Insurers that deny coverage often expect their decisions will be challenged in court. But recently, a policyholder made the unusual allegation that a denial of his claim constituted a violation of his civil rights.
In Robinson v. Allstate, in 1984, plaintiff purchased a homeowner’s policy, including coverage for plaintiff’s barn, which he used as a “barn/museum” to store his collection of 200 motorcycles. The Allstate agent told him the contents of the barn would be covered, “as long as he was not running a business.”
In 1999, gasoline leaked from one of the motorcycles, starting a fire. The barn burned down, and plaintiff suffered $800,000 in damages. Allstate disclaimed coverage, citing to an exclusion barring coverage for structures used for business purposes.
Plaintiff sued Allstate in New York State Court, and ultimately a jury held that Allstate properly applied the exclusion. Plaintiff also filed suit in federal court against Allstate, his village, the police department, and the county sheriff, alleging they engaged in a fraudulent conspiracy to deny him coverage for his loss and to violate his equal protection rights.
The federal judge held that res judicata barred plaintiff’s lawsuit, because the issues had already been decided in the state court action. But in any event, the court also ruled that plaintiff failed to prove the existence of any conspiracy, and that there was no conspiracy “motivated by a class based animus.” The court thus dismissed the lawsuit, saving insurers from another worry, at least for the moment.
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