Opinion
NO. 2013 CA 0954
12-27-2013
AMERICAS INSURANCE COMPANY v. VERNA COLE CHATMAN
Jonathan Womack Stephen P. Hall Port Allen, Louisiana Attorneys for Plaintiff/Appellant, Americas Insurance Company Trent A. Garrett Plaquemine, Louisiana Attorney for Defendant/Appellee, Verna Cole Chatman
NOT DESIGNATED FOR PUBLICATION
On Appeal from the
23rd Judicial District Court,
In and for the Parish of Ascension,
State of Louisiana
Trial Court No. 100488
The Honorable Alvin Turner, Judge Presiding
Jonathan Womack
Stephen P. Hall
Port Allen, Louisiana
Attorneys for Plaintiff/Appellant,
Americas Insurance Company
Trent A. Garrett
Plaquemine, Louisiana
Attorney for Defendant/Appellee,
Verna Cole Chatman
BEFORE: WHIPPLE, C.J., WELCH, AND CRAIN, JJ.
CRAIN, J.
Americas Insurance Company appeals a judgment denying its petition for declaratory judgment. We affirm.
FACTS
At issue is a homeowner's insurance policy that Americas issued to Verna Cole Chatman covering property located in Plaquemine, Louisiana, for the policy period of March 26, 2010 through March 26, 2011. Chatman applied for the policy in March 2010 through an independent agent. The application form was completed by the agent after discussion with Chatman, and was signed by Chatman. That application indicated that Chatman owned the property, that the property was occupied by the owner, and that the property was the owner's primary residence. The policy provided coverage limited to $190,000 for the dwelling on the residence, and $95,000.00 for personal property.
On January 7, 2011, the residence on the property (an immobilized trailer with additions), along with its contents were destroyed by a fire of undetermined origin. Chatman made a claim under the policy, and submitted an inventory of the contents she claimed were lost in the fire, which were valued at approximately $85,000.00.
During its investigation of Chatman's claim, Americas learned that Chatman had not been residing at the residence as indicated in the policy application she signed. In fact, Chatman had not resided at the residence since 2008, when she separated from her ex-husband after an incident of domestic violence for which her ex-husband was imprisoned. That same year Chatman had the utilities to the residence disconnected. Chatman's ex-husband indicated that Chatman had removed all of the contents of the trailer while he was in prison. The investigation farther suggested that since Chatman moved out in 2008, the residence remained vacant, with the exception of being broken into and occupied for undetermined periods of time by vagrants.
Chatman and her husband, Troy Anthony Cole, divorced in 2009. Chatman testified that the residence at issue was her separate property, which was confirmed by judgment rendered in January 2011, days before the residence burned.
Americas instituted this suit for declaratory judgment alleging that Chatman made material fraudulent misrepresentations in her policy application and in the loss inventory submitted in support of her contents claim. Americas seeks declaratory judgment declaring the policy void based on misrepresentations in the application or, alternatively, declaring that Americas is permitted to void coverage based on misrepresentations with regard to content loss. After an evidentiary hearing, the trial court denied the petition for declaratory judgment.
In written reasons, the trial court stated that although the evidence showed that the residence was not owner occupied or Chatman's primary residence, it also showed that the application was completed by Chatman's agent, with the agent, not Chatman, supplying some of the information. This fact, combined with Chatman's testimony that she did not understand the difference between homeowner's and renter's insurance, convinced the trial court that Chatman did not make a material misrepresentation that would void the policy. As to the contents claim, the trial court found Chatman's testimony that she was told by Americas' adjustor to merely estimate the value of the damaged property to be credible. The trial court additionally considered Chatman's testimony that she was rushed to provide the estimates. Recognizing that the values submitted in support of the contents claim were "probably inflated" due to the adjustor rushing Chatman to supply the information, the trial court stated it could not find that Chatman knowingly and intentionally made misrepresentations with the intent to deceive Americas.
Americas now appeals contending the trial court erred in its analysis and ruling.
DISCUSSION
Louisiana Revised Statute 22:1314 provides that:
A. No policy of fire insurance issued by any insurer on property in this state shall hereafter be declared void by the insurer for the breach of any representation, warranty, or condition contained in such policy or in the application therefor. Such breach shall not allow the insurer to avoid liability unless such breach: (1) exists at the time of the loss, and be such a breach as would increase either the moral or physical hazard under the policy; or (2) shall be such a breach as would be a violation of a warranty or condition requiring the insurer to take and keep inventories and books showing a record of his business.
B. Notwithstanding the provisions of Subsection A of this Section, such a breach shall not afford a defense to a suit on the policy if the facts constituting such a breach existing at the time of the issuance of the policy and were, at such time, known to the insurer or to any of his or its officers or agents, or if the facts constituting such a breach existed at the time of the loss and were, at such time, known to the insurer or to any of his or its officers or agents, except in case of fraud on the part of such officer or agent or the insured, or collusion between such officer or agent and the insured.
Section 1314, which was previously designated as Louisiana Revised Statute 22:692, is an "anti-technical" statute that serves to prohibit an insurer from denying fire insurance coverage by asserting defenses not materially related to the covered risk. Rodriguez v. Northwestern Nat. Ins. Co., 358 So. 2d 1237, 1239 (La. 1978). An insurer seeking to void such a policy providing fire insurance coverage bears the burden of proving by a preponderance of the evidence that (1) there has been a breach of a warranty, (2) the breach increased the moral or physical hazard under the policy, and (3) the breach and the resulting increase in hazard existed at the time of the loss. La. R.S. 22:1314A; Rodriguez, 358 So. 2d at 1241. "A warranty is a statement on the face of the insurance contract whereby the insured expressly contracts as to the existence of certain facts, circumstances or conditions essential to the validity of the contract of insurance." Benton Casing Service, Inc. v. Avemco Ins. Co., 379 So. 2d 225, 226 (La. 1979). The trial court's factual findings in this regard are entitled to great weight and will not be disturbed on appeal absent manifest error. Rodriguez, 358 So. 2d at 1241.
It is undisputed that Chatman was not residing at the residence at the time the application was completed, and that she was not residing at the residence at the time of the fire. However, it is also undisputed that Chatman did not complete the application form herself. Rather, she telephoned the office of her insurance agent, who had procured automobile policies for Chatman in the past. The agency representative testified that she did not ask Chatman if she was going to reside on the premises; rather, she assumed Chatman would reside on the premises because she was purchasing a homeowner's policy. Furthermore, the question on the application asking whether the premises would be occupied on a daily basis was left blank because she might not have asked Chatman that question. Chatman testified that she was not told that there were different types of coverage she could purchase. Instead, Chatman answered the questions she was asked and the agency completed the application for homeowner's insurance for her. Chatman later visited the agent's office where the completed application form was presented to her for signature.
Generally, one who signs a document is presumed to have done so with knowledge of its contents, regardless of whether she actually read it. See Coleman v. Jim Walter Homes, Inc., 08-1221 (La. 3/17/09), 6 So. 3d 179, 183. However, in the case of insurance contracts, if the insurer's agent undertakes to fill out and complete the policy application, the agent's acts, representations and mistakes, if any, are considered to be those of the insurance company. See National Life & Acc. Ins. Co. v. Vaughan, 32 So. 2d 490, 492-9 (La. App. 1 Cir. 1947); Miller v. Preferred Life Ins. Co., 107 So. 2d 323, 326 (La. App. 2 Cir. 1958); Fruge v. Woodmen of World Life Ins. Soc., 170 So. 2d 539, 543-44 (La. App. 3 Cir. 1965). An applicant is entitled to rely upon her agent's expertise in completing a policy application. See Tiner v. Aetna Life Ins. Co., 291 So. 2d 774, 777 (La. 1974). Thus, "if the agent by reason of mistake, fraud, omission or negligence inserts erroneous or untrue answers to the questions contained in the application, such representations bind the insurer but not the insured, provided the insured is justifiably ignorant thereof, has no actual or implied knowledge thereof, and has been guilty of no bad faith or fraud." Miller, 107 So. 2d at 326. See also Foster v. United of Omaha Life Ins. Co., 08-1170, 2010WL3834047 (W.D. La. 9/24/10)(unpublished).
Considering the foregoing, under the specific factual circumstances of this case, the misrepresentations in the policy application are attributable to Americas. Section 1314B precludes an insurer from voiding a policy based on breach of warranty when the breach existed at the time the policy was issued and the facts constituting the breach were known to the insurer or its agents. Since the mistaken information is attributable to Americas, it is precluded from voiding the policy pursuant to Section 1314B.
Alternatively, Americas seeks to void coverage under the policy due to material misrepresentations made by Chatman with regard to contents loss. Americas claims that Chatman's inventory of lost contents included items that were not present and that the value of the items listed was knowingly exaggerated.
Louisiana Revised Statute 22:1315 provides:
Assertion of a defense of material misrepresentation made by an insured subsequent to loss by fire as to the value of the contents of a residence or business shall not entitle an insurer to void total coverage of the policy based on such misrepresentation, unless a court of competent jurisdiction determines and adjudicates otherwise. Such judicial determination shall apply to the claim that is the subject of the litigation and shall not apply retroactively to any claim that occurred prior to the loss that is the basis of the claim that is the subject of the litigation.Misrepresentations in a proof of loss given to an insurer will void coverage under the policy only if the insured knowingly and intentionally makes such misrepresentations with the intent to deceive and defraud the insurer. Fraud will never be presumed from acts which may be accounted for on the basis of honesty and good faith. Williams v. United Fire and Cas. Co., 594 So. 2d 455, 460 (La. App. 1 Cir. 1991).
The existence of fraud is a question of fact subject to the manifest error standard of review. Smith v. Roussel, 00-1028 (La. App. 1 Cir. 6/22/01), 809 So. 2d 159, 164. Where factual findings are based on determinations regarding the credibility of witnesses, the trier of fact's findings demand great deference and are virtually never manifestly erroneous or clearly wrong. Rosell v. ESCO, 549 So.2d 840, 844 (La. 1989). Where there is conflict in the testimony, reasonable evaluations of credibility and reasonable inferences of fact should not be disturbed upon review, even though the appellate court may feel that its own evaluations and inferences are as reasonable. Id. It is only when documents or objective evidence so contradict the witness's story or the story itself is so internally inconsistent or implausible on its face that a reasonable fact-finder would not credit the witness's story, that the court of appeal may find manifest error, even in a finding purportedly based upon a credibility determination. Rosell, 549 So. 2d at 844-845. But where such factors are not present, and a fact-finder's finding is based on its decision to credit the testimony of one of two or more witnesses, that finding can virtually never be manifestly erroneous or clearly wrong. Rosell, 549 So. 2d at 845.
The inventory of lost contents that Chatman submitted to Americas in support of her claim included an extensive list of items with values totaling approximately $85,000.00. Americas argues that many of the items listed in the inventory were not present in the residence.
Chatman's ex-husband, Troy Anthony Cole, testified that after he was released from prison in 2008, he returned to the residence to retrieve some belongings, but found nothing there. Cole denied burning the residence and denied stealing Chatman's property, explaining that there was nothing there for him to take. Cole also described items that were sold and disposed of during the marriage, but maintained that he had not been to the residence since 2010. He therefore could not testify as to the contents of the residence when it burned in 2011.
Americas also refers to the deposition testimony of Ray Bishop, an independent insurance adjustor who investigated the fire for Americas. Bishop testified that the residence was a total loss and that "there was evidence of very little contents" which he felt was suspicious. He acknowledged that some of the property would have been consumed by the fire, but that charred evidence would remain, which he did not find. He found evidence of a Jacuzzi, some clothing, and shoes at the site, but did not find evidence of appliances and furniture she claimed were present and lost.
Chatman did not reside at the residence after 2008, and testified that she essentially used it for storage. Chatman explained that she had no photographs of the items she claimed were lost, and that documentation regarding the items was also lost in the fire. She maintained, however, that the inventory reflected property she purchased with money inherited from her father.
Chatman further testified that when she met with Bishop after the fire, he instructed her to complete the inventory as soon as possible and to estimate the requested information, which she did. In his deposition testimony, Bishop denied instructing Chatman to provide estimated information in the inventory. However, the trial court found "Chatman's testimony to be very credible." The trial court acknowledged that the values of the items listed in the inventory were "probably inflated" but attributed that to Bishop rushing Chatman to supply the information to Americas.
To void coverage under the policy pursuant to Section 1315, Americas bore the burden of proving that Chatman made misrepresentations with the intent to defraud it. The trial court credited Chatman's testimony over that of the other witnesses, and found that Americas failed to satisfy its burden of proving that Chatman made material misrepresentations with the intent to defraud Americas. Although we may have reached a different conclusion, we find that the trial court's determinations are reasonable and are not manifestly erroneous.
CONCLUSION
For the foregoing reasons, the judgment of the trial court is affirmed. Costs of this appeal are assessed to Americas Insurance Company.
AFFIRMED. AMERICAS INSURANCE
VERSUS
VERNA COLE CHATMAN
2013 CA 0954
WELCH, J., dissenting.
I disagree with the majority opinion in this matter. Ms. Chatman made material misrepresentations in her policy application that, in my opinion, voids the policy. The evidence established that Ms. Chatman was not residing at the residence (as indicated in her application) at the time the application was submitted to Americas Insurance Company (or for the two years prior to that time) nor at the time of the fire. These misrepresentations constituted material misrepresentations and were a breach of representation, warranty, or condition contained in the application and policy. But for Ms. Chatman's representation that she was residing in the mobile home as her primary residence, the policy would not have been written. Additionally, the evidence established that Ms. Chatman's breach of warranty or material misrepresentation increased the physical hazard under the policy. Therefore, Americas met its burden of proving that it was entitled to void the policy pursuant to the provisions of La. R.S. 22:1314, the judgment of the trial court should be reversed, and judgment should be rendered declaring the policy void.
Thus, I respectfully dissent.