The dispute began when Dennis Renfroe and his daughter Sherry Lambert, both of Centre, Alabama, fought over a jointly owned house slated for auction after a restraining order forced them apart. Their relationship had deteriorated for years, with Lambert claiming the property and a shared $500,000 investment account were under threat from Renfroe’s alleged plans to set the house on fire.
In January 2020, Renfroe told USAA General Indemnity that he suspected Lambert was preparing a blaze, pointing to furniture being moved in and out of the home. Lambert, in turn, removed sentimental items after learning Renfroe might orchestrate an arson, then warned USAA again in February 2020. Despite these warnings, the insurer issued a $500,000 policy covering both parties.
A few weeks later, the house caught fire. The investigation found characteristics consistent with arson, yet did not conclusively identify the arsonist, leaving both Renfroe and Lambert accusing each other of responsibility.
Renfroe sued USAA for breach of contract and bad faith, while the insurer cited the innocent‑insured exclusion. The federal district court in Alabama declared the exclusion invalid under public policy but allowed the case to proceed to trial, ultimately awarding Renfroe $425,000 before reducing the amount to $226,727.85.
On 11 August 2026, the Eleventh Circuit reversed the district court’s ruling on the exclusion, holding that USAA may rely on it to deny the claim. The court emphasized that the insurer’s policy language specifically bars losses caused intentionally by any insured person, even if another co‑insured was the perpetrator. The decision leaves Renfroe and Lambert to seek further appellate relief.