Evora v. Henry, 88-74-A

• Decision Date: 12 June 1989
• Docket Number: No. 88-74-A,88-74-A
• Citation: 559 A.2d 1038
• Parties: Viriato EVORA v. Guy HENRY. ppeal.
• Court: Rhode Island Supreme Court

Page 1038

559 A.2d 1038

Viriato EVORA v. Guy HENRY.

No. 88-74-Appeal.

Supreme Court of Rhode Island.

June 12, 1989.

Joseph A. Capineri and Capineri & Crowley, Pawtucket, for plaintiff.

William R. Grimm and Hinckley, Allen, Snyder & Comen, Providence, for defendant.

OPINION

FAY, Chief Justice.

This case comes before us on appeal by the plaintiff, Viriato Evora (Evora). Evora contends that the trial justice incorrectly directed a verdict in favor of the defendant, Guy Henry (Henry), and erred in granting the defendant's request for a conditional new trial. We find that the motion for a directed verdict was incorrectly granted, and we reverse.

This case arises out of a fire-insurance contract entered into between plaintiff and Nationwide Insurance Company (Nationwide). The insurance contract covered Evora's home, which he purchased in November 1975 for approximately $33,000. The central focus of this controversy is the representation made by Evora on his application to Nationwide. The completed application, which Evora signed, lists the purchase price and current market value of the home as $50,000. On the basis of Evora's application, Nationwide issued Evora a policy with a $50,000 limit of liability on the dwelling.

Subsequently a fire in February 1976 destroyed the home. When Nationwide refused to compensate Evora for this loss, Evora contacted Attorney Henry to represent him in an action to recover on the policy. Henry's failure to file the complaint within the time required by the statute of limitations resulted in Nationwide's prevailing on a motion for summary judgment. After we affirmed the grant of summary judgment, Evora commenced this action against Henry to recover for legal malpractice.

At trial Evora testified that insurance agent John Guido (Guido) filled out the insurance application after inspecting the property. Evora further testified that when Guido asked, "[W]hat I wanted to put in it," referring to the insured premises, Evora replied $50,000. Although Evora could not specifically recall at trial telling Guido the purchase price, he testified that he showed papers to Guido that contained the purchase price. In addition Evora affirmatively stated that he did not lie about the purchase price. After the presentation of evidence, defendant moved for a directed verdict. The defendant claimed three misrepresentations by plaintiff voided the policy so that no damages, an essential element of a legal malpractice claim, were recoverable. The trial justice reserved his ruling on the motion pursuant to Rule 50(b) of the Superior Court Rules of Civil Procedure. Following the motion the jury returned a verdict for $87,000 in plaintiff's favor, $62,000 for the fair-market value of the home and $25,000 for the value of personal property lost during the fire. Thereafter the trial justice granted defendant's directed-verdict motion, relying upon plaintiff's misrepresentation regarding the purchase price. ¹ The defendant's request for a conditional new trial pursuant to Rule 50(c) was likewise granted. The trial justice granted the conditional new trial upon the belief that he had incorrectly charged the jury. The plaintiff now appeals these two rulings.

Before embarking on our review, we note that the standards guiding a trial justice's decision on a directed-verdict motion and our review of that determination have been clearly defined. The trial justice must view all the evidence in the light most favorable to the nonmoving party and give that party the benefit of all reasonable and legitimate inferences that may properly be drawn from the evidence, without weighing the evidence or exercising independent judgment in regard to the credibility of witnesses. Brenner Associates, Inc. v. Rousseau, 537 A.2d 120, 123 (R.I.1988); Solitro v. Moffatt, 523 A.2d 858, 861 (R.I.1987); Gordon v. St. Joseph's Hospital, 496 A.2d 132, 136 (R.I.1985); Montuori v. Narragansett Electric Co., 418 A.2d 5, 9 (R.I.1980). This court on review is bound by the same standard. 418 A.2d at 9. If the trial justice should find that issues exist upon which reasonable minds could draw conflicting conclusions, the motion should be denied and the jury allowed to resolve the conflict. Id.

Initially we observe that the generally accepted view is that even when an attorney negligently permits the statute of limitations to run on a client's cause of action, the client must still prove, in order to prevail in a legal malpractice action, that the negligence was the proximate cause of his or her damages or loss. See Somma v. Gracey, 15 Conn.App. 371, 374-75, 544 A.2d 668, 670 (1988); O'Neil v. Bergan, 452 A.2d 337, 341 (D.C.Ct.App.1982); Flaherty v. Weinberg, 303 Md. 116, 134, 492 A.2d 618, 628 (1985); Lieberman v. Employers Insurance of Wausau, 84 N.J. 325, 342, 419 A.2d 417, 425-26 (1980); Brown v. Kelly, 140 Vt. 336, 338, 437 A.2d 1103, 1104 (1981); Annot., 90 A.L.R.3d 293, 297 (1979). Other courts have held that if a client does not have a valid, enforceable underlying claim, the attorney cannot be held liable for negligently permitting the statute of limitations to run on the claim. See Budd v. Nixen, 6 Cal.3d 195, 200, 491 P.2d 433, 436, 98 Cal.Rptr. 849, 852 (1971); Christy v. Saliterman, 288 Minn. 144, 150, 179 N.W.2d 288, 293-94 (1970); Brown v. Adams, 715 S.W.2d 940, 941 (Mo.Ct.App.1986). Adopting these views, we believe that the sine qua non in this case is whether plaintiff's misrepresentation voided the contract, effectively precluding recovery by plaintiff and justifying the directed verdict.

We have previously examined the effect of a misstatement of fact in an application for insurance. The theory clearly evinced by these cases is that a material misrepresentation in an insurance application makes voidable, without a concomitant demonstration of fraud, an insurance contract that is issued upon the application. See Guardian Life Insurance Co. of America v. Tillinghast, 512 A.2d 855 (R.I.1986); Affleck v. Potomac Insurance Co., 49 R.I. 112, 140 A. 469 (1928); Leonard v. State Mutual Life Assurance Co., 24 R.I. 7, 51 A. 1049 (1902). Therefore, the controlling inquiry in this case is whether a material misrepresentation has taken place.

Our Legislature has addressed material misrepresentations in accident and sickness insurance policies. Contained within G.L.1956 (1979 Reenactment) chapter 18 of title 27, which regulates accident and sickness insurance policies, § 27-18-16 states, "[t]he falsity of any statement in the application for any policy covered by this chapter may not bar the right to recovery thereunder unless such false statement materially affected either the acceptance of the risk or the hazard assumed by the insurer." See also Guardian Life Insurance Co. of America, 512 A.2d at 859 (upholding denial of motion for directed verdict on basis of material misrepresentation within § 27-18-16). Because the Legislature has not similarly spoken about fire-insurance applications, we must prescribe a practical definition for these circumstances.

We believe that a number of jurisdictions have adequately defined material misrepresentation. Many courts have...