               NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                          File Name: 08a0783n.06
                          Filed: December 23, 2008

                                           No. 07-4295

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT


PANZIE SMITH,                                    )
                                                 )
       Plaintiff-Appellant,                      )
                                                 )
v.                                               )    ON APPEAL FROM THE UNITED
                                                 )    STATES DISTRICT COURT FOR THE
                                                 )    SOUTHERN DISTRICT OF OHIO
ALLSTATE INDEMNITY COMPANY,                      )
                                                 )
       Defendant-Appellee.                       )




       Before: GIBBONS and COOK, Circuit Judges; STEEH,* District Judge.


       COOK, Circuit Judge. Panzie Smith sued Allstate Indemnity Company (“Allstate”) for

reimbursement of losses resulting from a house fire. Summary judgment proceedings and a jury

verdict favored Allstate. Smith now appeals.


                                                I.


       A fire that began in the early morning, subsided, then rekindled several hours later destroyed

Panzie Smith’s home on May 7, 2004. Smith immediately alerted her insurer, Allstate, precipitating

an investigation that same day. An Allstate agent interviewed witnesses (including Smith, her

       *
       Honorable George Caram Steeh, United States District Judge for the Eastern District of
Michigan, sitting by designation.
No. 07-4295
Smith v. Allstate


husband, and neighbors), studied the fire’s origin, and assessed the damages. This process disclosed

discrepancies about the cause and timing of the fire, the time the fire department arrived, and the true

contents of the house. From its investigation, Allstate also learned that the Smiths had a strong

financial motive to burn their home and ample opportunity. And most importantly, an outside

investigator hired by Allstate determined that an intentional act caused the rekindle. Having

considered all these factors, Allstate refused to pay Smith’s claim, relying on policy provisions

excluding: (1) losses resulting from “[i]ntentional or criminal acts of or at the direction of any

insured person,” and (2) “any loss or occurrence in which any insured person has concealed or

misrepresented any material fact or circumstance.”


       Smith sued Allstate on two grounds: (1) Allstate’s tortious “bad faith” refusal to indemnify

her, and (2) breach of its contractual duty to cover her losses. The district court granted summary

judgment for Allstate on the bad-faith claim, noting that the results of Allstate’s investigation

supported its refusal to pay, insulating it from any bad-faith-refusal-to-pay claim. The host of

discrepancies Allstate uncovered reasonably suggested that the Smiths themselves burned their home

and that their claimed losses exaggerated the burned contents and the contents’ value. The court

concluded that Allstate reasonably viewed the claim as “fairly debatable.”


       At trial, Allstate countered Smith’s breach-of-contract claim with an “arson defense,”

claiming that the Smiths set the fire themselves. The jury rejected that defense, but nonetheless

returned a verdict for Allstate on the alternate ground, finding that Smith misrepresented her claim.


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        We address two of Smith’s challenges: (1) that the district court erred in granting summary

judgment on her bad-faith claim, and (2) that the district court wrongly excluded two witnesses who

Smith failed to list on the joint pretrial statement. Because we uphold these judgments confirming

the absence of liability, we need not address Smith’s damages-related arguments—that the court

incorrectly applied judicial estoppel to cap her potential recovery and erred in its jury instruction

regarding personal property damages.


                                                  II.


                                        The “Bad Faith” Claim


        On a motion for summary judgment, Ohio law directs courts to assess bad-faith-denial-of-

coverage claims from the perspective of what information motivated the insurer’s denial. Viewing

the evidence in the light most favorable to the insured, courts ask whether “the claim was fairly

debatable and the refusal was premised on either the status of the law at the time of the denial or the

facts that gave rise to the claim.” Tokles & Son, Inc. v. Midwestern Indem. Co., 605 N.E.2d 936, 943

(Ohio 1992). An aggrieved insured must respond to the insurer’s motion “with evidence which tends

to show that the insurer had no reasonable justification for refusing the claim, and the insurer either

had actual knowledge of that fact or intentionally failed to determine whether there was any

reasonable justification . . . .” Id.




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Smith v. Allstate


       The district court found that Smith’s claim was fairly debatable in light of the many

discrepancies about the fire. “[T]here is evidence to support an arson defense,” the court observed,

and it determined that the record included evidence sufficient to allow Allstate to “have reasonably

concluded that Plaintiff and James Smith were concealing or misrepresenting material facts and

circumstances surrounding the fire.” We reach the same conclusion. Allstate decided to deny

coverage using the information available—especially the investigator’s report and witness

testimony—showing a probability that the fire resulted from the intentional act of an insured. The

record is rife with inconsistent testimony and concealed matters, each of which would legitimately

increase an insurer’s suspicions. Allstate did not have to conclusively establish arson; it could deny

coverage in good faith so long as the claim was “fairly debatable.” Here, the available evidence

supported Allstate’s “fairly debatable” assessment.


       Not only was Smith’s claim fairly debatable, but she also failed to oppose Allstate’s motion

with evidence tending to show that Allstate lacked a reasonable justification or “intentionally failed

to determine whether there was any reasonable justification.” Instead, her brief merely charges that

Allstate “ignor[ed] every bit of tangible evidence and focus[ed] only on bending the facts to justify

the inferences of the investigator.” Similarly, she complains that Allstate should have believed two

witnesses who testified that Smith’s husband did not start the fire. Neither of these challenges

diminishes the reasonableness of Allstate’s evidence-based skepticism. Smith points to Zoppo v.

Homestead Ins. Co., 644 N.E.2d 397, 400 (Ohio 1994), where an insurer acted in bad faith because

its investigation focused almost solely on the insured while discounting evidence suggesting arson

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Smith v. Allstate


by other individuals. Unlike Zoppo, Smith merely disagrees with the investigator’s conclusion

without pointing to any unfounded basis for Allstate’s conclusion or some investigative omission.

Abon, Ltd v. Transcon. Ins. Co., articulates the difference well: in Zoppo, the plaintiff showed that

the insurer “failed to locate key suspects, verify alibis . . . follow up with witnesses, or ask anything

but cursory questions of suspects other than Zoppo.” 2005-Ohio-3052, at ¶ 40 (5th Dist. App.)

(granting summary judgment for an insurer because the claim was fairly debatable). Smith proffers

no such evidence, leading us to conclude that Allstate reasonably believed her claim to be “fairly

debatable.”


        Smith’s appeal virtually ignores the second ground supporting summary judgment—that

Allstate could fairly question whether she misrepresented her claim. The record reveals a gulf

between the value of assets she claims to have lost and values listed only three-and-a-half years

earlier in the Smiths’ bankruptcy filing, which called for a listing of all personal property then owned

by Smith and her husband. The fire, Smith claimed, destroyed $58,184.85 in personalty while her

2000 bankruptcy schedule valued personal property at only $560. With the Smiths’ monthly income

of $1,189, the court noted the absence of a “logical explanation for how [Smith] and her husband

could have acquired the more than $40,000 in personal property they purportedly accumulated

following their bankruptcy.” We agree. Smith attributes the discrepancy to differences between

“replacement cost” and “market value” and to gifts.          But those explanations strain credulity.

Whether true or not, Allstate could reasonably doubt her claim, a doubt naturally heightened when



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Smith v. Allstate


investigators could not find any trace of certain items—an oriental carpet and oak cabinet, to name

just two.


        Viewing the record in the light most favorable to Smith, inconsistent witness testimony and

investigators’ suspicions about ignition fostered a legitimate belief that Smith’s policy excluded her

claim. Likewise, the property-loss claim raised serious doubt about whether she misrepresented her

losses, precluding a finding of bad faith as a matter of law. See Tokles, 605 N.E.2d at 943. Either

ground supports the district court’s decision to grant summary judgment on the bad-faith claim.


                            Witnesses Omitted From Pretrial Statement


        Smith also cites as error exclusion of two witnesses she wished to call. The court’s pretrial

order required both parties to disclose all potential witnesses in a joint pretrial statement, but Smith

did not list the Allstate employees she later sought to present in her case in chief. Though the court

enforced the order, denying Smith the right to present testimony from unlisted witnesses, it reassured

her that since Allstate listed both as defense witnesses, Smith could question them on cross-

examination.


        We find no abuse of discretion in the court’s enforcement of its pretrial order. Jones v.

Potter, 488 F.3d 397, 411 (6th Cir. 2007). Smith cites no authority to suggest that the court abused

its discretion; she does not even explain why she did not identify the witnesses as required.

Moreover, the record shows that the court went to lengths to ensure that Smith would not be unduly


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Smith v. Allstate


prejudiced. It asked whether she had other sources of evidence (she did), and even reserved the

option of allowing her to call the employees as rebuttal witnesses if their testimony was essential.

                                     Smith’s Damages Claims


       We need not address Smith’s damages-related claims because the jury verdict rendered them

superfluous. The jury found that because Smith misrepresented her claim and thus violated the terms

of the policy, Allstate need not pay Smith anything. Neither the court’s judicial estoppel ruling nor

the jury instruction regarding damages affected Smith’s recovery.


                                                III.


       We affirm the judgment of the district court.




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