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Cowie v. State Farm Fire & Casualty Co.

February 21, 2008

RENEE COWIE AND STEPHEN COWIE, PLAINTIFFS,
v.
STATE FARM FIRE & CASUALTY COMPANY, DEFENDANT.



The opinion of the court was delivered by: R. Allan Edgar United States District Judge

Edgar / Carter

MEMORANDUM

Plaintiffs Renee Cowie and Stephen Cowie bring this action for breach of contract and violation of the Tennessee Consumer Protection Act, Tenn. Code Ann. § 47-18-101 et seq. ("TCPA"). Defendant State Farm Fire & Casualty Company ("State Farm") moves for partial summary judgment dismissal of Plaintiffs' TCPA claim. [Court Doc. No. 86]. Plaintiffs have failed to oppose the motion for partial summary judgment.

Plaintiffs brought their original complaint for breach of an insurance contract in the Circuit Court of Genesee County, Michigan on October 26, 2006. State Farm subsequently removed the action to the United States District Court for the Eastern District of Michigan. Plaintiffs' original complaint stated that they were residents of Genesee County, Michigan. [Court Doc. No. 13-3, Complaint]. According to the Complaint, State Farm is incorporated in Illinois, but is licensed to conduct business in Michigan. Id.

State Farm moved in the Michigan district court for a transfer of venue to this court because the Plaintiffs' boat was destroyed in Chattanooga, Tennessee while they resided in Tennessee. [Court Doc. No. 13]. State Farm also issued the relevant insurance policy in Tennessee. The Michigan district court granted State Farm's motion for a transfer of venue to this court. Id.

Plaintiffs have since amended their original complaint on two separate occasions. See [Court Doc. Nos. 34, 59]. Plaintiffs' Third Amended Complaint [Court Doc. No. 59] alleges that Plaintiffs owned a 24-foot Stingray boat, which was destroyed by fire in Tennessee. Plaintiffs assert that State Farm insured the boat through a boat owner's insurance policy, Policy No. 42-J7-2868-8 (the "Policy"), which provided for the replacement cost of the boat upon a loss caused by fire. Third Amended Complaint, ¶ 5. Plaintiffs allege that they complied with their contractual obligations under the Policy, but State Farm denied their claim. Id. at ¶¶ 9-11. Plaintiffs assert that State Farm's failure to pay for the loss of their boat due to fire constitutes a breach of contract. They further assert that State Farm engaged in deceptive practices by relying on an erroneous expert report that suggested the fire was caused by arson attributable to the Plaintiffs when the company knew the expert report was in error.

State Farm answered the Third Amended Complaint and also brought a counterclaim for declaratory judgment against Plaintiffs. [Court Doc. No. 62]. The counterclaim seeks a declaratory judgment from this court that, among other things, the Plaintiffs are not entitled to any payment under the Policy.

I. Background

Based on the record provided by State Farm, the following facts appear to be undisputed by the parties. State Farm issued the Policy to Stephen and Renee Cowie on June 27, 2005. [Court Doc. No. 62-2]. The Policy was in effect on October 28, 2005. The Policy covered the Plaintiffs' 24-foot 2005 Stingray Cruiser.

The Policy contains a number of conditions pertaining to coverage. It states in relevant part:

Intentional Acts. If you or any person insured under this policy causes or procures a loss to property covered under this policy for the purpose of obtaining insurance benefits, then this policy is void and we will not pay you or any other insured for this loss.

Policy, Section I, Conditions, ¶ 12. The Policy further provides that Coverage L and Coverage M do not apply to bodily injury or property damage:

a. which is either expected or intended by an insured;

b. to any person or property which is the result of willful and malicious acts of an insured; . . .

Policy, Section II, Exclusions, ¶ 1. Concealment and fraud are further excluded from coverage:

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 the loss.

Policy, Section I and Section II - Conditions, ¶ 3.

In October 2005, Plaintiffs were mooring the boat covered under the Policy at the Lakeshore Marina on the Tennessee River in Chattanooga, Tennessee. See [Court Doc. No. 86-3, Affidavit of James Whitmire "Whitmire Aff."]. At 6:46 a.m. on October 28, 2005 a witness reported a fire at the Lakeshore Marina to the Chattanooga City Fire Department. Id. Captain James Whitmire responded to the scene of the fire.

Capt. Whitmire interviewed Mr. Cowie, the owner of the boat on which the fire originated. He summarized his findings in an Initial Investigator Report. [Court Doc. No. 86-3]. Capt. Whitmire's report indicates that Mr. Cowie informed him that he had not been on the boat since two weeks prior to the fire. At that time, Mr. Cowie asserted that he was removing a decal from the rear of the boat. While removing the decal, Mr. Cowie used an electrical, thermostatic controlled heater. After he was through using the heater, he placed it at the base of the stairs in the cutty cabin. The heater connected to a heavy-duty electrical cord and was plugged into an electrical outlet beside the sink in the cabin. Id. Mr. Cowie indicated that he did not know if he had unplugged the heater prior to the blaze.

By the time the firefighters arrived on the scene, the Cowies' boat was already engulfed in flames. Capt. Whitmire's report states:

Due to the boat being in the water and filled with water and foam no samples was [sic] taken until the boat was dry-docked. Once the boat was drained the area of origin appeared to be in the cutty cabin at the base of the steps going into the cabin. An electric heater connected to an industrial type extension cord was found melted to the carpet. In front of the heater laid [sic] a roll of paper towels with an odor of what appeared to be gasoline. [Court Doc. No. 86-3]. The record demonstrates that the fire damaged at least one neighboring boat and part of the marina. [Court Doc. No. 107].

Mr. Cowie testified in his deposition that he was on the boat the night before the fire around 6:30 p.m. [Court Doc. No. 86-5, Deposition of Stephen Michael Cowie II ("S. Cowie Dep. II"), pp. 144-145]. He also testified that he brought gasoline on the boat in a gallon jug that had previously held antifreeze coolant and that was three-quarters of the way full. Id. at 145; [Court Doc. No. 86-4, Deposition of Stephen M. Cowie ("S. Cowie Dep. I"), p. 64]. He had also placed a space heater on the boat prior to the fire and brought several rolls of paper towels with him the night before the fire. S. Cowie Dep. II, p. 145. On Thursday night October 27th, Mr. Cowie admitted that he used the electric heater on the boat. S. Cowie Dep. I, p. 77-78. He set the heater in the cabin at the base ...


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