                     NONPRECEDENTIAL DISPOSITION
                       To be cited only in accordance with
                               Fed. R. App. P. 32.1


           United States Court of Appeals
                            For the Seventh Circuit
                            Chicago, Illinois 60604


                               Argued June 8, 2007
                            Decided September 6, 2007


                                         Before

                         Hon. RICHARD A. POSNER, Circuit Judge

                         Hon. JOEL M. FLAUM, Circuit Judge

                         Hon. DANIEL A. MANION, Circuit Judge


No. 06-3233                                       Appeal from the United States
                                                  District Court for the Northern
R. D. LOTTIE,                                     District of Indiana, South Bend
                  Plaintiff-Appellant,            Division

      v.                                          No. 01 C 582

WEST AMERICAN INSURANCE                           William C. Lee, Judge.
COMPANY, et al.,
            Defendants-Appellees.


                                    ORDER

       R.D. Lottie sued his insurance carrier, West American Insurance Company,
Inc. (“West”), alleging bad faith, breach of contract, and race discrimination after
West denied Lottie’s claims for fire damage on two houses because it determined
that the damage was either not covered under the terms of the policy or barred by
the arson defense. The district court granted partial summary judgment to West on
Lottie’s bad faith and discrimination claims. The remaining claims for breach of
contract proceeded to trial, and a jury returned a verdict in favor of West on both
No. 06-3233                                                                       Page 2



claims. Lottie appeals the district court’s partial grant of summary judgment to
West on his race discrimination and bad faith claims, and challenges the district
court’s refusal to admit an affidavit at trial, the court’s jury instructions, and the
jury’s verdict on his breach of contract claims. We affirm.

                                            I.

       Lottie owns several houses in South Bend, Indiana which serve as rental
properties, two of which are involved in this case: 226 Birdsell Street (“Birdsell”)
and 1412 Linden Street (“Linden”). While Lottie received tax benefits by owning
these properties, he owed more than $180,000 on his rental properties and incurred
additional expenses for the repair and cleaning costs and for continued insurance on
the properties. Lottie insured these properties through policies West issued. Those
policies provided coverage for various liabilities on the houses, but did not cover loss
“caused by . . . vandalism and malicious mischief, theft or attempted theft if the
dwelling has been vacant for more than 30 consecutive days immediately before the
loss.”

       Lottie leases these houses to individuals who participate in the South Bend
Housing Authority (“Housing Authority”) Section 8 housing subsidy program.
Through this program, the Housing Authority pays seventy percent of the monthly
rent directly to the landlord and the participating tenant pays the remaining thirty
percent. In order for landlords like Lottie to lease homes to individuals who
participate in the program, the houses must pass a Housing Authority inspection,
which ensures the dwelling meets certain safety and cleanliness standards. These
inspections are conducted annually as well as after one tenant vacates the premises
and before a new tenant may move into the house.

        Since Lottie lives in California, Lottie’s brother and sister-in-law, William
and Debra Lottie (“William” and “Debra,” respectively), who live in South Bend,
assist him with the management of these properties. Debra serves as the primary
contact with the South Bend Housing Authority, finds tenants for the properties,
signs leases as Lottie’s agent, and generally manages the properties, including
arranging for repairs and submitting late notices to tenants. William has keys to
all of the houses and makes arrangements for repairs when Debra informs him that
they are needed. Also, William, who has twenty years of painting experience,
paints the houses.

      Debra, as Lottie’s agent, leased the Birdsell property to Sunceray Shorter
beginning in July 1998. Shorter’s housing subsidy ended on March 31, 2000, at
which time Debra informed Shorter that she could stay at the house pursuant to the
No. 06-3233                                                                    Page 3



lease, but was required to pay the full rent amount. Shorter vacated the Birdsell
property, but conflicting evidence was presented at trial regarding the exact date of
Shorter’s departure: Lottie testified that he had informed West’s adjuster, Bob
Freshour, that Shorter vacated the property on March 31 or April 1, and Freshour
testified to the same. Debra testified that she provided notice to Shorter to vacate
on April 8 or 9, never saw Shorter after April 9, and that the furniture was out of
the home between May 5 and 10; and Freshour testified that William had told him
that Shorter moved out at the end of April.

       After Shorter vacated the Birdsell property, it was in need of light
remodeling to repair holes in the dry wall and damage to the kitchen cabinets. On
May 16, 2000, William went to the Birdsell property to paint the interior, bringing
latex paint and gasoline with him to clean the brushes because the water had been
turned off at the house. When he quit painting that day, William went to his
mother’s home around the corner where he and his mother later reported that the
Birdsell property was on fire. An extensive investigation revealed pour patterns of
gasoline in the upstairs hallway and bedroom and that the fire was started by
gasoline ignited by human action. Following the investigation, West denied Lottie’s
claim on the Birdsell property citing the provision in its policy regarding vandalism
and malicious mischief.

      The Linden property similarly suffered fire damage on August 26, 2000, the
same date the tenant, Michelle Leno, moved out. William described that property as
“nasty,” requiring a professional exterminator to take care of the cockroach problem
and having suffered water damage from plumbing problems. West assigned Special
Investigative Unit investigator Eugene LaBelle to investigate this back-to-back fire
damage claim on Lottie’s rental properties. This lawsuit was filed, however, before
LaBelle completed his investigation.

       Lottie filed suit against West alleging bad faith, race discrimination, and
breach of contract. The district court dismissed the bad faith and race
discrimination claims on partial summary judgment, and Lottie’s breach of contract
claims proceeded to trial. At trial, the jury heard testimony from Lottie, Debra,
William, Freshour, and LaBelle. Also testifying were a representative from the local
electric company, Carmen Swinson-Lake, and a fire expert, Jack Sanderson.

      Swinson-Lake testified about the consumption of electricity at the Birdsell
property. She explained that the utility bills for the Birdsell property from
December 17, 1999, through January 2000, recorded the use of 419 kilowatt hours
of power and from March 27, 2000, through April 28, 2000, and metered only seven
kilowatt hours. Swinson-Lake further explained that an unscheduled reading was
No. 06-3233                                                                       Page 4



taken on March 27th because the account was made final at that time, which occurs
when a tenant moves out and requests that the electrical service be taken out of his
name.

        LaBelle testified at trial that his investigation revealed that both the Birdsell
and Linden fires were caused by gasoline and occurred within three months of each
other. He also noted that both properties were subject to inspection by the Housing
Authority, and William was near the scene within blocks of the fires. LaBelle also
testified that Lottie had insurance claims on two prior fires at rental properties. As
for William’s use of gasoline to clean brushes used to apply latex paint, LaBell
stated that someone with William’s experience should know that gasoline cannot be
used to clean water-based paint materials.

       Sanderson, in turn, testified that he investigated the Birdsell property and
concluded that there was no accidental cause for that fire and that it was likely
started by human action with gasoline serving as the accelerant for that blaze.
Sanderson further testified that gasoline cannot be used to clean latex-based paint
materials. As to the Linden property, Sanderson stated that it, too, was a set fire,
likely with a liquid accelerant because there was nothing in the area of the fire that
would serve as fuel. Sanderson also said that the Linden house smelled of gasoline,
and a gas can was on the front porch. Finally, Sanderson testified that there was
also no accidental cause of the Linden fire.

       At trial, Lottie sought to introduce the affidavit of Robert Thomas Moore for
the purpose of presenting evidence as to when Shorter vacated the Birdsell
property. Moore was a neighbor of the Birdsell property, and Lottie initially
presented Moore’s affidavit in connection with his motion for summary judgment in
2002. Moore was on Lottie’s witness list for trial, and West inquired about whether
Lottie would call Moore to testify at trial. A day and a half before trial commenced,
Lottie’s counsel responded to West’s attorney that he was unable to determine
whether Moore would be called as a witness because Moore was in a nursing home.
On the third day of trial, Moore, his daughter, and a caretaker from his nursing
home came to court, and the district court conducted a hearing out of the presence
of the jury. At that hearing, it became clear that Moore was not competent to
testify at trial due to some form of dementia, and Lottie moved for the admission of
Moore’s affidavit. The district court sustained West’s objection to the affidavit’s
admission because it determined that there was more probative evidence in the
record and because of Lottie’s lack of notice to West of his intent to introduce
Moore’s affidavit into evidence.
No. 06-3233                                                                     Page 5



       West sought to include in the jury instructions an instruction on the civil
arson defense, which under Indiana law provides a basis for the denial of coverage
under a fire policy and requires that an insurer “establish the truth of its claim of
wilful burning by the insured by a preponderance of the evidence.” Dean v. Ins. Co.
of N. Am., 453 N.E.2d 1187, 1194 (Ind. Ct. App. 1983) (citation omitted). Before the
case was submitted to the jury, Lottie objected to the district court giving the jury
the arson defense instruction, contending that there was no evidence that Lottie
intentionally caused loss to the properties either directly or indirectly. The district
court overruled Lottie’s objection. Lottie also sought to include a jury instruction
stating that:

      when interpreting an exclusionary clause of an insurance policy, the clause
      must clearly and unmistakably bring within its scope the particular act or
      omission that will exclude coverage. Any doubts as to the scope of the
      exclusion must be construed against the defendant insurance companies and
      any ambiguities are to be resolved against the insurers in favor of the
      plaintiff.

Lottie sought to include this instruction because he argued that the terms
vandalism and malicious mischief are ambiguous and do not exclude coverage for
fire. The district court rejected Lottie’s request.

       The jury returned verdicts in favor of West on the breach of contract claims
relating to the Birdsell and Linden properties. Lottie appeals the district court’s
partial grant of summary judgment on his race discrimination and bad faith claims,
the jury’s verdicts on the breach of contract claims, the jury instructions, and the
district court’s refusal to admit the Moore affidavit at trial.

                                          II.

       On appeal, Lottie first claims that the district court erred in granting
summary judgment. In diversity cases such as this, federal law controls procedural
issues whereas state law controls substantive issues. Erie R.R. v. Tompkins, 304
U.S. 64, 78 (1938). See Harper v. Vigilant Ins. Co., 433 F.3d 521, 525 (7th Cir.
2005). In reviewing a district court’s grant of summary judgment, “[w]e view all
facts and draw all inferences in the light most favorable to the non-moving party.
Summary judgment is appropriate where the evidence before the court indicates
that there are no genuine issues of material fact and the moving party is entitled to
judgment as a matter of law.” Abstract & Title Guar. Co., Inc. v. Chicago Ins. Co.,
489 F.3d 808, 810 (7th Cir. 2007) (citation omitted). Therefore, this court will
No. 06-3233                                                                    Page 6



review the district court’s grant of partial summary judgment de novo. Charter Oak
Fire Ins. Co. v. Hedeen & Co., 280 F.3d 730, 735 (7th Cir. 2002) (citation omitted).

       Lottie first argues that there is a genuine issue of material fact that West
acted in bad faith and committed race discrimination by denying his claims.
Incorporating by reference his motion for reconsideration and his filings in a
previous appeal, Lottie sets forth a five-page series of questions which he asserts
establish the existence of a genuine issue of material fact, but without providing
any case citations in support of his litany of questions. Lottie’s argument regarding
the district court’s partial grant of summary judgment in favor of West is
inadequate. Federal Rule of Appellate Procedure 28(a)(9) requires an appellant to
present his “contentions and the reasons for them, with citations to the authorities
and parts of the records on which the appellant relies; . . . .” As we further
explained in Pitsonbarger v. Gramley, 141 F.3d 728, 740 (7th Cir. 1998), “[p]art of
the appellate process is culling from the trial record those arguments that deserve
presentation to the court of appeals and devoting serious thought to them. If
incorporation by reference were enough, this process would be seriously
compromised.” Because Lottie did not develop his argument or provide supporting
citations on appeal, he has waived any claim that the district court erred in
granting summary judgment to West on his bad faith and race discrimination
claims. See United States v. Berkowitz, 927 F.2d 1376, 1384 (7th Cir.1991) (“We
repeatedly have made clear that perfunctory and undeveloped arguments, and
arguments that are unsupported by pertinent authority, are waived.”).

       We next address Lottie’s appeal of the jury verdict in favor of West on breach
of contract claim on the Birdsell property. “To sustain overturning a jury verdict,
the record must demonstrate no legally sufficient evidentiary basis for a reasonable
jury to find for the non-moving party. We are obliged to leave the judgment
undisturbed unless the moving party can show that no rational jury could have
brought in a verdict against [him].” Woodward v. Corr. Med. Serv. of Ill., 368 F.3d
917, 926 (7th Cir. 2004) (internal quotations and citations omitted).

       In challenging the jury verdicts, Lottie contends that the West policy does not
exclude coverage of fire, including arson. Also, because it was unclear on what date
the Birdsell property became vacant, Lottie argues that the jury could not rule in
favor of West on the thirty-day vacancy clause. Thus, Lottie concludes that the jury
verdict in favor of West on his breach of contract claim on his Birdsell policy is
contrary to law. The West policy, as set forth above, excludes from coverage damage
incurred by vandalism or malicious mischief incurred once the property had been
vacant for thirty days. Policy, Perils Against Insured § 2f. While there was
conflicting evidence presented at trial about what date Shorter vacated the
No. 06-3233                                                                     Page 7



property, evidence was presented from which the jury could have reasonably
determined that the property had been vacant for thirty days, namely Lottie’s
statement to West’s investigator that Shorter left on April 1 or April 2 and Debra’s
testimony that Shorter was gone by April 9. Additionally, the jury heard testimony
about the dramatic decline in electricity usage after the electric company account
for the Birdsell property was made final on March 27. Also, Sanderson and
Freshour testified at trial that the fire was intentionally set, thereby providing a
basis upon which the jury could conclude that the damage was caused by vandalism
or malicious mischief, regardless of who set the fire. Accordingly, there were facts
presented into evidence upon which a reasonable jury could determine that the
damage to the Birdsell property fell within the West policy exclusion for vandalism
or malicious mischief, and Lottie has not met his burden of showing that a rational
jury could not enter a verdict against him. Therefore, the jury reasonably entered a
verdict that West did not breach its contract regarding the policy on the Birdsell
property.

        Just as with the Birdsell property, Lottie also argues that the jury’s verdict
regarding the West policy on the Linden property should be overturned. Because
the Linden property had not been vacant for thirty days the vandalism exclusion
does not apply. However, even without a specific provision in the insurance policy,
under Indiana law, an insurer may deny coverage under a fire policy because of an
arson, and “an insurer raising an arson defense must establish the truth of its claim
of wilful burning by the insured by a preponderance of the evidence.” Dean v. Ins.
Co. of N. Am., 453 N.E.2d 1187, 1194 (Ind. Ct. App. 1983) (citation omitted).
“Circumstantial evidence is sufficient to establish proof of arson.” Hoosier Ins. Co.,
Inc. v. Mangino, 419 N.E.2d 978, 986 (Ind. Ct. App. 1981) (citation omitted).
LaBelle, Freshour, and Sanderson all testified that the fire was intentionally set by
gasoline, thereby providing a sufficient basis for the jury to conclude that the fires
were the result of willful burning. As to Lottie’s involvement, evidence was
presented that Lottie had submitted two previous insurance claims for two fires on
other rental properties. Also, he faced some financial difficulties. He was over
$180,000 in debt with all of his properties and was responsible for the repairs and
extermination needed on the two properties that burned, and the properties were
both subject to inspection by the Housing Authority for cleanliness and safety before
they could be re-leased under the program. In addition, there was evidence that
William was Lottie’s caretaker, had keys to Lottie’s rental properties, and was in
the vicinity when both the Birdsell and Linden fires started. All of these facts
provide sufficient circumstantial evidence for the jury to find in favor of West on its
arson defense, and Lottie does not attempt to rebut this evidence. Therefore, the
jury entered a rational verdict on the breach of contract claim on the Linden
property policy, and Lottie has failed to present a sufficient basis to disturb it.
No. 06-3233                                                                       Page 8



       Lottie also challenges the district court’s denial of his request for an
ambiguity instruction, and the district court’s overruling his objection to the
inclusion of the civil arson defense instruction. We review jury instructions for an
abuse of discretion and “with deference, analyzing them as a whole to determine if
they accurately state the law and do not confuse the jury.” Aliotta v. Nat’l R.R.
Passenger Corp., 315 F.3d 756, 759 (7th Cir. 2003) (citation omitted). If the
instructions misstate the law, then the reviewing court must determine whether the
mistake confused or misled the jury thereby prejudicing the litigant. Id.

      As to the ambiguity instruction, Lottie proposed the following instruction:

      You are instructed that when intepreting [sic] an exclusionary clause of an
      insurance policy, the clause must clearly and unmistakably bring within its
      scope the particular act or omission that will exclude coverage. Any doubts
      as to the scope of the exclusion must be construed against the defendant
      insurance companies and any ambiguities are to be resolved against the
      insurers in favor of the plaintiff.

The court rejected the proposed instructions, instead offering to submit an
instruction that any doubts about the policy language should be construed against
the insurer. Lottie declined this proposal, and neither was included.

        Indiana law provides that an insurance policy’s “exclusionary clause must
clearly and unmistakably bring within its scope the particular act or omission that
will bring the exclusion into play.” Erie Ins. Co. v. Adams, 674 N.E.2d 1039, 1041
(Ind. Ct. App. 1997) (citation omitted). The exclusionary clause at issue in this case
is the exclusion of coverage for vandalism or malicious mischief after a thirty-day
vacancy. The act alleged here is the intentional starting of a fire after a thirty-day
vacancy. Because the policy’s language “clearly and unmistakably bring[s] within
its scope the particular act” alleged in this case, the district court’s proposal did not
misstate the law, and while the district court denied Lottie’s proposal which was an
accurate statement of the law, there was no harm because intentionally starting a
fire clearly fell into the exclusion. Moreover, we note that Lottie has not claimed he
was prejudiced by the district court’s rejection of his proposed instruction.
Therefore, we conclude that the district court did not abuse its discretion in by
rejecting Lottie’s proposed instruction.

       Lottie also objected to the arson instruction. Specifically, Lottie challenges
the district court’s decision to instruct the jury:
No. 06-3233                                                                       Page 9



      If you find by a preponderance of all the evidence that the plaintiff, or those
      acting at his direction or on his behalf, intentionally set the fire at either of
      his rental properties, then you must return a verdict for the defendant and
      against the plaintiff on that claim.

Lottie does not claim that this instruction misstated Indiana law on the arson
defense. Rather, he argues that the evidence does not support this instruction. As
discussed above, there was evidence, though circumstantial, in the record that the
fires were intentionally set at Lottie’s direction. Therefore, the district court did not
err in providing the jury this instruction.

      Finally, Lottie claims that the district court erred in refusing to admit into
evidence Moore’s affidavit. We review a district court’s evidentiary rulings for an
abuse of discretion. Aliotta, 315 F.3d at 758. Lottie argues that the district court
abused its discretion by refusing to admit into evidence Moore’s affidavit because
West knew Moore was going to be a witness as early as June 2003. Lottie
incorrectly assumes that Moore’s inclusion on his witness list automatically permits
him to submit an affidavit in lieu of Moore providing live testimony and being
subject to cross- examination. This assumption ignores Federal Rule of Evidence
807 which provides:

      A statement not specifically covered by Rule 803 or 804 but having equivalent
      circumstantial guarantees of trustworthiness, is not excluded by the hearsay
      rule, if the court determines that (A) the statement is offered as evidence of a
      material fact; (B) the statement is more probative on the point for which it is
      offered than any other evidence which the proponent can procure through
      reasonable efforts; and (C) the general purposes of these rules and the
      interests of justice will best be served by admission of the statement into
      evidence. However, a statement may not be admitted under this exception
      unless the proponent of it makes known to the adverse party sufficiently in
      advance of the trial or hearing to provide the adverse party with a fair
      opportunity to prepare to meet it, the proponent's intention to offer the
      statement and the particulars of it, including the name and address of the
      declarant.

Fed. R. Evid. 807. We conclude that the district court did not abuse its discretion in
refusing to admit Moore’s affidavit. Lottie did not notify West “sufficiently in
advance of trial” of his intention to use the affidavit. Rather, he only notified West
of this intention during the trial itself and only after a hearing to determine Moore’s
competency. Lottie presents no reason why he did not ascertain Moore’s
availability prior to trial and discover his need to introduce Moore’s affidavit in lieu
No. 06-3233                                                                   Page 10



of Moore’s live testimony. Also, the fact to which Moore’s affidavit spoke, namely
the date when Shorter left the Birdsell property, was addressed at trial by Lottie’s,
Debra’s, and William’s testimonies, and therefore it was not “more probative on the
point for which it was offered than any other evidence.” Fed. R. Evid. 807(C).
Accordingly, the district court did not abuse its discretion in denying Lottie’s motion
to admit Moore’s affidavit.

                                         III.

      Lottie has waived his right to challenge the district court’s grant of summary
judgment on his bad faith and discrimination claims. The district court did not
abuse its discretion in refusing to admit Moore’s affidavit or in providing jury
instructions. Finally, there was a legally sufficient evidentiary basis for the jury’s
verdicts on Lottie’s bad faith claims. Accordingly, we AFFIRM.
