United States District Court, W.D. Virginia, Abingdon Division
Tayloe Ross, Robert S. Reverski, Jr., and David Paul Abel,
Midkiff, Muncie & Ross, P.C., Richmond, Virginia, for
Thomas Brown, Silver & Brown, Fairfax, Virginia, for
OPINION AND ORDER
P. Jones United States District Judge.
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
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.
Second Amended Complaint alleges the following facts, which I
must accept as true for purposes of deciding the Motion to
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.
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
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.
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.
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.
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
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.
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 ...