State v. Koke, ___ N.C. App. ___, 824 S.E.2d 887 (Feb. 19, 2019)

In a case where the defendant was found guilty of obtaining property by false pretenses and insurance fraud involving a claim regarding a stolen truck, although the trial court erred by admitting evidence of a truck later found in a river, the error did not rise to the level of plain error. The defendant applied for a commercial automobile insurance policy for coverage for his Dodge Ram. The application asked in part whether the defendant had been convicted of or pleaded guilty to any felony during the last 10 years. A felony conviction would preclude issuance of a commercial insurance policy, per company regulations. The defendant reviewed and signed the application, falsely answering this question, “no”; the defendant had in fact pleaded guilty to a felony in 2006. The defendant was issued a commercial automobile insurance policy that included theft protection. Five days after obtaining coverage, the defendant reported the Ram stolen. National General Insurance sent the defendant an affidavit to complete, sign, and have notarized. The defendant filled in most of the requested information but left some spaces blank, including one inquiring about “major repairs since purchase.” The defendant did not disclose that the Ram had been in an accident, but it was discovered by the company during its investigation of the theft. Once confronted about it, the defendant disclosed the repairs done to the vehicle. North Carolina Department of Insurance investigator Tyler Braswell was contacted by the police department to assist with locating the Ram. After the investigation, National General issued the defendant two checks, each for $11,000 on the claim. However, it attempted to stop payment on both after they were mailed, when its underwriting department determined that the defendant’s omission to disclose his prior felony conviction required the insurance policy to be rescinded. After a year, Braswell asked the police department for help searching a river for the vehicle. They looked in the area near a bridge where the defendant was known to keep vehicles and where the repairs to the Ram had been made. A submerged Dodge Ram was located without a license plate, but with damage on the front end. Officials were however unable to tow the truck out of the water. Braswell later discovered that the Ram had been towed out of the river at the defendant’s request. The tower testified that it was a Dodge which appeared to have been in the river for “awhile.” No license plate or VIN number from the recovered vehicle was identified or noted. The defendant was charged with one count of obtaining property by false pretenses and one count of insurance fraud. The defendant moved to exclude all evidence related to the truck found in the river. The trial court agreed in part and allowed the evidence only for the limited purpose of proof of the defendant’s intent to commit insurance fraud. The defendant was found guilty of both charges. He appealed.

            On appeal the defendant argued that evidence regarding the truck found in the river was not relevant to the insurance fraud charge. The alleged false statement was the defendant’s failure to disclose on the affidavit of vehicle theft that the vehicle had major repairs since purchase. The court rejected the State’s argument that evidence of the submerged vehicle falls under the chain of circumstance rationale. It further concluded that evidence of the submerged truck does not have any tendency to make any fact of the charged insurance fraud of failing to disclose major repairs more or less probable. The trial court thus erred in admitting the evidence. The court found however that the error did not rise to the level of plain error.