CFM Ins., Inc. v. Hudson

• Decision Date: 03 June 2014
• Docket Number: No. WD 76882.,WD 76882.
• Citation: 432 S.W.3d 797
• Court: Missouri Court of Appeals
• Parties: CFM INSURANCE, INC., Appellant, v. Charles Rick HUDSON and Lynette Hudson, Respondents.

432 S.W.3d 797

CFM INSURANCE, INC., Appellant,
v.
Charles Rick HUDSON and Lynette Hudson, Respondents.

No. WD 76882.

Missouri Court of Appeals,
Western District.

June 3, 2014.

[432 S.W.3d 798]

Paul P. Hasty, Jr., for appellant.

Thomas H. Hearne, for respondents.

Before Division One: JOSEPH M. ELLIS, Presiding Judge, KAREN KING MITCHELL, Judge and ANTHONY REX GABBERT, Judge.

JOSEPH M. ELLIS, Judge.

Appellant CFM Insurance, Inc. appeals from a judgment entered by the Circuit Court of Benton County granting Respondents Charles and Lynette Hudson's motions for partial summary judgment and judgment on the pleadings. For the following reasons, the judgment is affirmed in part and reversed and remanded in part.

In March 2012, Appellant filed a petition for rescission against Respondents alleging that Respondents made misrepresentations in their April 2010 application for homeowner's insurance. Appellant further alleged that it relied on those misrepresentations in issuing Respondents a homeowner's policy in April 2010; thus, the misrepresentations were material, and the policy should be rescinded ab initio. The misrepresentations allegedly made in the insurance application include whether any member of the household had been convicted of a felony, had filed bankruptcy, or had conducted any business pursuits other than farming on the premises. In their answer, Respondents denied that they made misrepresentations in the April 2010 insurance application and counterclaimed for amounts due under the policy for a fire that occurred on the insured property in September 2011.

On May 17, 2013, Respondents filed a motion for partial summary judgment on the issue of whether Respondent Charles Hudson had ever been convicted of a felony. Respondents contended that Hudson had not been convicted of a felony because, although he pleaded guilty to the felony of criminal nonsupport, the trial court suspended imposition of sentence and placed him on probation. Thus, Respondents contended that, under Missouri law, Hudson had not been convicted of a felony and, therefore, made no misrepresentation regarding a felony conviction on the insurance application. Appellant opposed the motion, alleging that, for purposes of the insurance application, conviction means that a person has been charged with a crime and found guilty of it. Thus, Appellant averred that Respondents misrepresented that no one in the household had been convicted of a felony on the insurance application. The trial court subsequently concluded that a suspended imposition of sentence does not constitute a felony conviction under Missouri law and, thus, granted partial summary judgment in Respondents' favor.

On June 26, 2013, Appellant filed its motion for summary judgment in which it contended that it was entitled to rescission as a matter of law. In opposing Appellant's summary judgment motion, Respondents asserted that there was a factual dispute as to whether Appellant issued a new policy to them in November 2010 that was not based upon the representations made in the April 2010 insurance application. In particular, Respondents explained that they submitted the insurance application containing the alleged misrepresentations in the process of obtaining a homeowner's policy in April 2010 (“the April 2010 Policy”). However, in October 2010, Appellant cancelled the April 2010 Policy due to Respondents' non-payment of premiums. In November 2010, Appellant reinstated

[432 S.W.3d 799]

Respondents' homeowner's policy (“the November 2010 Policy”), which was in effect at the time of the fire. Respondents averred that, under such circumstances, the November 2010 Policy constituted a new contract that was not based upon the representations made in the April 2010 insurance application.

The parties subsequently filed additional responses discussing the differences between the April 2010 Policy and the November 2010 Policy. At the conclusion of their sur-reply, Respondents requested that the trial court make a finding of “undisputed fact” that the November 2010 Policy constituted a new contract that was not based on the representations made in the April 2010 insurance application.

On August 6, 2013, the trial court entered an order denying Appellant's motion for summary judgment. In doing so, the trial court also stated that it was addressing Respondents' “request that the Court find as an undisputed fact that the policy issued November 15, 2010 was a new policy not conditioned on representations contained in the application of 2010.” The trial court analyzed whether, under the facts and circumstances of the case, the parties intended the November 2010 Policy to constitute a new contract or a continuation of the April 2010 Policy. Ultimately, the court concluded:

[F]rom the facts contained in the various motions and replies, as well as the argument of counsel, the Court declares that [Appellant] has failed to demonstrate that the parties intended the November policy to be a continuation of the April policy. Consistent with controlling case law, the November policy is hereby deemed and declared a new contract.

Respondents subsequently filed a motion for judgment on the pleadings. In their motion, Respondents averred that the November 2010 Policy could not be rescinded based upon alleged misrepresentations made in the April 2010 application due to the trial court's finding that the November 2010 Policy constituted a new contract. The trial court subsequently granted Respondents' motion for judgment on the pleadings. In doing so, the trial court explained that “[t]he basis of [Appellant's] claim is that its policy was issued because of alleged misrepresentations made in an application to obtain coverage.” The trial court further explained:

It ... was determined and is the law of this case based on this court's findings with respect to [Appellant's] Motion for Summary Judgment and [Respondents'] Response thereto, and [Appellant's] Reply and [Respondents'] Sur-reply that it is an undisputed fact that the April, 2010 policy was voided by [Appellant] in October, 2010 due to non-payment of premium by [Respondents]; and further, that the November, 2010 policy is a new contract of insurance, not a continuation of the preceding policy.

Thus, the trial court concluded that, based on the pleadings, Appellant had no claim for rescission as a matter of law.¹

Appellant now raises three points on appeal. In its first point, Appellant contends that the trial court erred in granting partial summary judgment in favor of Respondents because “convicted,” as used in the insurance application, must be interpreted in the common law context to mean an adjudication of guilt and, thus, includes Hudson's suspended imposition of sentence. We review a grant of summary judgment de novo.

[432 S.W.3d 800]

Farrow v. Saint Francis Med. Ctr., 407 S.W.3d 579, 587 (Mo. banc 2013) (citing ITT Commercial Fin. Corp. v. Mid–Am. Marine Supply Corp., 854 S.W.2d 371, 376 (Mo. banc 1993)). “Summary judgment is appropriate when the record demonstrates there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.” Id. at 587–88.

In its petition, Appellant alleged that Respondent Charles Hudson had been convicted of a felony and, thus, misrepresented on the insurance application that no one in the household had ever been convicted of a felony. ² Respondents subsequently filed a motion for partial summary judgment contending that Hudson's 1996 guilty plea to criminal nonsupport charges resulted in a suspended imposition of sentence and, therefore, did not, as a matter of law, constitute a conviction. The trial court granted partial summary judgment in favor of Respondents, finding that “a suspended imposition of sentence is not, as a matter of law, a conviction.”

There is no genuine issue of material fact regarding Hudson's 1996 guilty plea that resulted in a suspended imposition of sentence. Thus, the issue on appeal is whether, as a matter of law, Hudson's suspended imposition of sentence constituted a conviction for purposes of the insurance application.

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