Cameron v. Frances Slocum Bank & Trust Co.

• Citation: 824 F.2d 570
• Decision Date: 21 July 1987
• Docket Number: No. 86-1475,86-1475
• Parties: Emmlee K. CAMERON, Plaintiff-Appellant, v. FRANCES SLOCUM BANK & TRUST COMPANY, State Automobile Insurance Association, and Glassley Agency of Whitley, Indiana, Defendants-Appellees.
• Court: U.S. Court of Appeals — Seventh Circuit

Page 570

824 F.2d 570

Emmlee K. CAMERON, Plaintiff-Appellant, v. FRANCES SLOCUM BANK & TRUST COMPANY, State Automobile

Insurance Association, and Glassley Agency of

Whitley, Indiana, Defendants-Appellees.

No. 86-1475.

United States Court of Appeals,

Seventh Circuit.

Argued Sept. 24, 1986.

Decided July 21, 1987.

James V. McGlone, Stuart & Branigin, Lafayette, Ind., for plaintiff-appellant.

Charles W. McNagny, Barrett & McNagny, Fort Wayne, Ind., Charles R. Tiede, Tiede, Metz & Downs P.C., Wabash, Ind., Mark W. Gray, Kightlinger & Gray, Indianapolis, Ind., for defendants-appellees.

Before WOOD, COFFEY, and RIPPLE, Circuit Judges.

RIPPLE, Circuit Judge.

Emmlee K. Cameron appeals from an order granting summary judgment in favor of appellees Frances Slocum Bank & Trust Company (the Bank), State Automobile Insurance Association (SAIA), and the Glassley Agency of Whitley, Indiana (Glassley). On the record before us, SAIA and Glassley have failed to show the absence of a genuine issue of material fact. Therefore, we reverse that part of the district court's order granting summary judgment in their favor. Because there is no genuine issue of material fact with respect to Ms. Cameron's claims against the Bank, we affirm that part of the district court's order granting summary judgment in favor of the Bank.

I Facts

Ms. Cameron and her father, Mr. Schultz, purchased a building in Wabash, Indiana in 1976. They insured this building with a policy from SAIA that they obtained through Glassley. At that time, Mr. Schultz used part of the building for his fire truck manufacturing business. The Indiana Cities Water Corporation (Water Company) used another part of the building as a pumping station. Mr. Schultz's business went bankrupt during 1979, and after the summer of 1980, it no longer occupied part of the building. After this bankruptcy, Ms. Cameron became the sole owner of the building. During 1979, the Water Company also notified Mr. Schultz that it would be vacating the building by the end of 1979 or the beginning of 1980.

In December of 1980, Ms. Cameron failed to pay the insurance premium for the building. The Bank, which had a mortgage on the property, received a notice of cancellation from SAIA. The Bank notified Ms. Cameron that, if she did not reinstate the insurance coverage, she would face foreclosure. Ms. Cameron then sent a check for the amount of her usual premium to Glassley. Because the original policy had been cancelled, Glassley treated the check as an application for insurance.

An application was filled out for Ms. Cameron, using the information she had provided in her original application for insurance. However, Mr. Schultz's business was no longer listed as an occupant of the building. Someone other than Ms. Cameron signed her name to the application. Although he stated that he did not know who had signed Ms. Cameron's name to the application, agent Phil Glassley signed the application verifying that the signature on the application was Ms. Cameron's. This application described the building as being occupied by the Water Company as a pumping station. It also stated that Phil Glassley had visited the building and recommended it for insurance. This policy was renewed annually through 1984. The Water Company continued to be listed as an occupant of the building on the face pages to the policies.

On March 2, 1984, the Wabash Building Inspector, Mr. Keith Jolly, notified Ms. Cameron that the building was becoming a safety problem. Apparently, the building had been vandalized and had fallen into a state of disrepair. Mr. Jolly testified that the shrubbery around the building was so overgrown that it almost obscured the building, that doors and windows were broken or open, that debris was strewn about, both inside and outside the building, and that the building presented a general safety concern. Also, in March 1984, the Bank notified Ms. Cameron that she was in default under her mortgage agreement with the Bank because she had failed to pay past-due real estate taxes. This default made foreclosure a possibility.

On June 30, 1984, the building was destroyed by fire. ¹ Ms. Cameron filed a claim with SAIA for the loss. SAIA denied the claim relying upon the exclusion in the policy that applied if the building were vacant or unoccupied for a period of sixty days or more. Ms. Cameron then filed a "sworn statement of proof of loss with SAIA that described the building as being occupied by the Water Company." Cameron v. Frances Slocum Bank & Trust Co., 628 F.Supp. 966, 969 (N.D.Ind.1986) [hereinafter cited as Order].

The bank foreclosed on the property on April 16, 1985. A sheriff's sale was scheduled for June 4, 1985. Ms. Cameron then brought this action in the district court. Jurisdiction was based on diversity of citizenship. She claimed that SAIA had breached its contractual obligation by failing to pay the amount due under the insurance contract on account of the fire. She also claimed that Mr. Glassley was negligent in his handling of her requests for insurance and that, by issuing the insurance with knowledge that the building was vacant and unoccupied, he had waived the right to rely on that policy exclusion. SAIA is responsible, she contends, for Mr. Glassley's action because of their agency relationship. Finally, Ms. Cameron claimed that the Bank violated a duty it owed her by failing to secure insurance coverage to protect her interest in the building.

Ms. Cameron's challenges to that part of the district court's order in favor of appellees SAIA and Glassley are best considered separately from her challenges to that part of the order in favor of the Bank.

II Cameron v. SAIA and Glassley

Ms. Cameron argues that the district court improperly granted summary judgment in favor of appellees SAIA and Glassley because genuine issues of material fact exist as to: 1) whether the building had been vacant or unoccupied for sixty days at the time of the fire; 2) whether SAIA had waived its right to rely on the vacancy/unoccupancy provision; 3) whether SAIA should be estopped from relying on the vacancy/unoccupancy provision; 4) whether agent Glassley was negligent in procuring insurance for appellant; 5) whether SAIA is vicariously liable for Mr. Glassley's negligence; and 6) whether Mr. Glassley's testimony was credible. Because Ms. Cameron's contentions with respect to the waiver claim affect many of her other contentions, we shall focus primarily on that claim. ²

A. Ms. Cameron's Waiver Theory

In support of her waiver argument, Ms. Cameron submits that SAIA and Glassley accepted her premiums even though Glassley knew the condition of the building. She contends that they thereby waived the right to rely upon the vacancy/unoccupancy provision.

Under Indiana law, waiver is the "intentional relinquishment of a known right." Thombleson v. Board of School Trustees, 492 N.E.2d 327, 333 (Ind.App.1986). To have expressly waived the vacancy/unoccupancy provision, the insurance company must have had actual knowledge that the building was vacant and unoccupied. Furthermore, having that knowledge, the company must have voluntarily and intentionally relinquished its right to rely on that provision. Rushville Nat'l Bank v. State Life Ins. Co., 210 Ind. 492, 1 N.E.2d 445, 448 (1936). Ms. Cameron has the burden of proving waiver. Ohio Casualty Ins. Co. v. Rynearson, 507 F.2d 573, 580 (7th Cir.1974).

B. Summary Judgment Motion

The standard of review for an order granting a motion for summary judgment is well-established:

A motion for summary judgment should be granted only when there is no genuine issue as to any material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). An appellate court should reverse a grant of summary judgment upon the showing of a dispute over a material fact, however the plaintiff must "allude to specific facts which raise a genuine issue for trial." Linhart v. Glatfelter, 771 F.2d 1004, 1008 (7th Cir.1985). In reviewing a grant of summary judgment, an appellate court must view the record and the inferences drawn therefrom in the light most favorable to the party opposing the motion. United States v. Diebold, Inc., 369 U.S. 654, 655, 82 S.Ct. 993, 994, 8 L.Ed.2d 176 (1962).

Illinois v. Bowen, 808 F.2d 571, 573-74 (7th Cir.1986).

In resisting the motion for summary judgment, Ms. Cameron offered no direct evidence to establish that Glassley knew the building was vacant and unoccupied. Rather, she argued that Mr. Glassley's conduct, as evidenced by the application for insurance and by Mr. Glassley's own deposition, raises a genuine issue of material fact with respect to his knowledge of the building's condition. See Hargis v. United Farm Bureau Mut. Ins. Co., 180 Ind.App 432, 388 N.E.2d 1175, 1179 (1979); Rushville Nat'l Bank, 1 N.E.2d at 448. She notes that, on the 1981 insurance application, Mr. Glassley stated that he had visited the building. In his deposition, Mr. Glassley admitted that this question appeared on the form "[s]o the company will know what they are insuring." Dep. of Phil Glassley at 18. He further admitted that his usual practice was to visit the risk at the time of application:

Q. Can you tell me, please, under the contract, what function you performed with reference to State Automobile Insurance Association?

A. I was allowed to write commercial and personal insurance.

Q. And mechanically, how would that be done, say in the case of commercial insurance? What would you do?

A. What would I do?

Q. Yes.

A. Say someone came in and made an inquiry about coverage. We would go down and look at it and determine the amount they wanted on a building, and contents, and liability, and send the application in, and the company would review it in underwriting, and if everything was all right, they would issue a policy.

Id. at 6-7.

Glassley and SAIA counter this argument by noting that the form upon which Ms. Cameron relies contains no...