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Encompass Home and Auto Insurance Co. v. Harris

United States District Court, Fourth Circuit

November 19, 2013

COREY HARRIS, et al., Defendants.


GEORGE L. RUSSELL, III, District Judge.

THIS MATTER is before the Court on Plaintiff's, Encompass Home and Auto Insurance Company ("Encompass"), Motion for Summary Judgment (ECF No. 19), and Encompass's Motion in Limine to Exclude Defendants/Counter-Plaintiffs', Corey Harris and Nicole Saunders Harris (the "Harrises"), Insurance Expert's Testimony at Trial (ECF No. 20). The questions before the Court are whether (1) the Harrises' failure to include the purchase price of their property on their application for a homeowner's insurance policy was a material misrepresentation that supports Encompass voiding the policy ab initio; and (2) the insurance expert's testimony should be excluded at trial.

The issues have been fully briefed and no hearing is necessary. See Local Rule 105.6 (D.Md. 2011). For the reasons given below, Encompass's Motion in Limine to Exclude the Harrises' Insurance Expert's Testimony will be granted, and Encompass's Motion for Summary Judgment will be denied.


On August 2, 2011, the Harrises purchased a row home located at 2700 Classen Avenue, Baltimore, Maryland, (the "Property") for $7, 500. The only improvements made to the Property were applying plywood to the front door and resealing the roof. In May 2012, the Harrises contacted Jayne Clark of Donadio Insurance Group to add the Property to Ms. Harris's existing policy.[2] Based on the information provided to her by the Harrises, Ms. Clark completed an application for insurance to make the Property the primary residence on the policy with a replacement cost valued at $180, 000. Ms. Harris then reviewed and signed the application before returning it to Ms. Clark for submission to Encompass.

Encompass's underwriting guidelines require that the market value of any property it insures not be less than 70% of the current replacement value. The Harrises' insurance application omits the property value and market value of the Property. Nonetheless, Encompass accepted the application and endorsed the policy to include the Property.

Within a month after endorsement of the policy, a fire occurred. A subsequent investigation revealed that the Property was not being used as a primary residence, was not in livable condition, was purchased for only $7, 500, and had been uninsured since it was purchased in August 2011. As a result, Encompass initiated this action on August 29, 2012, seeking a declaratory judgment that the Policy is void ab initio based on material misrepresentations in the application.

In its Complaint, Encompass alleges that, had it known at the time the application was being reviewed that the Property was (1) not the Harrises' owner-occupied primary residence, (2) vacant, (3) purchased for $7, 500, and (4) without insurance since the time of purchase in August 2011, it would not have issued the Policy. The Harrises filed an Answer and a Counter-Complaint alleging that Encompass breached the conditions of the Policy. (ECF Nos. 10, 13). Encompass filed an Answer to the Counter-Complaint. (ECF No. 14).

On April 22, 2013, Encompass moved for summary judgment alleging that the material misrepresentation by the Harrises concerning the value of the Property compared to its replacement value entitles it to judgment as a matter of law.[3] The Harrises timely opposed Encompass's motion. (ECF No. 21). They argue that Encompass should not be permitted to avoid its responsibilities under the contract because (1) they did not represent to Encompass a purchase price different from what was actually paid but merely omitted the purchase price from the application; (2) the condition of the Property and their intentions with respect to the Property are imputed to Encompass through the insurance agent, Ms. Clark; and (3) Encompass waived its right to rescind the policy. Encompass filed a timely reply. (ECF No. 22).

On April 24, 2013, Encompass filed a Motion in Limine regarding the testimony of Michael Gardner, whom the Harrises intend to designate as their insurance expert. The Harrises' response was due by May 13, 2013. To date, the Court has no record of a response being filed. The Motion is ripe for disposition.


A. Motion in Limine

Although Mr. Gardner's expected testimony has no bearing on Encompass's Motion for Summary Judgment, the Court will address the Motion in Limine first. Having reviewed the record in this case, Encompass's Motion will be granted.

Federal Rule of Civil Procedure 26(a)(2)(A) requires parties to disclose the identity of any witness who may be used at trial. More specifically, the disclosure of a witness expected to provide expert testimony must include a written report signed by the person offering the expert witness testimony. Fed.R.Civ.P. 26(a)(2)(B). These disclosures shall ...

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