Bennett v. Hedglin

• Decision Date: 11 February 2000
• Docket Number: No. S-8830.,S-8830.
• Citation: 995 P.2d 668
• Parties: William H. BENNETT, Appellant, v. Yvonne J. HEDGLIN and Pate Insurance Agency, Inc., Appellees.
• Court: Alaska Supreme Court

995 P.2d 668

William H. BENNETT, Appellant, v. Yvonne J. HEDGLIN and Pate Insurance Agency, Inc., Appellees.

No. S-8830.

Supreme Court of Alaska.

February 11, 2000.

Rebecca J. Hozubin, Law Offices of George M. Kapolchok, Anchorage, for Appellant.

Gary A. Zipkin and Kari C. Kristiansen, Guess & Rudd, P.C., Anchorage, for Appellees.

Before MATTHEWS, Chief Justice, EASTAUGH, FABE, BRYNER, and CARPENETI, Justices.

OPINION

FABE, Justice.

I. INTRODUCTION

William Bennett lost his Anchor Point cabin in a fire and now argues that Pate Insurance Agency, Inc. must cover the loss because it issued, and never canceled, a binder on the property. We conclude that, regardless of the binder's existence at the time of the loss, Bennett made material misrepresentations on his insurance application that voided any coverage he might have had. Accordingly, we affirm the superior court's grant of summary judgment in favor of Pate.

II. FACTS AND PROCEEDINGS

In March 1996 William Bennett contacted Yvonne Hedglin, a licensed insurance agent at Pate Insurance Agency, Inc., an independent insurance agency. He sought homeowner's insurance on a log cabin located outside Anchor Point. After their conversation, Hedglin contacted Montgomery & Collins and asked it to insure Bennett's property. She then told Bennett to send her photographs of the cabin and a first premium payment of $779. On June 18 Bennett sent Hedglin the photos and the check.

After receiving the photos and the check, Hedglin on June 20 faxed Bennett the Montgomery & Collins application form, along with a note stating: "As soon as I receive the signed forms back via fax, I will bind coverage for you." Bennett faxed the completed and signed application to Hedglin the same day. Hedglin gave Bennett's check to Pate's accountant for deposit and faxed the completed application to Montgomery & Collins, asking that it bind coverage for Bennett.

On June 21 Montgomery & Collins informed Hedglin that it had declined Bennett's application for insurance. On the same day, Hedglin left Bennett a telephone message stating that Montgomery & Collins had rejected his application and asking him to call her. Despite the rejection, Pate cashed Bennett's premium check on June 24. On June 25 Bennett returned Hedglin's call. She told him that Montgomery & Collins would not insure the cabin and that he should look elsewhere for coverage. Bennett informed Hedglin that he possessed an existing homeowner's policy on an Anchorage residence through a different insurer, Allstate.¹ Hedglin advised Bennett to contact Allstate to obtain a policy on the Anchor Point cabin. Hedglin told Bennett that if Allstate did not insure the cabin, Bennett should call her back and she would attempt to obtain insurance for him. She advised him, however, that his remaining coverage options through Pate were very limited. After speaking with Bennett, Hedglin wrote him a "close-out letter" summarizing their phone call and sent it to Bennett along with a full refund and the cabin photographs.

Bennett contacted Allstate on June 27 and began negotiations to insure the Anchor Point cabin. He spoke with an insurance agent, who requested that he forward photographs of the cabin and a premium check to Allstate. Although he intended to apply to Allstate for insurance on the cabin, Bennett never completed an application. In his deposition, he explained that he could not forward the photographs or premium payment to Allstate because Pate had not yet returned these items to him.

On July 2, 1996, the Anchor Point cabin burned to the ground. Bennett filed a claim with Pate, but Pate denied coverage. On July 22 Hedglin returned to the office after a vacation and discovered that Bennett's close-out letter and refund check had been returned to Pate after three unsuccessful delivery attempts.

Bennett sued Hedglin and Pate (collectively Pate) in August 1997 for damages resulting from the fire and for defamation.² Both parties moved for summary judgment. Bennett requested oral argument, but Judge Rene J. Gonzalez denied the motion after "finding that the parties memoranda adequately present the parties' respective positions and legal arguments and additionally finding that oral argument would not be helpful to the court." On June 2, 1998, Judge Gonzalez granted summary judgment in Pate's favor. Bennett moved for reconsideration, which the court denied. Bennett appeals.

III. STANDARD OF REVIEW

This court reviews de novo a trial court's decision to grant summary judgment.³ Summary judgment is appropriate only when there are no material disputed facts such that the moving party is entitled to judgment as a matter of law.⁴ We must draw all reasonable inferences in favor of Bennett, the non-moving party.⁵

IV. DISCUSSION

A. Bennett's Misrepresentations on the Insurance Application Voided Any Insurance Coverage.

Bennett claims that Hedglin's promise to insure the cabin created a valid insurance binder that was not effectively canceled. Pate alleges that Bennett made numerous misrepresentations on his insurance application and therefore may properly be denied coverage.

In particular, Pate points to Bennett's statements with respect to his full-time residence, business conducted on the Anchor Point property, and losses occurring on the premises in the past five years. Bennett claimed that he resided full time at the Anchor Point cabin and did not own, occupy, or rent any other dwelling. Bennett also stated that he conducted no business on the premises despite his intention to open a sawmill there in the future. Further, Bennett stated that no insured or uninsured losses had occurred at the Anchor Point cabin within five years, despite a 1995 vandalization of the premises.

Alaska Statute 21.42.110 states that "[m]isrepresentations, omissions, concealment of facts, and incorrect statements" may prevent recovery under an insurance contract when they are either:

(1) fraudulent;

(2) material either to acceptance of the risk, or to the hazard assumed by the insurer; or

(3) the insurer in good faith would either not have issued the policy or contract, or would not have issued a policy or contract in as large an amount, or at the same premium or rate, or would not have provided coverage with respect to the hazard resulting in the loss, if the true facts had been made known to the insurer as required ... by the application for the policy.

1. Bennett's application responses constituted misrepresentations.

We must first determine whether Bennett's application responses were false or misleading so as to qualify as a misrepresentation under AS 21.42.110. Generally, the question of whether an applicant's statements were false or misleading is a jury question.⁶ But when the facts are not in dispute—such as when an applicant admits that a statement is false or when there is no conflicting evidence—courts can decide this question as a matter of law.⁷ Bennett's deposition testimony reveals that he may have given false or misleading responses to a number of the application's underwriting questions.

In particular, we conclude that Bennett misrepresented the fact that he resided full time in the Anchor Point cabin, rather than in one of his two homes in Anchorage. In response to Question 6 of the application, Bennett denied owning, occupying, or renting any residence other than the Anchor Point cabin.⁸ But Bennett later admitted that, at the time of the application, he owned two homes in Anchorage, living in one and renting out the other. In response to Question 7 of the application, Bennett stated that he was a "full-time resident" of the Anchor Point cabin.⁹ Bennett later explained this response by stating that he intended to reside full time at the Anchor Point cabin. Based on the inconsistency between application responses and his deposition testimony, we conclude, as a matter of law, that Bennett falsely stated the location of his full-time residence, thereby providing "[m]isrepresentations, omissions, concealment of facts, and incorrect statements"¹⁰ in his insurance application.

2. Bennett's misrepresentations were material to the insurer's acceptance of the risk.

To justify denying coverage under AS 21.42.110, Pate primarily argues that the misrepresentations about Bennett's full-time residence were material to the insurer's acceptance of the risk.¹¹ Pate urges this court to hold that Bennett's false statements and omissions were material as a matter of law. In general, materiality is a question of fact for the jury, but courts may decide it as a matter of law when "the evidence is such that there can be no reasonable difference of opinion."¹²

Here, Pate presented evidence that Bennett's misrepresentations regarding his full-time residence were material to an insurer's acceptance of the risk. An insurance expert retained by Pate concluded that Bennett's truthful revelations about his Anchorage residency and Anchor Point vacation cabin "would make the risk ineligible for Homeowner's Coverage." This expert stated that "[t]he fact that the dwelling is not a primary dwelling is material both to the acceptance of the risk and to its eligibility for the kind of insurance sought, namely a homeowners policy." This expert testimony comports with common sense—full-time residency in a dwelling increases the chances of promptly detecting and mitigating fires and other hazards. And a remote vacation home may be more likely subject to break-ins and vandalism, as Bennett's cabin was in 1995. Thus, whether the Anchor Point cabin was Bennett's full-time residence was material to the insurer's decisions regarding whether to insure the cabin and the proper premium rate. Bennett failed to present any evidence showing that his answers were not material to the risk of insuring the Anchor Point cabin. We therefore hold that Bennett's misrepresentation regarding full-time residence in the Anchor Point cabin is material to the risk of insuring that cabin....