                 United States Court of Appeals
                            For the Eighth Circuit
                        ___________________________

                                No. 18-2610
                        ___________________________

              Todd Borchardt; Michele Borchardt; Danielle Shaver

                      lllllllllllllllllllllPlaintiffs - Appellants

                                 Dillon Borchardt

                              lllllllllllllllllllllPlaintiff

                                           v.

                     State Farm Fire and Casualty Company

                       lllllllllllllllllllllDefendant - Appellee
                                      ____________

                    Appeal from United States District Court
                         for the District of Minnesota
                                ____________

                            Submitted: June 11, 2019
                              Filed: July 29, 2019
                                 ____________

Before LOKEN, KELLY, and ERICKSON, Circuit Judges.
                           ____________

ERICKSON, Circuit Judge.

     A fire destroyed Todd and Michele Borchardt’s home located in Byron,
Minnesota. A jury determined the fire was intentionally set, although not by Todd,
Michelle, or Danielle Shaver, the Borchardts’ daughter. Additionally, the jury found
that Todd, Michele, and Danielle (collectively, “the Borchardts”) each willfully, and
with intent to defraud, concealed or misrepresented a material fact or circumstance
relating to the fire or the insurance claim submitted to State Farm Fire and Casualty
Company (“State Farm”). The district court1 entered judgment awarding no damages
to the Borchardts and awarding $9,927.50 in damages to Dillon Borchardt for his
insurance claim. The Borchardts argue on appeal that State Farm failed to prove they
made a material misrepresentation to State Farm and thus the district court erred in
denying their motion for judgment as a matter of law. We affirm.

I.    Background

      In March 2006, Todd and Michele Borchardt purchased a house in Byron,
Minnesota, for $254,000.00 with the financial assistance of Todd’s parents. Although
the house was purchased without a loan, the Borchardts borrowed $54,000.00 from
a bank to finish the basement and make it handicap accessible. Their monthly
mortgage payment was $254.00. Michele testified that during her entire relationship
with Todd, approximately 25 years, they experienced financial difficulties. At times,
they borrowed money from other people to pay bills and other times would “finagle
things to pay them.”

      In September of 2014, the Borchardts’ children, Danielle (aged 23) and Dillon
(aged 16), and Danielle’s boyfriend, Jeff Lawson, resided in the home with Todd and
Michele. When the house had previously been in foreclosure proceedings, the
Borchardts borrowed money from others or withdrew money from a retirement
account to clear the default. Beginning in 2010, the Borchardts tried to sell the home,
both on their own and with the help of real estate agents. No offer to purchase was


      1
      The Honorable Patrick J. Schiltz, United States District Judge for the District
of Minnesota.

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ever conveyed to the Borchardts. In July 2013, Todd lost his job as a custodian at
Mayo Clinic, a job he had held for 12 years. Michele was unable to perform her
duties as an assistant head cook after undergoing surgery in December 2013. While
Todd was able to find work through a temporary service mowing lawns, by
September 2014 Todd and Michele were behind on all of their bills and no longer had
any savings or retirement accounts. They last made a mortgage payment in April
2014.

       On Monday, September 8, 2014, the electricity to the Borchardts’ home was
disconnected for nonpayment. The Borchardts made plans to camp for the weekend
because the campground had hot showers. Their weekend plans changed to renting
a local hotel room when it was cold and rainy on Friday morning. Around dinnertime
on Friday, September 12, 2014, Todd, Michele, Dillon, Danielle, Danielle’s
boyfriend, and the family dogs left the home, drove to Taco Bell to eat, and then
drove to the hotel for the night.

      Sometime between midnight and 1:00 a.m. on Saturday, September 13, 2014,
the Olmsted County (Rochester) Sheriff’s Department called Danielle’s phone.
Michele answered. The deputy told Michele that the house was on fire. Michele and
Todd immediately left the hotel and drove to the house to find it engulfed in flames.
Michele and Todd were on scene for about an hour and then returned to the hotel
when it became too emotionally difficult for Michele to watch the fire.

       As part of its investigation, State Farm retained Doug Noah, a fire investigator,
to assist in determining the cause of the fire. Noah opined that the fire was incendiary
in origin, the most probable cause arising from application of an open flame to
combustible materials. State Farm also discovered that approximately two years
before the fire, the Borchardts had no insurance on the house. The Borchardts
subsequently purchased a homeowners policy from State Farm. They received a
cancellation notice in January 2014 for nonpayment. The policy lapsed on March 6,

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2014, when the Borchardts did not make the required payment. In the spring of 2014
when the Borchardts received their 2013 tax year refund, they bought a new State
Farm homeowners policy and paid for the entire year’s premium up front. The policy
period began on April 28, 2014, and is the policy at issue here.

      In a sworn proof of loss statement, the Borchardts made a claim to State Farm
for $330,000.00 for the damaged house plus other structures and landscape and a
claim for $202,177.13 for damaged personal property. State Farm denied the claim
for two reasons:

      1.     The fire was caused or procured by or at the direction of an
             insured in violation of the terms and conditions of the State Farm
             policy, as well as the public policy of the state of Minnesota, all
             of which render the policy void.

      2.     There has been concealment and misrepresentation of material
             facts or circumstances concerning the insurance of the subject
             thereof, contrary to the State Farm policy and/or Minnesota
             statutory provisions in the submission of this claim.

       The sole issue tried to the jury was liability as to Todd, Michelle, and
Danielle’s insurance claim. The parties agreed that damages would be decided by the
court if the jury returned a verdict in their favor and the parties were unable to agree
on the amount. The parties reached a pretrial stipulation on liability and damages as
to the value of Dillon’s personal items that were destroyed by the fire.

      The Borchardts hired Michael Pakkala, a state licensed public insurance
adjuster, to assist in preparing an inventory and valuing the items destroyed in the
fire. Pakkala testified at trial. Because the Borchardts’ home was completely
destroyed, Pakkala relied on the Borchardts to provide an inventory of the contents.
Pakkala testified that the accuracy of a contents list is impacted when a home is
completely destroyed by fire because the homeowners must rely on their recollection

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of what was present and valuing is more difficult because often there is no brand or
receipt to guide them.

        At trial, State Farm identified items on the Borchardts’ proof of loss statement
that it argued were material misrepresentations. One of those items was Michele’s
wedding ring. She valued her jewelry in a bankruptcy petition prepared in 2000 or
2001 at $50.00; on the proof of loss statement to State Farm, Michele claimed her
wedding ring was worth at $2,000.00. Michele testified at trial that the family owned
one non-functioning lawnmower, but the proof of loss statement listed two
lawnmowers – one that was 12 years old and one that was 17 years old with no
notation that either was non-functioning. The proof of loss statement contained 13
televisions, of which four were flat screens. Michele testified they owned 10
televisions, of which two were flat screens. The Borchardts listed 1,000 DVDs on
their loss statement. Dillon testified during a deposition that the family owned an
estimated 100 DVDs. While two laptop computers were claimed to have been
destroyed, Danielle testified that she only owned one.

       On the statement, six food dehydrators were mistakenly listed instead of one
six-shelf food dehydrator. Even though Todd had pawned all of his firearms many
years earlier, he included on the loss statement a number of accessories for firearms,
including ammunition, eight pairs of head sets, a cleaning kit, padded carrying cases,
and a hard-sided case. State Farm also argued that the Borchardts’ claim for
$1,500.00 in food; $500.00 in liquor; and $500.00 in tea and coffee was implausible
given the Borchardts’ dire financial circumstances, particularly when Michele
borrowed $200.00 from her parents to buy milk and food for the family in the summer
of 2014. Given the family’s financial circumstances, State Farm also questioned the
loss of 14 pairs of sunglasses, including multiple pairs of designers sunglasses valued
at $135.00, $150.00, and $190.00.




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       The jury determined that the inaccuracies on the Borchardts’ proof of loss
statement were enough to establish a willful intent to defraud State Farm by
concealment or misrepresentation of a material fact or circumstance relating to the
insurance claim. The Borchardts moved for judgment as a matter of law, arguing that
no reasonable juror could have found the misrepresentations about their personal
property were material. The district court found there was sufficient evidence to
allow a reasonable juror to conclude that the Borchardts overstated the value of items
lost in the fire by thousands of dollars and thus no expert was required to explain to
the jury that fraudulent statements of this magnitude would be material to an insurer.
The Borchardts appeal, arguing the jury did not have a legally sufficient basis to
return a verdict in State Farm’s favor because State Farm presented no evidence on
the issue of materiality.

II.   Discussion

      We review the denial of a motion for judgment as a matter of law de novo,
viewing the evidence in the light most favorable to the jury verdict. Ryan Data
Exchange, Ltd. v. Graco, Inc., 913 F.3d 726, 732 (8th Cir. 2019) (citation omitted).
Under Minnesota law, an insurer has an affirmative defense to coverage if the insured
misrepresents “any material fact with intent to deceive or defraud” the insurer, or if
an insured’s material misrepresentation increases the insurer’s risk of loss. Indep.
Sch. Dist. No. 197 v. Accident & Cas. Ins. of Winterthur, 525 N.W.2d 600, 606
(Minn. Ct. App. 1995); Minn. Stat. § 60A.08, subd. 9 (2017). While the insurer bears
the burden of proof, the question of whether there has been a material
misrepresentation is typically to be resolved by the trier of fact. Id. (citations
omitted). A jury need not identify which act amounted to misrepresentation; it is only
necessary for the jury to find that an insured “committed one act of
misrepresentation.” RKL Landholdings, LLC v. Seneca Specialty Ins. Co., No. A14-
0781, 2015 WL 1959846, at *6 (Minn. Ct. App. May 4, 2015) (emphasis in original).
“A misrepresentation increases the risk of loss if it impairs the insurer’s ability to

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make a reasonable decision to assume the risk of coverage.” Schumann v. AMCO
Ins. Co., No. C4-02-2150, 2003 WL 21694552, at *3 (Minn. Ct. App. July 22, 2003)
(citing Howard v. Aid Ass’n for Lutherans, 272 N.W.2d 910, 912–13 (Minn. 1978)).

        The Borchardts argue that being inaccurate on their proof of loss statement
does not necessarily equate to being untruthful with an intent to deceive or defraud
their insurer. While they concede they made mistakes, they contend materiality is not
to be presumed. And, in this case, a type of “bottom-line” rule should apply since
their retained adjuster acted favorably to State Farm by applying a flat 30 percent
depreciation rate on each item, no matter its age or whether it would be subject to
depreciation, and listed items that were not assigned a value. The Borchardts also
assert State Farm has not been deceived or defrauded because they remember other
items that were destroyed in the fire and never included in the loss statement. In
contrast, State Farm advances essentially a type of bright-line rule that the quantity
and value of the Borchardts’ misrepresentation are per se material and void the
policy.

       The parties’ divergent views of the law need not be resolved because the
district court carefully and accurately defined the applicable law for the jury. The
jury was instructed on the meaning of “material” and “intent to defraud:”

            For a concealment or misrepresentation to be “material,” it must
      be sufficiently substantial to matter to a reasonable insurer. A
      concealment or misrepresentation that impacts the investigation of an
      insurer into the cause of a fire is material. Likewise, a concealment or
      misrepresentation about items of personal property that were allegedly
      destroyed by a fire is material unless the amount of money involved in
      the concealment or misrepresentation is so small that a reasonable
      insurer is not likely to care about it.

             To act with an “intent to defraud” means to act with the purpose
      or intention of deceiving or cheating someone else. In considering

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      whether any of the Borchardts acted with an intent to defraud, you may
      consider whether they acted with a desire or purpose to bring about
      some gain or benefit to themselves at the expense of State Farm.

        At the charge conference, there was discussion about how “material” should
be defined. The court accepted the Borchardts choice of language. The instruction
initially proposed by the court listed a number of synonyms: significant, substantial,
important, or pertinent to a reasonable insurer. State Farm argued that only one was
necessary. The court agreed. State Farm requested “significant” and the Borchardts
wanted “substantial.” The court accepted “substantial.”

        Not only did the Borchardts receive the language in the instruction that they
requested, but their own expert witness, Pakkala, testified on cross-examination about
the importance of an insured providing accurate information. Pakkala acknowledged
the exclusion in insurance policies for lying with the intent to deceive or defraud and
agreed that “many insurance companies” take the position that if an insured lies about
the existence of an item, the insured does not get paid. Here, the Borchardts admitted
at trial to misrepresenting a number of items they claimed were lost in the fire – as
examples, they submitted 10 times the number of DVDs that Dillon testified in his
deposition were inside the home, they submitted a claim for two flat screen
televisions that did not exist, and they submitted a claim for two lawnmowers when
they owned only one non-functioning mower. State Farm cast doubt on the
plausibility of the Borchardts’ claim for $2,500.00 in food, liquor, coffee, and tea.
In addition, Michele was unable to explain why she valued her wedding ring at an
amount 50 times more than she valued all of her jewelry in a bankruptcy petition filed
approximately 13 years earlier. On this record, there was ample evidence for a
reasonable jury to find that the Borchardts’ misrepresentations were material – that
is, they were substantial enough to matter to a reasonable insurer.




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       Most importantly, it is apparent from the record that the jury did not presume
materiality, as argued by the Borchardts. While deliberating, the jury submitted the
following question to the court: “Is there a specified amount State Farm considers to
be a ‘small amount’. ex. % or dollar amount.” The court responded: “As Instruction
No. 13 explains, State Farm has the burden of proving that any concealment or
misrepresentation was ‘material’ – that is, ‘sufficiently substantial to matter to a
reasonable insurer.’ You must rely on your own recollection of the evidence in
deciding whether State Farm carried its burden.”

        We assume the jury followed the court’s instructions, weighed the evidence
and credibility of the witnesses, and carefully reached the verdict that it did. Viewing
the evidence in a light favorable to the verdict, we conclude that this record contains
sufficient evidence to sustain the jury’s determination that Todd, Michele, and
Danielle made material misrepresentations relating to their insurance claims. Their
material misrepresentations regarding the personal property lost in the fire voided
their right to recover at all under the policy. Collins v. USAA Prop. & Cas. Ins. Co.,
580 N.W.2d 55, 57–58 (Minn. Ct. App. 1998).

III.   Conclusion

       For the foregoing reasons, we affirm the judgment of the district court.
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