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Mali v. Federal Insurance Co.

United States Court of Appeals, Second Circuit

June 13, 2013

LUCRETIA MALI, ESTATE OF FREDERICK J. MALI Plaintiff-Appellants-Cross-Appellees,
v.
FEDERAL INSURANCE COMPANY, Defendant-Appellee-Cross-Appellant.

Argued: January 24, 2013

Plaintiffs appeal the judgment of the United States District Court for the District of Connecticut (Burns, J.) rendered on a jury verdict in favor of their insurer, denying their claim for a barn that was destroyed in a fire. Plaintiffs contend that the trial court erred in instructing the jury that it could draw an adverse inference against Plaintiffs with respect to a photograph that Plaintiffs had not produced in discovery. Defendant insurer cross-appeals, seeking attorney fees and equitable relief.

For Plaintiff-Appellants-Cross-Appellees: DAVID N. ROSEN, David Rosen & Associates, P.C., New Haven, CT.

For Defendant-Appellee-Cross-Appellant: ROBERT D. LAURIE (Elizabeth F. Ahlstrand, on the brief) Seiger Gfeller Laurie, LLP, West Hartford, CT.

Before: LEVAL, RAGGI, LIVINGSTON, Circuit Judges.

LEVAL, Circuit Judge

Plaintiffs Lucretia Mali and the estate of Frederick Mali (hereinafter "Plaintiffs" or "the Malis") appeal from the judgment of the United States District Court for the District of Connecticut (Ellen Bree Burns, J.), entered after trial on the jury's verdict in favor of defendant Federal Insurance Company (hereinafter "Defendant, " the "insurer, " or "Federal"). The verdict and judgment denied the Malis indemnification under their insurance policy for the destruction of their barn by fire. The jury found the Plaintiffs had forfeited coverage under the terms of the policy by submitting fraudulent claims relating to the value of the barn and its contents. The Plaintiffs contend that the court abused its discretion in authorizing the jury to draw an adverse inference against them by reason of their failure to make disclosures demanded by the Defendant during the pre-trial discovery proceedings. Federal cross appeals, demanding attorney fees and the return of a partial payment it made to the Plaintiffs on their claim. On Plaintiffs' appeal, we find no error in the instruction given to the jury. As for Defendant's cross appeal, we conclude Federal's claims are either forfeited or without merit.

BACKGROUND

A. The Malis' claim for destruction of their barn

The Malis owned property in Winsted, Connecticut, which included a barn converted for use as a residence. On April 1, 2005, the barn was destroyed by fire. The barn and its contents were covered by an insurance policy issued to the Plaintiffs by Federal. The Malis filed a claim with Federal for the loss of the barn and its contents. The policy included a provision denying recovery in the event the insured commits fraud in the assertion of a claim.

In July 2005, the Malis submitted to Federal an estimate of their claim, showing a loss of $1.325 to $1.5 million. Federal made three payments to the Malis totaling $72, 665.48, for the loss of books, jewelry, a piano, and other items. Subsequently, in support of their claim, the Malis submitted a sketch of the layout of the barn showing that it had fourteen rooms, including a second floor with four rooms and a bathroom, and four skylights on the roof. Federal questioned the validity of the sketch as well as other factual predicates of the Malis' estimate, such as copper gutters, pine hardwood floors in the living room, a Garland stove in the kitchen, and four refrigerators. Federal declined to make further payments.

B. The Malis' suit on the claim

In August 2006, the Malis brought this suit. During pre-trial discovery Federal demanded, inter alia, that the Plaintiffs produce the names of household help who could furnish information as to the layout and contents of the barn, as well as any photographs of the interior of the barn, and in particular of the second floor. The Malis responded that they had no photographs of the second floor. They also did not identify any household help. The Malis meanwhile increased their loss estimate to $2.299 million, based on their assertion that the barn contained $632, 137.65 worth of ceramic tile.

At trial, Lucretia Mali testified, consistent with the Plaintiffs' earlier submission, that the barn had fourteen rooms, including four rooms on the second floor, and that the barn contained four skylights, ceramic tiling, a Garland stove, four refrigerators, a back room, and wide plank wood floors in the main living space.

Among the witnesses called by the Plaintiffs in support of their claim was Helaine Fendelman, an antiques appraiser whom Lucretia Mali had hired to estimate the value of various items that were allegedly destroyed in the fire. Fendelman testified that in the course of her work, she was shown photographs depicting both ...


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