This post was also written by Michael N. DiCanio.
Policyholders and their counsel should check out a May 27 ruling denying summary judgment to the insurance company defendants in Bray & Gillespie IX, LLC v. Hartford Fire Insurance Co., et ano. In the B&G decision, a magistrate judge in the Middle District of Florida relied in part on the so-called Broad Evidence Rule. Under that rule, any evidence logically tending to establish a correct estimate of the value of damaged or destroyed property may be considered by the trier of fact to determine “actual cash value” at the time of the loss. This means that replacement cost, wholesale cost, a contractor’s estimate, even the owner’s own testimony, are among the many types of evidence that a jury could consider to determine “actual cash value.” The judge in the B&G case characterized the Broad Evidence Rule as a “liberal admissibility standard.”
In the same decision, the magistrate judge suggested that a much tougher evidentiary standard must be met by an insurance company alleging fraud or misrepresentation by a policyholder.
The magistrate judge held that the insurance company must prove that any misrepresentations by a policyholder were intentional acts of fraud, a burden the court concluded was not negligible. Quoting from two early Fifth Circuit decisions, the magistrate judge noted that inaccurate proofs of loss, exaggeration in the amounts of claims, or even the assertion of a doubtful claim, did not meet this heightened standard, and that an insurance company seeking to rely on a fraud-and-misrepresentation defense had a “heavy burden of establishing that the conduct complained of was done and was a willful, purposeful misrepresentation of facts having substantial materiality under circumstances to which the law would attribute the intention to defraud, that is, cheat, deceive and cause the insurer to do other than that which would have been done had the truth been told.”