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Harleysville Insurance Co. v. Holding Funeral Home, Inc.

United States District Court, W.D. Virginia, Abingdon Division

September 8, 2016

HARLEYSVILLE INSURANCE COMPANY, Plaintiff,
v.
HOLDING FUNERAL HOME, INC., ET AL., Defendants.

          Robert Tayloe Ross, Robert S. Reverski, Jr., and David Paul Abel, Midkiff, Muncie & Ross, P.C., Richmond, Virginia, for Plaintiff;

          C. Thomas Brown, Silver & Brown, Fairfax, Virginia, for Defendants.

          OPINION AND ORDER

          James P. Jones United States District Judge.

         The plaintiff, an insurer of commercial property, invoking this court's diversity jurisdiction, seeks a declaratory judgment that it is not obligated to pay claims filed by the insureds for damages resulting from arson, that the insurance contract is void due to material misrepresentations by the insureds, and that the insurer is entitled to a refund of all advances made by it under the insurance contract. The defendants, the insureds, have moved to dismiss for failure to state a claim and have asserted a counterclaim against the insurer.

         Reviewing the plaintiff's allegations in the light most favorable to it, I find that the Second Amended Complaint states plausible claims for declaratory relief. Accordingly, the defendants' Motion to Dismiss is denied.

         I.

         The Second Amended Complaint alleges the following facts, which I must accept as true for purposes of deciding the Motion to Dismiss.

         Harleysville Insurance Company (“Harleysville”) is a corporation organized and existing under the laws of the Commonwealth of Pennsylvania, with its principal place of business in Harleysville, Pennsylvania. Harleysville is licensed to do business as an insurance company under the laws of the Commonwealth of Virginia.

         Defendants and Counterclaimants Holding Funeral Home, Inc. (“Holding”) and L.J. Horton Florist are corporations, organized under the laws of the Commonwealth of Virginia, with principal places of business in Big Stone Gap, Virginia. Marvin Blake Wilson, Jr. is the sole owner of these two entities.

         Golden Rule Family Management, LLC, doing business as Holding Funeral Home of Castlewood (“Holding of Castlewood”), is a corporation, also organized under the laws of the Commonwealth of Virginia, with its principal place of business in Castlewood, Virginia. Michael Riebe and Marvin Blake Wilson, Jr. each hold a fifty percent interest in Holding of Castlewood.

         Harleysville and the defendants were parties to a renewal contract of insurance issued by Harleysville for the time period of November 23, 2013, to November 23, 2014 (the “Insurance Contract”). The Insurance Contract provides commercial property insurance coverage for Holding of Castlewood for a funeral home located in Castlewood, Virginia.

         On October 22, 2014, a fire damaged the funeral home. Harleysville conducted an independent investigation and found both that the fire had been intentionally set and that it had been directly or indirectly caused or arranged for by the defendants. The limit of property insurance coverage had been increased from $850, 000 to $1, 200, 000 less than three weeks prior to the fire. Upon receiving notice of the fire loss and the resulting claims on October 22, 2014, Harleysville began investigating the claims. During the course of the claims investigation, Riebe and his wife gave false alibis regarding their whereabouts around the time of the fire, and Riebe falsely informed Harleysville that he was unaware of any police arson investigation, that certain corporate documents requested by Harleysville had been burned in the fire, that he had placed an advertisement offering a reward for information relating to the fire, and that he had not been at the premises in the days prior to the fire.

         Harleysville requested that Holding of Castlewood provide documents and information needed for the investigation. Holding of Castlewood responded with only a partial document production. Harleysville renewed its request on twenty subsequent occasions.[1]

         On March 23, 2015, Harleysville provided Holding of Castlewood with proof of loss forms for the building, contents, and business income claims. On April 8, 2015, Holding of Castlewood filed a Sworn Statement in Proof of Loss as to the building, which was dated April 3, 2015, and contained a claimed Partial Replacement Cost of $1, 151, 002.10 and a claimed Partial Actual Cash Value of $921, 997.24. Harleysville neither accepted nor rejected the proof of loss for the building pending its investigation of the claim.

         On May 22, 2015, Holding of Castlewood filed a Sworn Statement in Proof of Loss as to the contents, with a claimed Partial Replacement Cost of $182, 261.76 and a claimed Partial Actual Cash Value of $145, 998.73. Although requested to do so, Holding of Castlewood did not provide an itemized inventory or any documentation to support its claim with respect to the loss of its contents. The same day, Holding of Castlewood also filed a Sworn Statement in Proof of Loss ...


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