Luscher v. Empkey

• Decision Date: 01 July 1980
• Docket Number: No. 42666,42666
• Citation: 293 N.W.2d 866,206 Neb. 572
• Parties: Blanche LUSCHER, Appellee and Cross-Appellant, v. Frank EMPKEY et al., Appellants and Cross-Appellees.
• Court: Nebraska Supreme Court

Page 866

293 N.W.2d 866

206 Neb. 572

Blanche LUSCHER, Appellee and Cross-Appellant, v. Frank EMPKEY et al., Appellants and Cross-Appellees.

No. 42666.

Supreme Court of Nebraska.

July 1, 1980.

Syllabus by the Court

1. Fraud. The elements of a cause of action for fraudulent misrepresentation are (1) That a representation was made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made; (2) That it was made with intent to deceive and for the purpose of inducing the other party to act upon it; and (3) That such party did, in fact, rely on it and was induced thereby to act to his injury or damage.

2. Fraud: Reliance. The test of whether a party relied upon the other party's representations is generally whether he would have acted in the absence of the representations.

3. Fraud: Damages. The false representations must have been the proximate cause of the damage before a party may recover.

Harvey B. Cooper of Abrahams, Kaslow & Cassman, Omaha, for appellant Alexander & Alexander, Inc.

Spencer W. Dillon, Omaha, for appellee and cross-appellant.

Heard before KRIVOSHA, C. J., and BOSLAUGH, McCOWN, CLINTON, BRODKEY, WHITE, and HASTINGS, JJ.

CLINTON, Justice.

This is an action by Blanche Luscher, against the defendant, Alexander & Alexander, Inc., a corporation, for damages for fraudulent representations which allegedly induced her to enroll in a group health and accident insurance policy procured on her behalf by her employer, Four Seasons Heating and Air Conditioning, Inc. The damage allegedly resulted from the fact that, after the policy went into effect, the plaintiff incurred expenses for chiropractic adjustments for which the group policy paid no benefits. The action was commenced in the municipal court of Omaha, Nebraska, and the court found for the defendant and dismissed the action. Upon appeal to the District Court for Douglas County, Nebraska, the court found for the plaintiff and entered judgment for the sum of $1,019, the amount incurred up to that time for chiropractic services.

On appeal to this court, the defendant assigns as error and argues that the evidence is insufficient to sustain the verdict. We find the assignment meritorious and reverse with directions to dismiss.

The elements of a cause of action for fraudulent misrepresentation are: (1) That a representation was made as a statement of fact, which was untrue and known to be untrue by the party making it, or else recklessly made; (2) That it was made with intent to deceive and for the purpose of inducing the other party to act upon it; and (3) That such party did, in fact, rely on it and was induced thereby to act to his injury or damage. Negus-Sweenie, Inc. v. Beaver Lake Corp., 202 Neb. 671, 276 N.W.2d 668 (1979); Cook Livestock Co., Inc. v. Reisig, 161 Neb. 640, 74 N.W.2d 370 (1956).

The evidence indicates that, during the year 1976, the employees of Four Seasons were covered by a group health and accident insurance policy issued by Washington National Life Insurance Company. The evidence further shows that James Tappero, the president of Four Seasons, upon receiving notice that the premium would be increased by Washington National, asked Frank Empkey, an employee of Alexander & Alexander, Inc., the defendant, an independent insurance broker, to "shop the market for us to get us as cheap as coverage as could without losing value of our insurance." This same type of service had been performed by Empkey at Tappero's request in previous years, Empkey having procured for Four Seasons the Washington National policy then in force.

On this occasion, Empkey, after a survey, recommended placement with Blue Shield and presented an analysis sheet, highlighting the benefits of the Blue Shield proposal and the present insurance. Tappero elected to take the Blue Shield policy which would become effective January 1, 1977. This election was made some time late in 1976. In December of 1976, at Tappero's request, Empkey appeared at a meeting of the Four Seasons employees to explain policy differences and to answer questions. Each employee was given a copy of the analysis sheet which had been previously furnished to Tappero.

The plaintiff, Luscher, was present at that meeting. She and other witnesses testified that Empkey said that the Blue Shield policy has the "same" coverage or better than Washington National. She testified that, although she had never used the services of a chiropractor, she knew that Washington National provided benefits for chiropractic adjustments because Mr. Tappero's wife had, during 1976, used such services and Washington National had paid benefits.

The plaintiff relies upon this alleged representation made at the meeting as well as upon representations allegedly made by Empkey to Tappero as agent for the employees at the time Tappero made the selection of the policy. There is a direct conflict in the evidence as to what Empkey said at the meeting. Tappero and other witnesses testified that the representation was in substance that the coverage was "as good," if not better. The plaintiff's position seems to be that the representation was that the policy benefits were identical or better than Washington National's coverage. It is clear from the record that the municipal court resolved the issue of the misrepresentation on the basis of the credibility of witnesses. The District Court, on trial of the case de novo, found for the plaintiff without making any specific findings other than the amount of damages.

In January of 1977, the plaintiff began to have pains in her...