Colonial Penn Ins. Co. v. Guzorek
| Decision Date | 21 August 1996 |
| Docket Number | No. 45A03-9511-CV-369,45A03-9511-CV-369 |
| Citation | 669 N.E.2d 1042 |
| Parties | The COLONIAL PENN INSURANCE COMPANY, Appellant-Plaintiff, v. Dorothy GUZOREK, Donald Guzorek, Marianne Van Winkle, Marsha Pocius and John Pocius, Appellees-Defendants, and Illinois Farmers Ins. Co., Appellee-Intervenor. |
| Court | Indiana Appellate Court |
This declaratory judgment action requires us to examine various provisions of an automobile insurance policy provided by Colonial Penn Insurance Company to Dorothy Guzorek. The trial court below denied Colonial Penn's motion for summary judgment and granted Guzorek's motion for summary judgment.
On October 20, 1992, Donald Guzorek, Dorothy Guzorek's husband, was involved in an automobile accident with two other vehicles, one driven by Marsha Pocius and the other driven by Marianne Van Winkle. On the day of the accident, Colonial Penn had a policy for automobile insurance identifying Dorothy Guzorek as the named insured. This policy was issued in April of 1990 after Guzorek filled out an insurance rate request form. The form asked for the names of all driver's licensed operators in the household of the applicant, and Guzorek listed only her name on the form. While Donald Guzorek lived with his wife, his driver's license was suspended as a result of at least two prior convictions for driving while intoxicated. On a "personalized quotation/enrollment form," Guzorek was asked to list all customary operators of the vehicles, and she failed to list her husband, although he did drive several times a week.
Colonial Penn issued a policy on April 27, 1990, identifying Guzorek as the named insured. 1 Colonial Penn continued to renew Guzorek's policy over the next two years. In September of 1992, a 1980 Buick Skylark was listed as an insured vehicle under the policy. On September 22, 1992, Guzorek purchased a 1978 Buick LeSabre. Twenty-nine days later, on October 20, 1992, Donald Guzorek was driving the 1978 Buick LeSabre home from the Beer Barrel Tavern when he was involved in an automobile accident involving two other vehicles. Guzorek did not notify Colonial Penn of the existence of the 1978 Buick LeSabre, although her intent was to replace the 1980 Buick Skylark with the 1978 Buick LeSabre when her premium was due for renewal of the policy on October 27, 1992.
After the accident, Guzorek did not think that there was any coverage under the Colonial Penn policy for either her husband or for the 1978 Buick LeSabre. Both Van Winkle and Pocius brought actions against Donald Guzorek. Guzorek did not notify Colonial Penn of these lawsuits; rather, Colonial Penn first learned of the accident from Van Winkle's attorney. Colonial Penn did not learn of the Pocius lawsuit until after a default judgment had been entered against Donald Guzorek. 2 Guzorek did not consider the possibility of Colonial Penn providing coverage for the accident until the attorney representing Pocius raised the issue.
Colonial Penn filed the present complaint for declaratory judgment on April 7, 1994. Illinois Farmers Insurance Company, which had issued policies to both Van Winkle and Pocius including uninsured motorist coverage, was allowed to intervene in the present action. Pocius, Colonial Penn and Guzorek all filed motions for summary judgment. The trial court entered the following order:
The accident herein occurred on October 20, 1992, while Plaintiff had a valid insurance policy in effect with Dorothy Guzorek. Mrs. Guzorek purchased a new car on September 22, 1992, and under the policy was given 30 days to notify Colonial that she had either replaced an already insured car or bought an additional car for the purpose of inclusion in the policy. The 30 days had not expired at the time of the accident[,] and the Court finds the additional car was covered by the terms of the policy.
....
Defendant Dorothy Guzorek failed to notify Colonial of the accident assuming that Donald was not covered under her policy. The application for the policy indicated that Dorothy Guzorek's spouse, Donald Guzorek, had no driver's license; but Donald was not excluded, and the language included spousal coverage. The Court believes that the record establishes that no prejudice was caused by these delays in notice by the affidavits filed in this cause.
(R. 236-37). The court denied Colonial Penn's motion for summary judgment and granted summary judgment to the Guzoreks, finding that they are entitled to coverage under the policy.
Colonial Penn raises three issues for our review:
I. Whether the trial court erred because the policy issued to Guzorek was void as a result of omissions and material misrepresentations on the original policy application.
II. Whether the trial court erred because the vehicle operated by Donald Guzorek was not a covered vehicle under the policy.
III. Whether the trial court erred because Colonial Penn was prejudiced by Guzorek's failure to give notice of the accident.
Colonial Penn first argues that it was entitled to void the policy issued to Guzorek based upon her failure to reveal her husband's driving history on the insurance application.
Summary judgment is properly granted only when the evidentiary matter designated to the trial court shows that there is no issue of material fact and the moving party is entitled to judgment as a matter of law. Ind.Trial Rule 56(C); Briggs v. Finley, 631 N.E.2d 959, 963 (Ind.Ct.App.1994), trans. denied. The burden is on the moving party to prove that there are no genuine issues of material fact and that he is entitled to judgment as a matter of law. Landau v. Bailey, 629 N.E.2d 264, 266 (Ind.Ct.App.1994), reh'g denied. If the movant sustains this burden, the opponent may not rest on the allegations of the pleadings, but must set forth specific facts showing that there is a genuine issue for trial. Id. On appeal, we are bound by the same standard as the trial court and we must consider all matters which were designated at the summary judgment stage in the light most favorable to the nonmoving party. Schooley v. Ingersoll Rand, Inc., 631 N.E.2d 932, 936 (Ind.Ct.App.1994).
In 1971, we held that an automobile insurer may rescind a policy where the insured had misrepresented a fact material to the risk. Automobile Underwriters, Inc. v. Stover, 148 Ind.App. 555, 268 N.E.2d 114, 115-16 (1971). However, upon the passage of the Financial Responsibility Act, requiring proof of financial responsibility before a vehicle may be registered or operated on a public highway, we revisited this issue in American Underwriters Group, Inc. v. Williamson, 496 N.E.2d 807 (Ind.Ct.App.1986). In Williamson, we expressly overruled Stover, concluding that the legislature's announced policy of providing a source of recovery to those who suffer loss due to an automobile accident could not be reconciled with the existence of a right to rescind an insurance policy so as to escape liability to a third party. Id. at 810. We further examined this issue in Motorists Mut. Ins. Co. v. Morris, 654 N.E.2d 861 (Ind.Ct.App.1995). In Morris, as in the case before us, the injured third parties owned policies providing uninsured/underinsured motorist coverage. 3 Thus, we held that "1) because the legislature's policy of compensating accident victims has been upheld, and 2) because the real dispute here is between insurance companies who are not entitled to protection under the statutes involved, the Williamson ... decision, based upon the policy of the financial responsibility law, does not control the disposition of this case." Id. at 863. The court went on to hold that the insurance company could rescind the policy on the basis that the insured had misrepresented facts which would reasonably induce the insurer to accept the risk posed by the motorist. Id. Thus, the insured became an uninsured motorist--the precise risk for which the victim's policy insured. Id.
The insurance rate request form filled out by Guzorek does not list her husband as a driver. However, the application only asks for "driver's licensed operators in the household." (R. 123). Thus, this application does not seem to indicate any misrepresentations. However, on the personalized quotation/enrollment form, Guzorek failed to list her husband as a "customary operator." (R. 126). Donald's deposition testimony clearly reveals that he was a regular driver, despite his suspended license. Thus, we conclude that the designated evidence establishes that Guzorek misrepresented facts which are material to the risk involved.
However, our inquiry does not end here. Guzorek argues that Colonial Penn was placed on inquiry notice regarding her husband's driving record as a result of a telephone survey taken on behalf of Colonial Penn approximately one year after the issuance of the policy. The document produced by the survey company lists Donald Guzorek as a driver but further states that Donald did not have a driver's license. (R. 181). The document also reveals that "sp.," which is indicated on the form to stand for Donald Guzorek (presumably as "spouse"), drives one vehicle six to seven thousand miles annually.
An insurance company has no right to rescind a policy where it has knowledge of the facts or where it has sufficient information which would cause a reasonably prudent man to inquire further. Johnson v. Payne, 549 N.E.2d 48, 51 (Ind.Ct.App.1990), trans. denied; State Farm Mut. Auto. Ins. Co. v. Price, 181 Ind.App. 258, 396 N.E.2d 134, 137 (1979). Where an insurance company or its agent has knowledge which would be sufficient to lead a prudent man to inquire about the matter, when the truth could have been ascertained conveniently, such knowledge constitutes notice of whatever the...
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Colonial Penn Ins. Co. v. Guzorek
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