Summary 2010 WY 89

Summary of Decision issued June 29, 2010

Summaries are prepared by Law Librarians and are not official statements of the Wyoming Supreme Court.

Case Name: Harper v. Fidelity & Guaranty Life Ins. Co.

Citation: 2010 WY 89

Docket Number: S-09-0119

Appeal from the District Court of Natrona County, the Honorable Scott W. Skavdahl, Judge.

Representing Harper: Stephen R. Winship of Winship & Winship, PC, Casper, Wyoming.

Representing Fidelity: Julie Nye Tiedeken of McKellar, Tiedeken & Scoggins, LLC, Cheyenne, Wyoming.

Facts/Discussion: Mr. Harper, husband of Gail Harper, bought a life insurance policy and died within two months of doing so. Fidelity refused to pay the claim because they insisted that Mr. Harper misrepresented/omitted the state of his health in the claim application.

Materiality: Mrs. Harper contested the district court’s finding that there was no issue of material fact as to whether Fidelity properly rescinded Mr. Harper’s insurance policy. Mrs. Harper argued that a representation or omission in an insurance application is material if knowledge or ignorance of it would naturally influence the judgment of the insurer in making the contract, or in estimating the character of the risk or setting the premium thus making it a question for the jury to decide. Materiality is determined by asking whether reasonably careful and intelligent persons would have regarded the omitted facts as substantially increasing the chances of the events insured against so as to cause a rejection of the application or different conditions, such as higher premiums. Mr. Harper’s omissions were material. He did not disclose several health conditions on his application. Even though there were material misrepresentations, summary judgment was appropriate because they were of such a nature that there was no dispute to the materiality. Thus, there were no genuine issues of material fact and Fidelity was entitled to summary judgment.
Duty to investigate: Mrs. Harper argued that Fidelity had a duty to further investigate Mr. Harper’s answers on his application. An insurer has no duty to investigate the truthfulness of an applicant’s responses unless it has notice that those responses might not be truthful or accurate. Mr. Harper represented in his application that the statements were complete, true and correctly recorded. Based upon the law and Mr. Harper’s assertions, Fidelity was under no duty to investigate.
Promissory estoppel: Harper was clearly not the picture of health and although he may have applied to another life insurance company there was nothing in the record apart from his wife’s assertions which suggested another company would have insured him.
Good faith and fair dealing: Fidelity rescinded the policy of insurance because it determined after obtaining an opinion from the chief underwriter that there were material misrepresentations, omissions, and incorrect statements made on the application which if they had been known at the time would have caused the application to have been rejected. There is no question of material fact that § 26-15-109 allows rescission under those circumstances.
Reasonable expectations doctrine: The Court failed to see how any claim would exist under the doctrine of reasonable expectations because Mr. Harper was advised that the information in the application would be relied upon in issuing the insurance. The policy contained a contestability clause and Mr. Harper verified the answers with his signature.

Conclusion: There is no issue of material fact as to whether Fidelity properly rescinded Mr. Harper’s insurance policy. His application contained omissions and misrepresentations and summary judgment is appropriate where the misrepresentations are of such a nature that there can be no dispute as to its materiality. An insurer is under no duty to investigate the truthfulness of an applicant’s responses unless it has notice that those responses might not be truthful or accurate. There was no basis to conclude that the equities in this instance required the insurance contract be enforced under the doctrine of promissory estoppel. The covenant of good faith and fair dealing was not breached and no claim existed under the doctrine of reasonable expectations.

Affirmed.

J. Hill delivered the decision.

Link: http://tinyurl.com/24l8lh3 .

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