State Auto Property & Casualty v. Sigismondi Foreign Car Special ( 2022 )

NOT PRECEDENTIAL
UNITED STATES COURT OF APPEALS
FOR THE THIRD CIRCUIT
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No. 21-2435
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STATE AUTO PROPERTY AND CASUALTY INSURANCE COMPANY
v.
SIGISMONDI FOREIGN CAR SPECIALISTS, INC.,
Appellant
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On Appeal from the United States District Court
for the Eastern District of Pennsylvania
(D.C. No. 2-19-cv-05578)
District Judge: Hon. Eduardo C. Robreno
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Submitted Under Third Circuit LAR 34.1(a)
November 17, 2022
Before: HARDIMAN, PORTER, and FISHER, Circuit Judges.
(Filed: November 18, 2022)
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OPINION *
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HARDIMAN, Circuit Judge.
Sigismondi Foreign Car Specialists, Inc. appeals the District Court’s summary
*
This disposition is not an opinion of the full Court and pursuant to I.O.P. 5.7 does not
constitute binding precedent.
judgment in favor of State Auto Property and Casualty Insurance Company on State
Auto’s declaratory judgment action and statutory insurance fraud claim. Sigismondi also
appeals the Court’s order dismissing its counterclaim. Sigismondi disputes whether it
knowingly made material misrepresentations when it submitted doctored invoices during
the adjustment of its insurance claim. We agree with the District Court’s analysis
rejecting Sigismondi’s arguments, so we will affirm.
I
This appeal concerns a commercial insurance policy issued by State Auto that
provided coverage for Sigismondi’s car repair shop. Sigismondi requested an insurance
payment for water damage, but State Auto denied the claim, citing fraud.
The misrepresentations at issue occurred during the claims-adjustment process.
Sigismondi and State Auto retained adjusters to value the damaged inventory. The
adjusters first created a joint inventory—a list of all the damaged items for which
Sigismondi sought insurance proceeds. State Auto’s adjuster, Chad Foster, then
researched prices of the same or similar products to determine either a “replacement
value” (if Sigismondi replaced the item) or an “actual cash value” (if not). Sigismondi’s
adjusters, or Sigismondi itself, likewise valued the items.
Sigismondi valued certain items higher than Foster estimated or could verify. For
these, Foster requested that Sigismondi’s adjusters obtain “invoice support” from
Sigismondi. Sigismondi responded with what appeared to be original invoices from
various vendors. In truth, a Sigismondi employee had scanned at least some of the
invoices into the computer and then used editing software to change the items and prices
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listed by the vendors. After Foster alerted State Auto to this issue, State Auto sent
Sigismondi a reservation of rights letter, requesting further documentation and
highlighting a policy provision stating the policy would be void if any insureds
“intentionally conceal or misrepresent a material fact concerning . . . [a] claim under this
policy.” App. 167–70; Supp. App. 74.
State Auto filed suit after further investigation confirmed the alterations. It sought
a declaratory judgment that the policy was void. It also requested damages for statutory
insurance fraud, 18 Pa. Cons. Stat. § 4117; common law fraud; and reverse bad faith.
Sigismondi counterclaimed for statutory bad faith. At the summary judgment stage,
Sigismondi initially claimed its misrepresentations were not material. It later obtained
leave to address a recent decision in Commonwealth v. Risoldi, 238 A.3d 434 (Pa. Super.
Ct. 2020). Sigismondi then offered new arguments: that the altered invoices were not
knowingly made to contain false or misleading information and that they were not, in
fact, misleading. The District Court determined these new arguments were forfeited and
the misrepresentations were material, so it granted summary judgment to State Auto on
its declaratory judgment action and statutory insurance fraud claim. State Auto Prop. &
Cas. Ins. Co. v. Sigismondi Foreign Car Specialists, Inc., 533 F. Supp. 3d 268, 275 &
n.3, 278–79 (E.D. Pa. 2021). The Court also declined to vacate its prior order dismissing
Sigismondi’s counterclaim. Id. at 278–79.
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II 1
Sigismondi’s appeal of the summary judgment for State Auto is based on its
argument that there are genuine disputes of material fact as to whether the edited invoices
were knowingly made to be false or misleading, whether they were misleading at all, and
whether they were material—necessary elements of both the declaratory judgment and
statutory fraud causes of action. 2 See 18 Pa. Cons. Stat. § 4117(a)(2); Supp. App. 74.
A
Sigismondi offers two somewhat intertwined contentions: that it did not knowingly
or in bad faith provide false or misleading information by submitting the altered invoices,
and that the invoices themselves were not in fact misleading. See 18 Pa. Cons. Stat.
§ 4117(a)(2); Supp. App. 74. The company argues it submitted the invoices only to allow
the adjusters to identify items and vendors—not prices. Sigismondi insists this should
have been clear because the invoices were dated after the water-damage incident.
Sigismondi has forfeited these arguments. In its initial summary judgment
briefing, Sigismondi framed its argument entirely in terms of materiality. It was not until
Sigismondi was given leave to address Risoldi that it shifted focus to the other elements
of the cause of action. That was too late. The District Court granted leave to address
1
The District Court had diversity jurisdiction under 28 U.S.C. § 1332. We have
jurisdiction under 28 U.S.C. § 1291.
2
The statutory fraud claim also requires that Sigismondi acted with the intent to defraud.
See 18 Pa. Cons. Stat. § 4117(a)(2). Because Sigismondi does not dispute the District
Court’s conclusion that the company acted with the requisite intent, it has forfeited any
argument to the contrary. See In re Wettach, 811 F.3d 99, 115 (3d Cir. 2016).
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Risoldi’s impact on the materiality question before the Court; it was not an invitation to
raise new arguments that could have been raised sooner. See State Auto, 533 F. Supp. 3d
at 275 n.3. The District Court thus correctly concluded that Sigismondi forfeited these
arguments. Id.; see Bruni v. City of Pittsburgh, 941 F.3d 73, 84 n.11 (3d Cir. 2019).
Regardless, it’s hard to imagine how the invoices—which were doctored to include prices
that did not come from the vendor—were anything but knowingly made to include false
or misleading information. See Risoldi, 238 A.3d at 455 n.21 (“A fabricated receipt
created by a consumer and presented as an official document from a retailer, without the
retailer’s knowledge, constitutes false or misleading information … .”).
B
Sigismondi also argues that any misrepresentations were not material because the
invoices would not be the final word on value—Foster would conduct his own inquiry
into prices based on the items and vendors. See 18 Pa. Cons. Stat. § 4117(a)(2); Supp.
App. 74. We disagree.
Sigismondi provided the altered invoices in response to a request for “invoice
support” or other “documentation for the value claimed.” Supp. App. 257–58. Its
argument that the invoices, to which it added prices, were relevant only for information
about items and vendors is thus contradicted by undisputed evidence. And because this
exchange of information was part of an effort to determine the value of the insured items,
the falsified invoices that indicated prices charged by vendors were undoubtedly material.
See Risoldi, 238 A.3d at 455 n.21 (“[F]abricated receipt[s] … certainly would be material
to [an] insurance claim.”); see also Rohm & Haas Co. v. Cont’l Cas. Co., 781 A.2d 1172,
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1179 (Pa. 2001) (stating that information is material “[w]hen knowledge or ignorance of
[that] information would influence the decision of an insurer”).
Reviewing the record in the light most favorable to Sigismondi, see Blunt v. Lower
Merion Sch. Dist., 767 F.3d 247, 265 (3d Cir. 2014), the altered invoices were material.
So the District Court properly granted State Auto summary judgment on its declaratory
judgment and statutory insurance fraud claims.
III
As Sigismondi recognizes, our affirmance of declaratory relief in favor of State
Auto dooms Sigismondi’s counterclaim for statutory bad faith. Because the policy was
void, it did not cover Sigismondi’s damaged inventory. It follows that State Auto cannot
be liable for bad faith denial of the claim. See USX Corp. v. Liberty Mut. Ins. Co., 444
F.3d 192, 202 (3d Cir. 2006).
***
For the reasons stated, we will affirm.
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