Opinion ID: 1750084
Heading Depth: 1
Heading Rank: 2

Heading: material misrepresentation with intent to deceive

Text: Under the terms of R.S. 22:619A, which sets forth the conditions under which an insurer can avoid a liability insurance contract, an oral or written misrepresentation or warranty made by or on behalf of an insured in negotiating an insurance contract cannot be deemed material or void the contract unless made with the intent to deceive. Accordingly, there must be a finding of intent to deceive on the part of the insured in order to defeat coverage. [2] Cousin v. Page, 372 So.2d 1231, 1233 (La. 1979); DiGerolamo v. Liberty Mutual Insurance Co., 364 So.2d 939, 941 (La.1978). The insurer claiming the defense of material misrepresentation in order to avoid coverage bears the burden of proving that the insured misrepresented a material fact and did so with the intent to deceive. Cousin v. Page, supra at 1233. Because of the difficulties inherent in proving that a person acted with the intent to deceive, the courts have lightened somewhat the insurer's burden by considering the surrounding circumstances in determining whether the insured knew that representations made to the insurer were false: Intent to deceive must be determined from surrounding circumstances indicating the insured's knowledge of the falsity of the representations made in the application and his recognition of the materiality of his misrepresentations, or from circumstances which create a reasonable assumption that the insured recognized the materiality. Id. It is undisputed in this case that Patrick lived at home with his parents during the time period in question, and the evidence clearly shows that Safeco would not have renewed the Darby's policy had it known that Patrick remained a member of the Darby household. Thus, the issues are whether the Darbys made a material misrepresentation concerning Patrick's residence and, if so, whether they made it with the intent to deceive Safeco. In its answer to interrogatory number 2, the jury found that neither Edwin nor Marjorie Darby intentionally misrepresented to Safeco or its agent Lucille Chautin that Patrick Darby no longer lived with them. In reversing this finding, the court of appeal focused on Edwin Darby's failure to list Patrick as a member of his household when he completed a 1983 renewal questionnaire sent to him by Safeco. Since Darby had listed both Patrick and his daughter Joan on the 1978 renewal questionnaire, the court of appeal determined that the Darbys' intent in answering the questionnaire had changed because they were well aware of the fact that SAFECO would cancel their insurance if it were known that Patrick was still living at home, regardless of whether or not he drove the insured vehicles. Darby v. Safeco, supra at 41. The question now before this court is whether the court of appeal erred in reversing the factual finding of the jury. An appellate court should not disturb reasonable evaluations of credibility and reasonable inferences of fact made by a jury when the record as a whole reveals a reasonable basis for the finding in the trial court. See Virgil v. American Guaranty and Liability Insurance Co., 507 So.2d 825, 826 (La.1987) (Dennis, J. concurring); Arceneaux v. Domingue, 365 So.2d 1330, 1333 (La.1978). A review of this record discloses that the court of appeal erred in reversing the jury's finding that the Darbys did not intentionally misrepresent to Lucille Chautin that their son no longer lived at home in order to secure the renewal of their insurance with Safeco. The record in its entirety supports instead the jury's reasonable conclusion that the Darbys believed that Safeco would renew their insurance so long as Patrick did not drive their cars. The record does contain conflicting evidence concerning what Lucille Chautin and Marjorie Darby discussed during the May 1981 telephone call. Chautin testified that Marjorie Darby told her that Patrick no longer lived at home. However, numerous witnesses, including Patrick and his sister Joan, with whom he sometimes spent the night, testified that he had always lived at home with his parents. Employment records from Tidewater Marine showed that Patrick did not begin to work offshore until February 1982. Patrick's 1981 tax return was consistent with testimony that he worked short periods for two construction companies during 1981. Also consistent with the plaintiff's position was testimony that Patrick, who was scheduled to graduate in May 1981, attended the final weeks of class during that spring term. Safeco contends that the testimony of Marjorie Darby that she did not represent to Lucille Chautin that her son no longer lived at home is self-serving when compared with the contemporaneous telephone notation Lucille Chautin made of the conversation. The uncontradicted testimony of several witnesses that Patrick had always lived at home and did not own a car or work offshore until late 1981 or early 1982 undercuts the persuasiveness of that telephone notation and supports Marjorie Darby's account of the conversation. The ambiguous memorandum also includes the notation sign not to drive, a notation that could also be seen as supporting Mrs. Darby's position. Thus, whether Marjorie Darby told Lucille Chautin in May of 1981 that Patrick was working offshore and no longer living at home involves an evaluation by the jury of the credibility of both witnesses. In the face of conflicting testimony, [t]his court accords great weight to the factual findings of the trier of fact ... and generally will not disturb reasonable evaluations of credibility and reasonable inferences of fact.... Chapman v. Belden Corp., 428 So.2d 396, 399 (La.1983). The jury was not clearly wrong in believing Mrs. Darby and in determining that the Darbys had made no misrepresentation. The Darbys have contended throughout this litigation that their understanding was that Patrick could not drive their cars in order for them to retain their Safeco coverage. The transfer of the truck to Patrick by his father in July 1981 is consistent with this position. So too is the listing of Edwin and Marjorie Darby's address and telephone number on Patrick's subsequent insurance applications with the Agency. Thus, the Agency knew that the address of Patrick and his parents was the same. Under the well-settled terms of agency law, this knowledge is imputed to Safeco. Safeco's contention that the same address and telephone number listed on both policies was the result of Marjorie Darby's handling of Patrick's insurance business is insufficient to negate the other evidence presented. Although Edwin Darby did sign an endorsement deleting Patrick from coverage under the policy because he no longer lived at home, it is significant that Lucille Chautin retained the insured's copy in the Agency's file. The Darbys thus had nothing in writing to indicate to them that their understanding that Patrick was not to drive the cars was incorrect. Indeed, the notice of nonrenewal sent to the Darbys by Safeco, dated April 15, 1981, specifies that the decision not to renew their insurance is due to Patrick's accidents on October 11, 1980 and January 5, 1981 (where speed was a contributing factor). Lucille Chautin admitted the Agency's file contained no documents stating that Safeco would not renew the Darbys' policy if Patrick were a member of the household, even though both Safeco and the Agency required documentation of such critical information. Since the record as a whole does not establish that the Darbys made any misrepresentations with the intent to deceive, such an intent cannot be inferred from individual items in the record. Consequently, the jury could have reasonably believed that Edwin Darby omitted Patrick's name from the 1983 renewal questionnaire because Patrick was no longer allowed to drive the cars covered by the policy, and not because Edwin Darby intended to deceive Safeco concerning his son's residence in order to renew the insurance.