Opinion ID: 1669904
Heading Depth: 1
Heading Rank: 4

Heading: Did the trial court err in denying Nationwide's postjudgment motion for a judgment as a matter of law?

Text: Nationwide argues that the trial court should have granted its postjudgment motion for a judgment as a matter of law because, it argues, no breach of contract occurred. We review the grant or denial of a motion for a judgment as a matter of law under the following standard: `The standard of review applicable to a motion for directed verdict or judgment notwithstanding the verdict [now called a preverdict motion and a postverdict motion for a judgment as a matter of law, see Rule 50, Ala. R. Civ. P.] is identical to the standard used by the trial court in granting or denying the motions initially. Thus, when reviewing the trial court's ruling on either motion, we determine whether there was sufficient evidence to produce a conflict warranting jury consideration. And, like the trial court, we must view any evidence most favorably to the non-movant.' Glenlakes Realty Co. v. Norwood, 721 So.2d 174, 177 (Ala.1998) (quoting Bussey v. John Deere Co., 531 So.2d 860, 863 (Ala.1988)). Nationwide argues that no breach of the insurance policy occurred because, based on the misrepresentations on the application, Pabon was not entitled to recover benefits under the policy. Nationwide relies on § 27-14-7, Ala.Code 1975, which provides: Misrepresentations, omissions, concealment of facts and incorrect statements shall not prevent a recovery under the policy or contract unless either: (1) Fraudulent; (2) Material either to the acceptance of the risk or to the hazard assumed by the insurer; or (3) The insurer in good faith would either not have issued the policy or contract, or would not have issued a policy or contract at the premium rate as applied for, or would not have issued a policy or contract in as large an amount or would not have provided coverage with respect to the hazard resulting in the loss if the true facts had been made known to the insurer as required either by the application for the policy or contract or otherwise. Under this Code section, it is not necessary that the insured have made the misrepresentation with an intent to deceive; even if innocently made, an incorrect statement that was material to the acceptance of the risk assumed by the insurer or that would have caused the insurer in good faith not to issue the policy provides a basis for the insurer to avoid the policy. See, e.g., Taylor v. Golden Rule Ins. Co., 544 So.2d 932 (Ala.1989); § 27-14-7, Ala.Code 1975. To invoke § 27-14-7, an insurer need establish only that a misrepresentation in the application was a material contributing influence that induced the insurer to issue the policy. That the insurer could make its own investigation does not lessen its right to rely on the representations in the application. See Reliance Life Ins. Co. v. Sneed, 217 Ala. 669, 117 So. 307 (1928). Under Alabama law, the materiality of a misrepresentation on an application for an insurance policy is generally a jury question. Bennett v. Mutual of Omaha Ins. Co., 976 F.2d 659 (11th Cir.1992); Clark v. Alabama Farm Bureau Mut. Cas. Ins. Co., 465 So.2d 1135 (Ala.Civ.App. 1984). However, it has been held that some misrepresentations, whether made intentionally or innocently, increase the risk of loss as a matter of law and are therefore material to the issuance of the policy. See, e.g., Clark, supra; Thomas v. Liberty Nat'l Life Ins. Co., 368 So.2d 254 (Ala.1979); Gunn v. Palatine Ins. Co., 217 Ala. 89, 114 So. 690 (1927); Inglish v. United Servs. Gen. Life Co., 394 So.2d 960 (Ala.Civ.App.1980). Pabon argues that her oral answers to the questions were accurate but that the agent then incorrectly recorded the information on the application. Pabon argues that the answers on the application should not be imputed to her when, she alleges, the agent improperly recorded Pabon's responses and Pabon merely failed to notice those incorrect answers before she signed the application. We reject these arguments. It is undisputed that Pabon knew of her husband's pending bankruptcy proceeding when she applied for the Elite II homeowner's policy; it is also undisputed that the insurance application indicates no in response to the following question: [H]as insured or family member been sued, filed bankruptcy, had repossession/judgment within the last 7 years? It is also undisputed that Pabon was given the opportunity to review the application with the printed answers before she signed it; Pabon signed the application directly below the following statement: I hereby declare that the facts stated in the above application are true and request the company to issue the insurance and any renewals thereof in reliance thereon. Absent misrepresentations, fraud, or other deceit by the agent, a person able to read and write is bound by an insurance application signed by him or her, whether or not he or she reads it. First Nat'l Life Ins. Co. of America v. Maxey, 25 Ala.App. 289, 145 So. 589 (1932). Because Pabon was given the opportunity to review the answers on the insurance application before she signed it, we reject the arguments that Nationwide's agent created the inaccuracies on the application and that Nationwide waived its right to defend on the basis that the application contained innocent but material misrepresentations. We conclude that Pabon is bound by the answers on the insurance application. We also conclude that those misrepresentations were material to Nationwide's acceptance of the risk presented here. Nationwide's underwriter testified that, under the underwriting standards in effect at Nationwide at the time Pabon's application was filed, an applicant who had filed a petition in bankruptcy within the previous five to seven years was ineligible for homeowner's insurance with Nationwide. More specifically, Nationwide's underwriter testified that Barakat's bankruptcy (as well as his prior loss history) made him ineligible for coverage with Nationwide. For these reasons, we conclude that Pabon's answers were material as a matter of law to Nationwide's acceptance of this risk, and we conclude that had Nationwide received accurate answers on that application, it would not have issued the Elite II insurance policy at issue in this case.