Schmidt v. Ind. Ins. Co.

• Decision Date: 02 December 2015
• Docket Number: No. 22S01–1507–PL–412.,22S01–1507–PL–412.
• Citation: 45 N.E.3d 781
• Parties: Christopher SCHMIDT, Appellant/Plaintiff, v. INDIANA INSURANCE COMPANY, C & F Insurance Group, LLC, and Bart Stith, Appellees/Defendants.
• Court: Indiana Supreme Court

45 N.E.3d 781

Christopher SCHMIDT, Appellant/Plaintiff

v.INDIANA INSURANCE COMPANY, C & F Insurance Group, LLC, and Bart Stith, Appellees/Defendants.

No. 22S01–1507–PL–412.

Supreme Court of Indiana.

Dec. 2, 2015.

Richard R. Fox, Kristi L. Fox, Steven A. Gustafson, The Law Office of Richard R. Fox, New Albany, IN, Attorneys for Appellant.

John C. Trimble, Lewis S. Wooton, Michael R. Giordano, Lewis Wagner, LLP, Indianapolis, IN, Attorneys for Appellee Indiana Insurance Co. Richard T. Mullineaux, Crystal G. Rowe, Ashley G. Eade, Kightlinger & Gray, LLP, New Albany, IN, Attorneys for Appellees C & F Insurance Group, LLC and Bart Stith.

On Transfer from the Indiana Court of Appeals, No. 22A01–1403–PL–135

DICKSON, Justice.

Following the denial of his homeowner's fire insurance claim, the plaintiff commenced this action against the company that issued his policy, the insurance agency, and the insurance agent. The trial court granted summary judgment in favor of all the defendants. We reverse in part the grant of summary judgment favoring the agency and agent, but otherwise affirm as a partial summary judgment.

In December 2004, the plaintiff, Christopher Schmidt, inherited residential property. He allowed his cousin to live in the house and did not obtain insurance on the property. From 2007 to 2009 the plaintiff received multiple complaints about animals left on the property and odors emanating from the property. Plaintiff testified that in 2007, while his cousin was in jail, “two fire trucks, four Animal Control units, the Health Department, [and] the Police Department” came and took away seven dogs and about thirty cats. Appellant's App'x at 160. In 2009 the plaintiff received a call from the New Albany, Indiana Police Department that his cousin had moved out of the property two months prior, around April of that year, and abandoned animals in the house. Police called and dispatched New Albany Floyd County Animal Control and Shelter. On July 1, 2009, Animal Control reported that the property was covered in feces, fleas, and garbage and removed two emaciated dogs and one dead dog. The plaintiff testified that firemen had to use oxygen masks to go in. The Floyd County Health Department investigated and issued a Notice of Violation and Order to Abate, declaring the property unfit for human habitation. After the property was condemned, no one was permitted to enter except for cleaning. Id. The plaintiff indicated he began cleaning the property at some time after the condemnation, but as of April 2010 “it wasn't near ready.” Id. at 96. The plaintiff had removed multiple truckloads of debris, but the remediation also required removal of the drywall and the urine-soaked carpeting and subflooring in the home.

In April 2010, the plaintiff contacted Bart Stith, an insurance agent employed by C & F Insurance Group, LLC, an insurance brokerage agency, (collectively, “the Agents”) to procure insurance on the property. When examined under oath on October 26, 2010, pursuant to the policy requirements, the plaintiff explained his purpose for getting insurance on the property:

I never really thought about it as being a hazard until one of my neighbors said you do have insurance, don't you, and I'm like, why would I need insurance. Well, if somebody goes in there and gets hurt. So that's when I went and took out a policy.

Appellant's App'x at 277. In his deposition on September 13, 2012, the plaintiff stated:

Well, I didn't know what type of insurance I had to have. So I more or less went in there with the thought that I was going to have to get liability, you know, in case anybody got hurt, it covered them. Because, there was a lot of things still there—the house itself that people could've got hurt on. And so, I just wanted to get insurance on it and get it covered.

Id. at 165. At the time of the insurance application, the property was vacant, uninhabitable, undergoing renovation, and intended for rent (not for the plaintiff's residence), and the plaintiff claims he provided this information to the Agents. Insurance agent Stith submitted to Indiana Insurance Company a “Dwelling Fire Application,” Id. at 108, that did not disclose the vacancy, condemnation, renovation, or rental status of the property. Stith testified¹ that he went over the contents of the application with the plaintiff, who signed it. The plaintiff, however, does not remember signing the application. Based on the application, the insurance company issued a “Dwelling Fire Policy” on the property. Id. at 206.

About two months later in June 2010, the property was destroyed by fire. After conducting an investigation in February 2011, the insurance company denied coverage and exercised its right to rescind the policy because it contained material misrepresentations and false statements about the property. The insurance company refunded all premiums paid. In April 2011 the plaintiff initiated this action against the Agents and the insurance company, alleging that the Agents had “falsely and wilfully or negligently made false representations as to the occupancy status of the house on the application submitted to Indiana Insurance, contrary to the Plaintiff's actual representations....” Id. at 11. The complaint also alleged that the actions of the Agents constituted offenses against property, namely Forgery,² Deception,³ and Insurance Fraud,⁴ under the Indiana Crime Victims Relief Act. Id. (citing Ind.Code § 34–24–3–1 ). The plaintiff sought reinstatement of the policy and a declaration of coverage, compensatory and punitive damages, and statutory relief under the Indiana Crime Victims Relief Act. The Agents and Indiana Insurance Company filed separate motions for summary judgment. The trial court granted both motions and, finding no just reason for delay, directed entry of judgments for all of the defendants. The plaintiff appealed.

The Court of Appeals reversed the grant of summary judgment for the Agents, finding genuine issues of material fact as to whether the plaintiff told the insurance agent Stith about the condition of the property and whether someone forged his signature on his application, but affirmed the grant of summary judgment for Indiana Insurance Company, concluding that the insurance company properly relied on the representations of fact in the application. Schmidt v. Ind. Ins. Co., 24 N.E.3d 516, 520 (Ind.Ct.App.2015). We granted transfer and now review the Agents' motion for summary judgment, but summarily affirm the decision of the Court of Appeals with respect to the grant of summary judgment in favor of Indiana Insurance Company. Indiana Appellate Rule 58(A)(2).

In their summary judgment motion, the Agents asserted that there was no genuine issue of material fact as to “whether [the plaintiff] made a material misrepresentation or omission of fact on his application for insurance, precluding coverage, or alternatively, [that the plaintiff could not] prove he was damaged by [the Agents'] conduct....” Appellant's App'x at 65 (emphasis added). In its summary judgment motion, Indiana Insurance asserted that it properly denied the plaintiff's claim because the false representations rendered the policy void under the conditions of the policy and voidable at its discretion under Indiana law.

The trial court granted both motions for summary judgment, finding that the plaintiff's insurance claim “was properly denied because of the representation made to Indiana Insurance Company that the property would be tenanted and was not undergoing renovations at the time the insurance was issued and that such misrepresentation was material,” that the plaintiff “failed to prove the essential elements of causation and damages,” and that the plaintiff failed to provide evidence “that any insurance company would have issued a policy on a house in its state and condition.” Id. at 8–9. Finding no proof on these “key elements,” the trial court concluded there were no genuine issues of material fact. Id. at 9.

In challenging the trial court's grant of summary judgment in favor of the Agents, the plaintiff essentially argues that the Agents failed to make a prima facie showing of no factual dispute as to (1) the non-availability of fire insurance that would have covered the plaintiff's property, and (2) the plaintiff's ratification of a dwelling insurance application that inaccurately described the dwelling.

As the moving party, the defendants carried the initial burden of affirmatively negating the plaintiff's claim by demonstrating “the absence of any genuine issue of fact as to a determinative issue, at which point the burden shifts to the non-movant to come forward with contrary evidence showing an issue for the trier of fact.” Hughley v. State, 15 N.E.3d 1000, 1003 (Ind.2014) (internal quotations and citation omitted). We review summary judgment de novo, applying the same standard as the trial court: summary judgment is appropriate where, drawing all reasonable inferences in favor of the non-moving party, “the designated evidentiary matter shows that there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law.” Id. (quoting Williams v. Tharp, 914 N.E.2d 756, 761 (Ind.2009) (quoting T.R. 56(C) )). “Summary judgment is appropriate when the undisputed material evidence negates one element of a claim.” Estate of Mintz v. Conn. Gen. Life Ins. Co., 905 N.E.2d 994, 998 (Ind.2009) (citing Rhodes v. Wright, 805 N.E.2d 382, 385 (Ind.2004) ).

To succeed at trial on his claim for negligent procurement, the plaintiff needed to demonstrate (1) a duty defendants owed him, (2) a breach of that duty by the defendants, and (3) an injury to him proximately caused by the breach. See French v. State Farm Fire & Cas. Co., 881 N.E.2d 1031, 1039 (Ind.Ct.App.2008) (citing Ford Motor Co. v. Rushford, 868 N.E.2d 806, 810 (Ind.2007) ), trans. not sought. Similarly, under the Crime Victims Act, the plaintiff needed to establish that he suffered the...