Court Opinion

ID: 9657808
Source: CourtListenerOpinion
Date Created: 2023-08-23 20:38:39.606043+00
Date Added: 2024-06-11T18:13:48.561154
License: Public Domain

STEINMETZ, J.
(dissenting). I disagree with the majority's holding in this case. The appellants' misrepresentation clearly violated the express condition of their insurance contract, therefore, voiding coverage for all claims submitted for the fire. Hence, I dissent.
Other jurisdictions have held that fraud or misrepresentation as to any portion of property under an insurance policy voids the entire policy. See, e.g., 44 Am. Jur. (2d) secs. 1371-76 (1982); 5A Appleman and Appleman, Insurance Law and Practice, sec. 3595 (1970); 45 C.J.S. Insurance sec. 1021 (1946). In fact, a New Jersey case, Longobardi v. Chubb Ins. Co., 121 N.J. 530, 582 A.2d 1257 (1990), is similar to the present case both procedurally and factually. The issue articulated in Longobardi queried whether an insured's post-loss misrepresentation of personal property justified denial of coverage. Id. at 533. This is analogous to the issue facing this court.
*16The insurance policy in Longobardi contained a provision which read as follows: "Concealment or Fraud: We do not provide coverage for any insured who has intentionally concealed or misrepresented any material fact or circumstance relating to this insurance." Id. at 534. A provision in the insurance policy in the present case resembles the aforementioned concealment or fraud section. It states: "We do not provide coverage for any insured who has: a. Intentionally concealed or misrepresented any material fact or circumstance; b. Made false statements or engaged in fraudulent conduct; relating to this insurance."
The jury in Longobardi found that the insured had made "a material false statement during the examination under oath conducted by defendant, or the written statement... in an effort to or for the purpose of hindering, deflecting or misleading defendant in the course of its investigative process." Id. at 536. The circuit court judge ultimately dismissed the case. Similarly, in the present case, the trial judge dismissed the claim against Aetna.
When the Longobardi case was appealed to the New Jersey Court of Appeals, the court concluded that the concealment or fraud clause was ambiguous and construed the ambiguity in favor of coverage. See Longobardi v. Chubb Ins. Co. of New Jersey, 234 N.J. Super 2, 560 A.2d 68 (1989). This finding was analogous to the decision made by the court of appeals in the present case. See Tempelis v. Aetna Casualty & Surety Co., 164 Wis. 2d 17, 473 N.W.2d 549 (Ct. App. 1991). However, the New Jersey Supreme Court ultimately arrived at a different holding than our majority.
The New Jersey Supreme Court concluded that concealment or fraud clauses apply when an insured misrepresents facts to the insurance company that is investi*17gating a loss. See Longobardi, 121 N.J. at 538. The court reasoned that "[u]nder standard fire policies that expressly applied to misrepresentations 'whether before or after a loss,' courts from sister states have declared policies void when the insured made post-loss misrepresentations to the insurer." Id. at 538-39. See also Sales v. State Farm Fire and Cas. Co., 849 F.2d 1383 (11th Cir. 1988); American Employers' Ins. Co. v. Taylor, 476 So. 2d 281 (Fla. Dist. Ct. App.), cause dismissed without opinion sub nom. Taylor v. American Employers' Ins. Co., 485 So. 2d 426 (Fla. 1985); State Farm Fire & Casualty Co. v. Jenkins, 167 Ga. App; 4, 305 S.E.2d 801 (1983); Dale v. Iowa Mut. Ins. Co., 40 N.C. App. 715, 254 S.E.2d 41 (1979). Writing on behalf of a unanimous court, Justice Pollock in Longobardi, 121 N.J. at 539, continued:
When an insurer clearly warns in a 'concealment or fraud' clause that it does not provide coverage if the insured makes a material misrepresentation about any material fact or circumstance relating to the insurance, the warning should apply not only to the insured's misrepresentations made when applying for insurance, but also to those made when the insurer is investigating a loss. Such misrepresentations strike at the heart of the insurer's ability to acquire the information necessary to determine its obligations and to protect itself from false claims. Thus, an insured's commitment not to misrepresent material facts extends beyond the inception of the policy to a post-loss investigation.
It was held that Longobardi's lies were sufficient for the Chubb Insurance Company to nullify the policy.
This court should have come to the same conclusion in the present case. Aetna's policy clearly warns in the concealment or fraud clause that it does not provide *18coverage if the insured makes a material misrepresentation about any material fact or circumstance relating to the insurance.1
When the Tempelises submitted their loss claim following the fire that destroyed their home, they included a claim for additional living expenses and fabricated receipts showing meals and hotel expenses. More specifically, the plaintiffs submitted a sworn statement in proof of loss to Aetna. It included a document entitled "additional living expense" and over fifty receipts. Each of the receipts was dated between January 28 and March 25, 1989. The plaintiffs obtained blank receipts and menus from Lakeview Castle, a hotel/restaurant owned by Zoe Tempelis’s sister. Fifty-one separate meal receipts were filled in showing specific menu items and drinks ordered; the receipts even reflected sales tax. The receipts were fabricated as the meals were never actually purchased. The receipts were also fraudulently prepared to. reflect several weeks of living at the hotel when, in fact, plaintiffs were living with Sally Tempelis's parents. The lodging receipts even identified numbers from the check with which the phony hotel bills were purportedly paid.2
*19The jury unanimously concluded that the Tempe-lises intentionally misrepresented material facts and made false statements regarding their insurance. Because the jury found that the Tempelises made material misrepresentations concerning their insurance, this court should have followed Longobardi and other jurisdictions by voiding all coverage concerning the fire.
Moreover, well-settled principles of contract construction require that a contract be construed as a whole. Laabs v. Chicago Title Ins. Co., 72 Wis. 2d 503, 510, 241 N.W.2d 434 (1976). The court of appeals interpreted the concealment or fraud language without regard to the caption above that provision. The heading makes it unmistakably clear that the conditions clause applies to both Section I and Section II. Such a construction of the policy gives the words their ordinary meaning and carries out the reasonable intention of the parties.
By not deciding that the proof of loss concealment provision voids coverage, this court is encouraging insureds to exaggerate losses, thereby burdening insurance companies with judicially mandated suspicion for every proof of loss statement submitted and ultimately increasing costs to all consumers. This court should have concluded that pursuant to this clear and unambiguous *20contract that fraud or misrepresentation as to any portion of claim under this insurance policy voided collection on all claims submitted for the fire. Because of the aforementioned reasons, I dissent.

The clause itself does not have legalistic phraseology and complex sentence structures. Rather, it is written so a reasonable person could understand it.

I believe it noteworthy that the facts leading up to this case are fraught with questionable activity. First, in an attempt to lower the purchase price of their home, Mrs. Tempelis submitted a very low bid on the property under her "maiden" name. Shortly thereafter, Mr. Tempelis submitted another offer to purchase the home at a slightly higher price which was ultimately the purchase price of the home.
Second, Mr. Tempelis could not recollect how the amount of the insurance coverage was decided. He could not remember whether he asked his insurance agent to give him $100,000 coverage on the property or simply an amount over $75,000. The insur-*19anee agent testified that Mr. Tempelis had requested a policy for the amount of $100,000. The agent stated that Mr. Tempelis had told him that he was planning to make improvements to the home. Despite this claim, no major changes were made to the home from the time of the purchase to the time of the fire.
Plaintiffs were sophisticated regarding procedures to follow when submitting insurance claims. In fact, in the one year preceding the fire, plaintiffs submitted two insurance claims of theft losses. Plaintiffs also had previous experience submitting a fire claim, as a commercial building owned by them burned during 1984.