s policy when they no

      2   Carroll v. Metro. Ins. & Annuity Co., 166 F.3d 802, 805 (5th Cir. 1999).
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                                        No. 13-60726
longer owned their home, the Baptists made a misstatement of material fact

that entitled Nationwide to rescind the policy. 3 Accordingly, the judgment of

the district court is AFFIRMED.

       3 See id. (“Under Mississippi law, if an applicant for insurance is found to have made
a misstatement of material fact in the application, the insurer that issued a policy based on
the false application is entitled to void or rescind the policy. To establish that, as a matter of
law, a material misrepresentation has been made in an insurance application, (1) it must
contain answers that are false, incomplete, or misleading, and (2) the false, incomplete, or
misleading answers must be material to the risk insured against or contemplated by the
policy. The party seeking to void the insurance contract . . . must establish the existence of a
factual misrepresentation and its materiality by clear and convincing evidence. Whether the
misrepresentation was intentional, negligent, or the result of mistake or oversight is of no
consequence.” (internal footnotes omitted)).
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