NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 18a0202n.06
Case No. 17-3921
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Apr 18, 2018 NGOC TRAN, ) DEBORAH S. HUNT, Clerk ) Plaintiff-Appellant, ) ) ON APPEAL FROM THE UNITED v. ) STATES DISTRICT COURT FOR ) THE SOUTHERN DISTRICT OF FEDERAL INSURANCE COMPANY, ) OHIO ) Defendant-Appellee. )
BEFORE: MOORE, THAPAR, and BUSH, Circuit Judges.
THAPAR, Circuit Judge. Ngoc Tran owned a lot of gold jewelry—$374,330 worth, to be
exact. A few years ago, she decided it was time to insure her collection, so she purchased a
valuable-articles policy from Federal Insurance Company (“Federal”). About eight months later,
Tran reported the jewelry stolen and sought to collect on the policy.
Federal suspected that the burglary was an inside job. For starters, the responding officer
did not think the crime scene—which would have required the purported burglar to make a rather
acrobatic leap through a window—looked like a break-in. And Federal spotted a number of
other inconsistencies and oddities in Tran’s story, including the substantial disparity between her
reported annual income ($0) and monthly living expenses (sometimes in excess of $5000). So
the company asked Tran to provide various business and personal records to corroborate her Case No. 17-3921 Tran v. Fed. Ins. Co.
story. But for one reason or another, Tran failed substantially to do so. After several
unsuccessful attempts to obtain the records, Federal denied Tran’s claim, citing her “failure to
cooperate.”
Tran filed suit, seeking to compel Federal to cover the claimed loss. The district court
granted Federal summary judgment, holding that Tran had failed to cooperate with the
company’s investigation. Tran now appeals. This court reviews the grant of summary judgment
de novo. Peffer v. Stephens, 880 F.3d 256, 262 (6th Cir. 2018).
I.
Insurance policies often include “cooperation clause[s]” that impose certain duties on the
insured party in the event of a loss. See Doerr v. Allstate Ins. Co., 121 F. App’x 638, 640 (6th
Cir. 2005). Tran’s policy had a cooperation clause requiring her to “produce all records and
documents” that the insurance company requested. R. 132, Pg. ID 2581. Because Tran failed to
produce many requested documents, Federal maintains that it does not have to pay out her claim.
Under Ohio law, an insured party’s failure to comply with a cooperation clause lets the
insurer off the hook if the insured’s noncooperation “result[s] in material and substantial
prejudice to the insurance company.” Gabor v. State Farm Mut. Auto. Ins. Co., 583 N.E.2d
1041, 1043 (Ohio Ct. App. 1990) (citing State Farm Mut. Auto. Ins. Co. v. Holcomb, 458 N.E.2d
441, 445 (Ohio Ct. App. 1983)); see also Luntz v. Stern, 20 N.E.2d 241, 244–45 (Ohio 1939).
Generally, whether a party’s noncooperation relieves the insurer of the obligation to pay is a
question of fact. Doerr, 121 F. App’x at 640. But where the material facts are undisputed, as
here, the court may decide the question as a matter of law. Id.
Here, Federal repeatedly requested records from Tran, and Tran repeatedly failed to
produce many of those records. Initially, Tran claimed that she did not have the records. Then,
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instead of retrieving copies of those records from third parties—such as her bank and
accountant—she gave Federal written authorization to get the documents. The problem is, even
with Tran’s written authorization, many of the third parties would not provide the records
directly to the company.
When Federal eventually got ahold of some records, Tran refused to confirm their
accuracy. For example, the company obtained a few years’ tax returns from Tran’s accountant,
but Tran would not verify that they accurately represented her income. In another instance,
Federal got Tran’s phone records from AT&T, but Tran claimed not to remember the identities
of eight key telephone numbers listed in the log. And when Federal obtained win/loss statements
from local casinos (Tran’s live-in boyfriend was a gambler), Tran disputed the statements’
accuracy.
Then there is the information that Federal was never able to obtain in the course of its
claims investigation: Tran’s complete bank account information, as well as two years’ tax
returns. Tran initially told Federal that she did not have any bank accounts. After further
questioning, she admitted to having two accounts, but she still never gave Federal complete
account information. Tran also claimed that two years of missing tax returns simply did not
exist, but did not offer evidence to support that claim. So when all was said and done, Tran
provided the insurance company only some of the documents and information it requested and
refused to confirm the accuracy of several key documents Federal obtained on its own accord.
This level of noncompliance was material and substantial. Federal had reason to question
Tran’s story about the burglary. And Tran’s failure to provide the requested records impeded its
ability to investigate the truth of her claims. The bank records and tax returns would have shed
light on Tran’s financial situation in the years surrounding the alleged burglary. So too would
-3- Case No. 17-3921 Tran v. Fed. Ins. Co.
the casino records reflecting her boyfriend’s gambling habit. Instead, Federal confronted a
record that suggested Tran had no annual income, yet somehow maintained monthly expenses
sometimes exceeding $5,000 around the time of the loss. Likewise, identifying the phone
numbers that Tran contacted around the time of the burglary would have provided Federal with
the names of potential witnesses (or accomplices). But Tran’s obstinacy frustrated the
company’s ability “to determine [Tran’s] motive, alibi, or any other aspect of [her] involvement
(or non-involvement)” in the alleged burglary. Doerr, 121 F. App’x at 641. Moreover, because
Tran’s noncooperation persisted for months and affected several categories of information, it
impaired Federal’s “ability to complete a full and fair investigation.” Id. at 642. Her
noncooperation was thus prejudicial too.
Tran nevertheless insists that her attempted compliance was enough. She reasons that she
provided some records and made an effort to obtain others. But Tran sets the bar for compliance
too low. A party’s compliance with some of a policy’s requirements does not excuse the party’s
material failure to comply with others. Id. at 640 (citing Walker v. Buck, 621 N.E.2d 1307, 1309
(Ohio Ct. App. 1993)). And although Tran provided Federal with authorizations to obtain
records from third parties, it was Tran’s undisputed responsibility under the contract to obtain
the requested documents—not Federal’s. See Ponamerenko v. Allstate Ins. Co., No. 4:94 CV
2153, 1995 U.S. Dist. LEXIS 22460, at *28 (N.D. Ohio, June 13, 1995) (applying Ohio law).
Tran has not pointed to anything in the contract or the facts of this case that would allow her to
“wipe [her] hands of the responsibility of providing the requested documents” just by signing an
authorization form. Id. (“Plaintiff’s position is tantamount to saying that opening one’s file
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NOT RECOMMENDED FOR FULL-TEXT PUBLICATION File Name: 18a0202n.06
Case No. 17-3921
UNITED STATES COURT OF APPEALS FOR THE SIXTH CIRCUIT FILED Apr 18, 2018 NGOC TRAN, ) DEBORAH S. HUNT, Clerk ) Plaintiff-Appellant, ) ) ON APPEAL FROM THE UNITED v. ) STATES DISTRICT COURT FOR ) THE SOUTHERN DISTRICT OF FEDERAL INSURANCE COMPANY, ) OHIO ) Defendant-Appellee. )
BEFORE: MOORE, THAPAR, and BUSH, Circuit Judges.
THAPAR, Circuit Judge. Ngoc Tran owned a lot of gold jewelry—$374,330 worth, to be
exact. A few years ago, she decided it was time to insure her collection, so she purchased a
valuable-articles policy from Federal Insurance Company (“Federal”). About eight months later,
Tran reported the jewelry stolen and sought to collect on the policy.
Federal suspected that the burglary was an inside job. For starters, the responding officer
did not think the crime scene—which would have required the purported burglar to make a rather
acrobatic leap through a window—looked like a break-in. And Federal spotted a number of
other inconsistencies and oddities in Tran’s story, including the substantial disparity between her
reported annual income ($0) and monthly living expenses (sometimes in excess of $5000). So
the company asked Tran to provide various business and personal records to corroborate her Case No. 17-3921 Tran v. Fed. Ins. Co.
story. But for one reason or another, Tran failed substantially to do so. After several
unsuccessful attempts to obtain the records, Federal denied Tran’s claim, citing her “failure to
cooperate.”
Tran filed suit, seeking to compel Federal to cover the claimed loss. The district court
granted Federal summary judgment, holding that Tran had failed to cooperate with the
company’s investigation. Tran now appeals. This court reviews the grant of summary judgment
de novo. Peffer v. Stephens, 880 F.3d 256, 262 (6th Cir. 2018).
I.
Insurance policies often include “cooperation clause[s]” that impose certain duties on the
insured party in the event of a loss. See Doerr v. Allstate Ins. Co., 121 F. App’x 638, 640 (6th
Cir. 2005). Tran’s policy had a cooperation clause requiring her to “produce all records and
documents” that the insurance company requested. R. 132, Pg. ID 2581. Because Tran failed to
produce many requested documents, Federal maintains that it does not have to pay out her claim.
Under Ohio law, an insured party’s failure to comply with a cooperation clause lets the
insurer off the hook if the insured’s noncooperation “result[s] in material and substantial
prejudice to the insurance company.” Gabor v. State Farm Mut. Auto. Ins. Co., 583 N.E.2d
1041, 1043 (Ohio Ct. App. 1990) (citing State Farm Mut. Auto. Ins. Co. v. Holcomb, 458 N.E.2d
441, 445 (Ohio Ct. App. 1983)); see also Luntz v. Stern, 20 N.E.2d 241, 244–45 (Ohio 1939).
Generally, whether a party’s noncooperation relieves the insurer of the obligation to pay is a
question of fact. Doerr, 121 F. App’x at 640. But where the material facts are undisputed, as
here, the court may decide the question as a matter of law. Id.
Here, Federal repeatedly requested records from Tran, and Tran repeatedly failed to
produce many of those records. Initially, Tran claimed that she did not have the records. Then,
-2- Case No. 17-3921 Tran v. Fed. Ins. Co.
instead of retrieving copies of those records from third parties—such as her bank and
accountant—she gave Federal written authorization to get the documents. The problem is, even
with Tran’s written authorization, many of the third parties would not provide the records
directly to the company.
When Federal eventually got ahold of some records, Tran refused to confirm their
accuracy. For example, the company obtained a few years’ tax returns from Tran’s accountant,
but Tran would not verify that they accurately represented her income. In another instance,
Federal got Tran’s phone records from AT&T, but Tran claimed not to remember the identities
of eight key telephone numbers listed in the log. And when Federal obtained win/loss statements
from local casinos (Tran’s live-in boyfriend was a gambler), Tran disputed the statements’
accuracy.
Then there is the information that Federal was never able to obtain in the course of its
claims investigation: Tran’s complete bank account information, as well as two years’ tax
returns. Tran initially told Federal that she did not have any bank accounts. After further
questioning, she admitted to having two accounts, but she still never gave Federal complete
account information. Tran also claimed that two years of missing tax returns simply did not
exist, but did not offer evidence to support that claim. So when all was said and done, Tran
provided the insurance company only some of the documents and information it requested and
refused to confirm the accuracy of several key documents Federal obtained on its own accord.
This level of noncompliance was material and substantial. Federal had reason to question
Tran’s story about the burglary. And Tran’s failure to provide the requested records impeded its
ability to investigate the truth of her claims. The bank records and tax returns would have shed
light on Tran’s financial situation in the years surrounding the alleged burglary. So too would
-3- Case No. 17-3921 Tran v. Fed. Ins. Co.
the casino records reflecting her boyfriend’s gambling habit. Instead, Federal confronted a
record that suggested Tran had no annual income, yet somehow maintained monthly expenses
sometimes exceeding $5,000 around the time of the loss. Likewise, identifying the phone
numbers that Tran contacted around the time of the burglary would have provided Federal with
the names of potential witnesses (or accomplices). But Tran’s obstinacy frustrated the
company’s ability “to determine [Tran’s] motive, alibi, or any other aspect of [her] involvement
(or non-involvement)” in the alleged burglary. Doerr, 121 F. App’x at 641. Moreover, because
Tran’s noncooperation persisted for months and affected several categories of information, it
impaired Federal’s “ability to complete a full and fair investigation.” Id. at 642. Her
noncooperation was thus prejudicial too.
Tran nevertheless insists that her attempted compliance was enough. She reasons that she
provided some records and made an effort to obtain others. But Tran sets the bar for compliance
too low. A party’s compliance with some of a policy’s requirements does not excuse the party’s
material failure to comply with others. Id. at 640 (citing Walker v. Buck, 621 N.E.2d 1307, 1309
(Ohio Ct. App. 1993)). And although Tran provided Federal with authorizations to obtain
records from third parties, it was Tran’s undisputed responsibility under the contract to obtain
the requested documents—not Federal’s. See Ponamerenko v. Allstate Ins. Co., No. 4:94 CV
2153, 1995 U.S. Dist. LEXIS 22460, at *28 (N.D. Ohio, June 13, 1995) (applying Ohio law).
Tran has not pointed to anything in the contract or the facts of this case that would allow her to
“wipe [her] hands of the responsibility of providing the requested documents” just by signing an
authorization form. Id. (“Plaintiff’s position is tantamount to saying that opening one’s file
cabinets to an opposing party in response to requests for production of documents would
somehow be considered a sufficient response to the request.”).
-4- Case No. 17-3921 Tran v. Fed. Ins. Co.
Tran also argues that Federal cannot prove that her failure to cooperate was willful,
because she did not destroy any documents or fail to produce documents that she had in her
possession. Maybe so, but this argument misses the point. If Tran did not currently have the
requested records, the cooperation clause obligated her to make an effort to obtain them. See
Mobley v. Phila. Indem. Ins. Co., 218 F. App’x 456, 462–63 (6th Cir. 2007) (summary judgment
appropriate where insured made no attempt to obtain requested records). And though Tran
attempts to analogize to Templin v. Grange Mutual Casualty Co., this is not a case where
circumstances outside Tran’s control—such as a fire—prevented her from obtaining the records.
611 N.E.2d 944, 947–48 (Ohio. Ct. App. 1992) (summary judgment inappropriate where insured
partially cooperated and provided sworn assertion that the records he could not provide were
destroyed in a fire). Tran’s imperfect recordkeeping is not a license to sit on her hands. And
while Tran suggests that she did eventually make an effort to obtain her tax returns, she did not
do so until more than a year after she filed this suit. That is not “cooperation.” Tran does not
point to any other facts in the record supporting this argument, and we decline to “scour the
record” to construct the argument for her. LidoChem, Inc. v. Stoller Enters., Inc., 500 F. App’x
373, 388 (6th Cir. 2012) (Thapar, J., concurring). The district court thus properly granted
summary judgment to Federal on the grounds that Tran failed to cooperate.
II.
In the course of discovery, the district court deemed the income stated on two of Tran’s
tax returns admitted after she refused to admit or deny the income. Tran now claims this
decision was erroneous. But since the district court properly granted summary judgment due to
Tran’s failure to cooperate, Tran’s challenge to its ruling on the request for admission is moot.
See McPherson v. Mich. High Sch. Athletic Ass’n, 119 F.3d 453, 458 (6th Cir. 1997) (en banc)
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(noting that an issue is moot where the relief sought would not “make a difference to the legal
interests of the parties” (citation omitted)).
*****
We AFFIRM.
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