Court Opinion

ID: 9885495
Source: CourtListenerOpinion
Date Created: 2023-10-06 13:04:23.405136+00
Date Added: 2024-06-11T07:48:54.487788
License: Public Domain

BAILEY, Judge,
dissenting.
The majority reverses judgment favoring Linda Good ("Good") on the ground that the trial court improperly denied Allied's motion for summary judgment. Because I disagree with the majority's interpretation of the application form and the materiality of Good's responses to certain items on that form, I respectfully dissent.
Construction of the Application Form
I cannot join with the majority opinion's construction of the application form Good submitted to Allied. In particular, I take a different view of the implication of the word "ever" as it exists on the application form Good completed in seeking insurance with Allied. (App.667.)
On the application form, the question regarding prior denials of coverage is presented thus:
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(App.667.) The majority notes that the "Coverage Ever Declined, Cancelled, or Non-Renewed" item comes last in a single row of questions, all of which relate to the current insurance carrier. The majority then goes on to hold that despite its context, "ever" applies to any form of insurance coverage Good ever sought or had obtained, and that "[the cancellation question could not have been limited ... to the eH 'current company'" because "it is not possible" that MetLife Eeonomy could have refused to insure Good by virtue of the fact that MetLife was Good's insurer at the time she filled out the application.
I cannot agree with this approach. Taking "ever" out of its context seems to me to disregard how a reasonable person could construe the question. Reading the *235form as presented above, a reasonable person could indeed interpret the item about prior cancellations as pertaining to the current insurer-particularly since the section heading is "INSURANCE COVERAGE," not "Prior Insurance Coverage," "Coverage History," or the like. (App. 667.) An insurer could cancel an insured for failure to timely pay premiums, but later agree to extend coverage to that individual. A policy may also be cancelled when an insured selects a new insurance product offering from the same insurer before the end of the policy period for the existing contract. °
Nor is it unreasonable to think that a single insurance company-even a current insurer-could, over the course of an individual's life, deny coverage or renewal at one point but be willing, under different cireumstances, to extend coverage at another time. This phenomenon may well be known among those who have had homeowner's insurance in hurricane zones non-renewed 8 and later moved elsewhere and obtained coverage from the same company. It may also have occurred with individuals who were denied one form of coverage (eg., automotive insurance) by an insurance carrier but were not denied homeowner's insurance by that same carrier. Thus, reasoning that "it is not possible" for a current insurer to have denied coverage to an insured in the past does not necessarily follow.
Additionally, the case to which the majority points for its interpretation of "ever" as applying to any coverage-related event seems inapposite. While the case, Home Ins. Co. of New York v. Cavin, includes the word "ever" in the question asked of the insured, the question posed is much clearer and more complete: "Have you ever suffered loss by fire, and if so, when and how did fire originate?" 162 Miss. 1, 137 So. 490, 490 (1931). The insured in that case claimed to have "understood the question to refer only to loss by fire on buildings covered by insurance." Id. As the trial court here noted in ruling on Allied's motion for judgment on the evidence, "Allied very easily could have asked ... have you or any person residing in your household ever, at any time, had any insurance coverage cancelled or not renewed?" (Tr. 1314.) Allied did not do this and, unlike the insurer in Cavin, may have received an accurate answer within the bounds of the question, properly construed, as it was posed to Good.
Given the range of reasonable interpretations of the question as presented on the form in light of the inferences favoring the insured that come from any possible ambiguity, see Bean v. Wausau Ins. Co., 765 N.E.2d 524, 528 (Ind.2002), I cannot concur with the majority that the application unambiguously favors Allied's interpretation. I would hold that the prior cancellations question refers only to Good's insurance carrier at the time of the application-MetLife Economy-and would affirm the trial court on that ground.
Materiality
Affirming the trial court on the interpretation of the prior cancellations issue forecloses any need to address the materiality issue. Yet even if I could join with the *236majority's interpretation of the prior cancellations question, I must part with its application of Guzorek to the issue of the materiality of Good's response to the application. I agree with the majority's assessment of the law on materiality in Indiana, but I cannot agree with its decision that Allied's affidavit establishes that there is no genuine issue of material fact as to the materiality of Good's failure to disclose prior insurance cancellations.
The majority approaches the materiality problem in part by noting that other jurisdictions have determined that, in cases similar to this one, omissions from insurance applications have been held to be material misrepresentations as a matter of law. While these cases are certainly helpful to the analysis, the Indiana Supreme Court has held that materiality is a question of fact and not of law. Guzorek, 690 N.E.2d at 673 (citing Prudential Ins. Co. v. Winans, 263 Ind. 111, 115, 325 N.E.2d 204, 206 (1975)). Thus we must consider the evidence of materiality put forth by Allied, and it is here that Allied's attempt to avoid its obligations under the policy fails.
Deciding materiality solely upon the contents of an affidavit stating that an insurer would have made a different underwriting decision had it known of the existence of an undisclosed fact is a tenuous thing.9 As this Court has noted elsewhere, "summary judgment is inappropriate if a reasonable trier of fact could choose to disbelieve the movant's account of the facts" stated in an affidavit. InsureMax Ins. Co. v. Bice, 879 N.E.2d 1187, 1190 (Ind.Ct.App.2008) (quoting McCullough v. Allen, 449 N.E.2d 1168, 1172 (Ind.Ct.App.1983), trams. denied ). In order for there to be no genuine issue of material fact, all the evidence designated by. the movant must support its position even after all inferences arising from that evidence are drawn in favor of the non-moving party. Dugan v. Mittal Steel USA, Inc., 929 N.E.2d 184, 185-86 (Ind.2010). That Allied relied upon Good's statement or lack thereof and issued the policy as a result is not enough. Under Guzgorek, Good's omission must have been material to the risk insured, whether the insurer seeks complete or partial rescission of the contract. Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 672-74 (Ind.1997).10
The properly drawn inferences from Allied's own evidence do not show the absence of a genuine issue of material fact as to whether Good's omission was material to the risk assumed by Allied in issuing *237the insurance policy.11 Extracting the rule of law from Guzorek, Allied presented an underwriter's affidavit asserting that, had Good disclosed prior denials, cancellations, and non-renewals, Allied would have charged a higher premium or declined to underwrite insurance for Good altogether. (App.659.)
Yet the true materiality to Allied of Good's insurance and loss history is put into doubt by Good's answer of "yes" to the question regarding losses for the three years prior to completing the Allied application for insurance. That question and its answer appear thus:
[[Image here]]
(App.667.) Despite her answer and ample space on the form to provide detail, Allied did not seek additional information on actual losses that Good had sustained even though Good did not provide the requested prior loss history. (App.667.) This failure certainly raises the question of whether a reasonable person would have inquired further, but Allied did not do so. See Guzorek, 690 N.E.2d at 674. Allied's failure to investigate recent losses, which it acknowledged in its own affidavit is important in assessing the risks of underwriting,12 throws its affidavit into doubt and makes summary judgment inappropriate-especially where the application form Good submitted was attached as an exhibit to the affidavit. See InsureMax, 879 N.E.2d at 1190.
Good's affirmative answer to the question on prior losses also has the effect of putting Allied on notice that further investigation into Good's application was needed before a policy could be written. I agree with the majority that Guzgorek imposes no duty upon an insurer to inquire into the representations made by an insured unless the insurer already knew the facts behind the misrepresentation or unless "a reasonable person would have investigated further." Guzorek, 690 N.E.2d at 674. But I differ on the application of that standard. Good provided Allied with some very limited information that she had suffered losses-a "yes" without details requested by the application form-that would, on the terms of Allied's affidavit, be material to the underwriting risk. Yet she did not *238provide complete information on these matters, and Allied failed to inquire into this omission. Allied cannot be heard to complain now that it was misled on one issue when its conduct reveals that, on a related issue with materiality to the underwriting risk, it had notice but made no inquiry.
The cases the majority cites as examples of material misrepresentation as a matter of law do not, in my view, buttress the majority's opinion.13 The question posed by Allied, "Coverage Ever Declined, Can-celled, or Non-Renewed," (App.667) compares unfavorably with the examples cited by the majority because of its lack of specificity. Aside from the question of proper construction, the placement of Allied's question, its relative lack of clarity, and Allied's failure to follow up on Good's answer to the item on prior losses lead me to conclude that Good's answers were simply not material to Allied except as an attempt to seek some form of "post-claim underwriting" that would allow Allied to reassess the risk after-and because-Good made her claim.
Allied asks this court to agree that its question is as clear as those in the cases cited by the majority. But Allied's question is less artfully and precisely asked than those in the examples cited by the majority. It instead serves as one more piece of evidence that, with inferences properly drawn, there is a genuine issue of material fact as to the materiality of Allied's underwriting decisions regarding the prior cancellations question.
On a clean slate, perhaps we could write a different story. But even if I could agree with the majority's interpretation of the application form, where the information clearly put Allied on notice to inquire further into Good's insurance history, I cannot join in its application of Guzgorek to reverse the trial court's denial of Allied's motion for summary judgment.
I must therefore respectfully dissent.

. See, e.g., Elliott Mittler, A Case Study of Florida's Homeowners' Insurance Since Hurricane Andrew, http://www.colorado.edu/hazards/publications/wp/wp96.html (last retrieved September 30, 2010); Tom Zucco, Insurance Crisis Fixed ? Check Your Mailbox, St. Petersburg Times, http://www.sptimes. com/2007/ 03/08/Business/Insurance._cri-sis _fixe.shtml (last retrieved September 30, 2010) (each discussing the effects of homeowner's insurance cancellation and non-renewal moratoria imposed by Florida in the wake of several hurricanes).

. The majority holds that it was enough that Allied submitted an affidavit stating the materiality of Good's omission, and that Good's failure to produce any countervailing evidence is the end of the matter. This approach raises the prospect that an affidavit from an insurer could never be successfully opposed by an insured upon summary judgment. I am concerned that the majority's approach could ultimately lead to an unqualified rule that there is no genuine issue of material fact so long as the insurer can produce an affidavit in support of a motion for summary judgment that simply restates the rule in Guzorek with respect to whatever misrepresentation is claimed as a defense or ground for relief by the insurer.

. Guzorek presents two options for an insurer when addressing a material misrepresentation. One permits the insurer to rescind the policy entirely. The other allows the insurer to extend coverage, subject to the limitation that the policy is rescinded as to those risks regarding which a material misrepresentation was made. Another panel of this court has addressed the automotive insurance context of Guzorek when it declined to extend the partial rescission approach in Allianz Ins. Co. v. Guidant Corp., 884 N.E.2d 405 (Ind.Ct.App.2008), reh'g denied, trans. denied. I am not as convinced as the majority (or as the Allianz court) that the partial rescission option is limited exclusively to automotive insurance. Allied does not seek partial rescission here, and thus we need not reach that issue.

. Because I believe Allied's own evidence is not sufficient to establish the absence of a genuine issue of material fact, Good would have no burden to produce her own evidence. See Dugan v. Mittal Steel USA, Inc., 929 N.E.2d 184, 185-86 (Ind.2010) (requiring the non-movant to produce evidence in its favor in order to demonstrate a genuine issue of material fact where the movant's designated evidence establishes the absence of such).

. Specifically, "Allied needs truthful and accurate information requested in the applications for insurance completed by the insureds to accurately make decisions involving whether to issue a policy or charge a certain premium." (App.659.)

. The cases the majority cites from other jurisdictions often deal with application forms that make much more explicit requests for information than the form used by Allied. In Wilson v. State Farm Fire & Cas. Co., an application question asked, "Has any insurer or agency canceled or refused to issue or renew similar insurance to the named applicant or any household member within the past three years." 761 So.2d 913, 917 (Miss.Ct.App.2000). Another case indicates that a material misrepresentation occurred when an insured "answered 'no' to the question whether he had had any insurance policy cancelléd within the three years preceding the application when, in fact, he had three such cancellations." Graphic Arts. Mut. Ins. Co. v. Pritchett, 220 Ga.App. 430, 430-31, 469 S.E.2d 199, 201 (Ga.Ct.App.1995). Still another holds as material a misrepresentation to the question "Any policy cancelled or non-renewed?" Nationwide Mut. Fire Ins. Co. v. Dungan, 634 F.Supp. 674, 676 (S.D.Miss.1986), aff'd, 818 F.2d 1239 (5th Cir.1987). Still another involved an application that asked, "Has any insurance company (including this Company) ever refused, cancelled, refused to renew, or given notice of intention to cancel or refuse, any automobile insurance for you or any member of your household?" Hawkeye-Sec. Ins. Co. v. Gov't Emp. Ins. Co., 207 Va. 944, 946, 154 S.E.2d 173, 175 (1967).
While the question posed by Allied is similar to that asked of the insured in Dungan, the procedural posture of Dungan-judgment after a bench trial, 634 F.Supp. at 675-does not provide the support for summary judgment sought by the majority's opinion.