Darst v. Illinois Farmers Ins. Co.

• Decision Date: 27 September 1999
• Docket Number: No. 49A02-9809-CV-775.,49A02-9809-CV-775.
• Citation: 716 N.E.2d 579
• Parties: Richard L. DARST, United States Bankruptcy Trustee, In re Bert Sloan and Lavonna Sloan, Appellant-Plaintiff, v. ILLINOIS FARMERS INSURANCE COMPANY, Appellee-Defendant.
• Court: Indiana Appellate Court

716 N.E.2d 579

Richard L. DARST, United States Bankruptcy Trustee, In re Bert Sloan and Lavonna Sloan, Appellant-Plaintiff, v. ILLINOIS FARMERS INSURANCE COMPANY, Appellee-Defendant.

No. 49A02-9809-CV-775.

Court of Appeals of Indiana.

September 27, 1999.

Robert W. Strohmeyer, Jr., Mitchell Hurst Jacobs & Dick, Indianapolis, Indiana, Attorney for Appellant.

Laura S. Reed, Riley Bennett & Egloff, Indianapolis, Indiana, Attorney for Appellee.

OPINION

SULLIVAN, Judge

Appellant, Richard L. Darst, United States Bankruptcy Trustee (Trustee), appeals the trial court's grant of summary judgment in favor of Illinois Farmers Insurance Company (Illinois Farmers) upon Bert and Lavonna Sloans' claims for fraud and breach of an assumed duty to provide accurate information.¹

We affirm.

On April 4, 1996, Bert Sloan (Sloan) was involved in an automobile accident when his van was rear-ended by another vehicle driven by Glen Weger (Weger). Sloan was insured through Illinois Farmers Insurance Company (Illinois Farmers), and Weger was insured through Sagamore Insurance Company (Sagamore). After the accident, Sloan had several conversations with Todd Kelly (Kelly), an insurance adjuster for Sagamore, regarding the damage to his van as well as his personal injuries. On April 10, 1996, during a telephone conversation between Kelly and Sloan, Kelly asked Sloan what he thought would be a fair settlement offer for his personal injuries. Sloan replied that $15,000 would "take care of [him] and anything that would pop up later on." Record at 24. Kelly told Sloan that $4,000 was the best settlement offer that he could give Sloan. Sloan stated that he would discuss the offer with his wife and call Kelly back. Lavonna Sloan, Bert Sloan's wife, advised Bert to call an attorney. Instead of calling an attorney, Sloan testified that he "called [Illinois Farmers] to ask them their advice, and they said it wouldn't do [him] any good." Record at 27. Specifically, Sloan claims that he spoke with Brent Gaumer (Gaumer) of Illinois Farmers who told him, "you can call an attorney if you want to, but you're not going to get any more money in your pocket. It's only going to go in the attorney's pocket. It's up to you." Record at 31. Further, during his deposition, Sloan was asked "[d]id [Gaumer] represent to you that, in his opinion, he thought [$4,000] was fair—a fair settlement?" Record at 31. In response, Sloan answered, "[y]es. That's what he said." Record at 31. Thereafter, without contacting an attorney, Sloan accepted Sagamore's offer and signed a form releasing Sagamore from further liability for Sloan's personal injuries.

On appeal, Trustee contends that the trial court erroneously granted summary judgment in favor of Illinois Farmers on the claims for actual and constructive fraud,² negligent misrepresentation, and breach of an assumed duty to provide Sloan with accurate information. We review a trial court's grant of summary judgment using the same standard as the trial court. Gable v. Curtis (1996) Ind.App., 673 N.E.2d 805 (citations omitted). Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Id. "A trial court's grant of summary judgment is `clothed with a presumption of validity,' and the appellant bears the burden of demonstrating that the trial court erred." Id. at 809 (citing Rosi v. Business Furniture Corp. (1993) Ind., 615 N.E.2d 431, 434).

Actual and Constructive Fraud

The elements of actual fraud are

1. a material misrepresentation of past or existing fact by the party to be charged which

2. was false,

3. was made with knowledge or in reckless ignorance of the falsity,

4. was relied upon by the complaining party, and

5. proximately caused the complaining party injury.

The elements of constructive fraud are

1. a duty owing by the party to be charged to the complaining party due to their relationship,

2. violation of that duty by the making of deceptive material misrepresentations of past or existing facts or remaining silent when a duty to speak exists,

3. reliance thereon by the complaining party,

4. injury to the complaining party as a proximate result thereof, and

5. the gaining of an advantage by the party to be charged at the expense of the complaining party.

Pugh's IGA, Inc. v. Super Food Services, Inc. (1988) Ind.App., 531 N.E.2d 1194, 1197 (citations omitted), trans. denied. Each tort requires the misrepresentation of fact; "[e]xpressions of opinion are not actionable and the court should refuse to submit such statements to the jury." Id. at 1198 (citations omitted). Further, in order to establish either tort, the complaining party must have had a reasonable right to rely upon the statements made or omitted. Id. We conclude that Gaumer's statements to Sloan constituted expressions of opinion rather than fact and that Sloan had no reasonable right to rely upon them. Thus, the entry of summary judgment in favor of Illinois Farmers regarding the fraud allegations was appropriate.

The cases cited by Trustee are easily distinguished. For instance, in Vernon Fire and Cas. Ins. Co. v. Thatcher (1972) 152 Ind.App. 692, 285 N.E.2d 660, trans. denied, two agents from the plaintiff's insurance company represented to the plaintiff on numerous occasions that certain items of personal property would be included within the insurance policy, which items were not in fact covered by the insurance policy. Additionally, the insurance company actually did pay a smaller claim regarding the property at issue prior to the fire that was the basis for the claim being litigated. The statements made in Vernon were factual ones which were made with regard to the coverage of certain items of personal property under the insurance policy and "which would have been known to the Company's agent and field representative before either made any statement concerning it." Id. at 669. The court further explained that, "[i]f they were subjectively stating mere opinions they were reckless in stating them as facts without first having ascertained their truth." Id. at 670.

A person reasonably expects that his insurance agent will be aware of what is covered under the insurance policy and that if the agent is unaware, such information can be easily obtained by the agent through examination of the policy. Thus, if an agent represents that an item is covered, a party may reasonably rely upon that representation. However, in this case, the advice given by Gaumer was not information which could have been ascertained easily by Gaumer. Sloan did not call to obtain factual information regarding his policy or coverage, but, rather, he testified that he called to obtain advice about the fairness of the settlement offer, meaning he called to get an opinion. The basis upon which a settlement may be determined to be fair is not written into any insurance policy. Rather, unless a person has expertise which allows him to measure the amount of a settlement against settlements commonly given in such circumstances, he can do no more than offer a subjective opinion with regard to whether a settlement is fair or not. As Sloan acknowledged in his deposition, he recognized Gaumer as a claims adjuster, who "takes care of automobiles." Record at 30. Clearly then, Sloan had no reasonable right to rely upon Gaumer's subjective opinion as a representation of fact. That the opinion he solicited and chose to follow may have been ill-advised is not actionable.³

Trustee also cites to McDaniel v. Shepherd (1991) Ind.App., 577 N.E.2d 239, 242, wherein an insurance agent "advised an elderly, uneducated, and acutely disturbed woman [that she should not] hire an attorney" in pursuing her claim, that she would get ahead if she did not contact an attorney, and that the attorneys for the insurance company would give her any legal assistance she required. The agent failed to point out that the woman and the insurance company did not share the same interest with regard to the matter of inquiry. Further, in that case, the agent failed to fully explain the ramifications of signing a release agreement. In McDaniel, the plaintiff was told not to get an attorney, while here Gaumer advised Sloan that any extra money he received as a result of consulting an attorney would merely go into the attorney's pocket. However, Gaumer did maintain that it was up to Sloan to make the decision. Additionally, he did not attempt to further persuade Sloan not to hire an attorney by stating that the attorneys at Illinois Farmers would provide Sloan with legal assistance if he needed it. Further, the McDaniel court limited its holding to "the situation where an insurer induces an observably mentally disadvantaged person to rely on the insurer for legal advice, negligently represents the content of a legal document, and then relies on the document to the injured party's detriment and the insurer's gain." Id. at 245 n. 10. In this case, there is no evidence in the record suggesting that Gaumer made representations regarding the release agreement that Sloan signed for Sagamore. The record demonstrates that Sloan had a full understanding of the ramifications of signing the release agreement. Moreover, there is no evidence which indicates that Sloan was mentally disadvantaged at the time nor that Gaumer was attempting to induce Sloan to rely upon Illinois Farmers for legal advice. Thus, we conclude that the reasoning of McDaniel is inapplicable to this case.

Further, in all three cases cited by Trustee, the misrepresentations were made regarding issues related to the essence of the relationship between the parties, i.e. misrepresentations regarding the coverage of or collection upon the policies that the plaintiffs in those cases had with the defendant companies. Thus, the plaintiffs in those cases had a reasonable right to rely upon the agents' representations. However, here, the advice sought was not...