Callaway v. Sublimity Ins. Co.

• Decision Date: 01 September 1993
• Citation: 858 P.2d 888,123 Or.App. 18
• Parties: Donald F. CALLAWAY and Linda L. Callaway, Respondents, v. SUBLIMITY INSURANCE COMPANY, an Oregon corporation, Appellant. 9101-00207; CA A73082.
• Court: Oregon Court of Appeals

Page 888

858 P.2d 888

123 Or.App. 18

Donald F. CALLAWAY and Linda L. Callaway, Respondents, v. SUBLIMITY INSURANCE COMPANY, an Oregon corporation, Appellant.

9101-00207; CA A73082.

Court of Appeals of Oregon.

Argued and Submitted March 1, 1993.

Decided Sept. 1, 1993.

J. Phillip Parks, Salem, argued the cause, for appellant. With him on the briefs, were Billy M. Sime and Parks, Bauer & Sime, Salem.

Michael S. Joseph, Portland, argued the cause, for respondents. With him on the brief was Donald K. Robertson & Associates, Portland.

Before WARREN, P.J., and EDMONDS and LANDAU, JJ.

WARREN, Presiding Judge.

In this action for breach of an insurance contract, defendant Sublimity Insurance Company (Sublimity) appeals a judgment for plaintiffs entered after the trial court denied its motion for a directed verdict. We reverse.

In October, 1989, plaintiffs bought a used 1989 Ford pickup and had it insured by Sublimity against losses, including theft loss. The truck was stolen in February, 1990. After Sublimity denied plaintiffs' claim for the loss, plaintiffs sued to recover their attorney fees and $22,085.54, the alleged value of the truck. Sublimity raised an affirmative defense that plaintiffs had engaged in fraud in submitting their claim and that, therefore, there was no coverage. At trial, Sublimity moved for a directed verdict on the basis of that defense. The trial court denied the motion and submitted the case to the jury, which returned a verdict of $11,042.77 in favor of plaintiffs.

Sublimity assigns error to the denial of its motion for a directed verdict. The insurance policy contains an anti-fraud provision that reads:

"FRAUD

"We do not provide coverage for any 'insured' who has made fraudulent statements or engaged in fraudulent conduct in connection with any accident or loss for which coverage is sought under the policy." (Emphasis in original.)

To prevail on that defense, Sublimity must prove that plaintiffs

"made [a false representation] either with knowledge of its falsity or recklessly, without any knowledge as to whether it was true or false, such representation being of a nature that would reasonably tend to influence the action of the insurer * * *." Walker v. Fireman's Fund Ins. Co., 114 Or. 545, 559, 234 P. 542 (1925).

See also Kentner v. Gulf Ins. Co., 297 Or. 470, 476, 686 P.2d 339, mod. on other grounds, 298 Or. 69, 689 P.2d 955 (1984). ¹

It is uncontroverted that plaintiffs made false statements and submitted altered receipts in connection with their claim. The evidence shows that their fraudulent conduct was related to the following accessories that were allegedly put on the truck:

(1) Tires and wheels. In the course of investigation, Koger, a claim representative for Sublimity, took a recorded statement from defendant Donald Callaway. Callaway told Koger that he bought five tires for $667.50. To support that claim, he later submitted an invoice, on which he had changed the date of the purchase from June 19, 1989 to October 19, 1989, the name of the purchaser from Bart Associates to himself, the number of tires from four to five, the price of the tires from $33.50 per unit to $133.50 and the total amount of invoice from $134 to $667.50. He added a description of the tires that was not on the original invoice. At trial, Callaway admitted that the tires were from his old pickup and originally purchased at a considerably lower price. ²

Callaway also obtained a receipt that described four wheels costing $76.54 each, and altered it by changing the name of the purchaser from Bart Associates to himself and the price per wheel from $76.54 to $96.54. He added a figure of $386.16 as the total amount of the purchase price and deleted the words "rim cracked."

(2) Running boards. In his recorded statement to Koger, Callaway stated that he had recently installed $300 worth of new running boards on the truck. To support that claim, Callaway obtained an invoice from his brother-in-law and altered it to show that the invoice belonged to him and pertained to his truck. At trial, Callaway admitted that he bought the running boards at a flea market for $75 and installed them on the truck himself. He was also untruthful in an examination under oath concerning the source of that altered receipt.

(3) Tailgate cover. Callaway altered a bedliner invoice to include a tailgate cover worth $25.

(4) Trailer hitch. Callaway told Koger that he bought a trailer hitch for cash at Twelve Mile Welding the previous October. At trial, he admitted that that was not true, because the trailer hitch was about 10 years old and had been on a number of other pickups.

In addition, during his examination under oath, Callaway stated that he attached a yellow sticker in the middle of the altered receipts with a notation that says, "[T]his is a copy of what it would cost to replace--not an invoice of purchase." He admitted that no such notations were actually attached.

In addition to admitting that he engaged in the described behavior, Callaway acknowledged that when he submitted false receipts to Sublimity he intended to represent that the receipts were for the purchases he actually made, although in fact he knew they were not. ³ He also understood at the time he submitted his claim that, by misrepresenting some accessories on the truck as newer, he would get more money. ⁴

Although the trial court agreed with Sublimity that Callaway's statements were false and material, it denied Sublimity's motion for a directed verdict. The court reasoned that the question of plaintiffs' intent in doing what they did was for the jury to decide. On appeal, plaintiffs argue that the trial court was correct, because whether they intended to deceive Sublimity and whether their misrepresentations were material are both jury questions. Under the circumstances of this case, we disagree.

Based on the uncontroverted evidence, including plaintiffs' admissions, reasonable minds cannot differ on the nature and purpose of plaintiffs' conduct. Callaway admitted that he made false statements and submitted altered receipts with the intent to mislead Sublimity into paying more than the actual loss. If intent to deceive is a necessary element in a false claim submission case, Callaway's admissions suffice. Compare Willis v. Horticultural Fire Relief, 69 Or. 293, 137 P. 761 (1914); Transamerica v. Bloomfield, 55 Or.App. 31, 35, 637 P.2d 176 (1981), overruled on other grounds by Mutual of Enumclaw Ins. Co. v. McBride, 295 Or. 398, 667 P.2d 494 (1983), with ...