The Fifth Circuit Court of Appeals upheld a key evidentiary ruling in a dispute between a policyholder and United National Insurance Co., but criticized the lower court for improperly disregarding the policyholder’s sworn statements based solely on the assumption they were self-serving.
The case stemmed from damage to a parsonage owned by a Louisiana church during Hurricane Laura in 2020.
Annie Marbury, the church’s co-founder, submitted an insurance claim to United for $47,889, which was paid. She later sought an additional $192,425 for further repairs.
United refused the second payment, prompting Marbury to sue in 2022 for breach of contract and statutory violations.
Underlying the claim was a complex policy history. In early 2019, the church filed a fire damage claim with its former insurer, Guideone Insurance.
At that time, Marbury submitted a letter stating her daughter, the church’s youth pastor, lived in the property rent-free. The church paid the mortgage; the daughter covered utilities and incidental expenses.
Later that year, Marbury obtained a new policy from United. Unlike the Guideone policy, she named herself as the insured, not the church.
In its motion for summary judgment, United argued Marbury lacked an insurable interest. She had no financial stake in the property, no documented contribution to its maintenance or construction, and no legal right to occupy it.
United acknowledged Marbury arranged the mortgage on the church’s behalf but claimed this didn’t establish a personal economic interest.
United also asserted that Marbury made material misrepresentations on the policy application. Supporting its position, the insurer cited several documents: the earlier Guideone claim, the United policy, a mortgage listing the church as sole obligor, property records naming the church as owner, and Marbury’s own deposition.
The U.S. District Court for the Western District of Louisiana granted partial summary judgment, agreeing that Marbury lacked insurable interest.
However, it rejected United’s misrepresentation claim, noting the application only required the applicant’s name and not ownership disclosures.
Marbury testified that she paid the mortgage personally since the property’s purchase. The court dismissed this testimony, labeling it self-serving and unsupported.
It relied instead on the Guideone letter, which said the church paid the mortgage. Based on that, the court concluded she offered no evidence of direct financial contribution to the home.
Marbury challenged the use of the Guideone letter on appeal, arguing United improperly introduced it in a reply brief rather than in its main motion. She cited procedural rules that allow parties to rebut new evidence. However, the appellate court noted Marbury never objected to the letter during district court proceedings and failed to show any prejudice resulting from its admission.
Still, the appeals court reversed the district court’s treatment of her testimony. Louisiana law does not allow courts to dismiss evidence solely because it comes from an interested party. Courts may disregard such testimony only if it’s vague, conclusory, or lacks personal knowledge. The district court did not make any such findings.
On the matter of insurable interest, the appellate panel reaffirmed that Louisiana law requires a policyholder to hold a valid interest at the time the policy is issued and at the time of loss.
This interest doesn’t depend on ownership or legal title, but rather on whether the person benefits from the property’s continued existence and suffers a loss from its destruction.
