Court Opinion

ID: 2723941
Source: CourtListenerOpinion
Date Created: 2014-09-05 14:00:28.763186+00
Date Added: 2024-06-11T09:34:30.030885
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 14a0694n.06

                                         No. 13-2587

                         UNITED STATES COURT OF APPEALS
                              FOR THE SIXTH CIRCUIT                                 FILED
                                                                                Sep 05, 2014
MONIQUE SINKFIELD,
                                                                            DEBORAH S. HUNT, Clerk
       Plaintiff-Appellant,
v.
                                                    ON APPEAL FROM THE UNITED
                                                    STATES DISTRICT COURT FOR THE
STATE FARM INSURANCE,
                                                    EASTERN DISTRICT OF MICHIGAN
       Defendant-Appellee.

BEFORE:       BOGGS, CLAY, and GILMAN, Circuit Judges.

       CLAY, Circuit Judge. Plaintiff Monique Sinkfield appeals from the district court’s

grant of summary judgment in favor of Defendant State Farm Insurance (whose actual name is

State Farm Fire and Casualty Company) on Plaintiff’s claim of breach of a contract of insurance.

For the reasons set forth below, we AFFIRM the district court’s judgment.

                                      BACKGROUND

       In approximately November 2010, Plaintiff purchased a home on Mark Twain Street in

Detroit, Michigan. The purchase price was $50,000, which Plaintiff financed with a 15-year

mortgage from Black Diamond Mortgage Corporation. Plaintiff paid Black Diamond $800 per

month, a figure that included taxes and insurance on the home. But since Black Diamond would

not pay for home insurance after January 2011, Plaintiff applied for over $200,000 worth of

insurance from Defendant in December 2010. Defendant wrote the policy.
                                            No. 13-2587

       On December 30, 2010, Plaintiff filed a voluntary petition for Chapter 7 bankruptcy. In

her original petition, Plaintiff valued her liabilities at just over $82,000 and her assets at $4,000.

These assets were few—a $500 desktop computer, $500 worth of jewelry, and $3000 worth of

clothing. Plaintiff initially claimed her home was worth nothing, but in February 2011, she

amended her petition to state its value at $27,000. Plaintiff also listed her monthly income as

$1600, which translated into take-home pay of $1325 per month. But since Plaintiff’s monthly

obligations totaled $1380, she was actually working herself deeper into debt. Plaintiff was

discharged from bankruptcy on April 18, 2011. Her creditors received nothing.

       Less than fourteen months later—in the small hours of June 11, 2012—Plaintiff’s house

caught fire. Plaintiff claimed that the fire caused $143,000 worth of damage to the house. At

first, she claimed that the fire also caused $123,477.95 of damage to her personal property. The

basis of this claim was an itemized list of damaged property that Plaintiff submitted to

Defendant.    However, Plaintiff has since admitted that the list of destroyed property was

prepared by her adjuster, and that Plaintiff herself did not assist the adjuster in making the list or

valuing the property.    She now asserts that the fire destroyed $170,000 worth of personal

property. Summed up, Plaintiff claims that the fire caused $313,000 worth of damage.

       Plaintiff has difficulty explaining the disparity between the value of her assets when she

emerged from bankruptcy and the amount she now wants Defendant to pay. She gives no

explanation at all for the dramatic increase in the value of her home. As for her personal

property, Plaintiff asserts that she received $7000 worth of gifts in the fourteen months after her

bankruptcy. Plaintiff claims that she purchased the remainder between April 2011 and June

2012. Plaintiff did not have much disposable income during that time. According to her tax

returns, Plaintiff made only $16,975 in 2010 and $11,678 in 2011. Plaintiff estimated that at the

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                                            No. 13-2587

time of the fire, she made between $550 and $1000 per month working for the National Health

Foundation. Plaintiff also claims that at the time of the fire, she received a total of about $2500

per month in child support, unemployment benefits, and Social Security Insurance benefits. In

addition, Plaintiff asserted that she made approximately $1000 per month for promoting a local

strip club, and approximately $3500 every time she threw a party for a social club she helmed.

As Plaintiff candidly admitted at her deposition, “I make three times as [much as] what I report

to the I.R.S.” (R. 17-4, Sinkfield Dep., at 204.)

       Defendant denied Plaintiff’s claim in December 2012. Among other reasons, Defendant

asserted that Plaintiff violated the policy’s fraud clause, which reads:

       Concealment or Fraud. This policy is void as to you and any other Insured, if you
       or any other Insured under this policy has intentionally concealed or
       misrepresented any material fact or circumstance relating to this insurance,
       whether before or after a loss.

(R. 17-3, Policy, at 172.) Shortly after Defendant denied Plaintiff’s claim, Plaintiff sued for

breach of contract in Michigan state court.         Defendant removed on the basis of diversity

jurisdiction and, after discovery, moved for summary judgment. The district court granted

Defendant’s motion on the basis of judicial estoppel. Sinkfield v. State Farm Ins., Inc., No. 13-

10418, 2013 WL 5954540 (E.D. Mich. Nov. 7, 2013). This appeal timely followed.

                                          DISCUSSION

I.     JUDICIAL ESTOPPEL

       The district court disposed of Plaintiff’s claim entirely on the basis of judicial estoppel—

concluding that the value of Plaintiff’s property in June 2012 compared to its value in April 2011

simply could not be believed. We review the application of judicial estoppel de novo. See

Lorillard Tobacco Co. v. Chester, Willcox & Saxbe, LLP, 546 F.3d 752, 757 (6th Cir. 2008).

“The doctrine of judicial estoppel applies to a party who has successfully and unequivocally

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                                           No. 13-2587

asserted a position in a prior proceeding; he is estopped from asserting an inconsistent position in

a subsequent proceeding.” Edwards v. Aetna Life Ins. Co., 690 F.2d 595, 598 (6th Cir. 1982).

The purpose of judicial estoppel is “to protect the integrity of the judicial process,” and “prevent

improper use of judicial machinery.” New Hampshire v. Maine, 532 U.S. 742, 749, 750 (2001)

(internal quotation marks omitted). Courts consider several factors when determining whether to

apply judicial estoppel:

       First, a party’s later position must be clearly inconsistent with its earlier position.
       Second, courts regularly inquire whether the party has succeeded in persuading a
       court to accept that party’s earlier position, so that judicial acceptance of an
       inconsistent position in a later proceeding would create the perception that either
       the first or the second court was misled . . . . A third consideration is whether the
       party seeking to assert an inconsistent position would derive an unfair advantage
       or impose an unfair detriment on the opposing party if not estopped.

Id. at 750–51 (internal quotation marks and citations omitted).          These factors are neither

exclusive nor inflexible. See id. at 751. “Moreover, the doctrine of judicial estoppel is applied

with caution to avoid impinging on the truth-seeking function of the court because the doctrine

precludes a contradictory position without examining the truth of either statement.” Lorillard,

546 F.3d at 757 (internal quotation marks omitted).

       Judicial estoppel usually applies to particular arguments that parties advance.           For

example, in New Hampshire, that state was estopped from arguing that the boundary between it

and Maine ran along the shoreline of a river, when it had argued several years before that the

boundary ran down the middle of the river’s navigable channel. See New Hampshire, 532 U.S.

at 751. But under certain circumstances, we have held that judicial estoppel can apply to bar

entire claims.   Thus, if a party fails to disclose the existence of a claim in a bankruptcy

proceeding, that party might be estopped from prosecuting that claim after the bankruptcy has

come to a close. See White v. Wyndham Vacation Ownership, Inc., 617 F.3d 472, 478–79 (6th

Cir. 2010).

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                                            No. 13-2587

          Plaintiff’s claim cannot be estopped in its entirety for the simple reason that it did not

exist at the time that she was in bankruptcy. This case thus differs from other bankruptcy-related

estoppel cases where the separate proceeding could be dismissed as a matter of law. See id. at

478–79. Nor can we say that judicial estoppel necessarily applies to Plaintiff’s version of the

facts. Plaintiff does not dispute the value of her property at the close of her bankruptcy. It is

Plaintiff’s own contention that she acquired approximately $166,000 of personal property

between April 2011 and June 2012, and that her house appreciated in value by more than

$100,000 over the same period. Plaintiff’s version of the case strains credulity, but it does not

seem to be “clearly inconsistent with” the position she took in her bankruptcy proceeding. New

Hampshire, 532 U.S. at 750.

          Although we doubt that judicial estoppel should apply in this case, this legal quibble has

no practical effect. Call it judicial estoppel or simply Plaintiff’s sworn testimony—either way,

Plaintiff has locked herself into the position that the value of her real and personal property was

approximately $31,000 in April 2011, and over $300,000 just fourteen months later. The next

question is whether this dramatic increase of fortunes establishes a violation of the policy’s fraud

clause.

II.       THE FRAUD CLAUSE

          The district court did not address the merits of the parties’ contractual dispute. But “as

long as the parties were given a full and fair opportunity to address” this issue, we may reach it

on appeal. Smith v. Jefferson County Bd. of Sch. Comm’rs, 641 F.3d 197, 205 (6th Cir. 2011).

Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any

material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a).

We “must view all the facts and the inferences drawn therefrom in the light most favorable to the

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                                          No. 13-2587

nonmoving party.” Birch v. Cuyahoga County Probate Ct., 392 F.3d 151, 157 (6th Cir. 2004).

Under this standard, Defendant was entitled to summary judgment.

       The fraud clause in Plaintiff’s policy is simply a version of the fraud clause found in

Michigan’s now-repealed statutory fire insurance form. See Mich. Comp. Laws § 500.2832

(1989 ed.); see also Mich. Comp. Laws § 500.2833(1)(c). This standard clause allows an insurer

to raise a fraud defense (also called “false swearing”) to an insured’s claim for breach of

contract. As Michigan courts have construed this defense:

       To void a policy because the insured has wilfully misrepresented a material fact it
       must be shown that (1) the misrepresentation was material, (2) that it was false,
       (3) that the insured knew that it was false at the time he made the representation
       or that it was made recklessly, without any knowledge of its truth, and (4) that the
       insured made the material misrepresentation with the intention that the insurer
       would act upon it.

Rayis v. Shelby Mut. Ins. Co. of Shelby, Ohio, 264 N.W.2d 5, 8 (Mich. Ct. App. 1978) (internal

quotation marks omitted). The insurer must prove these elements by a preponderance of the

evidence. See Stein v. Home-Owners Ins. Co., 843 N.W.2d 780, 784 (Mich. Ct. App. 2013).

       As a general matter, “[w]hether misrepresentations or false statements void an insurance

policy depends upon the intent to defraud and this is a question of fact for the jury.” West v.

Farm Bureau Mut. Ins. Co. of Mich., 259 N.W.2d 556, 557 (Mich. 1977) (per curiam) (quotation

marks omitted). When the alleged misrepresentation comes down to a disparity between the true

value of the damaged property and the value claimed by the insured, Michigan courts will submit

these cases to a jury so long as the claimant has a “plausible non-fraudulent explanation” for the

disparity—even if the disparity is rather large. Id. at 558. However, we can rule on this defense

as a matter of law if the difference between the actual value of the property and the claimed

value of the property is “extreme.” Rayis, 264 N.W.2d at 7 n.3; accord J.C. Wyckoff & Assocs.

v. Standard Fire Ins. Co., 936 F.2d 1474, 1486 (6th Cir. 1991).

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                                              No. 13-2587

          This case falls into the narrow category of matters where we can rule on the fraud defense

as a matter of law. According to Plaintiff, her home appreciated in value from $27,000 to at least

$143,000 over the space of just fourteen months. Plaintiff has provided no explanation for this

dramatic change of fortunes. Also, according to Plaintiff, she acquired about $159,000 worth of

personal property between April 2011 and June 2012. (This figure represents the $170,000 she

wants Defendant to pay, minus the $7000 of gifts she allegedly received, and minus the $4000

worth of personal property she declared in bankruptcy.) Even if we accept Plaintiff’s statement

that she makes three times more than what she discloses to the IRS, and then further assume that

Plaintiff plowed every cent of her earnings into buying furniture, clothing, jewelry, and the like,

Plaintiff still cannot explain where she got more than $100,000 worth of personal property.

          In short, the dollar disparities in this case are too extreme for a rational jury to find for

Plaintiff. There are no reasonable inferences that could explain the dramatic increase in the

value of Plaintiff’s real and personal property other than the one Defendant suggests—that

Plaintiff’s valuation of her property was false. Because Plaintiff knew it was false, because it

was material, and because Plaintiff made this representation with the intent to defraud

Defendant, Defendant was entitled to summary judgment on the basis of the policy’s fraud

clause.

                                           CONCLUSION

          For these reasons, we AFFIRM the judgment of the district court.

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