Opinion ID: 2543075
Heading Depth: 1
Heading Rank: 7

Heading: Whether the Duty to Read Automatically Bars Claims Against Nationwide.

Text: ¶ 48. The fifth issue raised by the Mladineos is whether the duty-to-read and imputed-knowledge doctrines automatically bar claims against Nationwide for the alleged misrepresentations of its agents, Schmidt and the Felsher Agency, who the Mladineos allege acted with apparent authority. The Mladineos allege that Nationwide is bound by the alleged representation of its agents that the subject policy covered both wind and water damage to the Mladineos' Ocean Springs home. The trial court granted summary judgment to the defendants on all of the Mladineos' claims, including whether Nationwide was liable for Schmidt's alleged misrepresentations. ¶ 49. Apparent authority exists when a reasonably prudent person, having knowledge of the nature and usages of the business involved, would be justified in supposing, based on the character of the duties entrusted to the agent, that the agent has the power he is assumed to have. Andrew Jackson Life Ins. Co. v. Williams, 566 So.2d 1172, 1180 (Miss.1990) (quoting Ford v. Lamar Life Ins. Co., 513 So.2d 880, 888 (Miss.1987)). To recover under the theory of apparent authority, the following three factors must be present: (1) acts or conduct on the part of the principal indicating the agent's authority, (2) reasonable reliance on those acts, and (3) a detrimental change in position as a result of such reliance. Id. ¶ 50. The Mladineos again look to this Court's holdings in Merrill and Hollins as support for their argument that Mississippi law supports holding Nationwide responsible for the acts of its agent. However, in making this argument, the Mladineos miss a key factual distinction between those cases and the present case: the agent made misrepresentations to the insurance company in Merrill and Hollins, not to the consumer, as alleged in the present matter. ¶ 51. As stated above, Hollins involved a hospital indemnity policy, while Merrill involved a life insurance policy. In both matters, the agent took charge of the policy applications and asked the plaintiffs the questions contained therein. Although both applicants were truthful in their responses, both applications misrepresented prior health history of the applicants. When claims were filed pursuant to these policies, they were denied in both matters due to the misrepresentations on the application, and the Hollins policy was rescinded, while the premiums paid on the Merrill policy were refunded. ¶ 52. This Court has said, in cases where the agent takes charge of the application or suggests the answers to the question, the company shall not avoid the policy because they are false or untrue, if full disclosures were made by the applicant to him. Hollins, 830 So.2d at 1235 (citing McCann v. Gulf Nat'l Life Ins. Co., 574 So.2d 654, 657 (Miss.1990)). ¶ 53. The facts in the present matter are not similar to those in Merrill and Hollins. Here, the alleged misrepresentation by the agent was made to the consumer (the Mladineos), not to the insurance company (Nationwide). For four months, the Mladineos had possession of a policy with terms in direct conflict with the alleged misrepresentation, which was enough time to recognize and remedy the deficit in coverage. Further, as discussed in Section II, supra, after receipt of the insurance policy, it was not reasonable for the Mladineos to rely on any oral representations by Schmidt which contradicted the terms of that policy. Nationwide's denial of claims as to flood damage is in accordance with the terms of that policy. Therefore, the trial court is affirmed as to this issue.