MOUNT VERNON – The Fifth District Appellate Court has upheld a verdict denying a Belleville property owner's fraud claims against State Farm Insurance Co. regarding a fire-damaged property.

The three judge panel including Justices Richard Goldenhersh, Thomas Welch and John Barberis, further held that he got more than he originally sought.

“If the court had reformed the policy to what the plaintiff had originally paid for and thought he received, he would have ended up with a much smaller recovery than what he obtained in negotiations,” the Sept. 6 order read.

The plaintiff, Ronnie Phillips, owned two properties on East Main Street in Belleville, purchased in the 1990s for $60,000.

According to the order, Phillips contacted State Farm officials in 2010 and said he wanted to insure the properties. An underwriter did a calculation of the replacement cost and cash value of the property, but due to an error in calculation, estimated the amount as 10,000 square feet smaller than the actual combined size of the two buildings, the order states.

The plaintiff had asked State Farm to provide the lowest coverage possible, which amounted to approximately $436,800.

A fire occurred at a building adjacent to the properties and damaged both buildings in 2010 with the result that one had to be demolished and would not be rebuilt. State Farm paid the plaintiff Phillips the replacement amount agreed to - $436,800, the order states.

In July 2011, Phillips asked for an adjusted policy coverage for the remaining building and it was at this time the error in the original calculating was discovered. A revised coverage limit was proposed in exchange for added premium payments by the plaintiff, but he allegedly initially refused.

State Farm offered to reform the coverage limit to $774,400 in exchange for a premium payment of $2,046. Based on advice he received, Phillips eventually paid the $2,046 and received the full revised settlement of $774,400 plus added coverage totaling more than $822,000. 

All the checks from State Farm were cashed.

In May 2012, Phillips filed a five-count complaint alleging breach of contract, unreasonable delay of claim and vexatious denial of coverage. The plaintiff withdrew three of the counts and a fourth was dismissed.

In October 2013, the plaintiff then filed a two-count amended complaint alleging consumer and common law fraud and that State Farm had knowingly provided false information or concealed relevant information deliberately designed to mislead.

The plaintiff asked for $2.7 million in damages.

At a jury trial held in March 2016, on the question of whether the plaintiff agreed to pay the $2,046 in exchange for greater coverage, the jury decided yes.

On June 28, 2016, the court concluded that no deliberate deception had taken place and a verdict was returned in favor of State Farm. Post trial motions brought by Phillips were denied by the court.

Phillips appealed the decision on July 26, 2016.

In dismissing the appeal, the Fifth District noted that State Farm adjusters were not aware the error in estimating coverage had occurred and when the error was discovered, re-calculated it from $436,800 to $774,400 to correct the total. Thus, there was both a lack of intent to deceive and a lack of damage injury to the plaintiff.

The court concluded that the adjusted amount was to the plaintiff’s benefit.  

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