United States District Court, D. Arizona
Douglas L. Rayes. United States District Judge
the Court is Plaintiff Pekin Insurance Company's
(“Pekin”) motion for summary judgment (Doc. 95),
which is fully briefed. Pekin requested oral argument, but
after reviewing the parties' briefing and the record, the
Court finds oral argument unnecessary. See Fed. R.
Civ. P. 78(b); LRCiv. 7.2(f). For the reasons stated below,
Pekin's motion is granted.
judgment is appropriate when there is no genuine dispute as
to any material fact and, viewing those facts in a light most
favorable to the nonmoving party, the movant is entitled to
judgment as a matter of law. Fed.R.Civ.P. 56(a). Summary
judgment may also be entered “against a party who fails
to make a showing sufficient to establish the existence of an
element essential to that party's case, and on which that
party will bear the burden of proof at trial.”
Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986).
A fact is material if it might affect the outcome of the
case, and a dispute is genuine if a reasonable jury could
find for the nonmoving party based on the competing evidence.
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248
party seeking summary judgment “bears the initial
responsibility of informing the district court of the basis
for its motion, and identifying those portions of [the
record] which it believes demonstrate the absence of a
genuine issue of material fact.” Celotex, 477
U.S. at 323. The burden then shifts to the non-movant to
establish the existence of material factual issues that
“can be resolved only by a finder of fact because they
may reasonably be resolved in favor of either party.”
Anderson, 477 U.S. at 250. The non-movant
“must do more than simply show that there is some
metaphysical doubt as to the material facts, ” and
instead “come forward with specific facts showing that
there is a genuine issue for trial.” Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574,
586-87 (1986) (internal quotation and citation omitted).
Conclusory allegations, unsupported by factual material, are
insufficient to defeat summary judgment. Taylor v.
List, 880 F.2d 1040, 1045 (9th Cir. 1989). If the
non-movant's opposition fails to cite specifically to
evidentiary materials, the court is not required to either
search the entire record for evidence establishing a genuine
issue of material fact or obtain the missing materials.
See Carmen v. S.F. Unified Sch. Dist., 237 F.3d
1026, 1028-29 (9th Cir. 2001); Forsberg v. Pac. N.W. Bell
Tel. Co., 840 F.2d 1409, 1417-18 (9th Cir. 1988).
2013, Harley and Mary Krager purchased a homeowner's
insurance policy (“Policy”) from Pekin. (Docs.
96-5; 96-7.) In doing so, the Kragers completed and signed
Pekin's insurance application
(“Application”), which included the following
acknowledgment: “I have read the above application and
I declare to the best of my knowledge and belief all of the
foregoing statements are true, and that these statements are
offered as an inducement to [Pekin] to issue the policy for
which I am applying.” (Doc. 96-7.) The Application
asked a series of questions, including whether the Kragers
conducted any business out of their home. The Kragers
answered that they did not.
6, 2016, while insured under the Policy, the Kragers'
residence was destroyed by a fire. Harley died in the fire.
Afterward, Mary submitted a claim to Pekin on behalf of
herself and the Krager Revocable Living Trust. As part of its
investigation, Pekin hired BrightClaim to do an inventory of
the personal property loss at the Krager residence. (Doc.
field representative, Clay Olson, met with Mary and her son,
Bruce Krager, to conduct an inventory. (Doc. 97-4.) The group
substantially completed an inventory of the main floor of the
house, which consisted of the living area. According to
Olson, Mary and Bruce still needed to “come up with
ages and costs of things we weren't able to determine
today.” (Id. at 2.) The inventory for the
house's lower level, which consisted of the garage and
workshop, proved much more complicated. (Id.) Olson
noted that “[n]ot only are there incredible amounts of
different parts of firearms, but the amount of ammunition, in
every size, shape, and color . . . is spread
everywhere.” (Id.) Olson added, “[i]t is
very easy to see that the average person cannot look at
this material and identify it . . . .” (Id.)
As a result, the inventory could not be completed until
someone capable of identifying these items was present.
(Id.) O n J u ly 5, 2016, BrightClaim emailed
Phillip Craft at Pekin, notifying him that the Kragers still
had “a number of unfinished, unsigned, inventory
sheets” that could not be completed without Bruce.
on the large inventory of firearms, ammunition, and
specialized machinery on the premises, Pekin elected to
investigate the nature of Harley's firearm activities. On
June 14, 2016, Pekin sent a letter to Mary requesting that
she provide various documents related to Harley's
firearms activities. (Doc. 97-5.) More than two months later,
Bruce responded via letter, offering some of the requested
documents and stating that the remaining documents requested
were a “work in progress” and that after he went
through Harley's office he would “provide
applicable records that survived enough to be legible. . .
.” (Doc. 97-7.) Bruce's letter also recognized that
the Kragers' “personal property inventories are in
progress, but the severity of the fire has made
identification of items difficult and time consuming.”
(Id.) Bruce promised to “provide inventories
as they are completed.” (Id.)
Pekin sent a letter to Mary's attorney, requesting that
she produce the outstanding documents concerning Harley's
firearm activities, allow for inspection of fire damaged
items, and sit for an Examination Under Oath
(“EUO”). (Doc. 97-8.) Pekin requested that Mary
comply with its requests by no later than December 14, 2016.
(Id.) On December 13, 2016, Mary's attorney
responded to Pekin's letter, requesting that the document
inspection and EUO“be continued until the end of
January 2017, when [Bruce] believes he will have all of the
documentation  requested . . . and the inventory
completed.” (Doc. 97-9 at 3.) According to the letter,
Bruce still needed 6-8 weeks to complete the inventory.
(Id. at 2.)
January 17, 2017, Pekin sent another letter to Mary's
attorney, requesting an EUO with Bruce, who had
“formally succeeded to the [Federal Firearm License
(“FFL”)]” of Harley, production of the
inventories and specific documents related to Harley's
firearms activities, and inspection of fire damaged items.
(Doc. 97-10.) The letter proposed that production of
documents occur no later than February 1, 2017, and the EUO
by no later than February 3, 2017. (Id.) On February
3, 2017, Mary and Bruce sat for EUOs with Pekin. (Doc. 98-2.)
Thereafter, Pekin sent transcripts of the EOUs to be signed
by Mary and Bruce, requesting a response by no later than
March 8, 2017. (Doc. 98-3.)
March 1, 2017, Pekin received a letter from Mary's
attorney demanding a coverage decision by no later than March
17, 2017. (Doc. 98-4.) Pekin requested an extension to March
31 and reminded Mary and Bruce that they still needed to
submit signature pages for the EUOs. (Doc. 98-5.) On April 5,
2017, Pekin notified Mary that it intended “to deny the
claim and to seek Declaratory Relief . . . .” (Doc.
April 10, 2017, Pekin filed this action, asserting that it is
entitled to rescind the Policy because the Kragers materially
misrepresented their business activities in the home and,
alternatively, that Defendants are estopped from denying that
the Kragers conducted business out of their home. For relief,
Pekin seeks a declaratory judgment that the Policy has been
rescinded and therefore Pekin need not cover the loss. (Doc.
1.) Defendants the Estate of Harley Krager, the Krager
Revocable Living Trust, and Mary filed counter-claims for
breach of contract and bad faith, arguing that coverage
exists, Pekin breached the Policy by denying coverage, ...