Summary judgment was intended to be a method of disposing of cases where there are not any disputed issues for the court to trial. Sometimes it seems that summary judgment is a way to get rid of cases that the court doesn't want to try. In a new opinion about insurance coverage, the Fifth Circuit has reminded lower courts that no genuine issue of material fact means exactly that. Guzman v. Allstate Assurance Company, Case No;. 20-11247 (5th Cir. 11/10/21). While this is not a bankruptcy case, it has important lessons for attorneys practicing in the federal system.
What Happened
In Guzman, a 26 year old man purchased an insurance policy. In his application, he said that he did not smoke and had not smoked in the past. The insurance company reviewed his medical records and a urine test and issued a policy for $250,000. When he died of a seizure just two years later, the insurance company performed an investigation and concluded that the man really was a smoker. The company refunded the premiums paid of $433.84. His wife sued.
The Court's Ruling
The insurance company filed for summary judgment. Allstate submitted medical records, most of which described the decedent as a smoker. His wife and his wife's sister submitted affidavits stating that he was not a smoker. The district court decided that it could ignore the affidavits because they were "self-serving" and granted summary judgment. The Fifth Circuit, in an opinion by Judge Elrod, reversed the District Court ruling. Judge Elrod said that the trial court was wrong for two reasons.
First, “self-serving” affidavits and depositions may create fact issues even if not supported by the rest of the record. Where self-interested affidavits are otherwise competent evidence, they may not be discounted just because they happen to be self-interested. Indeed, “[e]vidence proffered by one side to . . . defeat a motion for summary judgment will inevitably appear ‘self-serving.’” (citation omitted). But self-serving evidence may not be discounted on that basis alone. How much weight to credit self-interested evidence is a question of credibility, which judges may not evaluate at the summary judgment stage. (citation omitted).
Rather, self-serving evidence must only comport with the standard requirements of Federal Rule of Civil Procedure 56. Self-serving affidavits and declarations, like all summary judgment evidence, must “be made on personal knowledge, set out facts that would be admissible in evidence, and show that the affiant or declarant is competent to testify on the matters stated.” (citation omitted). And these facts must be particularized, not vague or conclusory. (citation omitted).
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Unlike in these cases, Mirna’s and Martha’s affidavits are competent summary judgment evidence. They are based on personal knowledge, set out facts that are admissible in evidence, are given by competent witnesses, and are particularized rather than vague or conclusory. Mirna and Martha testify about their personal experiences with Guzman. In her deposition and affidavit, Mirna claimed that Guzman was not a smoker; that she was often with Guzman and would know if he smoked; that she is “able to tell whether [people] use tobacco because they have a peculiar and specific smoke smell”; and that neither Guzman nor his belongings, including his clothes and truck, ever smelled like smoke. Martha made substantially similar claims in her own affidavit. Though self-serving, this testimony is sufficient to—and does— create a genuine dispute of material fact.
Opinion, pp. 5-6, 7. The Court went on to find that summary judgment should not have been granted because Allstate's own summary judgment evidence was inconsistent, in that some medical records said he was a smoker and some did not. Additionally, the medical records were not clear about who had described the decedent as a smoker. Was this something that he said or someone else's conclusion?
Why It Matters
This is a good opinion because the Court of Appeals points out that the issue on summary judgment is whether there is a fact issue. Period. That fact issue can come from insufficiency in the moving party's proof or an affidavit from a self-interested witness which provides specific facts based on personal knowledge. The irony here is that the District Court was willing to discount the affidavits from the self-interested witnesses but overlooked the inconsistencies in the insurance company's proof. Given that federal judges have lifetime appointments, they should take the time to get it right, even if that means allowing a possibly weak case with genuine fact issues to go to trial.
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