Allied Prop. and Cas. Ins. Co. v. Good

Decision Date21 January 2011
Docket NumberNo. 85A04-0905-CV-240.,85A04-0905-CV-240.
PartiesALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant-Defendant, v. Linda GOOD, Appellee-Plaintiff, and Randall Good, Appellee-Third Party Defendant.
CourtIndiana Appellate Court
938 N.E.2d 227

ALLIED PROPERTY AND CASUALTY INSURANCE COMPANY, Appellant-Defendant,
v.
Linda GOOD, Appellee-Plaintiff,
and
Randall Good, Appellee-Third Party Defendant.


No. 85A04-0905-CV-240.

Court of Appeals of Indiana.

Nov. 24, 2010.
Rehearing Denied Jan. 21, 2011.

938 N.E.2d 229

Charles T. Jennings, Thomas R. Haley III, Jeffrey W. Ferrand, Jennings Taylor Wheeler & Haley, P.C., Carmel, IN, Attorneys for Appellant.

Mark C. Guenin, Emily C. Guenin-Hodson, Guenin Law Office, P.C., Wabash, IN, David W. Stone IV, Stone Law Office & Legal Research, Anderson, IN, Attorneys for Appellees.

OPINION

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.1

FACTS AND PROCEDURAL HISTORY

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,2 and a counterclaim against Linda for the same. Thereafter, Allied filed a motion for summary judgment, asserting its contract with Linda was void ab initio because Linda had misrepresented her cancellation history on her application for insurance. The trial court denied that motion. A trial commenced on December 12, 2008, and ended in a mistrial. Allied appealed the mistrial and we

938 N.E.2d 230
affirmed. Allied Prop. and Cas. Ins. Co. v. Good, 919 N.E.2d 144 (Ind.App.Ct.2009), trans. denied.3

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.

DISCUSSION AND DECISION

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):

A party is entitled to summary judgment upon demonstrating the absence of any genuine issue of fact as to a determinative issue unless the non-moving party comes forward with contrary evidence showing an issue of fact for trial. An appellate court reviewing a trial court summary judgment ruling likewise construes all facts and reasonable inferences in favor of the non-moving party and determines whether the moving party has shown from the designated evidentiary matter that there is no genuine issue as to any material fact and that it is entitled to judgment as a matter of law. But a de novo standard of review applies where the dispute is one of law rather than fact.
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

938 N.E.2d 231
(1976). See also Home Ins. Co. v. Cavin, 162 Miss. 1, 137 So. 490 (1931) (home insurance policy voided because insured falsely denied that he had ever sustained a fire loss; the court found the language of the query to be unambiguous, and the insured's incorrect interpretation of "ever" did not relieve him from the penalty of his false assertion). In the contract, "ever" modified the words "declined, canceled, and non-renewed." (App. at 7940.) "Decline" is "to refuse to undertake, undergo, engage in." www. merriam- webster. com/ dictionary/ decline (last accessed September 9, 2010). "Cancel" is defined as "to destroy the force, effectiveness, or validity of." www. merriam- webster. com/ dictionary/ cancel (last accessed September 9, 2010). "Renew" means "to grant or obtain an extension of." www. merriam- webster. com/ dictionary/ renew (last accessed September 9, 2010).

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:

Q: Oh, you don't think—I thought you said before Met cancelled you for the gas leak?
A: We got cancelled, but we got another policy through them. Maybe it—I think it was West-, Westfield that cancelled us. Then we got Met Life, then we switched from Beauchamp & McSpadden because we'd been talking to other people and their policies were cheaper and we thought we'd get a better buy if we went to WIA.
( 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
938 N.E.2d 232
Goods' cancellation history on the application.

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.4 Am. Nat. Fire Ins. Co. v. Rose Acre Farms, Inc., 107 F.3d 451, 458 (7th Cir.1997) (applying Indiana law). A material misrepresentation or omission of fact in an insurance application, relied on by the insurer in issuing the policy, renders the coverage voidable at the insurance company's option. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 672 (Ind.1997). An insurance company has no right to rescind a policy "where it had...

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