Denial of Claim Based Upon Dispute over EUO Overturned
The First Circuit reversed the district court's granting of summary judgment to the insurer based upon a dispute over compliance with attending Examinations Under Oath. Philadelphia Indem. Ins. Co. v. BAS Holding Corp., 2023 U.S. App. LEXIS 21573 (1st Cir. Aug. 17, 2023).
An arsonist destroyed the State Building, a landmark building, owned by BAS Holding Corporation ("BAS"). BAS sought coverage from its insurer, Philadelphia. Philadelphia investigated the loss and became convinced that the State Building may not have been insured under the policy. Philadelphia sought a EUO and asked BAS to designate someone who could answer questions relating to eight enumerated topics. BAS sent Susan Rodrigues to the EUO. She handled all the insurance and oversaw maintenance of the State Building.
Rodrigues tried to answer all questions put to her at the EUO. For questions she could not answer, she offered to research and provide a response at a later date. The day after the EUO, Phildelphia requested six individuals Rodrigues identified as potentially having additional information to attend EUOs. Philadelphia asked that George Carney, the president and owner of BAS, testify. BAS stated it would respond later to Philadelphia's request to take additional EUOs. Philadelphia claimed this was the first refusal by BAS to produce Carney for an EUO. BAS then wrote to inform Philadelphia it would provide additional witness for EUOs if it was "reasonably required," as stated in the policy. Philadelphia argued this constituted the second refusal of BAS to produce Carney for an EUO.
Philadelphia then wrote back that it was permitted to take the EUO of Carney because he owned and managed BAS. Philadelphia also added additional questions and document requests. Less than 72 hours later, and before BAS could respond, Philadelphia denied the claim based upon failure to attend the EUOs.
Philadelphia then filed suit seeking declarations that the State Building was not covered under the policy and that BAS breached the policy's EUO conditions. The parties filed cross-motions for summary judgment. The district court granted Philadelphia's motion due to lack of cooperation of Carney.
On appeal, the First Circuit considered whether BAS willfully and without excuse refused Philadelphia's request for an EUO of Carney, thereby breaching the policy. The First Circuit determined that asking why additional EUO's were necessary was not an unexcused and willful refusal to present Carney for an EUO. BAS presented Rodrigues who answered what she could and was not evasive. Carney's non-appearance at an EUO in and of itself did not support the district court's grant of summary judgment as a matter of law to Philadelphia.
