United States Court of Appeals
Fifth Circuit
F I L E D
IN THE UNITED STATES COURT OF APPEALS
May 5, 2006
FOR THE FIFTH CIRCUIT
Charles R. Fulbruge III
)))))))))))))))))))))))))) Clerk
No. 04-31167
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WILSON W. WILSON,
appearing in his capacity as the curator
of the interdict,
Plaintiff-Appellee,
versus
STATE FARM FIRE AND CASUALTY INSURANCE CO.,
Defendant-Appellant.
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:96-CV-3345
Before GARWOOD, PRADO, and OWEN, Circuit Judges.
PER CURIAM:*
I. BACKGROUND
This case involves Plaintiff-Appellee Wilson’s allegation that
Defendant-Appellant State Farm Fire and Casualty Company (“State
Farm”) failed to pay an insurance claim owed to an insured
homeowner, Christel Fontenot, when her house was destroyed in a
*
Pursuant to 5TH CIR. R. 47.5, the court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in 5TH CIR. R. 47.5.4.
fire. On Monday, July 17, 1995, a fire caused substantial damage
to the dwelling owned in community by Christel Fontenot and her
husband Martin Fontenot. The house, located in Baton Rouge, was
insured by State Farm. At the time of the fire, Martin and Christel
Fontenot had been married for approximately twenty-nine years and
had owned the house for seventeen years.
About ten years before the fire, doctors diagnosed Christel
Fontenot with a bipolar disorder, which involves alternating periods
of depression and manic behavior. State Farm alleges that Christel
Fontenot’s mental illness interrupted her work as a teacher for two
years. Moreover, the malady allegedly induced her to neglect her
children and to engage in a pattern of excessive spending which she
could not afford. Martin Fontenot claims that because he could not
persuade his wife to comply with a drug therapy regimen that would
stabilize her mental health, he made the decision to end his
marriage. Consequently, on July 7, 1995, ten days before the fire,
he packed his belongings, moved out of the home, and stated that he
would be filing for a divorce.
Although it is undisputed that Christel Fontenot was not
properly served with divorce papers until after the fire, trial
testimony suggests that after Martin Fontenot moved out of the home
Christel Fontenot began burning paper in the back yard, an activity
that she had not engaged in previously. Additionally, Christel
Fontenot began parking in the driveway or on the street in front of
the house as opposed to her normal place in the garage, purportedly
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because there was too much gasoline in the garage.
On the day before the fire, Martin Fontenot took three of his
sons on a trip to Houston, Texas, leaving Christel Fontenot alone
in the house. After the children departed with their father,
Christel Fontenot began ripping out the carpet in the master bedroom
of the house. On Monday, the day of the fire, she continued to
remove strips of carpet from the home. Additionally, Christel
Fontenot spread newspaper throughout the house, taping it to the
walls and stuffing it under doors in some instances. Although
Christel Fontenot claims that she spread the newspaper in order to
inhibit the spread of dust following the removal of the carpet in
the master bedroom, newspaper was spread beyond the bedroom’s
vicinity.
Before departing the residence on the evening of the fire,
Christel Fontenot removed framed and loose photographs from the
walls of the home, packed two of her three jewelry boxes, and packed
a box with numerous personal, family, and work-related documents.
Fontenot locked the house and departed a few minutes before the fire
was reported to 911. The Baton Rouge Fire Department received the
report of the fire at 6:36 p.m. Although she alleges that when she
left her home, she was going to visit friends in Destrehan,
Louisiana, Christel Fontenot never reached Destrehan. Instead, she
checked into a Baton Rouge motel.
Initially, under sworn testimony, Fontenot stated that she left
her home around noon. However, she later recanted. There is
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testimony from two separate individuals who had conversations with
her only minutes before she actually left the house after 6:00 p.m.
One of those individuals, Arthur Fabre, a neighbor of the Fontenot
family was the last person on the family’s property. He had been
asked by Martin Fontenot to feed the horses on the property, and
noticed that Christel Fontenot’s car was gone when he finished his
task. A few minutes after departing from the Fontenot family land,
while standing outside with a friend, Fabre noticed that the
Fontenot family’s residence was on fire and called 911. He also
attempted to extinguish the flames with a garden hose.
Upon arriving at the scene of the fire, firefighters found that
the home had been locked and secured. There were no signs of forced
entry. Martin Fontenot, Christel Fontenot, and their kids were the
only individuals with keys to the house. Firefighters also noticed
that the fire started in the master bedroom closet.
At the conclusion of State Farm’s investigation, it decided to
deny the Fontenot family’s claim under their insurance policy.
However, State Farm separately settled with Martin Fontenot after
the claim was denied, and paid him the full amount for his interest
in the destroyed property and for that of his children. State
Farm’s management decided to settle with Martin Fontenot because
there was no evidence that Martin Fontenot was involved in causing
the loss. Christel Fontenot, on the other hand, was not paid any
of her claim against State Farm notwithstanding her claim that she
did not start the fire.
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On May 23, 1998, the district court conducted a non-jury trial.
On March 28, 2003, the district court entered judgment in favor of
Plaintiff-Appellee, and against State Farm. State Farm timely filed
a notice of appeal. On appeal, this Court determined that (1) the
district court failed to assign any written reasons for its ruling
in violation of Federal Rule of Civil Procedure 52(a); (2) the
district court committed reversible error when it, sua sponte,
excluded the testimony of Christel Fontenot by finding her to be
incompetent to testify; and (3) the evidence in the record did not
support the court’s judgment. On October 13, 2004, the trial
resumed with the parties stipulating that the entire record of the
first trial would carry over. The only additional evidence added
to the record was the trial testimony of Christel Fontenot.
Following that testimony, the district court, again, rendered
judgment in favor of Plaintiff-Appellee, and against State Farm.
The district court, this time, gave oral reasons for its judgment.
On November 4, 2004, State Farm timely filed a Notice of Appeal.
II. STANDARD OF REVIEW
This court reviews a district court’s conclusions of law de
novo and its findings of fact for clear error. Rimade Ltd. v.
Hubbard Enter., Inc., 388 F.3d 138, 142-43 (5th Cir. 2004) (citing
Joslyn Mfg. Co. v. Koppers Co., 40 F.3d 750, 753 (5th Cir. 1994)).
We will only reverse a finding of fact if, notwithstanding evidence
to support it, we are left with a “definite and firm conviction”
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that a mistake has been made. Justiss Oil Co., Inc. v. Kerr-McGee
Ref. Corp., 75 F.3d 1057, 1062 (5th Cir. 1996). However, when a
finding of fact is premised on an improper legal standard, it loses
the insulation of the clearly erroneous rule. Maritrend, Inc. v.
Serac & Co. (Shipping) Ltd., 348 F.3d 469, 470 (5th Cir. 2003).
III. DISCUSSION
State Farm makes three main claims: (1) the finding for
Plaintiff-Appellee was clearly erroneous because Defendant-Appellant
submitted sufficient evidence to succeed on its arson defense; (2)
after State Farm met its initial burden with regard to its arson
defense, the district court should have switched the burden of proof
to Plaintiff-Appellee to offer reasonable proof to exonerate
herself; and (3) at trial, Defendant-Appellant proved that Fontenot
made knowing material misrepresentations of fact concerning her
actions, thus voiding the insurance policy. Because we determine
that the trial evidence presented by State Farm preponderates in
favor of State Farm in such a convincing manner that a finding for
Plaintiff-Appellee would be clearly erroneous, we reverse the
district court’s judgement, and render judgment for State Farm.
First, State Farm claims that the district court erred in
finding that it failed to carry its burden of proof to succeed on
its arson defense to policy coverage. Under Louisiana law,1 to
1
Because this case falls within federal diversity
jurisdiction, we must apply Louisiana law. See Erie R.R. Co. v.
Tompkins, 304 U.S. 64, 79-80 (1938).
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sustain the defense of incendiarism, insurers bear the burden of
proving the defense by a preponderance of the evidence--unlike in
criminal cases where the State must prove the guilt of an arsonist
beyond a reasonable doubt. Sumrall v. Providence Washington Ins.
Co., 60 So. 2d 68, 69 (La. 1952). Recognizing that in most cases
the only evidence of arson is circumstantial due to the fact that
perpetrators of incendiarism do not engage in such activity
notoriously, the Louisiana Supreme Court has repeatedly stated that:
Inasmuch as the defense is arson, the burden
rested upon the insurer to establish, by
convincing proof, that the fire was of
incendiary origin and that plaintiff was
responsible for it. It is well settled that
the insurer need not prove its case against a
plaintiff beyond a reasonable doubt; it
suffices that the evidence preponderates in
favor of the defense. Proof, of course, may
be and invariably is entirely circumstantial.
And, in these instances, a finding for
defendant is warranted where the evidence is
of such import that it will sustain no other
reasonable hypothesis but that the claimant is
responsible for the fire.
Id.; Rist v. Commercial Union Ins. Co., 376 So. 2d 113, 113-14 (La.
1979). Hence, under Sumrall, the preponderance of the evidence
standard is the appropriate standard for considering whether or not
a defendant has met its burden of proving an arson defense. As an
evidentiary matter, “[m]otive plus the incendiary origin of the fire
[will], in the absence of believable rebuttal evidence, be
sufficient to sustain the affirmative defense pleaded by the
insurer.” Sumrall, 60 So. 2d at 70 (citations omitted).
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Some Louisiana appellate courts have, however, construed
Sumrall to mean that, in cases depending solely on circumstantial
proof, the evidence must be so convincing that it will sustain no
other reasonable hypothesis but that the plaintiff was responsible
for the fire. Christensen v. State Farm Mut. Auto. Ins. Co., 552
So. 2d 1377, 1378-79 (La. Ct. App. 5th Cir. 1989) (citation omitted)
(“Where circumstantial evidence is relied upon, the facts, “[t]aken
as a whole ... must exclude other reasonable hypotheses with a fair
amount of certainty.”); Wallace v. State Farm Fire & Cas. Ins. Co.,
345 So. 2d 1004, 1006-07 (La. Ct. App. 3d Cir. 1977) (“When proof
is circumstantial, the evidence must be so convincing that it will
sustain no other reasonable hypothesis but that plaintiff was
responsible for the fire.”); see also Baghramain v. MFA Mut. Ins.
Co., 315 So. 2d 849, 851 (La. Ct. App. 3d Cir. 1975).
It is this more rigorous standard that the district court
seemed to apply in the case at hand. In finding that State Farm did
not meet its burden, the court wrote:
I threw out Fabre not to say that he did it or
anything like that, but to say that there are
reasonable explanations for what happened
other than that Mrs. Christel Fontenot did it.
And another possible explanation that the
court cannot ignore is the fact that Martin
Fontenot was only four hours away from Baton
Rouge in Houston.... Again, that’s not to say
Martin Fontenot started the fire, but that is
to say that the evidence that Christel
Fontenot was the cause of the fire does not-
the evidence that she caused it does not
exclude- the circumstantial evidence that she
caused the fire does not exclude the
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reasonable possibility that it was started by
someone else. Fabre and Martin Fontenot being
just two reasonable possibilities.
Hence, the district court subscribed to the notion that in order to
prevail on its arson defense, State Farm had to exclude all other
reasonable causes of the fire.
There is an obvious tension between the two articulations of
the standard of proof insurers asserting the defense of arson must
meet. In Viviano v. Travelers Insurance Company, 533 F. Supp. 1
(E.D. La. 1981), the district court addressed this very issue.
There, the court chose to adhere to the preponderance of evidence
standard alone. Id. at 7. First, the court reasoned that “the
preponderance of the evidence requirement bears the imprimatur of
the ultimate construer of Louisiana law,” the Louisiana Supreme
Court. Id.
Next, the court explained that the “no other reasonable
hypothesis standard” seems to have grown out of a misunderstanding
of the holding of Sumrall. Id. In Sumrall, the facts of that
particular case were such that the evidence would sustain no other
reasonable hypothesis than that the claimant started the fire. Id.
However, there was no holding that the defendant must exclude other
reasonable possibilities in order to prevail on its arson defense.
Rather, the Sumrall court emphasized that, in cases relying
primarily on circumstantial evidence, a finding for the defendant
is warranted where the evidence is so strong that it will sustain
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no other reasonable hypothesis but that the claimant started the
fire. Sumrall, 60 So. 2d at 69; see also Viviano, 533 F. Supp. at
7. Hence, in Viviano, the court held that in order to meet the
burden of proof regarding an arson defense, the evidence need only
preponderate in favor of the defense. Viviano, 533 F. Supp. at 7.
We approve of the Viviano court’s interpretation of Louisiana
law and apply the preponderance of the evidence requirement as the
proper standard of proof an insurer must meet in order to sustain
an arson defense. State Farm not only met this initial burden to
sustain its arson defense; but because the circumstantial evidence
is so strong, we find that State Farm has also convincingly proven
that there are no other reasonable explanations for the fire
notwithstanding Christel Fontenot’s testimony that she did not start
the fire. It is undisputed that the fire was of incendiary origin.
Additionally, Christel Fontenot, the only individual with a key to
the house in Baton Rouge, left the house only minutes before the
fire was discovered. Christel Fontenot’s financial pressures and
the impending divorce serve as evidence of motive. Moreover,
Fontenot’s removal of jewelry, family photographs, and important
documents just before the fire are also probative of the fact that
she caused the loss. Together, this circumstantial evidence
preponderates in favor of the defendant in such a way that a finding
for Plaintiff-Appellee, irrespective of the standard used, would be
clearly erroneous. The hypothetical reasonable alternatives
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proffered by the district court find no evidentiary support in the
record. Furthermore, a review of the record suggest no other
reasonable alternatives in addition to the ones proposed by the
district court. Consequently, we reverse the district court’s
judgement, and render judgment for State Farm. See Sumrall, 60 So.
2d at 71.2 Because we reverse the district court’s judgment based
on the arson defense, we do not reach State Farm’s other arguments.
REVERSED and RENDERED.
GARWOOD, Circuit Judge, dissenting in part:
The trial court’s judgment is based on the legally erroneous
premise that State Farm’s defense of arson required it to eliminate
all reasonable possibilities other than the plaintiff’s arson. I
would accordingly reverse. Given plaintiff’s testimony, implausible
though it is, – which the trial court may or may not have credited
– I would not now render.
2
In light of the fact that this is our second occasion to
correct the district court’s errors and because any finding for
Plaintiff-Appellee would be clearly erroneous, the interests of
judicial economy would best be served by not sending this case
back to the district court, notwithstanding Plaintiff-Appellee’s
claim that she did not start the fire.
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