Nationwide Prop. & Cas. Ins. Co. v. Faircloth, 15-3378

• Court: United States Courts of Appeals. United States Court of Appeals (8th Circuit)
• Writing for the Court: SMITH, Circuit Judge.
• Citation: 845 F.3d 378
• Parties: NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff–Appellee v. Donald R. FAIRCLOTH, Jr., Defendant–Appellant Robert Jones; Carolyn Jones; Randall Cohea, Defendants
• Docket Number: No. 15-3378,15-3378
• Decision Date: 28 December 2016

845 F.3d 378

NATIONWIDE PROPERTY AND CASUALTY INSURANCE COMPANY, Plaintiff–Appellee
v.
Donald R. FAIRCLOTH, Jr., Defendant–Appellant

Robert Jones; Carolyn Jones; Randall Cohea, Defendants

No. 15-3378

United States Court of Appeals, Eighth Circuit.

Submitted: September 22, 2016
Filed: December 28, 2016

Counsel who appeared on the brief and presented argument on behalf of the appellant was Lawrence W. Jackson, of Marion, AR.

Counsel who presented argument on behalf of the appellee was Mark D. Wankum, of Little Rock, AR. The following attorney(s) appeared on the appellee brief; Randy P. Murphy, of Little Rock, AR., Mark D. Wankum, of Little Rock, AR.

Before RILEY, Chief Judge, MURPHY and SMITH, Circuit Judges.

SMITH, Circuit Judge.

Donald Faircloth purchased an automobile insurance policy online from Nationwide Property and Casualty Insurance Company ("Nationwide"). Faircloth wrecked his car, and Nationwide rescinded the policy. Before the district court,¹ Nationwide sought declaratory judgment that it had no duty to indemnify or defend Faircloth under the policy's coverage because Faircloth made material misrepresentations in his online insurance application. The district court granted summary

845 F.3d 381

judgment to Nationwide, concluding that Nationwide was entitled to rescind the policy because Faircloth misrepresented the "primary use" of his vehicle. We affirm.

I. Background

In May 2013, Donald Faircloth applied online for an automobile insurance policy from Nationwide. The application asked Faircloth to identify the "primary use" of the vehicle from a multiple choice list. According to Nationwide's reproduction of the online application, Faircloth had three choices: "Work/School (commute to/from, errands)"; "Pleasure (recreational driving)"; and "Business (deliveries, sales calls, taxi)." Faircloth answered "Work."² Nationwide approved Faircloth's application and issued a policy.

On June 30, 2013, Faircloth hydroplaned, lost control of his vehicle, and crashed. On July 18, 2013, Nationwide decided to rescind Faircloth's policy because Faircloth's online application represented that Faircloth would maintain continuous insurance coverage until the Nationwide policy took effect, but Faircloth's former insurance policy allegedly lapsed before the Nationwide policy took effect.

On November 4, 2013, Nationwide filed an action seeking declaratory judgment that it had no duty to indemnify or defend Faircloth under the policy's coverage because Faircloth made material misrepresentations in his application. Nationwide subsequently notified Faircloth that it was rescinding his policy and tendered his premiums to him; Faircloth did not accept or deposit the tender. On September 8, 2014, Nationwide deposed Faircloth and discovered that Faircloth used the vehicle to make business-related deliveries, putting over 1,200 miles a week on the vehicle for such deliveries. Nationwide contends that these facts establish that Faircloth also misrepresented his "primary use" of the vehicle as "work" instead of "business." Faircloth and Nationwide filed competing motions for summary judgment.

The district court granted Nationwide's motion for summary judgment and denied Faircloth's motion as moot. Although Faircloth "kind-of dispute[d] whether the online application he filled out included the parentheticals" that explain the three primary-use choices, the court determined that Faircloth failed to raise a material question of fact about how the primary-use choices appeared. Thus, "[a] reasonable fact finder could come to only one conclusion: the parentheticals were there." Therefore, the court held that Faircloth misrepresented his primary use of the vehicle because "[a] reasonable person in Faircloth's position—a person putting 1,200 miles a week on his car delivering things—would have chosen business as the primary use."

II. Discussion

Faircloth argues that the district court erred in granting Nationwide's motion for summary judgment. First, he argues that the district court failed to address the "materiality" of the purported misrepresentation. Second, Faircloth argues that even if the misrepresentation was material, the application was ambiguous and Nationwide "cannot rescind the policy based on misrepresentations that it caused or induced." Additionally, Faircloth argues that Nationwide failed to properly effectuate rescission under Arkansas law, Nationwide is estopped from rescinding the policy, and

845 F.3d 382

his third-party-liability coverage claim is not moot.

"We review de novo the district court's grant of summary judgment and may affirm the judgment on any basis supported by the record." Hohn v. BNSF Ry. Co. , 707 F.3d 995, 1000 (8th Cir. 2013). Considering the facts in the...