Country Mutual Insurance Co. v. Kambic

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF ALASKA
COUNTRY MUTUAL INSURANCE
CO.,
Plaintiff,
vs.
WILLIAM J. KAMBIC, JR.,
Defendant.
Case No. 3:21-cv-00042-JMK
ORDER DENYING MOTION FOR
SUMMARY JUDGMENT
WILLIAM J. KAMBIC, JR.,
Counter Claimant,
vs.
COUNTRY MUTUAL INSURANCE
CO.,
Counterclaim
Defendant.
Pending before the Court is Plaintiff’s Motion for Summary Judgment at
Docket 37. Defendant responded at Docket 41, and filed several evidentiary objections at
Dockets 43 and 44. Plaintiff replied at Docket 48. As set forth below, Plaintiff’s Motion
is DENIED.
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I. 	BACKGROUND
A. 	Undisputed Facts
Mr. Kambic previously owned a house located at 18435 Jasmine Road,
Chugiak, Alaska 99567 (“the Chugiak Property”).1 In December 2018, Wells Fargo Bank
(“Wells Fargo”) foreclosed on the Chugiak property.2 	On May 2, 2019, Mr. Kambic
initiated litigation with Wells Fargo over the foreclosure, alleging the Notice of Default
was defective under Alaska Stat. § 34.20.070.3
Several months later, on September 9, 2019, Mr. Kambic sought and
obtained insurance coverage for the Chugiak Property through Country Mutual Insurance
Company (“Country”).4 The policy was subsequently renewed through September 2021.5
Mr. Kambic was named on the policy, along with First National Bank Alaska (“First
National Bank”), as an insured mortgagee.6 	Wells Fargo was not listed as an additional
insured on the policy, despite the ongoing dispute between Mr. Kambic and Wells Fargo
concerning ownership of the Chugiak Property.7
In December 2020, Mr. Kambic became aware of extensive water damage to
the property.8 Mr. Kambic reported the loss to Country and began work to remediate the
property damage.9
1 Docket 10 at ¶ 2.
2 Id. at ¶ 7.
3 Docket 37-8.
4 See id.
5 Docket 1-2 at 3.
6 Id. at 3–4.
7 Id.
8 Docket 37-7 at 51:13–23.
9 Id. at 51:13–16.
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On January 13, 2021, Country issued a reservation of rights letter to
Mr. Kambic.10 In this letter, Country advised Mr. Kambic that his claim for the December
2020 water damage might be denied due to the ownership dispute and litigation with Wells
Fargo.11 	Country then attempted to intervene in the litigation between Wells Fargo and
Mr. Kambic, alleging that Mr. Kambic violated the insurance contract and that it did not
owe a duty of coverage for the property at issue.12 On February 19, 2021, Mr. Kambic and
Wells Fargo entered into a confidential settlement agreement, and Country’s Motion to
Intervene was denied as moot.13 As of April 8, 2021, Wells Fargo has full ownership rights
of the property pursuant to the settlement agreement.14
On February 23, 2021, Country filed the present action, naming both
Mr. Kambic and Wells Fargo as defendants.15 Country subsequently voluntarily dismissed
Wells Fargo as a defendant on April 9, 2021.16 The Court issued an Order bifurcating the
proceedings to first determine whether the insurance policy covering the Chugiak Property
was void ab initio.17
10 Docket 37-15.
11 Id.
12 See Docket 92, Kambic v. Wells Fargo, et al., No. 3:20-cv-00120-SLG (D. Alaska
May 8, 2020).
13 Docket 100 (text order), Kambic v. Wells Fargo, et al., Case No. 3:20-cv-00120-SLG
(D. Alaska May 8, 2020).
14 Docket 10 at ¶ 8.
15 Docket 1.
16 Docket 6.
17 Docket 32.
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B. 	Disputed Facts
Country 	alleges 	that 	Mr. 	Kambic 	made 	material 	misrepresentations
regarding his ownership and occupancy of the Chugiak Property when he applied for
insurance 	coverage 	in 	September 	2018.18 	Country 	relies 	on 	the 	Home 	Insurance
Application to demonstrate that Mr. Kambic represented his mailing address was the
Chugiak Property,19 that Mr. Kambic represented the only additional interest in the
Chugiak Property was held by First National Bank of Alaska,20 and that Mr. Kambic
represented the Chugiak Property would be owner-occupied.21 	Country also provides
evidence that it “would not have issued policy number A54K5224230 to William Kambic
had Mr. Kambic advised Country that the property the policy was to insure had been
foreclosed on and sold to Wells Fargo, or that he was not going to be occupying the
residence.”22
Mr. Kambic disputes Country’s allegations.23 	Mr. Kambic alleges that the
insurance application was filled out by Country.24 Mr. Kambic further alleges that, during
the process of obtaining insurance coverage for the Chugiak Property, Mr. Kambic verbally
put Country on notice of Wells Fargo’s foreclosure by indicating the mortgage was “under
litigation.”25 Mr. Kambic also alleges he advised Country that the Chugiak Property was
18 Docket 38 at 3–4.
19 Id. at 3 (citing Docket 37-2).
20 Id.
21 Id. at 4 (citing Docket 37-2).
22 Docket 40.
23 Docket 41 at 4–15.
24 Docket 45 at ¶ 13.
25 Docket 41-2 at 38:6–11.
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his home, but that he only resided there when he was not working out of state as a crane
operator.26 	Mr. Kambic states that if he had not given Country his mailing address in
California, he “would not have received the premium renewal notices,” which were sent to
his mailing address in California.27 Mr. Kambic further alleges his previous insurer, State
Farm, reached out to Country on Mr. Kambic’s behalf, providing Country with details
including Mr. Kambic’s previous insurance coverage.28
II. 	LEGAL STANDARD
Summary judgment is appropriate “if the movant shows that there is no
genuine dispute as to any material fact and the movant is entitled to judgment as a matter
of law.”29 	The initial burden is on the moving party to show that there is an absence of
genuine issues of material fact.30 	If the moving party meets this initial burden, the non-
moving party must set forth specific facts showing that there is a genuine issue for trial.31
The non-moving party must support its showing of facts with evidence that is admissible.32
“[A] complete failure of proof concerning an essential element of the nonmoving party’s
case necessarily renders all other facts immaterial.”33 All evidence presented by the non-
moving party must be believed for purposes of summary judgment, and all justifiable
inferences are to be drawn in its favor.34 A court’s function on summary judgment is not
26 Docket 45 at ¶ 14.
27 Id. at ¶ 18.
28 Docket 41-2 at 41:22–42:5.
29 Fed. R. Civ. P. 56(a).
30 Celotex Corp. v. Catrett, 477 U.S. 317, 325 (1986).
31 Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247–48 (1986).
32 Orr v. Bank of Am., NT & SA, 285 F.3d 764, 773 (9th Cir. 2002).
33 Celotex Corp. 477 U.S. at 317.
34 Id. at 255.
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to weigh evidence or determine the truth of the matter, but rather to determine if there are
genuine issues for trial.35
III. 	DISCUSSION
Country seeks summary judgment determining the insurance coverage of the
Chugiak Property was void ab initio due to Mr. Kambic’s misrepresentations.36 Country
relies on Bennett v. Hedglin, 995 P.2d 668 (Alaska 2000), for the proposition that if an
insured misrepresented material facts when applying for insurance coverage the insurer
may rescind the coverage rendering the coverage void ab initio.37
In Bennett, an insurer sought to rescind insurance coverage for a cabin that
was destroyed by fire.38 When applying for insurance coverage for the cabin, the insured
“denied owning, occupying, or renting” any residences besides the cabin for which he was
seeking insurance coverage and asserted that he was a full-time resident of the cabin.39
Later, the insured admitted that he owned several properties in addition to the cabin.40 The
insured tried to explain that he intended to reside full time at the cabin.41 	The Alaska
Supreme Court found these statements to be material misrepresentations and granted
summary judgment in favor of the insurer.42 Country seeks to have the Court apply Bennett
to the case at hand because Mr. Kambic’s Home Insurance Application fails to disclose
35 Id. at 249.
36 Docket 38 at 2.
37 Id. at 11.
38 995 P.2d 668, 671 (Alaska 2000).
39 Id.
40 Id. at 671–72.
41 Id.
42 Id at 672.
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that Wells Fargo had foreclosed on the Chugiak Property and that Mr. Kambic lived in
California for much of the year.43
Mr. Kambic responds that Country fails to meet its initial burden to
demonstrate there are no disputed material facts.44 Mr. Kambic asserts that Country knew
that Mr. Kambic lived in California while working and that Country knew or should have
known about the foreclosure because Mr. Kambic advised Country there was ongoing
litigation concerning the second mortgage.45 	Mr. Kambic also objects to evidence on
which Country relies in its attempt to establish an absence of material fact.46
Country replies that (1) even if Mr. Kambic informed Country that the
mortgage underlying the Chugiak Property was subject to litigation, this was insufficient
to put Country on notice of the foreclosure; and (2) Mr. Kambic cannot rely on inconsistent
statements to establish a disputed fact regarding his residence.47
A. 	Disclosure Requirements Under Alaska Stat. § 21.42.110
Country argues that Mr. Kambic failed to disclose the relevant fact that Wells
Fargo had foreclosed on the Chugiak Property before Mr. Kambic sought insurance
coverage.48 	According to Country, even if Mr. Kambic disclosed to Country that the
second mortgage was in litigation, such a disclosure was insufficient, and the Court should
rescind the insurance coverage.49
43 Docket 38 at 13.
44 Docket 41 at 21.
45 Id. at 4–15.
46 Docket 43; Docket 44.
47 Docket 48 at 2.
48 Id.
49 Id. at 7.
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Under Alaska law, “[a]ll statements and descriptions in an application for an
insurance policy or annuity contract, or in negotiations for the policy or contract, by or in
behalf of the insured or annuitant, shall be considered to be representations and not
warranties.”50 	Furthermore, “[m]isrepresentations, omissions, concealment of facts, and
incorrect statements” normally do not prevent an insured from obtaining recovery from
their insurer.51 	Misrepresentations, omissions, concealment of facts, and incorrect
statements can prevent an insured from obtaining recovery if they are “material either to
the acceptance of the risk, or to the hazard assumed by the insurer” or the insurer in good
faith would not have issued the insurance policy if the insurer knew the truth concerning
the insured statements and the insurance application or contract required disclosure.52 In
applying this disclosure requirement, the Alaska Supreme Court has held that “[i]t is an
insurer’s duty to ascertain the facts, and if nothing is concealed, and it makes no inquiries,
it cannot complain that the situation was not what it supposed it to be.”53
Alaska 	Supreme 	Court 	precedent 	forecloses 	Country’s 	argument 	that
Mr. Kambic’s disclosure was insufficient. In Stewart-Smith Haidinger, Inc. v. Avi-Truck,
Inc., the Alaska Supreme Court determined that an insurer can be charged with knowledge
implied by the negotiated insurance policy because the insurer bears the “burden of
investigating the risk they agreed to underwrite.”54 	In Avi-Truck, an insurance policy
50 Alaska Stat. § 21.42.110.
51 Id.
52 Id.
53 Stewart-Smith Haidinger, Inc. v. Avi-Truck, Inc., 682 P.2d 1108, 1116 (Alaska 1984).
54 Id. at 1117.
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covering an aircraft “provided that coverage does not apply while the aircraft is in flight
unless its airworthiness certificate is in full force and effect.”55 After the aircraft crashed,
the insurer sought summary judgment to avoid paying on the insurance policy because the
aircraft did not have an airworthiness certificate.56 The insurer was aware of the aircraft’s
make, model, relative age, and size, as well as that the aircraft would not carry passengers.57
The 	insurer 	assumed, 	but 	never 	confirmed, 	that 	the 	aircraft 	had 	an 	airworthiness
certificate.58 	In fact, the aircraft, “like most surplus military aircraft, could not have
obtained an airworthiness certificate for carrying cargo.”59 	The court reasoned that “[i]f
the insurers had any reason to know that an airworthiness certificate was virtually
unobtainable under these circumstances, their agreement to insure the plane for carrying
freight includes an implied agreement to insure it without an airworthiness certificate.”60
As applied here, if Mr. Kambic advised Country that his second mortgage
was subject to litigation,61 then Country had an obligation to ascertain the relevant facts of
that litigation to determine if they wanted to provide insurance coverage. As in Avi-Truck,
Country had implied knowledge of the foreclosure if Country knew the mortgage was
“under litigation.”62 	Country’s insurance agreement covering the Chugiak Property may
include a direct agreement to cover the property despite the ongoing litigation and may
55 Id. at 1114 (internal quotations omitted).
56 Id.
57 Id. at 1110.
58 Id.
59 Id. at 1115.
60 Id.
61 Docket 41-2 at 38:6–11.
62 Id.
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include an implied agreement to insure the property despite the foreclosure. To adequately
adjudicate this issue, the Court will need to make a finding of fact, which normally is
inappropriate when considering a motion for summary judgment.63
B. 	Mr. Kambic’s Deposition Testimony and Sworn Declaration
Country argues that Mr. Kambic cannot rely on inconsistent statements to
establish a disputed fact regarding his residence.64 	Country argues that Mr. Kambic’s
deposition testimony in his litigation with Wells Fargo conflicts with his deposition
testimony in the case at bar.65 	Country alleges that Mr. Kambic’s account of what
happened when he applied for insurance coverage with Country is “disingenuous.”66
Country asks the Court to disregard Mr. Kambic’s statement that he told Country about his
living situation, arguing “[t]here is absolutely no objective evidence that supports the
notion that Country knew that Kambic lived anywhere but Chugiak, Alaska, at the time of
the application.”67
The “sham affidavit rule prevents ‘a party who has been examined at length
on deposition’ from ‘raising an issue of fact simply by submitting an affidavit contradicting
his own prior testimony . . . .’”68 To apply the sham affidavit rule, a district court “must
make a factual determination that the contradiction is a sham.”69 	The “inconsistency
63 Celotex Corp. 477 U.S. at 317.
64 Docket 48 at 2.
65 Id. at 6.
66 Id. at 3.
67 Id. at 5.
68 Yeager v. Bowlin, 693 F.3d 1076, 1080 (9th Cir. 2012) (alterations omitted) (quoting
Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266 (9th Cir. 1991)).
69 Id.
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between a party’s deposition testimony and subsequent affidavit must be clear and
unambiguous to justify striking the affidavit.”70 Courts applying the sham rule should use
“caution” because the sham rule stands in tension with the well-founded principle that “the
court is not to make credibility determinations when granting or denying summary
judgment.”71
Country misconstrues Mr. Kambic’s testimony; the sham rule does not apply.
Country argues that Mr. Kambic claims residency in California or Alaska depending on
convenience.72 	Country’s characterization is unsupported by the record.73 	Mr. Kambic
stated, “[t]hey knew that my work was in California, but my home was in Alaska. 	They
absolutely knew that.”74 	This statement does not directly conflict with Mr. Kambic’s
affidavit filed in his previous litigation with Wells Fargo, in which Mr. Kambic complains
that he did not receive actual notice of foreclosure on the Chugiak Property because it was
never mailed to him in California.75 	Without a direct contradiction that makes a party’s
statements unambiguously inconsistent, the sham rule does not apply.76
Country’s 	remaining 	assertions—that 	Mr. 	Kambic’s 	statements 	are
“disingenuous,” 	or 	that 	there 	is 	“absolutely 	no 	objective 	evidence” 	supporting
70 Van Asdale v. Int’l Game Tech., 577 F.3d 989, 998–99 (9th Cir. 2009).
71 Yeage, 693 F.3d at 1080.
72 Docket 48 at 6.
73 Compare Docket 41-2 at 48:7–21 (indicating Mr. Kambic told Country that he worked
in California but that his home was in Alaska), with Docket 37-9 at ¶¶ 3–10 (declaring that a notice
of foreclosure was never sent to Mr. Kambic at his residence in California and therefore he did not
receive actual notice that his home was being foreclosed on).
74 Docket 41-2 at 49:12–13.
75 Docket 37-9 at ¶¶ 3–10.
76 Yeager, 693 F.3d at 1080.
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Mr. Kambic’s 	assertions—ask 	the 	Court 	to 	impermissibly 	weigh 	credibility 	while
examining a motion for summary judgment,77 which the Court is not inclined to do.
IV. 	CONCLUSION
For the reasons stated above, Country’s Motion for Summary Judgment is
DENIED.
IT IS SO ORDERED this 8th day of January, 2024, at Anchorage, Alaska.
/s/ Joshua M. Kindred
JOSHUA M. KINDRED
United States District Judge
77 Nelson v. City of Davis, 571 F.3d 924, 928 (9th Cir. 2009).
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