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The Oregon federal district court recently addressed the legal effect of an insured's breach of a document production or similar duty after loss provision in a first party property policy. In Schoning v. State Farm Fire & Cas. Co., 2012 U.S. Dist. LEXIS 31371 (D. Or. March 8, 2012), the insured homeowner sued for breach of contract after State Farm had denied coverage for a suspicious fire loss. The fire was believed to be an arson, and the property had been in foreclosure at the time of the loss. But the insured refused to provide State Farm with documents related to the insured's financial condition or the mortgage for, and foreclosure, of the property. The insured insisted that these documents were not relevant to the loss. After making multiple unsuccessful attempts to get these documents from the insured, State Farm denied the claim for failure to cooperate.
Judge Marco Hernandez disagreed with the insured's refusal, finding that the documents requested were relevant and that the insured had prejudiced State Farm's ability to investigate. Judge Hernandez found that, whether the insured's cooperation obligations were analyzed as a condition precedent or a condition of forfeiture, State Farm had properly denied coverage because the insured's refusals had prejudiced the investigation. The court also noted that the insured's lawsuit was barred by the policy's "Suit Against Us" provision which requires an insured to comply with all policy provisions before filing suit.
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