### IN THE COURT OF APP EALS OF TENNESS EE AT KNOXVI LLE D ec em be r 6, 200 4 S es sio n
DENIS E WASS OM v . STATE FARM MUTUAL AU TOMO BILE IN SU RA NC E C O.
Appeal f romthe Law Cou rt for Sulli van Coun ty No. C35276 Richard E. Ladd , Judge

No. E2004-00098-COA- R3-CV - F ILED FEBRUARY 24, 2005

Denise Wassom (“Plaintiff” ) loane d her c ar to he r ex-boy friend w ho then had a single -ca r ac cident while making a bee r run. Plaintiff’s ve hicle was a total loss. Fe aring that her e x -boy friend mig ht be arr e ste d f

or DU I , Pl a int if

f r e po rt e d to the po lic e that he r c ar h a d b e e n s tol e n. Pla int if f’ s v e hic le was insure d throug h State Fa rm Mutual Automobile I nsuranc e Company (“State F arm” ). Plaintiff also repor ted to State Fa

rm that her c ar ha d been stolen. A pproxi mately two wee ks into State F arm’s investigation, an adjustor for State Fa rm interviewe d the witnesses whom Plaintiff claimed to have be e n wi th at th e tim e he r v e hic le wa s st ole n. I mme diate ly a ft e r the se int e rv ie ws , Pl a int if f “ c a me
c le a n” a ndtol d St a te F arm the truth . St a te F arm

de nie d Pl a int if

f’ s c la im a ndPlain ti ff f

ile d s uit claiming State Fa

rm was in bre ac h o f co n t ra ct. State Fa rm filed a motion for summary judgme nt claiming t he undisputed material fac ts demonstrated that Plaintiff had ma de material misrepre sentations with the in t en t t o d eceive. The Trial Court g rante d State Fa rm’s motion for summary judgme nt, and Plaintiff appea ls. W e af firm.

Te nn. R . A pp. P . 3 App e al a s o f Rig ht ; J udgm e nt of t he Law Court Affi rm ed; Case R em anded

D. M I CH A EL S WI NEY , J ., delivere d the opinion of the court, in which C H A RLES D. S US ANO , J R ., and S HAR ON G. LEE , J J ., joined.

Ge or g e To ddEa st, Ki ng sp ort, T e nn e sse e , f or theAp pe lla nt D e nis e Was so m.

L eslie T. Ridings, King sport, Tenne ssee, f or the Appe llee State F arm Mutual Automobile I nsuranc e C o m p a n y.It i s a C l ass D f elo ny t o “[i ]nit i ate a rep o rt o r st atem en t t o a law en fo rce m en t o f f i ce r co nc ern i ng an o f

fen se 1

o r i nci d ent wi t hi n t he o f f i cer' s co ncern know i ng t hat

... t he o f fense or i nci d ent r e p o rte d d i d not o ccur ... [or] t he i nf ormat i on r el at i ng t o t he offens e r eport ed i s f al s e...

. ” See T en n. C o d e A nn

. § § 3 9

- 1 6

- 5 0 2 (a)(1 ) an d (b )(1 ). A C l ass D felo n y is p u n ish a b le w ith im p riso n m e n t o f n o t le ss th a n two (2 ) ye a rs no r m o re tha n twe lve (1 2 ) ye a rs . A fi n e no t t o
e x c e e d fi v e tho u sa n d d o llar s ($ 5 ,0 0 0 ) m a y a lso b e im p o se d

. See T enn. C o d e A nn. § 4 0

- 3 5

- 1 1 1 (b)(4).
-2- OP IN ION

Bac kgr ound

Pla int if f w a s insu re d thr ou g h an a uto mob ile ins ur a nc e po lic y iss ue d b y Sta te F arm

. Af te r P la int if

f’ s v e hic le wa s to ta le d ina sin g le -c ar a c c ide nt andState F arm re fu se d to pa y he r c la im, Plaintiff filed this suit claiming State Fa rm had bre ache d the i n s u ra n ce co ntrac t. The issues on appea l conce rn whe ther Plaintiff’s a dmitted post-loss misrepre sentations wer e such that St ate F arm could re fuse to pay

Plaintiff’s claim.

The unde rly ing f

acts in this case are not in dispute. On the eve ning of Fe bruary 27, 2002, Plaintiff was at her house with her ex -boy friend, Michael P err y (“Per ry ”). Kenny

Stanley and Nicole Stanley

wer e also at h er house. Plaintiff loaned Per ry her c ar ke y s, and Perry

and Ke nny Stanley left to g o buy

some bee r. Perry

had a sing le-c ar a ccide nt while on the beer run. Ac cording to Plainti ff, whe n Perry and Stanley returne d to her house “ [w] e all we nt inside and they come up with t h e st ory , which I

went along with it, of calling the police a nd reporting it stolen.” Plaintiff te sti fi e d inhe r d e po sitionthat sh e we nt a lon g wi th the “ sto ry ” be c a us e sh e wa s af raid P e rry wo uld g et into trouble bec ause “ [h] e had me ntioned may be g etting a

DUI .” Perr y an d t h e S t anley s left Plaintiff’s residenc e shortly afte r Plaintiff ca lled the police a nd reported her vehicle stolen. 1

Pla int if f a lso re po rt e d to Mik e Capp e ll ( “ Capp e ll” ), a n in su ranc e a dju sto r f or State Fa rm, that her c ar ha d been stolen. Plaintiff told Cappell that on the evening in que stion, she le ft her house and w as with Perry and the Stanley s. Her story to Cappell was that while she was a way from he r h ou se , s ome on e br ok e int o the h ou se, to ok only he r c ar k e y s, a ndthe n s tol e he r c ar. Capp e ll sp e c if ic a lly a sk e d Pl a int if

f i f s he ha d loane d he r c ar to a frie nda ndsh e re sp on de d th a t sh e ha d n ot. Plaintiff also denied knowing the identity of who wa s driving he r ca r whe n it was wre cked.

Ba sed on Plaintiff’s re port that her c ar ha d been stolen, State Fa rm provided Plaintiff wi th an “ Af

fi da vit of Ve hic le Th e ft ,” wh ic h sh e c omp le te d a nd re turne d to State F arm . T he a ff ida vit was sig ned by

Plaintiff under oath and notarized. I n the aff idavit Plaintiff stuck to he r “story ” that the car had been stolen, stating that the l ast time she saw her vehicle was when she left her house at 7:30 p.m. on Febr

uary 27 . Plaintiff added that she was wi t h Perry and the Stanley s until she th returne d home ar ound 2:30 a.m., at which ti me s he dis cover ed her car key s and vehicle wer e g one.

Don B eedle (“Beed l e” ) i s an adjuster with State Farm who handles fir e and the ft claims. Be cause Plaintiff’s claim i nvolved a theft, t he claim was transfe rre d from Cappe ll to Bee dle. Be edle inter viewed Plaintiff a bout her c laim, and she told him t he same version of e vents that she ha d to ld C app e ll. B e e dle a lso inf orme d Plai nti ff that he ne e de d to inte rv ie w Pe rry a ndthe Sta nle y s.T he t i m e f ram es p rovided b y t he Stanl eys and P erry did no t co rr o b o rat e P l ai nt i f f ’ s vers i o n of event s o n t he 2

e v e n ing he r c a r w a s sto le n

. -3- Unfortunately , neither Per ry nor the Stanley s had telephone s so Be edle mailed them letters saying that he ne e de d to mee t w iththe m to dis c us s Plaint if f’ s c la im. B e e dle ne ve r r e c e ive d a ny re sp on se and re -sent the letter s via ce rtified mail. Afte r a c ouple of day s had passed and B eedle had not

r e c e i v e d t h e r e t u r n r e c e i p t s f o r t h e c e r t i f i e d l e t t e r s , P l a i n t i f

f t o l d B e e d l e t h a tP e rr y a n d t h e S t a n l e ys
we re no t g oin g to p ic k u p th e c e rt if ie d le tte rs . T he n o ne mornin g , “ [o]ut of th e blu e ” B e e dle

rec eived a telephone c all at 8:30 a.m. from Nic ole Stanley stating she , her husba nd, and Perry “we ’re

rea dy to talk to y ou now.” The y ag ree d to me et with B eedle that morning at 9:00 a.m. Acc ording to Be edle:

About 10 minutes later Ms. W as s o m called me and said,

“Don, I ’ve be en trying to ge t ahold ... of the Stanley s and this Perry fellow. The y ’re just not going to cooper ate. The y don’t want to g et involved and they ’re not going to w o rk wi th y ou and they ’re not g oing to he lp me on this.”

... I said, “De nise, would y ou believe that I just hung up the phone with Ms. St anley and they are on their wa y out here rig ht no w and they will be here ... [i n about] five to 10 min ute s. ” An d th e re wa s a lon g paus e a ndsh e we nt, “ Oh , o kay . A ll rig ht. Good. Well, then never mind,” and hung up.

Fi v e o r 10 minutes passed and sur e enoug h, they wer e standing out in the lobby , the Stanley s. Right on time.... And I sat down and inter viewed t hem and I interviewe d Perry . And as I was
wa lki ng on e of

the tw o o ut b e c a us e I

didit i nd ivi du a lly , in to m y lob by , I sa w D e nis e c ome in the front do or . A ndI c ou ld t e ll something w as g oing on.... I could just te ll that those two w omen – they wer e g iving e ach othe r some funny looks and I g ot a sense that something w as not – not rig ht here

.
So I interviewe d the Stanley s, interviewed Perry and 2 dismiss ed them and g ave th em my car d, shook their hand a nd sent them down the road. And Denise said, “I need to spe ak to y ou now. There ’s something I ’ve g ot to tell y ou.” And I – I just knew what wa s coming . And we went back to my confe renc e room ... a nd she said, “L oo k, I misled y ou. I

did not tell y ou the truth,” a nd then she proce eded to tell me what happene d which wa s tha t s h e h ad g iven Michae l Perry

permission to drive her

car , he’d wre cked it and he ’d been drinking a nd they

wer e trying to protec t him from getting a DUI

arr est and the r est kind of unfolded f rom there

.T enn

. Co de Ann. § 39

- 14

- 13 3 provi des t hat “ [ a] ny per s on wh o i nt ent i onal l y pre s ent s or cau s es t o be pres ent ed 3
a f al se or f

raudulent cl ai m , or any p roo f i n s up p o rt o f

such cl ai m , for t he p ayment o f a l o ss , or o t her bene f

i t s, upo n any
con t r ac t of

i n s u r an ce cov er ag e, or au t omobi l e c ompr eh en s i v e or col l i s i on i n s u r an ce , or c er t i f i ca t e of s u ch i n s u r an ce or p re p a re s, m a k e s o r su b sc rib e s to a false o r fra u d u le n t ac c o u n t, c e rtifi c a te , a ff id a v it o r p ro o f o f l o ss, o r o the r d o c u m e n ts

or w r i t i n g , w i t h int ent that t h e s ame ma y be pr es en t ed or u s ed i n s u ppor t of s u ch c l ai m, i s pu n i s h ed as i n t h e ca s e of the ft. ”
-4-

At her pr e-tria l deposition P laintiff ac knowledg ed af firmatively misrepre senting that her c ar ha d been stolen, that she had not loa ned her car to a friend, that she did not know who wa s driving the ca

r whe n it was wre cked, e tc. Plaintiff admitted she knew that she wa s under oath when sh e pr ov ide d th e false inf

orma tio n inhe r a ff

ida vit . Pl a int if

f f urthe r a c kn ow le dg e d th a t

th e“ Af fi da vit of Ve hicle The ft” specifica lly stated t hat i t was “a crime to knowing ly provide fa lse, incomplete, or

m i s l e a d i n g i n f

o r m a t i o n t o a n i n s u r a n c e c o m p a n y f o r t h e p u rp o s e o f

d e f r a u d i n g t h e c o m p a n y. Penalties ... [include] imprisonment, fines, an d denial of insura nce be nefits.” Af ter re porting the vehicle stolen, Plaintiff a lso s i gn ed a d ocument titled “Consent to Move and Examine Property ,” when she still was claiming her vehicle had been stolen. This doc ument also contained the above

warning to the e ffe ct that it was a c rime to provide false information to an insurance company , and

e ve n th ou g h Pl a int if

f r e a d th is w arn ing , s he ne ve rthe le ss p ro c e e de d to sig n th e do c ume nt. 3

Be edle testified in his depositi on that Plaintiff’s reporting that the vehicle had bee n stolen aff ecte d the cour se of State F arm’s inve stigation. Accor ding to B eedle :

I f Ms

. Wa s s o m w o u ldh a v e p r e s e n te d th e f a c ts a s they actua lly occurred, w e would have interviewe d Mr. Perry to confirm that. We would have se en if there we re any specific injuries, if we ha d a ny a dd iti on a l e xpos ur e s. ... [W]e ha d th e po te nti a l f or pr op e rt y damag e, liability . We had the exposure for bodily injury exposure and we had medica l pay ments exposure if there was a ny injuries.

No r ma ll y w h e n a v e h ic le ’ s r e n d e r e d a

to ta l l o s s a n d f

li pped on its roof

... y ou’re probably g oing to have some injuries somewher e
o r p o t e n t i a l l y s o m e

– a n o t h e r v e h i c l e ’ s b e e n h i t , s o m e f i x e d p r o p e r t y, mailbox , tree s, fenc es. You just n ev er know . So that would have been inve stigated ....

Be edle then a dded that bec ause the loss wa s re p o rted a s a theft, “ all that [pot ential incre ased exposure] ... was not there.” I n other words, had the truth been r eporte d, State Fa rm “would ha ve be e n in ve sti g a tin g the e xpos ur e s f or ou r pot e nti a l liab ili ty iss ue s for fi xed pr op e rt y , me dic a l is su e s,
me dic al li abi li ty

... we stoo d a la rg e – mu c h la

rg e r i nc re a se of

e xpos ur e the re .” I t is a lso wo rth noting that if the vehicle ha d been damag ed af ter be ing stolen, St at e Farm would have had a subrog ation claim ag ainst the thief to the extent of any payments made by

State Fa rm to Plainti ff.

Be edle f urther te stified that State Fa rm provided Plaintiff with a r ental ca r immediately

afte r the a ccide nt. Be edle state d that, acc ording to the p o l icy , “[i] f the loss was-5-

submitt ed as a collision claim and the vehic le was r ender ed a total loss, the policy only g ives y ou five a dditional day s of renta l loss afte r an offe r to se ttle ha s been made.” Be cause Plaintiff chang ed he r s tory du ri ng the inv e sti g a tio n, sh e wa s p ro vid e d w ith a re nta l c ar f

or a lon g e r p e ri odof

tim e beca use it took S t at e Fa

rm more time to complete its investig ation and make a dec ision about the claim.

P lain tif

f’ s in su ranc e po lic y

c on tains the fo llo wi ng pr ov isi on re g ard ing fa lse

re pr e se ntatio ns :

There is no coverag e under this poli cy

if y ou or any

other pe rson ins ur e d u nd e r this po lic y ha s mad e fa lse state me nts wi th the int e nt t o
c on c e a l or

mis re pr e sent a ny

ma te ri a l f

a c t or c ir c ums ta nc e s in

c o n n e c t i o n w i t h a n y c l a i mu n d e r t h i s p o l i c y.

Pla int if f’ s d e du c tib le wa s $ 25 0 f or pr op e rt y da ma g e to h e r v e hic le re su lti ng fr om a collision when her c ar w as being driven by an insured driver. The policy define s an insured drive r to include any one oper ating Plaintiff’s vehicle w ithin the scope of he r conse nt and, there fore , Perry
was a n insu red driver. How ever , there was no a pplicable de ductible if Plaintiff’s vehic le was damag ed af

ter be ing stolen.

State Fa rm filed a motion for summ ary judgme nt claiming Plaintiff wa s not entitled to any proce eds from her insurance policy beca use of he r intentional and mate rial misrepre sentations

a ndhe r fa ilu re to co op e rate in the inv e sti g a tio n of the c la im by no t tell ing the truth . St a te F arm a lso claimed Plaintiff’s misrepr esentations lengthe ned the investiga t i o n and incr ease d the expenses attendant ther eto.

The Trial Court gr anted State F arm’s motion for summary judgme nt a fter c oncluding the material fac ts were not in disput e and r easona ble m inds could re ach only one conc lusion, which was that Plaintiff intended to de ceive State Fa rm as to material fac ts r eg arding her loss. The Trial Cou rt a lso held th at it was no t ne c e ssa ry fo r S tate F arm

to s ho w an in c re a se in the ri sk of los s resulting from the misrepr esentations.

Plaintiff appea ls claiming the Trial Court er red w hen it g rante d State Fa rm’s motion for summary

judgme nt because there wer e g e n u in e issues of mate rial fa ct re g arding whether Plaintiff int e nd e d to de c e ive State F arm a ndwh e the r the mis re pr e se ntatio ns we re ma te ri a l.

Discussion

I n Bl air v . W est T ow n Mal l , our Supreme Court r ece ntly reiter ated the sta ndards

app lic able wh e n a

pp e llate c ou rt s a

re re vie wi ng a

mot ionfo r s umm ary

jud g me nt. Bl air

v . W e st To wn Ma ll , 130 S.W .3d 761 (Tenn. 2004) . I n Bl air , th e Cou rt state d:-6- The standa

rds g overning an appe llate court’s revie w of a motion for summary

judgme nt ar e well settled. Since our inquiry inv olv e s p ur e ly

a que sti on of

la w, no pr e su mpt ionof c or re c tne ss
a tta c he s to the low e r c ou rt ’s jud g me nt, a ndou r t a sk is c on fi ne d to revie wing the re cord to de termine whe ther the r equ irements of Tenne ssee Rule of Civil Procedur e 56 have been me t. See Staples v

. CBL & Assoc., Inc

. , 1 5 S .W .3 d 83, 88 (T e nn . 2 00 0) ; Hunter v. Br own , 9 55 S.W. 2d49 , 5 0- 51 (T e nn . 1 99 7) ; Co wd e n v

. Sovran Ba nk /Ce ntr al S ou th , 816 S.W .2d 741, 744 (Tenn. 1991) . Tenne ssee Rul e of Civ il Pr oc e du re 56 .0 4 pr ov ide s that su mma ry jud g me nt is appropriate whe re: 1) the re is no g enuin e i s sue with reg ard to the

mate r ia l f

a c ts r e le v a n t to th e c laim o r d e f e n s e c o n tain e d in the motion, and 2) the moving party is entitled to a judg ment as a matter of law on the undisputed fac ts. Staples , 15 S.W .3d at 88.

* * *

Whe n th e pa

rty se e kin g su mma

ry jud g me nt m ake s a

pr op e rl y
su pp orte d mo tio n, the bu rd e n s hif ts t o th e no nmo vin g pa

rt y to set forth spec ific fa cts establishing the exi stence of disputed, material f

acts which must be resolved by the trier of fac t.

To pr op e rl y su pp ort it s mo tio n, the mov ing pa rt y mus t either a ffirmatively

n egate an esse ntial element of the

non-m o ving pa

rty ’s claim or c onclusively establish an aff irmative d efe nse. I f the moving party fails to neg ate a
c la ime d b a sis fo r the su it, the no n- mov ing party ’s bu rd e n to produce evidenc e esta

blishing the e x istenceo f

a g e n u ine issue for tria l is not t rig g ere d and the motion for summary judgme nt must fail. I f t he moving party succe ssfully

neg ates a claimed ba sis fo r the a c tio n, the no n- mov ing pa rt y ma y no t si mpl y

re st upon the pleading s, but must offer proof to establish the exis tence of the e ssential elements of the claim.

Bl air , 1 3 0 S

. W

. 3 d at7 6 3 -6 4 , 7 6 7 (q u o t i n g Staples , 15 S.W .3d at 88-89).

Our S upreme Court also has provided instruction reg arding assessing the evidenc e wh en d ea l i n g wi th a m o t i o n fo r s u m m ar y j u d gm en t , s t at i n g:

The standa

rds g overning the ass es s m ent of e vidence in the

su mma ry jud g men t con te xt ar e a lso we ll e sta bli sh e d. Cou rt s mu st vie w the e vid e nc e in the lig ht m os t f a vo ra ble to the no nmo vin g pa

rt y-7- and m u s t also draw all rea sonable infe renc es in the nonmoving party ’s fa vor. See Robinson v. Om er , 9 52 S.W. 2da t 42 6; Byrd v. Ha ll , 847 S.W .2d at 210-11. Courts should gra n t a summary judgme nt o n l y when both the facts and the infere nces to be draw n from the fa ct s permit a re asonable person to re ach only one conclusion. See McCall v. Wil der , 913 S.W .2d 150, 153 (Tenn. 19 95 ); Carvell v. Bottoms , 900 S.W .2d 23, 26 (Tenn. 1995)

. Staples v. CBL & Assocs., Inc

. , 15 S.W .3d 83, 89 (Tenn. 2000)

.

Be fore we discuss whether the Trial Court pr operly g rante d State Fa rm’s motion for summary judgme nt, we note that this ca se does not involve a misre prese ntation alleg ed to have be en made in an a

pplication for insura nce. In case s involving misrepres en t at i o n s in an application for insurance , the Tenne ssee L eg islature has se t forth spec ific instructions on what must be prove n for such misrepre sentations to be deeme d materia l in or der f or cove rag e to be voided. Spec ifically , a misrepre sentation in an application for insuranc e cannot be dee med materi al “u n l ess such misrepre sentation or wa

rra nty is made with ac tual intent to deceive , or unless the matter repr esente d incre ased the risk of loss.” Tenn. Code Ann. § 56-7-103. T his statute was passe d orig inally in 1895 and ther e ar e numer ous case s discussing its application.

The number

of ca ses addr essing post-loss mis r e p r e s e n ta ti o ns are not as plentiful. The following g ener al discussion is contained in 46A C.J .S. Insurance § 1249 (1993 & Supp. 2004):

An insuranc e compa ny

has a c ompelling inter est in and a rig ht to a c c ur a c y

in the pr oo f o f l os s f

orm s; and in s ome po lic ie s th e re is a provision that any

fraud or fa lse swea

ring by insured re lating to the los s o r in th e p r o o f

s o f lo s s f o r f e it s a n y r ig h t o f r e c o v e r y b yhim, a usual provision being that the pol icy shall be void in case of any fraud or fa lse swea

ring by insured touching any

matter re lating to the insurance or the subjec t thereof , whether befor e or a fter a

loss.

* * *

Gene rally speaking , false swea

ring consists in knowing ly and int e nti on a lly statin g on oath w hat is no t tr ue , o r the state me nt o n o a th of a f act a s true which the insured does not k n o w t o be true , and wh ic h h e ha s n o r e a so na

ble g ro un d for

be lie vin g to b e true . T o a vo id the po lic y , th e fa lse state me nts mus t ha ve be e n ma de int ent io na lly

a ndwi llf ull y ; a ndun de r so me a uth ority , a lth ou g h no t a ll, the y mus t have be en made with an intent to dece ive or de fraud.

To establish the def

ense of misrepre sentati o n of proof s of los s , an ins uranc e compa ny must demonstrate that re prese ntations-8- made by insured we re r eleva nt, material an d i ntentionally false. Ho we ve r, a

mis re pr e se ntatio n aft er los s n e e d o nly be ma de wi th actua l intent to deceive the insurance company and be relate d to the

m at t erwh i ch i s m at er i al

. Un d er p o l i cyp ro v i s i o n s v o i d i n g co v er age for f raud or fa lse swea

ring , conce alment or misrepr esentation,

rec overy will be denied to insured who has made de liberate materia l misstatements in a sworn proof of loss. Rights under a

policy are not t o b e for feited e x cept f

or conc ealment or

misrepre sentation relative to the loss claimed.

An ins ur a nc e c omp a ny

ne e d n ot e sta

blish that it

re lie d to its pr e jud ic e up on fa lse or

fr a ud ule nt s ta te me nts in a pr oo f o f l os s in

o r d e r t o e s t ab l i s h a

b r e a c h o f c o n tr a c ta n d v o i d t h e p o l i c y.

* * *

Gene rally , the issue of whe ther insure d’s fa lse s ta te me n t t o the ins ur a nce c omp a ny

wa s kno wi ng ly

a ndint e lli g e ntl y

ma de wi th knowledg e of its fa lsity , and wi t h i n t ent t o defr aud, is a que stion of fac t.... The materiality

of fa lse repr esent at i o n s to an insuranc e company for recove ry on a cla im is a mix ed question of law and fa ct which can be decided as a matter of law if re asonable minds could not differ

.
46A C.J .S. Insurance §1249, at pp 77-79 (c itations omi tted). Ac c or d 44 Am. J ur. 2d Insurance § 1371 (1982 & Supp. 2002) (Under policy provisions which provide that f alse swearing will relieve the ins ur e r f

ro m li a bil ity , “ fa lse state me nts a s to ma te ri a l matte rs wi llf ull y ma de by

the ins ur e d in proofs of loss with the i ntention of deceiving the i nsurer will preclude any

rec overy on the policy

by the ins ur e d; andc on ve rs e ly , to c on sti tut e fr a udor fa lse sw e ari ng un de r s uc h a pr ov isi on , th e re mus t be fa lse statements willfully made with respect to a material matter and with the intention of thereby dece iving the insure r.... The motives prompting an insure d to swear falsely are ... immaterial; and even thoug h his purpose in so doing is not t o cheat the insurer, but to ac complish some other end, the fa lse statement avoids the policy .”)( citations omitt ed).

I n Nix v . S e ntr y In s. , 666 S.W .2d 462 (Tenn. Ct. App. 1983), the plaintiff suffe red a fire loss and f

iled suit after the defe ndant insurance company ref used to pay

the loss. The issues at trial ce ntere d around w hether the pl aintiff had committed arson and whether the pl aintiff had ma de materia l misreprese ntations reg arding what property actua lly was de stroy ed by

the fire and its value. The trial c ourt held that while the pla intiff h ad n o t committed arson, he ha d made mate rial misrepre sentations reg arding the value of the prope rty

destroy ed in the fire which re lieved the defe ndant of any liability for the loss. Id

. at 462. On appeal, this Court concluded that the evidenc e did not preponde rate ag ainst the trial court’s conclusion that the plaintiff had not c ommitt ed ar son.-9-

However , we r ever sed the trial c ourt’s conc lusion that the plaintiff had made materia l misrepre sentations. I n so doing, w e stated:

I t should be noted that we a re not he re de aling with an alleg ed materia lly

false statement made in a n application for insura nce. Such

a s t a t e m e n tw o u l d v o i d t h e p o l i c y ab ini tio

. Bre we r v s. Mi d- W e st National Life Insurance Company of Tenne ssee , (1979 M.S. Tenn. Ap p. ) 6 05 S.W .2 d 232. We a re he re de a lin g wi th a lle g e dly fa lse statements or fa lse swea

ring s made subsequent to the i ssuance of the policy and in c onnection with a l o s s

. I n Boston Marine Insurance Company vs. Sc ales , ( 18 99 ) 1 01 Te nn . 6 29 , th e Te nn e sse e Sup re me C o u r t h a d b e f

o r e i t a n i n s u r a n c e p o l i c y w i t h s i m i l ar p r o v i s i o n a s in this case. The insurer de fende d on the basis of an a lleg ed fa lse proof of los s a s a n a vo idanc e of

the po lic y . The Cou rt

he ld that in or de r t o
v o i d t h e p o l i c y

a n y f a l s e s t a tements in a proof of loss must be will ful ly fa ls e in s om e ma te ria l m att e r a nd ma de with int e nt to dece ive

.
Nix , 666 S.W .2d at 463-64 (e mphasis added) . The Nix Cou rt the n q uo te d th e fo llo wi ng fr om Boston Marine :

When the false sw earing is in the application it f orms the basis upon wh ic h th e con tr act re sts , a ndif fr a ude nte rs int o it

the po lic y

wo uld be voided e ven thoug h the policy does not so provide. B ut after the loss occurs then voiding the policy i s in the nature of a pe nalty or fo rf e itu re ; in oth e r w or ds , in suc h ca se s the ho ldi ng is v irtua lly that, altho u g h the insured ha s had a loss, and may be entitled to re cover from it, y et, as he has bee n g uilty of fraud i n the proofs, he must have his policy vacated and se t aside as a pu nishment for such f

raud, or attempted fr aud. In the latter c ase, a s in all case s of forf eiture, a strict construction should be a dopted, and the f orfe it u r en o t e nforc ed except

on the plaine st g ro un ds , if a t a ll.

See Nix , 6 66 S.W. 2da t 46 3- 46 ; Boston Marine , 101 Tenn. 628, 49 S.W. at 746 (Tenn. 1899).

After aff irming the trial court’s decision that the plaintiff ha d not committed arson,

we held “that if rig hts a

re to be forf

eited under the terms of this insuranc e policy , the conc ealment

or m isrepre sentation made must be relative t o the l oss claimed.” Id

. at 464. We then revie wed the evidenc e pertaining to the alleg ed misrepre sentations reg arding the value of items alleg ed to have been de stroy ed in the fire , and conc luded that the evide nce did not support a co n cl u s i o n t h at the p l ai n t i ff h ad made a ny

materia l misreprese ntations on these matters. Id. at 464-65. S e e a l so Matthews v. Auto Owners Mutual Ins. Co. , 68 0 F. Supp. 287, 289 (M.D. Te nn. 1988)(“ Under Tenne ssee law ... materia l misreprese ntations made in a proof of l o s s s t at em en t do not void anT her e i s no p r oo f i n t he r ecor d t hat P l ai nt i f f m i s r epre s ent ed her car t o be s t ol en i n or der t o avoi d hav i ng t o pay 4
the $ 2 5 0 d e d u c tib le a sso c ia te d w ith a c o lli sio n c la im , o r to o the rw ise c h e a t S ta te F a rm o u t o f an y m o n e y.

-10- insurance policy , unless evidenc e esta blishes, on the plainest g rounds, that the misrepr esentations

wer e willfully

and knowing ly

made with the intent to dec eive or defr aud the insure r.”)

.
T h e m ore r ece nt case of Joyne r v. Omaha Prope rty and Casualty Ins. Co. , N o. 02A01-9301-CV- 00021, 1993 Tenn. App. L exis 518 (Tenn. Ct. App. Aug

. 4, 1993), no ap pl. pe rm appeal filed , involved a cla im pursuant to an automobile insurance policy afte r the insured vehic le, a 1988 Pontiac F irebird, wa s stolen for a se cond time. The f ir s t t i m e t h e v eh icle wa s stolen the plaint if f r e po rt e d the t heft to th e po lic e . H ow e ve r, the plaint if f d id n ot r e po rt

the fi rs t th e ft

to h is insurance company

beca use the ve hicle wa s rec overe d the very next day . The ve h i cl e wa s stolen ag ain less than two months later. Joyne r , 1993 Tenn. App. LEXI S 518, at *1. One of the issues on appea l was whe ther the pla intif f’ s alleg ed post-loss misrepre sentations rende red the insurance

cover ag e void. One of

the alleg ed misrepr esentations invol ved the plaintiff be ing a sked if he ha d h a d a n y other ca rs s t olen, and his re sponse that he ha d not. The def endant insura nce c ompany claimed the pla intiff had mate ri al l y m i srepr esente d the first theft. How ever , the plaintiff cla imed in an af fidavit that he understood the question to mean whe ther a ny car s other than the 1988 Pontiac had bee n stolen. The other claimed misrepr esentations centere d around the plaintiff’s re sponse on the c la im f

orm a bo ut d a ma g e inc ur

re d to the ve hi cle fr om the fi rs t th e ft . We no te d th a t th e c la im form did not have a

place for a n explanation and the plaintiff had e x plained his response to the insurance company

. Id . at * 7. The Joyne r Cou rt the n re vie we d the app lic able la w r e g ard ing po stlos s mi sr e pr e se ntatio ns , c on c lud ing th at the p re va ili ng la w i n th is j urisd ic tio n r e g ard ing po st- los s misrepre sentations was that the “f alse stateme nts must be willfull y false in some material matter and made with the intent to dec eive.” Id . at ** 14 -1 5. We the n n ote d that in ten t to de c e ive wa s a question of fa ct and ther e we re g enuine issues of material fa ct re g arding whether the plaint i ff intended to dec eive the insurance company . Acc ording ly , we r ever sed the trial c ourt’s g ranting of

su mma ry jud g me nt t o th e de fe nd a nt.
Returning to the prese nt case , there is no doubt that P laintiff made se vera l wi l l ful misrepre sentations. Plaintiff claims summary judgme nt was not appropriate bec ause g enuine issues of material fac t exi st reg arding whether she: (1) intende d to dece ive State Fa rm; and (2) whether

the misrepre sentations wer e material. As to the first issue, State F ar m h as t he burde n of proving that Plaintiff either intende d to dece ive or de fraud the insurer . State Fa rm does not claim Plaintiff’s intent was to defr aud. Rather, State Fa rm asserts that the undisputed material fa cts demonstrate that Pla int if f i nte nd e d to de c e ive State F arm

. 4

I n h e r b r ie f, Pl a in ti f

f s imp ly a s s e r ts th a t s h e h a d n o in te n t to d e c e iv e St a te Farm beca use she w a s “ me r e ly a tt e mp ti n g to p r o te c t th e th ir d p ar ty d r iv e r f r o m p e r c e iv e d c r im inal pr o s e c u t i o n

. ” W e b e l i e v e t h i s ar g u m e n t m i s i n t e rp r e t s a n i n t e n t t o d e c e i v e v e r s u s a n i n t e n t to de fr aud . T he un dis pu te d mate ri a l f a c ts d e mon str a te wi thou t qu estion that Plaint if f i nte nd e d to dece ive State Fa

rm about how the accident occurre d. Plaintiff admitted in her de position t hat she-11-

lied to State Farm over and over a g ain and in fa ct lied under o at h and continued this course of de c e pti on up un til the tim e B e e dle int e rv ie we d Pl a int if f’ s a l l e g e d w i tn e s se s a ndhe r “ sto ry ” fe ll a pa rt

. Sin c e we are re vie wi ng a g rant o f s umm ary

jud g me nt, we mus t a nddo a ssu me th at Pla int if f i s
c o rr e c tw h e n s h e c l a i m s h e r m o t i v a t i o n f

o r m ak i n g t h e m i s r e p r e s e n t a t i o n s w a s t o p r o t e c tP e rr y. Even so, this does not chang e the undeniable fac t that she i ntended to dece ive S tate Farm during the

course of protec ting Per

ry . We fail to see how Plaintiff can contend in any serious manne r that she did not intend to dece ive S tate Farm when she admit tedly lied about her car being stolen, lied about whether she loane d the ca

r to a friend, lied about kno wi n g who was driving the c ar w hen it was

wr e c ke d, su bmi tte d a

sw orn a ff

ida vit wi th f a lse te sti mon y , e tc . T his iss ue is w ith ou t me ri t.
Plaintiff’s primary

arg ument on appea l involves the next issue, which is whethe r her admitted misrepre sentations wer e material. Plaintiff arg ues that the mi s re p re sentations wer e not materia l beca

use S tate Farm was not prejudice d by the lies and be cause the damag e to her car was
a cove red loss reg ardle ss of whether the car w as stolen or be ing driven by Perry with her pe rmission at the time of the a ccide nt. The Tria l Court held that the misrepre s entations wer e material and further held that State Fa

rm was not r equire d to show an incre ase in the risk of loss resulting from the misrepre sentations.

As noted pre viously , when a misrepre sentatio n i s m ad e in an application for insurance , cover ag e cannot be voided unless the insura nce com pany proves the misre prese ntation was “ made with ac tual intent to deceive , or unless the matter r epre sented incr ease d the risk of loss.” Tenn. Code Ann. § 56-7-103 (emphasis added)

. Although w e have explained that this st atute does

no t app ly to the pr e se nt c a se , w e a ssu me the Tria l C ou rt was ana log izin g to this statut e wh e n it

c on c lud e d St a te F arm

didno t ha ve to e sta

bli sh a n inc re a se d ris k of los s. I t is true un de r thi s st a tut e that an insuranc e compa ny would not ha ve to e stablish a n incre ased risk of loss if it ha s proven a n int e n t t o d e c e i v e

. W e b e l i e v e w h e n t h e L e g i s l a t u r e u s e d t h e p h r a s e “ i n c r e a s e d t h e r i s k o f l os s” it intended to re fer

to the risk of loss associate d wi t h determining whe ther a risk is insurable and, there fore , would not a

pply to c ases involving post-loss misrepr esentations. To the extent the Trial Court me ant that State Fa rm was not r equire d to pr ove that it a ctually lost money as a r esult of the misrepre sentation, we a g ree that is not a require ment under the applicable Tenne ssee law discussed previously

in this Opini on. Howeve r, it certa inly could be a

rele vant consider ation in determining whether a misrepr esentation was “mate rial.”

When an i n s u red suffer s a loss, the first step is to report the loss to the insuranc e
c omp a ny . T he fi rs t bi t of imp orta nt i nf

orma tio n th e ins ur a nc e c omp a ny ne e ds to kno w w he n it be g ins to p ro c e ss the c la im is how the los s occ ur re d. He re , Pl a int if

f i nte nti on a lly

mis re pr e se nte d th is important information. This misreprese ntation is clearly “re lative to the loss claimed.” Nix , 6 66 S.W .2d at 464. The nature of the misrepre sentation, i.e. re porting the ca r stolen, direc tly

impacted ho w St a te F arm

inv e sti g a te d th e c la im. Th is can be tte r b e un de rs too d b y e xami nin g the ov e ra ll

scena rio State Fa

rm was dealing with when Pl aintiff was insist ing that her c ar w as stolen. Pursuant to this scenario, Plaintiff’s insura nce policy only would have c overe d damag e to Plaintiff’s vehicle

. The policy

would not h av e cover ed: (1) any persona l injury

to the driver/thief ; (2) dama g e to any other ve hicles or pe rsonal injury to their occ upants; (3) pe rsonal injury to an y p edestrians or-12-

by stand er s ; o r (4 ) dama g e to any other ty pe of pr operty

resulting from the a ccide nt, such as mailbox es or fence s and the like. Plaintiff’s ve hicle wa s not involved in a minor fende r-be nder. The

car was a total loss and it either flipped or rolled over and landed on its top. Due to the sig nificant nature of the wr eck, the re w as ce rtainly more potential for

persona l injury , including injury to any p as s enger , or dama g e to other ve hicles or pr operty than would be the c ase if the car had bee n inv olv e d ina

min or a c c ide nt. State F arm was aware of the natur e of

the a c c ide nt, bu t be c aus e it b el i ev ed t h e c ar t o h av e be en s t o l en i t d i d n o ti n v es t i gat e w h et h eran y t yp e o f n o n -c o v er ed d am age or injury had take n place

. Since t here was no a pplicable de ductible, State Fa rm was r esponsible for the full amount of the loss to Plaintiff’s vehicle. The identity of the alleg ed thief also was important to State Fa

rm beca use it would have the rig ht to file a subrog ation lawsuit in the future in a n attempt to rec over any

money it ulti mately

paid to Plaintiff.

Once Plaintiff decided to c ome clean and tell State Fa rm what rea lly happene d, the

overa ll scenario dramatica lly chang ed and, f

or the most part, the opposite became true. State F arm
now was c oncerned with potential expo s u re for per sonal injuries, including possible injury to the passeng er, and property

damag e re sulting fr om the acc ident

. There was a potential for se rious pe rs on a l in

jury c la ims g ive n tha t the c ar ha d rol le d ove r an d lan de d on its top with tw o o c c up a nts in t h e v ehicle. Unfortunate ly , by this ti me it was at lea st two weeks post-a ccide nt and critical i n v e s t i g a t i o n t i m e w a s l o s t f o r e v e r

. E v e n a s s u m i n g t h a t t h e p a s s e n g e r i n t h e v e h i c l e , K e n n y S t a n l e y, ha s ma de no c la im fo r a ny pe rs on a l inj urie s, su c h a fa c t c ou ld no t ha ve be e n kno wn wi th c e rt a inty at t h e t i m e P l ai n t i ff

m ad e h erwi l l fu l m i s re p re s en t at i o n s

. I n d et er m i n i n g wh et h era mi srepresenta tion

wa s mate ri a l, the mis re pr e se nt ati on mus t be vie we d at th e tim e it w a s ma de a ndno t in hin ds ig ht. Her e, State F arm ha d the serious potential liability for pe rsonal injuries to the passe ng er, b u t was delay ed i n i t s investigation along that line for two we eks bec ause of Plaintiff’s willful misrepre sentations. I n addition, State Fa rm no longe r had a potential subrogation claim. Plainti ff

no w h a d a

$2 50 de du c tib le fo r any lo ss to he r v e hic le . T he tim e it t oo k St a te F arm to i nv e sti g a te Plaintiff’s claim nec essarily was leng thened onc e she c ame c lean and, beca use of that, St ate F arm was oblig ated to provide her w ith a renta l car for a longe r period of t ime than would have been the

ca s e h ad P l ai n t i ff

t o l d t h e t ru t h fr o mt h e b egi n n i n g.

Ba sed on the for eg o in g , w ec o n c lu d eth at P la in ti f f ’ s w il lf ul misreprese ntations indeed

wer e material and thi s is so even thoug h the damag e to her vehicle w ould have be en cove red unde r the policy

reg ardle ss of whethe r the c ar w as stol en o r b ei ng driven by Perry with Plainti ff’ s permis s i o n when the acc ident occur red. A lthough by

reporting he r ca

r stolen Plaintiff would not have ha d to pay

a $250 deduc tible, we nee d not and do not decide whether this fact, standing alone, woul d b e s u f

f ic ie n t to ma

k e h e r mi s r e p r e s e n tati o n s “ mate r ia l. ” F in a ll y , w e n o te th a t o u r holding sh ou ld n ot b e re a d a s me a nin g that a mis re pr e se ntatio n re g ard ing ho w a loss oc c ur re d a lw a y s w ill be dee med material. We simpl y concl u d e t h at t he undisputed fa cts in this case e stablish that the Tria l Co urt c or

re c tly c ha ra c te ri zedPla int if

f’ s w ill fu l mi sr e pr e se ntatio ns a s mate ri a l a ndma de wi th the intent to de ceive

. The Trial Court, the ref ore, proper ly g rante d State Fa rm’s motion for summary jud g me nt.-13- Conclusion

The judgme nt of the Trial Court is aff irmed, and this cause is rema nded to the Tria l Cou rt fo r c oll e c tio n of the c os ts be low . Co sts onapp e a l are a sse sse d a g a ins t th e Ap pe lla nt, De nis e Wassom, and her sure ty

.

__________________________________ D. MI CHAEL

SW I NEY, JUDGE