Deal v. Farm Bureau Mut. Ins. Co. of Arkansas, Inc.

• Decision Date: 14 December 1994
• Docket Number: No. CA,CA
• Parties: Norman O. DEAL and Jean Deal, Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC., Appellee. 93-1129.
• Court: Arkansas Court of Appeals

Page 774

889 S.W.2d 774

48 Ark.App. 48

Norman O. DEAL and Jean Deal, Appellants, v. FARM BUREAU MUTUAL INSURANCE COMPANY OF ARKANSAS, INC., Appellee.

No. CA 93-1129.

Court of Appeals of Arkansas,

Division II.

Dec. 14, 1994.

David P. Rawls, Little Rock, for appellants.

Richard N. Watts, Brian Allen Brown, Little Rock, for appellee.

MAYFIELD, Judge.

This is an appeal from a summary judgment. On May 17, 1989, appellant Norman Deal made application with the appellee Farm Bureau Mutual Insurance Company of Arkansas, Inc. (Farm Bureau) for fire insurance in the amount of $20,000.00 to cover a mobile home and its contents belonging to him and his wife, appellant Jean Deal. A policy was subsequently issued naming Norman and Jean Deal as insured.

On September 15, 1990, the mobile home and its contents were destroyed by fire. Farm Bureau advanced appellants $2,000.00 under the policy. Later, after receiving several anonymous phone calls to the effect that in 1976 Norman Deal had intentionally set fire to a mobile home in which he resided, Farm Bureau filed a complaint against Normal Deal for declaratory judgment asking for a declaration that the policy was void.

In its complaint Farm Bureau alleged that the application for the policy asked "Has anyone in household had any fire losses?"; that Norman Deal responded "no"; that he signed the application certifying all statements were true and correct; and that based upon his responses a policy of insurance was issued. Farm Bureau alleged that after it issued the policy, it learned that Norman Deal had made a material misrepresentation regarding his prior fire losses; that it would not have issued the policy had it been advised of the fire loss; and that the misrepresentation was intentional and material and voided coverage.

Appellant Norman Deal filed an answer and counterclaim denying any material misrepresentation regarding the 1976 fire and requesting payment under the policy. He stated that no claim was made to any insurance company for the items destroyed in the 1976 fire and that, based upon his understanding of the information requested, his answer on the 1989 policy application was truthful and correct.

Appellant Jean Deal, as a co-owner of the property covered by the policy, filed a motion to intervene, which was subsequently granted by the court, and a counterclaim for sums due under the policy.

Both parties filed motions for summary judgment. In support of its motion Farm Bureau filed a brief arguing that had it known the true facts of Norman Deal's loss history, it would not have issued the policy; that his misrepresentation was material to the risk involved; and that it had relied upon the misrepresentation. Further it argued no coverage is provided for the applicant, or his spouse, who acts fraudulently, makes false statements, or conceals or misrepresents any material fact or circumstance relating to the insurance coverage.

Appellants, on the other hand, argued the term "fire losses" is ambiguous as a matter of law and was reasonably interpreted by Norman Deal to mean damages that were claimed from an insurance company. Because he was not asked any questions about previous fires or previous burning until after the September 15, 1990 fire, Deal argued he made no material misrepresentation. Moreover, appellants argued Jean Deal's rights should not be voided because she made no representations; did not sign or ratify the application; and neither concealed nor misrepresented any material fact or circumstance.

After a hearing held June 8, 1993, the trial court granted Farm Bureau's motion for summary judgment and held the term "fire losses" is not ambiguous and Norman Deal was acting as Jean Deal's agent in making application.

On appeal appellants argue the trial court erred in finding Norman Deal made a material misrepresentation because the term "fire losses" is ambiguous.

Motions for summary judgment are governed by Ark.R.Civ.P. 56 which provides that a judgment may be entered if the pleadings, depositions, answers, interrogatories, and admissions on file, in addition to affidavits, show there is no genuine issue as to a material fact and the moving party is entitled to judgment as a matter of law. Summary judgment is an extreme remedy and should be granted only when it is clear that there is no issue of fact to be decided. Johnson v. Stuckey & Speer, Inc., 11 Ark.App. 33, 665 S.W.2d 904 (1984). Summary judgment is not proper where evidence, although in no material dispute as to actuality, reveals aspects from which inconsistent hypotheses might reasonably be drawn and reasonable men might differ. Prater v. St. Paul Insurance Company, 293 Ark. 547, 739 S.W.2d 676 (1987).

If the language in a policy is ambiguous, or there is doubt or uncertainty as to its meaning and it is fairly susceptible of two or more interpretations, one favorable to the insured and the other favorable to the insurer, the one favorable to the insured will be adopted. Drummond Citizens Ins. Co. v. Sergeant, 266 Ark. 611, 588 S.W.2d 419 (1979). See also Farm Bureau Mutual Ins. Co. v. Milburn, 269 Ark. 384, 601 S.W.2d 841 (1980).

Among other definitions, Websters Third New International Dictionary 338 (1976)...