                                NOT FOR PUBLICATION WITHOUT THE
                               APPROVAL OF THE APPELLATE DIVISION
        This opinion shall not "constitute precedent or be binding upon any court." Although it is posted on the
     internet, this opinion is binding only on the parties in the case and its use in other cases is limited. R. 1:36-3.




                                                        SUPERIOR COURT OF NEW JERSEY
                                                        APPELLATE DIVISION
                                                        DOCKET NO. A-3336-17T3


ULISSA POKHAN and
RONALD POKHAN,

         Plaintiffs-Appellants,

v.

STATE FARM FIRE AND
CASUALTY COMPANY,

     Defendant-Respondent.
__________________________

                   Submitted February 6, 2019 - Decided July 30, 2019

                   Before Judges Fuentes and Accurso.

                   On appeal from the Superior Court of New Jersey, Law
                   Division, Hudson County, Docket No. L-0116-16.

                   Frank J. Nostrame, attorney for appellants.

                   Messineo Law, LLC, attorneys for respondent (Tariq J.
                   Messineo, on the brief).

PER CURIAM
       This appeal arises out of the involuntary dismissal of plaintiff Ulissa

Pokhan's complaint for breach of her homeowners' insurance policy at the end

of her case at trial pursuant to Rule 4:37-2. Pokhan's carrier, defendant State

Farm Fire and Casualty Company, moved for dismissal arguing Pokhan's

misstatements during its investigation of the fire at her home voided coverage

for the loss in accord with Longobardi v. Chubb Ins. Co. of N.J., 121 N.J. 530,

533 (1990). According plaintiff's evidence the "generous view" Rule 4:37-2

requires, see Cameco, Inc. v. Gedicke, 157 N.J. 504, 509-10 (1999), we conclude

the court erred in finding that evidence satisfied State Farm's burden to establish

that Pokhan's misstatements were material, see Liberty Mut. Ins. Co. v. Land,

186 N.J. 163, 177-78 (2006).

       Following a fire that severely damaged her home in Newark, Pokhan made

a claim under her homeowners' policy. After completing its investigation, State

Farm denied the claim based on Pokhan's "[v]iolation of the fraud provisions of

the policy."1 Pokhan filed a complaint in the Law Division for breach of the


1
    The policy's "Concealment or Fraud" provision states:

             This policy is void as to you and any other insured, if
             you or any other insured under this policy has
             intentionally concealed or misrepresented any material
             fact or circumstance relating to this insurance, whether
             before or after a loss.
                                                                          A-3336-17T3
                                        2
contract of insurance. State Farm filed an answer and affirmative defenses

asserting Pokhan's misrepresentations both during the policy period and during

presentation of the claim barred her from any recovery.

      The testimony at trial was brief and easily summarized. Plaintiff testified

her father gifted her the property when she graduated from college in 2012. She

secured homeowners' insurance through an agency in Bayonne.            In 2012,

Hurricane Sandy ripped shingles from the roof. Pokhan made a claim under her

policy for which she received payment of $5000 or $6000. In early 2013, a

frozen pipe burst on the second floor causing extensive water damage

throughout the residence. According to Pokhan's trial testimony, she received

$90,000 from insurance on that claim.

      After the second claim, Pokhan started shopping around for new insurance

because her premium was going up. She testified she found State Farm through

an internet search and applied for coverage. Pokhan was approved for coverage

after speaking with an agent by telephone, who took her credit card information

for the premium. The policy went into effect in April 2013 and was renewed

the following year.

      In January 2015, a fire caused extensive damage to plaintiff's home,

rendering it uninhabitable. State Farm sent an investigator to take a recorded


                                                                        A-3336-17T3
                                        3
statement from her in February. Although recorded, the statement was not under

oath and the investigator explained at the outset it was being taken "strictly to

gain information about [Pokhan] and about [her] loss." When the investigator

asked about prior losses at the property, Pokhan acknowledged a "frozen pipe"

but denied she sustained any damage, and said she did not "believe any payments

were made." Pokhan further told the investigator she had not had any other

losses at the property, omitting the roof damage from Sandy. In an examination

under oath in April, however, Pokhan corrected her misstatements, detailing the

flood loss and the prior insurer's payments. 2

      Asked on cross-examination why she initially told the investigator she had

not made a claim for the flood loss, Pokhan replied "[b]ecause I didn't feel like

she needed to know that." Pokhan continued, "she's not telling me what's going

on. So I'm new to this. I mean, being recorded by an agent that's not telling me

anything." Pokhan's response prompted State Farm's counsel to ask: "So you

gave her the wrong information?" prompting Pokhan to reply: "If that's what

you want to call it."




2
   It's unclear from the transcript whether Pokhan was asked about the Sandy
claim in her examination under oath. No transcript of either recorded statement
was admitted in evidence and only fragments were read into the record.
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                                        4
      Pokhan's adjuster testified it would cost a little under $160,000 to restore

the property to its condition before the fire. Pokhan's counsel also read in

portions of the deposition testimony of State Farm's investigator. She testified

she had been with State Farm for over thirty-five years and was assigned to the

special investigator unit in February 2015 when she interviewed Pokhan. She

claimed cases were assigned to the unit on a case-by-case basis based on

National Insurance Crime Bureau indicators, and that the indicator mentioned

in the "large loss report" in this case was that the policy address and Pokhan's

mailing address were not the same.

      Pokhan denied receipt of correspondence from State Farm reserving its

rights under the policy based on "questions about concealment and

misrepresentation." She claimed State Farm's denial letter sent in October 2015

was the first letter she received from the company and the only indication it was

investigating her for fraud.3

      After plaintiff rested, State Farm moved for involuntary dismissal

pursuant to Rule 4:37-2(b), arguing Pokhan admitted there was a $90,000 flood



3
  Although not included in the record on appeal, Pokhan identified four letters
from State Farm addressed to her but with a different house number than the one
assigned to her home, all of which she claimed she never received. Only two of
those letters appear to have been admitted into evidence.
                                                                         A-3336-17T3
                                        5
loss "prior to taking out insurance with State Farm," and acknowledged she had

not been truthful to State Farm's investigator when asked about it directly.

      Pokhan's counsel countered that Pokhan was not advised by the

investigator that she was conducting a fraud investigation, and indeed, was

misled by the investigator telling her the inquiry was limited to the fire loss. He

further noted the initial statement was not sworn and Pokhan corrected it several

weeks later in her examination under oath. After being advised by the court that

Longobardi established that neither an insured's intent in making a misstatement

nor whether that misstatement was under oath was relevant to the inquiry,

Pokhan's counsel responded, "Yeah, but still, that's an issue about materiality."

      The court proceeded to discuss materiality, quoting the Longobardi

Court's agreement with the Second Circuit's statement that "the materiality

requirement is satisfied if the false statement concerns a subject relevant and

germane to the insurer's investigation as it was then proceeding." Longobardi,

121 N.J. at 541 (quoting Fine v. Bellefonte Underwriters Ins. Co., 725 F.2d 179,

183 (2d Cir. 1984)). Applying the law to the facts, the judge found:

                  Now, in this case, obviously checking the
            application, which is what [the investigator] had, where
            all prior losses were denied — I understand the
            Plaintiff’s position that she did not provide the false
            information. And by the way, in the event of appellate
            review, I’ll accept — for purposes of this motion — that

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                                        6
      the Plaintiff did not provide the false information on the
      application.

             I know there’s a dispute over that. There was
      information on — the application essentially denied all
      prior losses. But whether the Plaintiff provided that
      false information or not — if this alleged [State Farm
      agent] put it down on her own — it’s irrelevant, because
      that’s what the application said.

            And [the investigator] was certainly entitled to
      see if there were material misrepresentations on the
      application. That’s why these questions about the prior
      loss — particularly, the pipe that broke in February
      2013 — was certainly a legitimate concern of [the
      investigator's]. It wasn’t some irrelevant fact that she
      brought up in order to trap the Plaintiff in a lie. It was
      certainly part — a legitimate part of her investigation.

            And it seems that the Plaintiff’s motive for lying
      doesn’t count; that it wasn’t in the end prejudicial,
      doesn’t count. The definition of materiality certainly
      encompasses why [the investigator] would have asked
      her that question.

Turning to the particular misstatement, the court found:

      [Pokhan] acknowledged that she certainly willfully
      misled [the investigator] because she didn't think it was
      any of [the investigator's] business, because she
      thought [the investigator] should only have been asking
      her questions directly related to the fire and the
      property claim itself. She did not think that [the
      investigator] had any business asking her about
      questions that touched on the accuracy of the
      application.



                                                                   A-3336-17T3
                                  7
             But that, under Longobardi, that's not relevant. Her
             excuse for lying is not relevant. She knew [the
             investigator] was from State Farm. She knew she was
             investigating this claim. And she clearly tried to
             mislead her as to something that seemed to justify what
             looked like misstatements in the application.

Stating there was "nothing that reasonable minds could possibly differ about"

under Rule 4:37-2(b), the court dismissed Pokhan's complaint. This appeal

followed.

     Although we employ the same standard as the trial court in reviewing a

motion decided either under Rule 4:37-2(b) or Rule 4:40-1, Smith v. Millville

Rescue Squad, 225 N.J. 373, 397 (2016), "[a] dismissal at the close of a

plaintiff's case invokes more searching appellate review than does one at the

close of the entire case," Cameco, 157 N.J. at 509. As the Supreme Court has

explained:

             When reviewing a dismissal at the close of a plaintiff's
             case, the appellate court accepts the truth of the
             plaintiff's evidence together with the legitimate
             inferences that the evidence supports. R. 4:37-2(b);
             Dolson v. Anastasia, 55 N.J. 2, 5-6 (1969). By
             comparison, when reviewing factual findings made at
             the close of the entire case, the appellate court accepts
             those findings whether they support a decision in favor
             of the plaintiff or the defendant, if the findings are
             supported by substantial credible evidence. R. 2:10-1;
             Rova Farms Resort, Inc. v. Investors Ins. Co. of Am.,
             65 N.J. 474, 483-84 (1974); Pressler, Current N.J.
             Court Rules, cmt. 2.3 on R. 2:10-1 (1998). Thus, a

                                                                         A-3336-17T3
                                        8
             dismissal under Rule 4:37-2(b) requires a more
             generous view of a plaintiff's evidence than does one at
             the close of evidence under Rule 2:10-1.

             [Cameco, 157 N.J. at 509-10.]

      That distinction is critical here. Pokhan brought a complaint against State

Farm for breach of her insurance contract. Thus in order to establish a prima

facie showing sufficient to survive involuntary dismissal at the close of her case,

plaintiff needed to show she suffered a covered loss under the policy, which the

carrier refused to pay. S.T. Hudson Eng'rs, Inc. v. Pa. Nat'l Mut. Cas. Co., 388

N.J. Super. 592, 603 (App. Div. 2006). As State Farm did not dispute the

validity of the policy or that the fire is a covered loss, Pokhan plainly established

her prima facie case.

      State Farm defended the case based on its claim that Pokhan's

misrepresentations during its post-loss investigation barred her from any

recovery, an affirmative defense on which it bore the burden of proof at trial.

See Land, 186 N.J. at 177-78. Under Longobardi, State Farm had to prove

Pokhan "willfully misrepresented material facts after a loss." 121 N.J. at 540.

We agree with the trial court judge that Pokhan's admissions at trial satisfied

State Farm's burden to prove her misstatements were willful. The question on




                                                                            A-3336-17T3
                                         9
this record, and the one plaintiff's evidence did not answer, is the materiality of

those statements.

        The Court in Longobardi held "[a]n insured's misstatement is material if

when made a reasonable insurer would have considered the misrepresented fact

relevant to its concerns and important in determining its course of action." 121

N.J. at 542. There was absolutely no evidence in this record that would permit

a fact-finder to judge the materiality of Pokhan's misstatements to State Farm

under that test. The judge's speculation about the materiality of the questions

based on the application Pokhan submitted to State Farm was only speculation.

        Pokhan's State Farm insurance application was not introduced or admitted

in evidence4 and the limited reading in of the investigator's deposition testimony

did not address how Pokhan's statements were relevant to State Farm's concerns

or important in determining its course of action. Accordingly, regardless of

whether the information in an application not introduced at trial came from

plaintiff or someone else, there was no factual basis for the judge to find that

Pokhan "clearly tried to mislead [the investigator] as to something that seemed

to justify what looked like misstatements in the application."        Without the

original insurance application or testimony from anyone at State Farm as to the


4
    The application in the record was the one to Pokhan's prior insurer.
                                                                           A-3336-17T3
                                        10
nature of the investigation, the trial court clearly erred when it involuntary

dismissed Pokhan's suit based on her willful misrepresentation of material facts

following her fire loss. See R. 4:37-2(b); Longobardi, 121 N.J. at 540-42.

      Although our conclusion as to the absence of anything in Pokhan's

evidence to establish the materiality of her admittedly willful misstatements to

State Farm is dispositive of the appeal,5 we agree with plaintiff that a fact-finder

could also consider whether Pokhan corrected her misstatements promptly in her

examination under oath in considering their materiality. See Mariani v. Bender,

85 N.J. Super. 490, 501 (App. Div. 1964) (holding "[e]ven though an insured

may have given his insurance carrier an untrue statement of the accident, no

breach of the cooperation clause results if the untrue statement is promptly and

seasonably corrected"). We, of course, express no opinion on the merits of such

a claim, or whether the evidence admitted at a retrial will be sufficient to permit

Pokhan to survive a motion for judgment at the conclusion of all the evidence.

We decide only that involuntary dismissal of plaintiff's complaint at the

conclusion on her case pursuant to Rule 4:37-2(b) on this record was error.




5
  State Farm's alternative bases to support its judgment all rely on the materiality
of Pokhan's misstatements and thus are equally unavailing on this record.
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                                        11
      Reversed and remanded for further proceedings consistent with this

opinion. We do not retain jurisdiction.




                                                                A-3336-17T3
                                     12
