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Insurer not entitled to rescind home insurance policy

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The failure to disclose true value in a real estate insurance context doesn’t give rise to a rescission claim, the Indiana Court of Appeals held in a case of first impression.

In Jerry French, et al. v. State Farm Fire & Casualty Company, No. 18A02-1005-PL-489, both parties appealed the denial of their motions for summary judgment in a dispute over whether State Farm Fire & Casualty Co. would have to pay for the Frenches’ stick-built home under the insurance policy that covers the “reasonable and necessary cost” of replacing their home with one of “similar construction” after their manufactured home burned.

When Jerry French obtained insurance on the manufactured home, the independent insurance agent never asked if the home was manufactured or how much the home cost. The agent assumed it was a stick-built home because French said the home was “under construction.” The replacement cost of the home under the policy was $173,200; the Frenches’ manufactured home cost nearly $77,000.

The home was destroyed by a fire and the Frenches decided to build a stick-built home on the site at a cost of more than $180,000. State Farm only offered to pay the cost of replacing the manufactured home with the same model. The Frenches sued for breach of insurance policy, and the trial court denied both parties’ motions for summary judgment.

The appellate judges found the policy was ambiguous when it came to the use of the terms “similar construction” and “reasonable and necessary cost,” and affirmed the denial of summary judgment for both parties on the question of whether the policy terms covered the cost of replacing the manufactured home with a stick-built one.

State Farm argued that it’s entitled to reformation of the policy based on a mutual mistake of fact, and rescission of the policy based on concealment of material facts by the Frenches. On the reformation issue, the judges remanded with instructions to enter summary judgment in favor the Frenches, because there’s no evidence that the Frenches were mistaken regarding the true value or nature of the manufactured home. Regarding the rescission of the insurance contract based on the concealment of the purchase price, or the fact it was a manufactured home, the judges noted that no Indiana case has squarely addressed the question of whether failure to disclose a material fact leads to the same result as a misrepresentation.

The appellate court looked at foreign cases involving the failure to disclose the value of insured real estate and cases involving the failure to disclose the value of insured property. In the real estate cases, those courts held that failure to disclose true value in a real estate insurance context doesn’t give rise to a rescission claim. Courts have held that not disclosing the value of insured property – such as art objects – is grounds for voiding the policy.

Judge Cale Bradford pointed out that in the real estate cases, the insurance company didn’t inspect the property in question before issuing coverage, which is what happened in the instant case.  

“… it would have been a simple matter for a State Farm agent to visit the Frenches’ home, at which point it would have been immediately apparent that it was a manufactured home, even without going inside. In contrast, the true value of personal property, such as an art collection, would be much more difficult for the insurer to ascertain,” he wrote. “We do not think it is an unreasonable rule that insurance companies fail to ascertain the true value of insured real property at their peril, as they are in a far better position to accurately ascertain that value than most homeowners.”

The judges ordered summary judgment be entered in favor of the Frenches on this claim. They also denied awarding attorney fees and prejudgment interest to the Frenches. At trial, they may argue that additional living expenses pursuant to their insurance policy were reasonable and necessary costs of replacing their original home with one of similar construction.

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  1. Falk said “At this point, at this minute, we’ll savor this particular victory.” “It certainly is a historic week on this front,” Cockrum said. “What a delight ... “Happy Independence Day to the women of the state of Indiana,” WOW. So we broke with England for the right to "off" our preborn progeny at will, and allow the processing plant doing the dirty deeds (dirt cheap) to profit on the marketing of those "products of conception." I was completely maleducated on our nation's founding, it would seem. (But I know the ACLU is hard at work to remedy that, too.)

  2. congratulations on such balanced journalism; I also love how fetus disposal affects women's health protection, as covered by Roe...

  3. It truly sickens me every time a case is compared to mine. The Indiana Supreme Court upheld my convictions based on a finding of “hidden threats.” The term “hidden threat” never appeared until the opinion in Brewington so I had no way of knowing I was on trial for making hidden threats because Dearborn County Prosecutor F Aaron Negangard argued the First Amendment didn't protect lies. Negangard convened a grand jury to investigate me for making “over the top” and “unsubstantiated” statements about court officials, not hidden threats of violence. My indictments and convictions were so vague, the Indiana Court of Appeals made no mention of hidden threats when they upheld my convictions. Despite my public defender’s closing arguments stating he was unsure of exactly what conduct the prosecution deemed to be unlawful, Rush found that my lawyer’s trial strategy waived my right to the fundamental error of being tried for criminal defamation because my lawyer employed a strategy that attempted to take advantage of Negangard's unconstitutional criminal defamation prosecution against me. Rush’s opinion stated the prosecution argued two grounds for conviction one constitutional and one not, however the constitutional true threat “argument” consistently of only a blanket reading of subsection 1 of the intimidation statute during closing arguments, making it impossible to build any kind of defense. Of course intent was impossible for my attorney to argue because my attorney, Rush County Chief Public Defender Bryan Barrett refused to meet with me prior to trial. The record is littered with examples of where I made my concerns known to the trial judge that I didn’t know the charges against me, I did not have access to evidence, all while my public defender refused to meet with me. Special Judge Brian Hill, from Rush Superior Court, refused to address the issue with my public defender and marched me to trial without access to evidence or an understanding of the indictments against me. Just recently the Indiana Public Access Counselor found that four over four years Judge Hill has erroneously denied access to the grand jury audio from my case, the most likely reason being the transcription of the grand jury proceedings omitted portions of the official audio record. The bottom line is any intimidation case involves an action or statement that is debatably a threat of physical violence. There were no such statements in my case. The Indiana Supreme Court took partial statements I made over a period of 41 months and literally connected them with dots… to give the appearance that the statements were made within the same timeframe and then claimed a person similarly situated would find the statements intimidating while intentionally leaving out surrounding contextual factors. Even holding the similarly situated test was to be used in my case, the prosecution argued that the only intent of my public writings was to subject the “victims” to ridicule and hatred so a similarly situated jury instruction wouldn't even have applied in my case. Chief Justice Rush wrote the opinion while Rush continued to sit on a committee with one of the alleged victims in my trial and one of the judges in my divorce, just as she'd done for the previous 7+ years. All of this information, including the recent PAC opinion against the Dearborn Superior Court II can be found on my blog www.danbrewington.blogspot.com.

  4. On a related note, I offered the ICLU my cases against the BLE repeatedly, and sought their amici aid repeatedly as well. Crickets. Usually not even a response. I am guessing they do not do allegations of anti-Christian bias? No matter how glaring? I have posted on other links the amicus brief that did get filed (search this ezine, e.g., Kansas attorney), read the Thomas More Society brief to note what the ACLU ran from like vampires from garlic. An Examiner pledged to advance diversity and inclusion came right out on the record and demanded that I choose Man's law or God's law. I wonder, had I been asked to swear off Allah ... what result then, ICLU? Had I been found of bad character and fitness for advocating sexual deviance, what result then ICLU? Had I been lifetime banned for posting left of center statements denigrating the US Constitution, what result ICLU? Hey, we all know don't we? Rather Biased.

  5. It was mentioned in the article that there have been numerous CLE events to train attorneys on e-filing. I would like someone to provide a list of those events, because I have not seen any such events in east central Indiana, and since Hamilton County is one of the counties where e-filing is mandatory, one would expect some instruction in this area. Come on, people, give some instruction, not just applause!

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