United States District Court, W.D. Virginia, Danville Division
Jeb Stuart Auction Services, LLC, Plaintiff, Counter
Defendant: Catherine Jackson Huff, Daniel Robert Sullivan,
Guy M. Harbert, III, LEAD ATTORNEYS, GENTRY LOCKE RAKES &
MOORE, ROANOKE, VA; Philip G. Gardner, LEAD ATTORNEY,
GARDNER, GARDNER, BARROW & SHARPE, MARTINSVILLE, VA.
West American Insurance Company, Defendant, Counter Claimant:
Edwin Ford Stephens, LEAD ATTORNEY, CHRISTIAN AND BARTON,
RICHMOND, VA; Harrison Mann Gates, Roman Lifson, LEAD
ATTORNEYS, Christian & Barton, LLP Richmond, VA.
Jackson L. Kiser, SENIOR UNITED STATES DISTRICT JUDGE.
matter is before the Court on cross-motions for summary
judgment. I heard oral arguments on the motions on August 6,
2015. For the reasons stated herein, I will grant in part
Plaintiff's motion for partial summary judgment [ECF No.
23] and deny Defendant's motion for summary judgment [ECF
No. 27]. This matter will proceed to trial on the questions
of (1) damages and (2) bad-faith denial of Plaintiff's
claim, see Va. Code Ann. § 38.2-209.
STATEMENT OF FACTS AND PROCEDURAL BACKGROUND
Jeb Stuart Auction Services LLC (" Jeb Stuart" ) is
a Virginia-based limited liability company. Its manager and
sole-member is Robin Hiatt (" Hiatt" ). Jeb
Stuart's principle place of business is in Stuart,
West American Insurance Company (" West American" )
in an Indiana-based insurance provider. Burch-Hodges-Stone,
Inc. (" BHS" ) is a Virginia-based insurance agency
which sells, among other things, commercial insurance
policies provided by West American. Dianne Via-Fulcher
(" Via-Fulcher" ) is an agent with BHS, and her
office is located in Martinsville, Virginia.
14, 2009, Hiatt pleaded guilty to three counts of obtaining
money by false pretenses in violation of Va. Code Ann. §
18.2-178. Hiatt entered an Alford plea on the charge that he
" [paid] three individuals to wreck cars as part of a
fraudulent scheme to receive insurance proceeds" . (Dep.
of Robin Hiatt 32:6-8, June 10, 2015.)
2010, Hiatt formed Jeb Stuart. On or about February 11, 2014,
Jeb Stuart purchased property located at 219-221 Aaron
Street, Martinsville, Virginia, from C& S Property
Management, Inc. (" C& S" ).
the month of January 2014, Hiatt met with Via-Fulcher
regarding purchasing a commercial insurance policy on Jeb
Stuart's property in Martinsville. As a result of those
meetings, BHS submitted an unsigned application for insurance
to West American on January 13, 2014, and a signed
application on January 22, 2014. Hiatt signed the second
application (" the Application" ).
Application, under the section titled " Applicant
Information," " Jeb Stuart Auctions Services
LLC" and C& S are listed under " Name." In
that same section, the box next to " LLC" is
checked (as opposed to " Individual" ). Hiatt is
listed under " Mailing Address." Hiatt is also
listed as " Inspection Contact" and "
Records Contact." Under the section asking for the date
the business was started, Hiatt answered, "
Two of the Application, several questions are propounded.
Specifically, Question Eight asks:
During the last five years (ten in RI), has any applicant
been indicted for or convicted of any degree of the crime of
fraud, bribery, arson or any other arson-related crime in
connection with this or any other property?
Hiatt answered " No" to Question Eight. The
Application does not expressly define " Applicant"
as it relates to Question Eight.
days after he signed the Application, Hiatt returned to
Via-Fulcher's office to discuss whether his 2009
convictions were responsive to Question Eight. According to
Hiatt, he told Ms. Via-Fulcher that he had some felony
convictions in the past and he did not know what he needed to
do. (Hiatt Dep. 45:6-8, June 10, 2015.) He brought a folder
containing his criminal documentation and offered it to her.
(Id. 45:8-9.) Via-Fulcher asked, " Is any of
these charges to Jeb Stuart Auction Services" ?
(Id. 45:12-13.) Hiatt told her they were not, and
she responded: " Well, this is the insurance for Jeb
Stuart Auction, not you." (Id. 45:15-16.)
Via-Fulcher denies that this conversation ever took place and
counters that Hiatt only stated that he had " financial
problems" in the past. (See Dep. of Dianne Via-Fulcher
87:12-15, 106:11-16, May 14, 2015.)
signed the Application on January 22, 2014, under the section
titled " Applicant Signature." Two lines above the
signature, however, the Application states: " The
undersigned is an authorized representative of the applicant
and represents that reasonable inquiry has been made to
obtain the answers to questions on this application. He/she
represents that answers are true, correct and complete to the
best of his/her knowledge." Hiatt signed the Application
within five years of his conviction for a crime of fraud. In
response to the Application (which did not relay information
regarding Hiatt's convictions), West American issued a
commercial property insurance policy to Jeb Stuart ("
the Policy" ).
concedes that his Alford plea on his 2009 charges resulted in
a conviction was for a " crime of ...