Exclusion Does Not Defeat Negligence Claims

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Previously, the Michigan Court of Appeals held that the defendant Farm Bureau General Insurance Company of Michigan had the right to cancel the plaintiff’s insurance because of certain misrepresentations made in the application. The court said that, regardless of whether the plaintiff or the insurance agent provided the false information, the plaintiff proved that any lie was made by signing the application.

Lawrence S. Holman v. Farm Bureau General Insurance Company Of Michigan, Jonathan Heinzman Agency, Inc., and Jonathan HeinzmanNo. 357473, Michigan Court of Appeals (August 4, 2022)

After losing his case due to the chargeback, the Judge sued his insurance agent claiming that he had neglected to fill out the form.

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Plaintiff purchased a 2007 Mercury Mountaineer from an auto dealership and called Farm Bureau salesman Jonathan Heinzman to obtain insurance on the Mercury. Heinzman testified that he filled out the insurance application based on the responses he received from the appellant over the phone. Did the completed application misrepresent the facts that they did not drive or move any of the Applicant’s vehicles that did NOT have the required insurance for the past six months? The AAA policy number is listed as the claimant’s current insurance policy, with an expiration date prior to the effective date of the new policy. Heinzman faxed plaintiff a temporary certificate of insurance and asked plaintiff to send proof of his original insurance. That evening, appellant mailed Heinzman a AAA insurance policy that had expired two years ago.

Plaintiff’s application was submitted to the Farm Bureau without proof of previous insurance. On January 30, 2015, the Farm Bureau sent the complainant a letter stating that his application could not be approved because it was incomplete.

The plaintiff sued Farm Bureau for PIP benefits for the accident, and the trial court granted summary judgment to Farm Bureau. In Holman v Mossa-Basha (Holman I), issued on November 29, 2018, this court panel affirmed the decision of the high court that there is no need for a temporary insurance cancellation document because the document expired according to its principles on January 29, 2015, so the plaintiff did not want it. have information on the day of the accident. The Court of Appeals also held that Farm Bureau had the right to cancel the policy because of errors in the insurance application. Documentary evidence shows that these representations were false and materialistic.

The appellant signed the document after having had the opportunity to read and review it. Because the plaintiff signed the application after “reading it carefully,” he confirmed any misrepresentations or errors in the document.

Heinzman testified that he knew the Farm Bureau would terminate appellant’s policy. According to a transcript of his conversation with the plaintiff, Heinzman told the plaintiff on January 6, 2015, that the Farm Bureau would “probably” end the process. Similarly, after receiving an email from Farm Bureau regarding missing proof of previous insurance, Heinzman called plaintiff on January 7, 2015, and told her that Farm Bureau “may withhold coverage.” Heinzman also testified that he offered to look into claimant’s coverage through another insurance company. In contrast, plaintiff denied that Heinzman told her that Farm Bureau would not insure her or that she should look for other options.

Heinzman moved for summary judgment in the suit on the grounds that the plaintiff’s claims were barred by the doctrine of just because and collateral estoppel.

The trial court granted Heinzman’s motion for summary judgment. The court decided on the basis of collateral to prevent that Holman I was a defendant due to the plaintiff’s negligence.

ENJOYMENT

Plaintiff contends that the trial court erred in holding that his negligence against Heinzman was barred by the doctrine of collateral estoppel.

The doctrine of collateral estoppel precludes subsequent retrial, because of a different action between the same parties where the original judgment reached a valid judgment and the issue was actually determined in the earlier proceeding.

In general, for collateral estoppel to apply three conditions must be met:

  • the subject matter of the decision must have been argued and proved by a valid and final decision;
  • the parties themselves must have had a full and fair opportunity to contest the matter; and
  • there must be an estoppel contract.

Establishing a prima faci In a case of negligence, the defendant must prove that the defendant has a legal duty, the defendant breached a legal duty, the defendant suffered damages, and the defendant’s breach was the proximate cause of the defendant’s damages. The court decided that Holman I believed that the plaintiff erred in pleading and, therefore, the plaintiff could not prove that any negligent conduct of Heinzman caused the plaintiff’s damages.

As mentioned, a Holman I the panel concluded that it was “nonsense” if Heinzman provided a “bogus” AAA number in the application because the plaintiff, as a party to the contract, had the responsibility to read the contract and know what he had signed. In other words, the panel did not need to decide whether plaintiff’s or Heinzman’s misrepresentations were false for the purpose of determining whether the Farm Bureau had the right to withhold because plaintiff affirmed the contents of the form as a signatory.

The court found in favor of the insurer, relying on principles of contract law that “failure to read the contract is not a valid defense to the performance of the contract” and “[a] The contractor is responsible for reviewing the contract and knowing what the party has signed, and the contractor cannot be held liable for neglecting that duty. “

Stated differently, under contract law, the signing party agrees to the terms of the contract, regardless of whether they have read it. Therefore, it was unconscionable that he submitted false information to the insurance application in order to determine whether the insurance company would cancel the policy. The terms of the agreement depend on Holman I they have no duty in negligence if the insurance agent breached the duty to the insured.

Because the plaintiff’s negligence claims in the instant case are tortious, the appellate court held that the plain language of the comparative negligence statute required the trial court to give the requested instruction on comparative negligence.

The appeals court also said that the plaintiff’s failure to read the policy could be negligent and that the trial court should allow the jury to consider whether the plaintiff clearly failed to read the insurance policy and related documents.

The insured’s failure to read the insurance policy and related documents was consistent with comparative negligence, and that the jury could find that it was the cause of the insured’s loss. As applied here, the insurer’s failure to identify errors in the claim made by the insurer should not preclude an action for negligence, but it may be considered by the jury in the search for comparative error and causation.

Given that captive insurers are “order takers,” there is an obligation to do so accurately and not to provide false information on an application, either intentionally or by mistake.

It was not necessary for the Court of Appeals to determine whether there was a special relationship between the plaintiff and Heinzman because this case falls within the broad, narrow jurisdiction of the law.

A Court’s original decision granting an insurance waiver does not preclude a negligent action by an insurance carrier. The judgment of the superior court was reversed and the judgment was remanded for a new trial.

There is no reason why an insured person or an insurance agent wants to obtain insurance that the prospective insured lied to the insurer to obtain insurance. There is no doubt that the policy was found to be materially flawed enough to warrant the cancellation of the policy. Since the plaintiff claims that he told the truth to the agent then there may be a case of negligence on the part of the agent. If the agent lies, he loses the case of negligence. If they both lied, the jury will determine what share of responsibility each will receive. The trial will continue and a decision will be made.

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(c) 2022 Barry Zalma & ClaimSchool, Inc.

Barry Zalma, Esq., CFE, now limits his practice to working as an insurance consultant specializing in insurance, insurance administration, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He has practiced law in California for over 44 years as an insurance and claims attorney and over 54 years in the insurance business. He can be reached at zalma@zalma.com.

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