For a second time, the New Jersey Appellate Division considered an appeal related to State Farm Fire and Casualty Co.'s cancellation of a homeowner's insurance policy and remanded the case for a retrial over disputed misstatements during the post-loss investigation, according to the opinion.

In 2019, the appeals court reversed the involuntary dismissal of Ulissa Pokhan's complaint for breach of policy against State Farm at the end of her case at trial, finding the trial judge erred in finding the evidence was sufficient, according to the opinion.

At trial, Pokhan testified that her father gave her the Newark, New Jersey, residence in 2012 on her graduation from college and that she had made two prior claims on a homeowner's policy with another insurer. One claim was made in 2012 when Hurricane Sandy ripped shingles from the roof and a second claim in 2013 when a pipe burst. Pokhan testified that the first claim was paid for $5,000 or $6,000 and the second for $90,000, according to the opinion.

Pokhan shopped for another insurer because her premium was scheduled to increase following those losses. In 2013, she applied for a policy with State Farm over the phone and was issued a policy, which she renewed in 2014. In January 2015, there was a fire at her residence, according to the opinion.

The following month, in a recorded statement to State Farm, Pokhan failed to mention the roof damage incident and said that there had been a frozen pipe but denied any damage, stating that she didn't "believe any payments were made." At an examination under oath a few weeks later, Pokhan corrected those misstatements, according to the opinion.

At trial, the judge granted State Farm's Rule 4:37-2(b) motion for involuntary dismissal at the close of Pokhan's case, stating, "her excuse for lying is not relevant. She knew the investigator was from State Farm. She knew she was investigating this claim. And she clearly tried to mislead her as to something that seemed to justify what looked like misstatements in the application."

"We reversed, finding State Farm had not carried its burden on its affirmative defense, which required it 'to prove Pokhan 'willfully misrepresented material facts after a loss' under Longobardi. … Although satisfied Pokhan's statements to the investigator qualified as willful misstatements, we found there was nothing in the trial record to permit a factfinder to assess whether the misstatements were material under Longobardi, that is 'if when made a reasonable insurer would have considered the misrepresented fact relevant to its concerns and important in determining its course of action,'" wrote Appellate Division Judge Allison E. Accurso.

At the time, the court concluded that "without the original insurance application or testimony from anyone at State Farm as to the nature of the investigation," the trial court could only speculate as to the importance of Pokhan's statements during the investigation. The court further concluded that "a fact-finder could also consider whether Pokhan corrected her misstatements promptly in her examination under oath in considering their materiality."

"The case was not retried as we anticipated," Accurso wrote.

Rather, State Farm moved for summary judgment for misstatements in Pokhan's application for insurance as well as for misstatements in the post-fire investigation that had been previously considered by the Appellate Division. A motion judge granted State Farm's motion, only relying on Pokhan's application to determine "she provided untruthful answers" regarding any past losses, the opinion said.

Pokhan appealed, arguing that the motion judge improperly weighed the evidence in determining she provided misinformation contained in the application and did not timely correct her post-loss statements, the opinion said.

The appellate court agreed, reversing the summary judgment order in favor of State Farm, and again remanded for a retrial.

"There is obviously a material, factual dispute over whether Pokhan provided all of the information, including the information State Farm claims is false, on the insurance application, precluding summary judgment on State Farm's claim of fraud in Pokhan's procurement of the policy," Accurso wrote. "The application is not signed, and there is no dispute that State Farm never provided Pokhan—prior to the fire loss—a copy to permit her to confirm or deny the information recorded on the form by an individual State Farm has never produced and claims it cannot locate."

In 2017, State Far was denied summary judgment based on the same dispute of fact and nothing has changed since that time, the opinion said.

"Because the affiants had no personal knowledge of the facts surrounding the taking of Pokhan's application, including whether she provided all of the information recorded on the form, the affidavits did not comply with the requirements of Rule 1:6-6, and the court erred in relying on them to conclude Pokhan made the misstatements State Farm claims," Accurso wrote. "The judge's dismissal of Pokhan's certification, which was properly made on personal knowledge in accordance with Rule 1:6-6, as nothing more than 'self-serving statements carrying little weight in light of her other misstatements to State Farm,' was an obviously impermissible weighing of the evidence on the motion."

Accurso wrote that while the court offers no opinion on whether State Farm will succeed in admitting the insurance application as a business record at trial under N.J.R.E. 803(c)(6), the court is convinced that the company is precluded from summary judgment due to the factual dispute over misstatements in the application.

The same dispute precludes State Farm from summary judgment on its post-loss claim, according to the opinion.

"State Farm's argument and its reliance on the underwriter's affidavit led the judge to conclude Pokhan made the misstatements State Farm claimed in the application, and that the willful misstatements made during the post-loss investigation were material 'because they concern characteristics of the dwelling which are important to State Farm's determination of risk in providing coverage and establishing premiums,'" Accurso wrote. "That finding—and State Farm's argument based on its underwriter's affidavit—of course, presumes Pokhan was asked the questions in the application process and provided false information."

A jury could conclude, according to the opinion, that Pokhan was never asked the questions, or that even if she was, the answers were incorrectly recorded.

"In other words, State Farm's post-loss fraud argument on the motion was premised entirely on its contention that Pokhan provided false information in her application, which continues to be a disputed issue of fact," Accurso wrote.

Because the motion judge made findings on Pokhan's credibility without hearing her testimony, the Appellate Division said the case should go before another judge.

Contact information for Pokhan's counsel, Frank J. Nostrame, a solo practitioner, could not be located. Counsel for State Farm, Tariq J. Messineo, of Messineo Law, could not be immediately reached for comment.