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Allstate Indemnity Co. v. Dixon

United States Court of Appeals, Eighth Circuit

August 1, 2019

Allstate Indemnity Company Plaintiff - Appellee
v.
Joseph Dixon; Casey Dixon Defendants - Appellants

          Submitted: April 17, 2019

          Appeal from United States District Court for the Western District of Missouri - Springfield

          Before COLLOTON, GRUENDER, and ERICKSON, Circuit Judges.

          ERICKSON, CIRCUIT JUDGE.

         On February 14, 2014, Joseph and Casey Dixon purchased a former resort hotel in West Plains, Missouri, for $120, 000 with the intention of turning it into a bed and breakfast (B&B) and marriage retreat. The property contained a 15-bedroom, 12-bathroom structure. The structure was insured for $479, 857 actual cash value-an amount far in excess of the $120, 000 purchase price. On April 12, 2014, the property caught fire and burned to the ground in a little over an hour.

         Allstate investigated the fire and concluded that it was set by or at the direction of Joseph Dixon. Allstate paid the mortagees $107, 526.29 under the terms of the policy. It then commenced an action seeking a declaratory judgment that the Dixons had violated the intentional acts exclusion of the policy and that Allstate was entitled to recover its payment to the mortagees. The Dixons filed a counterclaim for breach of the insurance contract. The district court[1] denied the Dixons' motion for summary judgment. Allstate ultimately prevailed at trial. The Dixons appeal several evidentiary decisions and the denial of their motions for summary judgment, for judgment as a matter of law, and for a new trial. We affirm.

         I. Background

         The Dixons purchased the subject property located at 791 State Hwy T, West Plains, Missouri, for $120, 000. At the time of purchase, they owned an uninsured property in Willow Springs, Missouri, that they ran as a location for marriage retreats. The Dixons' stated purpose for purchasing the West Plains property was to run a B&B and to also use it as another location for wedding retreats. Between the time of purchase and the blaze, no material steps were taken to convert the property into its intended use as a B&B or a wedding retreat location, and the structure sat mostly dormant.

         When the Dixons were looking to purchase insurance for the property, they rejected two proposals to insure the property for $120, 000 and $300, 000 before accepting a proposal to insure the property for $479, 857 actual cash value and $60, 000 for personal property. The property was insured for nearly four times the $120, 000 purchase price. One month after the insurance policy went into effect, the building burned to the ground. The Dixons filed a sworn statement in proof of loss. Shortly thereafter, Allstate began investigating the claim.

         At the beginning of the investigation, Allstate retained Terry Decker, a certified fire investigator, to collect data about the incident and the fire scene. Decker was certified as a fire and explosion investigator by the National Association of Fire Investigators in 1997 and as a fire investigator by the International Association of Arson Investigators in 2001. He also was a certified fire investigator through the Missouri Department of Public Safety. As part of maintaining his certifications, Decker was required to engage in ongoing education and training.

         Decker investigated and photographed the scene, and reviewed photographs of the house prior to the fire. He interviewed the Dixons, their neighbors, and public fire officials, and also reviewed the local fire department report, 911 logs, and weather history data. Based on that information, Decker created a timeline of events. Joseph Dixon indicated he left the property with a man named Donald Hitch sometime between 7:30 p.m. and 8:00 p.m. Dixon described the sky as getting dark when he left. When the fire was discovered at 9:11 p.m., it was "totally involved" and caused the complete destruction of the building. Decker came up with a number of hypotheses to explain the blaze, including the possibility of accidental, undetected fires burning prior to when Dixon left and the possibility that the fire was burning at or shortly after Dixon left the property. After weighing those hypotheses against the collected evidence, Decker concluded that the fire must have been burning when or shortly after Dixon left the property. As part of his determination, Decker considered weather data that showed that twilight set at 8:06 p.m. on the night in question. Given Dixon's statement that it was getting dark when he left, Decker concluded that Dixon left the property at or slightly after 8:00 p.m. The destruction of the building meant that Decker was unable to come to a conclusive opinion as to the cause or origin of the fire, but that he could not rule out that it was an intentionally-set fire. Decker opined that the fire developed rapidly and progressed at an abnormal rate.

         Allstate retained a second certified fire investigator, Robert Wysong, to review the fire given the tight timeline that Decker identified. Wysong was the owner and president of ACS Investigative Services, a fire investigation company in operation since 1991. Wysong was certified as a fire and explosion investigator by the National Association of Fire Investigators. Wysong reviewed Decker's report as well as the sworn statements of the Dixons and Donald Hitch and photographs of the property. Wysong considered a number of hypotheses regarding the blaze, including the possibility of a fire caused by lightning, a fire caused by candle, a fire set in more than one location, and a fire that had been burning more than an hour. Wysong ultimately concluded that the fire must have been burning for more than an hour before discovery or that the area of origin was not a single location.

         Allstate's interviews with the Dixons and Donald Hitch did not suggest any alternative issues with electrical appliances that might have led to the blaze. During Casey Dixon's examination under oath, she testified that she thought somebody started the fire. Allstate, relying on the fire expert reports and the Dixons' sizable financial motive to commit arson, determined that the loss was not covered because the fire was intentionally set by or at the direction of Mr. Dixon. Pursuant to the policy, Allstate issued a payment to the mortgagees in the amount of $107, 526.29.

         Allstate filed a complaint for declaratory judgment on November 20, 2014. On February 26, 2015, Allstate amended its complaint and sought a judgment that the intentional acts exclusion barred coverage for the loss and that Allstate was entitled to recover its payment to the mortgagees of $107, 526.29. The Dixons filed a counterclaim alleging that Allstate breached the insurance contract. The ...


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