Ruiz v. Liberty Mutual Fire Insurance Company

Background

John Ruiz, who was proceeding without a lawyer when the motion was decided, sued Liberty Mutual Fire Insurance Company for allegedly breaching two homeowner’s insurance policies. The policies covered Ruiz’s property in Middletown, New York, and applied from September 13, 2016, to September 13, 2017, and from September 13, 2017, to September 13, 2018. Liberty Mutual also asserted counterclaims seeking to recover money it had paid Ruiz and to investigate his claims.

After burst pipes caused flooding at the Middletown Property in January 2017 and January 2018, Ruiz sought reimbursement for additional living expenses. He claimed rent payments for staying in a duplex at the Arverne Property, which was owned by his wife, Yolanda Brooks-Ruiz. A lease identified the landlord as “Yolanda Brooks,” a name Brooks-Ruiz used professionally. The lease required Ruiz to pay a $1,000 security deposit and $4,000 in monthly rent. Ruiz submitted rent checks and claim materials that described the arrangement as a rental home he had found.

During Liberty Mutual’s investigation of the second claim, an investigator asked Ruiz whether he was married. Ruiz said he was a widower. He did not disclose that he was married to Brooks-Ruiz until an examination under oath on August 16, 2018. Liberty Mutual later determined that Ruiz had violated the policies’ concealment-or-fraud provision and denied coverage for his claims. Before doing so, it had paid Ruiz $43,943.76 in additional living expenses related to the Arverne Property.

Summary-Judgment Standard

The court explained that summary judgment is appropriate when the evidence shows no genuine dispute over a material fact and the moving party is entitled to judgment under the law. The court must view disputed facts and reasonable inferences in favor of the party opposing the motion, but unsupported speculation, conclusory assertions, and inadmissible evidence are not enough to require a trial.

Concealment or Fraud Provision

The policies excluded coverage for an insured who intentionally concealed or misrepresented a material fact or circumstance, or engaged in fraudulent conduct, relating to the insurance. Applying New York law, the court stated that an insurer seeking to void an insurance policy for fraud must prove fraud by clear and convincing evidence. The insurer must establish a false and material misrepresentation or omission, knowledge that it was false, an intent to induce reliance, reasonable reliance, and resulting injury.

Court’s Analysis

The court held that Liberty Mutual established each required element as a matter of law.

First, the court found Ruiz’s relationship with Brooks-Ruiz was material. Liberty Mutual showed that it would not have reimbursed the rent payments had it known that Brooks-Ruiz was Ruiz’s wife. The omission therefore affected Liberty Mutual’s decision to pay the additional living expenses.

Second, the court found clear and convincing evidence that Ruiz knowingly concealed the marriage and misrepresented his connection to the Arverne Property. The court relied on evidence that Liberty Mutual’s claims handler was not told that Ruiz was married or that the property was owned by his wife, that the claim emails did not disclose the marriage, and that Ruiz told the investigator he was a widower. The court rejected Ruiz’s arguments that his public adjuster had disclosed the marriage, that the adjuster had concealed information from him, or that Liberty Mutual witnesses were unreliable. The court found those arguments unsupported by admissible evidence or too speculative to create a genuine factual dispute.

The court also found that the claim materials misrepresented how Ruiz came to occupy the Arverne Property. The materials suggested that Ruiz had found an available rental listing, rather than moved into his wife’s home. The court considered the security deposit and rent payments further evidence that the arrangement was presented as an ordinary rental.

Third, the court found that Liberty Mutual reasonably relied on Ruiz’s omissions and misrepresentations. It concluded that the claim materials did not give Liberty Mutual an obvious reason to investigate Brooks-Ruiz’s personal social-media accounts or otherwise discover the marriage before paying the claim.

Finally, the court found that Liberty Mutual suffered injury because it paid $43,943.76 in additional living expenses that it would not have paid had Ruiz disclosed his marriage to Brooks-Ruiz.

Disposition

The court granted Liberty Mutual’s partial motion for summary judgment and dismissed Ruiz’s claims. The order did not resolve Liberty Mutual’s counterclaims. It directed Ruiz and Liberty Mutual’s counsel to appear for a case-management conference to discuss, among other matters, a trial date, pretrial submissions, and settlement efforts. The clerk was instructed to terminate the motion.