MAY, Judge.
Allied Property and Casualty Insurance Company ("Allied") appeals judgments in favor of Linda and Randall Good ("the Goods"). Allied presents five issues and Linda raises one issue on cross-appeal, but we find one dispositive: whether the trial court erred by denying Allied's motion for summary judgment because misrepresentations on the application for insurance made Linda's policy void ab initio. Because the uncontradicted evidence indicates Linda misrepresented the Goods' cancellation history on the application for homeowners insurance and Allied would not have issued the policy if it had known the truth about their history, the trial court erred by denying Allied's motion for summary judgment. We accordingly reverse and remand for entry of judgment for Allied.
In July 2002, Linda completed an application for homeowners insurance with Allied. The application was signed by Linda only, and the policy was in her name only. The policy was to be in effect for one year, beginning July 2, 2002. On March 16, 2003, a fire destroyed the Goods' home and all its contents. They filed a claim with Allied, which neither paid nor denied the claim due to an ongoing investigation regarding the cause of the fire.
On March 9, 2004, Linda sued Allied for breach of contract based on Allied's non payment. Allied filed a third-party complaint against Linda's husband Randall, alleging he made false statements regarding the fire,
A second trial began January 12, 2009. It was bifurcated into a phase addressing Linda's breach of contract claim and Allied's third-party claims against Randall, and a phase addressing Allied's counterclaims. After hearing all evidence the court entered directed verdicts for the Goods. The issue of damages was presented to the jury, which awarded Linda $1,052,977.19.
Allied was entitled to summary judgment because Linda misrepresented on the insurance application that she had never had an insurance policy cancelled. Our standard for reviewing a summary judgment was set forth by our Indiana Supreme Court in Dugan v. Mittal Steel USA, Inc., 929 N.E.2d 184, 185-86 (Ind. 2010):
Construction of the terms of a written contract presents a pure question of law; accordingly, our review is de novo. Harrison v. Thomas, 761 N.E.2d 816, 818 (Ind. 2002). More specifically, the proper interpretation of an insurance policy generally presents a question of law that is appropriate for summary judgment. Bosecker v. Westfield Ins. Co., 724 N.E.2d 241, 243 (Ind.2000).
Whether Linda misrepresented her cancellation history hinges on the interpretation of the word "ever." Allied's application for insurance asks for the name of the applicant's current insurance company, the number of years with that company, and the expiration date of that policy. On the same line, there is a space to answer the query, "Coverage ever declined, cancelled, or non-renewed." (App. at 7940.) The Goods argue "ever" refers only to the policy in effect when they filed the application, while Allied argues "ever" refers to the applicant's entire insurance history.
When policy language "is clear and unambiguous," the language of the policy is given its plain meaning. Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind.2002). When the language is ambiguous, it is "construed strictly against the insurer" and is "viewed from the standpoint of the insured." Id. at 528. But there is ambiguity "only if reasonable persons would differ as to the meaning of its terms." Id. In insurance policies, "an ambiguity is not affirmatively established simply because controversy exists and one party asserts an interpretation contrary to that asserted by the opposing party." Id.
"Ever" means "at any time." Webster's Third New Int'l Dictionary 788
The Goods claim "ever" refers only to the policy in effect when they filed the application—that is, the application was asking if the MetLife homeowners' policy Linda had when she applied for the Allied policy had ever been declined, cancelled, or not renewed. The cancellation question could not have been limited, as the Goods argue, to the "current company." (App. at 667.) It is not possible that the current insurer had "refuse[d] to undertake, undergo, engage in" insuring the applicant for the current policy. Under the Goods' interpretation, there could be no "current company." Similarly, if the "current company" had "destroy[ed] the force, effectiveness, or validity of" the Goods' coverage, it could not be their "current company," because the Goods would no longer have a contract of insurance with that company. As there could be no current company if coverage had been canceled or denied, we decline their invitation to so interpret the application's language. See Utica Mut. Ins. Co. v. Precedent Companies, LLC, 782 N.E.2d 470, 474 (Ind.Ct.App.2003) ("When interpreting an insurance policy, we give plain and ordinary meaning to language that is clear and unambiguous.").
Because "ever" means "at any time," we hold the query, "Coverage ever declined, cancelled, or non-renewed," (App. at 667), refers to any policy the Goods "ever" applied for or had "at any time" in the past.
Linda answered "no" to that query on the application, and her answers in a deposition and an interrogatory designated as evidence in support of Allied's motion for summary judgment show that answer was false. In her deposition, Linda acknowledged at least one insurer, and possibly three, had cancelled policies she and Randall had held:
(Id. at 416.) In her response to the interrogatory, "Have you ever had insurance coverage cancelled for any reason?" Linda replied, "Meridian cancelled us sometime in 1994 or later. I don't remember exactly when they cancelled us. Scheerer Insurance was the agency. Westfield Insurance cancelled us I believe in 1999. Beauchamp and McSpadden was the insurance company." (Id. at 679.) The Goods did not designate any evidence that contradicted Linda's statements designated by Allied. There was no genuine issue of fact about whether Linda misrepresented the
We next turn to whether that misrepresentation was material. A misrepresentation on an application for an insurance policy is "material" if the fact misrepresented, had it been known to the insurer, would have reasonably entered into and influenced the insurer's decision whether to issue a policy or to charge a higher premium.
The first approach, which applies in this circumstance, considers whether the insurer would have refused to write a policy for the insured or would have charged a higher premium had it known of the misrepresentation. Guzorek, 690 N.E.2d at 672-73. Even an innocent misrepresentation will render a policy voidable, unless the insurer was on notice of the misrepresentation and a reasonable person would have inquired further. Id. at 673.
In support of its motion for summary judgment, Allied designated an affidavit from one of its underwriters that stated: "If Linda and Randall Good had disclosed the fact that they had coverage canceled by prior insurers (in this case multiple cancellations), Allied would not have issued the subject policy or would have charged a higher premium." (App. at 659.) The Goods did not designate any evidence to the contrary, and thus there was no genuine issue of material fact about the materiality of the misrepresentation made by Linda on the application for insurance: Allied relied on it to determine eligibility for a policy, and Allied would not have sold the policy had it known the truth. We also note that, although we found no Indiana decision addressing the materiality of a misrepresentation about an applicant's cancellation history, numerous jurisdictions have held such misrepresentations are, as a matter of law, "material misrepresentations." See, e.g., Wilson v. State Farm Fire and Cas. Co., 761 So.2d 913, 918 (Miss.App.2000) (false statement regarding renewal status of prior policy was material misrepresentation); Graphic Arts Mut. Ins. Co. v. Pritchett, 220 Ga.App. 430, 469 S.E.2d 199, 202 (1995) (co-insured's false statements regarding cancellation history voids entire policy); Nationwide Mut. Fire Ins. Co. v. Dungan, 634 F.Supp. 674, 682 (S.D.Miss.1986) (concealment of
Based on the designated evidence, there was no genuine question of fact regarding the Goods' misrepresentation of their past cancellation history or its materiality. Therefore, the trial court erred by denying Allied's motion for summary judgment.
Reversed and remanded.
BARNES, J., concurs.
BAILEY, J., dissents with separate opinion.
BAILEY, Judge, dissenting.
The majority reverses judgment favoring Linda Good ("Good") on the ground that the trial court improperly denied Allied's motion for summary judgment. Because I disagree with the majority's interpretation of the application form and the materiality of Good's responses to certain items on that form, I respectfully dissent.
I cannot join with the majority opinion's construction of the application form Good submitted to Allied. In particular, I take a different view of the implication of the word "ever" as it exists on the application form Good completed in seeking insurance with Allied. (App.667.)
On the application form, the question regarding prior denials of coverage is presented thus:
INSURANCE COVERAGE ---------------------------------------------------------------------------------------------------- Coverage Ever Declined, Name of Current Company Number of Years With Company Expiration Date Cancelled, or Non-Renewed ---------------------------------------------------------------------------------------------------- Met Life Economy 7-2-02 N ----------------------------------------------------------------------------------------------------
(App.667.) The majority notes that the "Coverage Ever Declined, Cancelled, or NonRenewed" item comes last in a single row of questions, all of which relate to the current insurance carrier. The majority then goes on to hold that despite its context, "ever" applies to any form of insurance coverage Good ever sought or had obtained, and that "[t]he cancellation question could not have been limited ... to the `current company'" because "it is not possible" that MetLife Economy could have refused to insure Good by virtue of the fact that MetLife was Good's insurer at the time she filled out the application.
I cannot agree with this approach. Taking "ever" out of its context seems to me to disregard how a reasonable person could construe the question. Reading the
Nor is it unreasonable to think that a single insurance company—even a current insurer—could, over the course of an individual's life, deny coverage or renewal at one point but be willing, under different circumstances, to extend coverage at another time. This phenomenon may well be known among those who have had homeowner's insurance in hurricane zones nonrenewed
Additionally, the case to which the majority points for its interpretation of "ever" as applying to any coverage-related event seems inapposite. While the case, Home Ins. Co. of New York v. Cavin, includes the word "ever" in the question asked of the insured, the question posed is much clearer and more complete: "Have you ever suffered loss by fire, and if so, when and how did fire originate?" 162 Miss. 1, 137 So. 490, 490 (1931). The insured in that case claimed to have "understood the question to refer only to loss by fire on buildings covered by insurance." Id. As the trial court here noted in ruling on Allied's motion for judgment on the evidence, "Allied very easily could have asked ... have you or any person residing in your household ever, at any time, had any insurance coverage cancelled or not renewed?" (Tr. 1314.) Allied did not do this and, unlike the insurer in Cavin, may have received an accurate answer within the bounds of the question, properly construed, as it was posed to Good.
Given the range of reasonable interpretations of the question as presented on the form in light of the inferences favoring the insured that come from any possible ambiguity, see Beam v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind.2002), I cannot concur with the majority that the application unambiguously favors Allied's interpretation. I would hold that the prior cancellations question refers only to Good's insurance carrier at the time of the application—MetLife Economy—and would affirm the trial court on that ground.
Affirming the trial court on the interpretation of the prior cancellations issue forecloses any need to address the materiality issue. Yet even if I could join with the
The majority approaches the materiality problem in part by noting that other jurisdictions have determined that, in cases similar to this one, omissions from insurance applications have been held to be material misrepresentations as a matter of law. While these cases are certainly helpful to the analysis, the Indiana Supreme Court has held that materiality is a question of fact and not of law. Guzorek, 690 N.E.2d at 673 (citing Prudential Ins. Co. v. Winans, 263 Ind. 111, 115, 325 N.E.2d 204, 206 (1975)). Thus we must consider the evidence of materiality put forth by Allied, and it is here that Allied's attempt to avoid its obligations under the policy fails.
Deciding materiality solely upon the contents of an affidavit stating that an insurer would have made a different underwriting decision had it known of the existence of an undisclosed fact is a tenuous thing.
The properly drawn inferences from Allied's own evidence do not show the absence of a genuine issue of material fact as to whether Good's omission was material to the risk assumed by Allied in issuing
Yet the true materiality to Allied of Good's insurance and loss history is put into doubt by Good's answer of "yes" to the question regarding losses for the three years prior to completing the Allied application for insurance. That question and its answer appear thus:
PRIOR LOSSES—Any losses over the previous three years ----------------------------------------------------------------------------- Any Losses During the Last 3 Years?Y ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- Date Type of Loss Description of Loss Amount Paid ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- ----------------------------------------------------------------------------- -----------------------------------------------------------------------------
(App.667.) Despite her answer and ample space on the form to provide detail, Allied did not seek additional information on actual losses that Good had sustained even though Good did not provide the requested prior loss history. (App.667.) This failure certainly raises the question of whether a reasonable person would have inquired further, but Allied did not do so. See Guzorek, 690 N.E.2d at 674. Allied's failure to investigate recent losses, which it acknowledged in its own affidavit is important in assessing the risks of underwriting,
Good's affirmative answer to the question on prior losses also has the effect of putting Allied on notice that further investigation into Good's application was needed before a policy could be written. I agree with the majority that Guzorek imposes no duty upon an insurer to inquire into the representations made by an insured unless the insurer already knew the facts behind the misrepresentation or unless "a reasonable person would have investigated further." Guzorek, 690 N.E.2d at 674. But I differ on the application of that standard. Good provided Allied with some very limited information that she had suffered losses—a "yes" without details requested by the application form—that would, on the terms of Allied's affidavit, be material to the underwriting risk. Yet she did not
The cases the majority cites as examples of material misrepresentation as a matter of law do not, in my view, buttress the majority's opinion.
Allied asks this court to agree that its question is as clear as those in the cases cited by the majority. But Allied's question is less artfully and precisely asked than those in the examples cited by the majority. It instead serves as one more piece of evidence that, with inferences properly drawn, there is a genuine issue of material fact as to the materiality of Allied's underwriting decisions regarding the prior cancellations question.
On a clean slate, perhaps we could write a different story. But even if I could agree with the majority's interpretation of the application form, where the information clearly put Allied on notice to inquire further into Good's insurance history, I cannot join in its application of Guzorek to reverse the trial court's denial of Allied's motion for summary judgment.
I must therefore respectfully dissent.
While the question posed by Allied is similar to that asked of the insured in Dungan, the procedural posture of Dungan—judgment after a bench trial, 634 F.Supp. at 675—does not provide the support for summary judgment sought by the majority's opinion.
