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Dutton v. Tennessee Farmers Mutual Insurance Co.

Court of Appeals of Tennessee, Knoxville

June 25, 2018

GRADY EUGENE DUTTON
v.
TENNESSEE FARMERS MUTUAL INSURANCE COMPANY

          Session March 13, 2018

          Appeal from the Circuit Court for Hawkins County No. CC16CV277 Alex E. Pearson, Judge

         We granted the Rule 9 application for an interlocutory appeal filed by Tennessee Farmers Mutual Insurance Company ("TN Farmers") to consider whether material misrepresentations made on an application for a policy of insurance may become not material by virtue of later changes made to the policy. We find and hold that the misrepresentations made on the policy application increased the risk of loss and voided the policy or prevented its attaching pursuant to Tenn. Code Ann. § 56-7-103 and that subsequent changes to a void policy did not render the misrepresentations not material. We, therefore, reverse the June 22, 2017 order of the Circuit Court for Hawkins County ("the Trial Court") denying TN Farmers' motion for summary judgment and remand this case to the Trial Court for entry of an order granting summary judgment to TN Farmers.

         Tenn. R. App. P. 9 Interlocutory Appeal; Judgment of the Circuit Court ReversedCase Remanded

          Thomas L. Kilday, Greeneville, Tennessee, for the appellant, Tennessee Farmers Mutual Insurance Company.

          Floyd W. Rhea, Sneedville, Tennessee, for the appellee, Grady Eugene Dutton.

          D. MICHAEL SWINEY, C.J., delivered the opinion of the court, in which FRANK G. CLEMENT, P.J.M.S. and THOMAS R. FRIERSON, II, J., joined.

          OPINION

          D. MICHAEL SWINEY, CHIEF JUDGE

         Background

         Grady Eugene Dutton ("Plaintiff") sued TN Farmers with regard to a property insurance policy ("the Insurance Policy") insuring a house ("the House") located at 187 Little Pumpkin Valley Road in Edison, Tennessee ("the Property"). The House was destroyed by fire on May 28, 2016, and TN Farmers refused to pay the claim after it discovered that Plaintiff and his ex-wife Sheila Brock ("Brock") had made misrepresentations when answering questions on the application for the Insurance Policy.

         Plaintiff, who was 73 years old at the time of the fire, has been married multiple times. He met Brock in 1994, and they were married in December of 1995 and divorced in 2002. Brock had drug problems, and on one occasion in 1998 Plaintiff placed Brock in drug rehabilitation for 30 days. After they divorced, Plaintiff and Brock reconciled and began living together again for a time. They later had another falling out, and Plaintiff moved to Missouri where he remarried, and then later divorced, his first wife. After that divorce, Plaintiff returned to Tennessee and reconciled with Brock.

         On April 29, 2008, Brock was arrested on multiple drug charges, some of which were felony charges. Specifically, Brock was arrested on charges of felony possession of drug paraphernalia, possession of Schedule II drugs (cocaine) for resale, and possession of Schedule III and Schedule IV drugs. Plaintiff was living in Missouri at that time, but Brock told him about her arrests when they spoke on the telephone. Plaintiff returned to Tennessee around Christmas of 2008, and he and Brock began living together again.

         The Property was acquired by deed dated March 10, 2009 with Brock listed as the sole grantee. Plaintiff testified that he does not know why the deed does not list him as a grantee as he and Brock purchased the Property together. A deed of trust dated approximately one month after the purchase of the Property listed both Brock's name and Plaintiff's name. Plaintiff testified that he and Brock purchased the Property for $130, 000 and that the mortgage was for $55, 000. He testified that he and Brock both contributed their own monies toward the remainder of the purchase price, and that he and Brock moved on to the Property as soon as they purchased it. On April 21, 2009, Plaintiff and Brock met with a TN Farmers' agent and executed an application to insure the Property.

         On the application, Plaintiff and Brock answered 'no' to questions about whether they had ever been charged with, convicted of, or pled guilty to a felony and whether they had ever been charged with, convicted of, or pled guilty to arson, fraud, theft, or drug related crime. On the page containing these questions and answers and Plaintiff's and Brock's signatures, the application also states: "I(We) understand that any misrepresentations or failure to answer questions truthfully, correctly and completely will void this insurance." Furthermore, the application for the Insurance Policy states that the applicants had a previous total fire loss of $10, 000 in December of 2006. When questioned during deposition, Plaintiff could not remember this fire loss, but could remember being insured by TN Farmers and living with Brock in Sneedville, Tennessee at that time.

         Additionally, the Insurance Policy contains the following language:

         ACTS WHICH AUTOMATICALLY VOID THE POLICY

         Concealment or Fraud

         The policy shall be automatically void as to all insureds if any insured, whether before ...


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