Opinion
No. 351676
02-18-2021
STEPHEN COUNCIL, Plaintiff-Appellant, v. ALLSTATE VEHICLE AND PROPERTY INSURANCE COMPANY, HICKMAN AGENCY, INC., and BRIAN K. HICKMAN, Defendants-Appellees.
If this opinion indicates that it is "FOR PUBLICATION," it is subject to revision until final publication in the Michigan Appeals Reports. UNPUBLISHED Genesee Circuit Court
LC No. 18-110760-CK Before: MURRAY, C.J., and JANSEN and STEPHENS, JJ. PER CURIAM.
In this action regarding a home insurance policy, plaintiff appeals the order granting defendants' motion for summary disposition under MCR 2.116(C)(10). We affirm.
I. FACTUAL BACKGROUND
In March 2014, plaintiff paid $10,000 cash to purchase a home in Flint, Michigan. On March 8, 2017, plaintiff went to Hickman Insurance Agency and consulted with an agent to obtain an insurance policy. Plaintiff recalled that the agent asked him typical questions to fill out the application for insurance, but the completed application contained several inaccurate statements. Most significantly, the application listed that the purchase price and current market value of the home was $75,000. Plaintiff stated that he did not know where the agent came up with that answer because he did not tell him that number. Plaintiff agreed that he was given the application to read and sign. He also agreed that his initials were on the page that contained the misstated purchase price and that his signature was under the following paragraph:
To the best of my knowledge the statements made on this application, including any attachments, are true. I request the Company, in reliance on these statements, to issue the insurance applied for. The Company may recompute the premium shown if the statements made herein are not true. In the event of any misrepresentation or concealment made by me or with my knowledge in connection with this application, the Company may deem this binder and any policy issued
pursuant to this application, void from its inception. This means that the company will not be liable for any claims or damages which would otherwise be covered.
On October 18, 2017, a fire damaged plaintiff's home. When plaintiff submitted a claim to Allstate for the replacement value of the home, Allstate voided the insurance policy, stating:
While investigating a recent claim you filed, we found important facts were misrepresented (or concealed) in your insurance application. You testified under oath that you paid $10,000.00 for the property . . . . The application reflects that you paid $75,000.00 for the property. During your examination under oath you advised that the signature on the application was yours. Had Allstate been made aware of the actual cash amount you paid for the property this policy would not have been issued.Allstate issued a refund check to plaintiff for the paid premiums.
Plaintiff filed the instant action, alleging breach of contract against Hickman and Allstate and negligence against Hickman, arguing, in part, that the agent had breached his duty of loyalty to plaintiff by misrepresenting the nature of the coverage and failing to inform plaintiff about the changes to the application. The circuit court granted defendants' motions for summary disposition pursuant to MCR 2.116(C)(10), finding that there was no genuine issue of material fact where plaintiff was responsible for the contents of the application after he signed the application and acknowledged that the information contained within was true. This appeal follows.
II. ANALYSIS
A. GENUINE ISSUE OF MATERIAL FACT
Plaintiff first argues that the circuit court erred by granting defendants' motions for summary disposition because a genuine issue of material fact remained regarding whether plaintiff or the agent made the misrepresentations on the application. We disagree.
We review a trial court's decision on a motion for summary disposition brought under MCR 2.116(C)(10) de novo. Maiden v Rozwood, 461 Mich 109, 118; 597 NW2d 817 (1999). Summary disposition pursuant to MCR 2.116(C)(10) is appropriate when, "[e]xcept as to the amount of damages, there is no genuine issue as to any material fact, and the moving party is entitled to judgment or partial judgment as a matter of law." MCR 2.116(C)(10). Any affidavits, depositions, admissions, and other documentary evidence must be viewed in a light most favorable to the party opposing the motion. West v Gen Motors Corp, 469 Mich 177, 183; 665 NW2d 468 (2003). "A genuine issue of material fact exists when the record, giving the benefit of reasonable doubt to the opposing party, leaves open an issue upon which reasonable minds might differ." Id. at 183. "[W]hen a court determines that a genuine issue of material fact exists, it must deny the motion for summary disposition and allow the fact-finder to resolve the disputed issues of fact at a trial." Strozier v Flint Community Sch, 295 Mich App 82, 87-88; 811 NW2d 59 (2011).
In this case, plaintiff argues that there was a genuine issue of material fact as to whether plaintiff or the agent made the misstatement on the application. This Court squarely addressed this issue in Montgomery v Fidelity & Guaranty Life Ins Co, 269 Mich App 126, 128-130; 713 NW2d 801 (2005). In Montgomery, the plaintiff and her decedent husband applied for a life insurance policy and erroneously stated in the application that the decedent had not used tobacco within the previous five years despite his significant smoking habit. Id. at 127-128. When the decedent was killed in a car accident, the defendant insurance company denied the plaintiff's claim for death benefits because of the material misrepresentation on the application. Id. The plaintiff argued that the trial court erred by granting the defendant's motion for summary disposition because there was a genuine issue of material fact as to whether the plaintiff or the agent made the misrepresentation. Id. Specifically, the plaintiff argued that the agent completed the application and that neither she nor the decedent read the application before signing it. This Court held:
Whether it was plaintiff, the decedent, or the agent who misrepresented the decedent's tobacco use on the application is not material because plaintiff and the decedent signed the authorization, stating that they had read the questions and answers in the application and that the information provided was complete, true, and correctly recorded. It is well established that failure to read an agreement is not a valid defense to enforcement of a contract. A contracting party has a duty to examine a contract and know what the party has signed, and the other contracting party cannot be made to suffer for neglect of that duty. Regardless of who actually completed the application, plaintiff and decedent both signed the authorization, attesting to the completeness and truth of the answers, after the application was completed. Thus, plaintiff and the decedent had the opportunity to review the application and correct any errors before submitting it. We therefore conclude that there was no genuine issue of material fact that the decedent made a material misrepresentation on the application, entitling defendant to rescind or avoid the policy. [Id. at 129-130.]
The facts of this case are almost identical to those in Montgomery. Plaintiff argues that the agent made the material misrepresentation in the policy and plaintiff did not read the application. However, just like in Montgomery, id. at 130, plaintiff signed the authorization stating that he had read the answers in the application and that the information was true. Further, plaintiff initialed the page on which the incorrect payment price for his home was listed, and plaintiff agreed that he was given the contract to read and approve. Therefore, the question of who came up with the misstatements was not a genuine issue of material fact because regardless, plaintiff was responsible for the misrepresentations when he was given an opportunity to read the application and authorized that the it was true and accurate.
Plaintiff nevertheless argues that Montgomery ignores precedent that shows that insurers and agents are liable for the misrepresentations made by the agent in applications for insurance regardless of whether the insured reads the application. Plaintiff cites at length Michigan Supreme Court cases decided more than a century ago, all of which are fact-specific and distinguishable. For example, in some of the cases, the insurance agent specifically instructed the insured to sign the inaccurate application. See Aetna Live Stock, Fire & Tornado Ins Co v Olmstead, 21 Mich 246 (1870). In others, the insured did not have an opportunity to review the application. See Mich State Ins Co v Lewis, 30 Mich 41, 42-43 (1874); Baumler v Farmers' Northern Mut Fire Ins Co, 148 Mich 430, 431; 111 NW2d 1069 (1907). In some cases, the insured did not even sign an application. See Wilson v Livingston Co Mut Fire Ins Co, 259 Mich 25, 27; 242 NW2d 827 (1932); Patrons' Mut Fire Ins Co of Mich v Perl, 228 Mich 493, 496; 200 NW2d 286 (1924). Because these cases are all factually distinct, they are distinguishable and do not conflict with Montgomery. Plaintiff also argues that Montgomery does not address exceptions to the plaintiff's general duty to read a contract for mistake, trick, deception, or fraud. However, there is simply no evidence of mistake, trick, deception, or fraud in this case. Plaintiff did not allege that Hickman or Allstate committed fraud, contrary to MCR 2.112(B)(1), which provides that "[i]n allegations of fraud or mistake, the circumstances constituting fraud or mistake must be stated with particularity." Therefore, plaintiff cannot claim on appeal that defendants committed fraud. Further, there is no evidence that the insurance agent intentionally attempted to trick or deceive plaintiff into signing an untrue insurance application. Overall, there is no indication that plaintiff was excused from his duty to read the insurance application.
The Michigan Supreme Court has recognized that these cases are fact-specific and their holdings are directly tied to the facts in each case:
We find much confusion in the statement of the law as to the liability of an insurer when false statements have been made in the application for insurance through the fault or with the connivance of the insurer's agent. The decisions, however, rest so largely on varying facts that the ruling in one case may not be at all adaptable to the facts in another. [Asposito v Security Benefit Ass'n, 258 Mich 507, 512; 243 NW2d 37 (1932) (citations omitted).]
Plaintiff also argues that the circuit court erred by failing to view his deposition testimony in the light most favorable to his case, as the party opposing the motion for summary disposition. West, 469 Mich at 183. The circuit court's opinion and order provided:
Plaintiff's only offer of proof appears to be his own deposition testimony. Even when viewed in a light most favorable to the non-moving party, these arguments fail to create a material factual dispute that would support Plaintiff's claim. In short, as to these particular arguments, Plaintiff has failed to come forward with evidentiary proofs beyond his own allegations.The language in the order shows that the court considered plaintiff's affidavit in the light most favorable to him, but the evidence was unpersuasive. Plaintiff's examination established that he was given the application to read and signed the acknowledgment that the application was true. Therefore, even when viewed in a light most favorable to plaintiff, we agree with the trial court and conclude that plaintiff was responsible for the misrepresentations in the application regardless of whether the agent completed the application on plaintiff's behalf.
B. ESTOPPEL
Plaintiff next argues that defendants should be estopped from asserting a valuation of the property that is inconsistent with what the agent listed on the application. We disagree.
The applicability of a legal doctrine, such as estoppel, is a question of law that we review de novo. James v Alberts, 464 Mich 12, 14; 626 NW2d 158 (2001).
"Estoppel arises where a party, by representations, admissions or silence, intentionally or negligently induces another party to believe facts, and the other party justifiably relies and acts on this belief, and will be prejudiced if the first party is permitted to deny the existence of the facts." Casey v Auto Owners Ins Co, 273 Mich App 388, 399; 729 NW2d 277 (2006) (quotation marks and citation omitted). Estoppel does not apply in this case. The agent did not induce plaintiff to rely on the misrepresentations because plaintiff had the opportunity to review the application and knew the correct purchase price of the house. Further, preventing defendants from denying the original valuation price would not provide plaintiff any relief. The policy in this case was voided, in part, because the application misstated the purchase price of the home as $75,000 when plaintiff actually paid $10,000. Even if Hickman was forced to uphold the valuation that was listed on the application, that would only change the market value and would not alter the misstated purchase price. Therefore, Allstate could still find the policy void for a material misstatement.
C. COMPARATIVE NEGLIGENCE
Plaintiff next argues that his failure to read the insurance application is not a defense to a negligence action, but is relevant only to the comparative fault of the parties. Again, we disagree.
Plaintiff concedes that he did not preserve this issue below. In civil cases, we are not required to consider unpreserved issues. Coates v Bastian Bros, Inc, 276 Mich App 498, 509-510; 741 NW2d 539 (2007). However, we may review unpreserved claims for plain error affecting substantial rights. Huntington Nat'l Bank v Ristich, 292 Mich App 376, 381; 808 NW2d 511 (2011). " '[A]n error affects substantial rights if it caused prejudice, i.e., it affected the outcome of the proceedings.' " Lawrence v Mich Unemployment Ins Agency, 320 Mich App 422, 443; 906 NW2d 482, 493 (2017), quoting In re Utrera, 281 Mich App 1, 9; 761 NW2d 253 (2008) (alteration in original).
In Montgomery, 269 Mich App at 130, we held:
It is well established that failure to read an agreement is not a valid defense to enforcement of a contract. A contracting party has a duty to examine a contract and know what the party has signed, and the other contracting party cannot be made to suffer for neglect of that duty. Regardless of who actually completed the application, plaintiff and decedent both signed the authorization, attesting to the completeness and truth of the answers, after the application was completed. Thus, plaintiff and the decedent had the opportunity to review the application and correct any errors before submitting it. [Citations omitted.]Therefore, a comparative fault analysis is applicable in this case because plaintiff was solely responsible for the accuracy of the application.
In Zaremba Equip, Inc v Harco Nat'l Ins Co, 280 Mich App 16, 36; 761 NW2d 151 (2008), we recognized that a comparative fault analysis is appropriate when there are conflicting duties between the insured and the agent. While the insured has a duty to read its insurance policy, "under the common law, an insurance agent whose principal is the insurance company owes no duty to advise a potential insured about any coverage" because the agent's job is to present the product of the principal and take orders. Harts v Farmers Ins Exch, 461 Mich 1, 8; 597 NW2d 47 (1999). However, "when an event occurs that alters the nature of the relationship between the agent and the insured," the agent can create a special relationship that imposes a duty on the part of the agent to advise the insured about coverage. Id. at 10. The Michigan Supreme Court in Harts recognized four situations in which an agent could create a special relationship with the insured:
(1) the agent misrepresents the nature or extent of the coverage offered or provided, (2) an ambiguous request is made that requires a clarification, (3) an inquiry is made that may require advice and the agent, though he need not, gives advice that is inaccurate, or (4) the agent assumes an additional duty by either express agreement with or promise to the insured. [Id. at 10-11.]In Zaremba, 280 Mich App at 36, we held that a comparative fault analysis was appropriate to assess the plaintiff's failure-to-read defense because the plaintiff owed a duty to read the insurance contract and the agent owed a duty because of the special relationship he had created. In this case, there is no indication that the agent created a special relationship with plaintiff. Therefore, a comparative fault analysis is appropriate where plaintiff was solely responsible for failing to read the application.
D. MATERIALITY OF MISREPRESENTATIONS
Plaintiff lastly argues that the misrepresentations were immaterial because Allstate would not have rejected the policy had it known the correct facts. We disagree.
Again, plaintiff concedes that he did not preserve this issue below. In civil cases, we are not required to consider unpreserved issues. Coates, 276 Mich App at 509-510. However, we may review unpreserved claims for plain error affecting substantial rights. Huntington Nat'l Bank, 292 Mich App at 381. " '[A]n error affects substantial rights if it caused prejudice, i.e., it affected the outcome of the proceedings.' " Lawrence, 320 Mich App at 443, quoting In re Utrera, 281 Mich App at 9 (alteration in original).
MCL 500.2218(1) provides that an insurer may void an insurance policy if it discovers that an insured made a material misrepresentation on the application for insurance. A misrepresentation is material when "knowledge by the insurer of the facts misrepresented would have led to a refusal by the insurer to make the contract." MCL 500.2218(1). In this case, Allstate issued a letter to plaintiff voiding his policy and stating that "[h]ad Allstate been made aware of the actual cash amount you paid for the property this policy would not have been issued." Allstate also submitted the affidavit of a field product manager in the underwriting department who agreed that Allstate would not have issued the policy had it known the truth. Therefore, the misstatement regarding the purchase price of the home was material because Allstate would not have authorized the policy had it known the true purchase price of the home.
Affirmed.
/s/ Christopher M. Murray
/s/ Kathleen Jansen
/s/ Cynthia Diane Stephens