                 IN THE COURT OF APPEALS OF TENNESSEE
                            AT KNOXVILLE
                                    May 7, 2001 Session

            TENNESSEE FARMERS MUTUAL INSURANCE CO. v.
                   ROBERT WESTMORELAND, ET AL.


                      Appeal from the Chancery Court for Rhea County
                         No. 9317    Jeffrey F. Stewart, Chancellor

                                     FILED MAY 30, 2001

                                No. E2000-02693-COA-R3-CV


Tennessee Farmers Mutual Insurance Company (“Plaintiff”) filed a declaratory judgment action
claiming that the homeowner’s insurance policy issued to Robert and Elizabeth Westmoreland
(“Defendants”) was void due to material misrepresentations made on the application for insurance
by Mr. Westmoreland. Defendants claim they provided the correct information, but it was
incorrectly recorded by the insurance agent. The Trial Court granted Plaintiff’s motion for summary
judgment. We affirm.


                          Tenn. R. App. P. 3 Appeal as of Right;
                Judgment of the Chancery Court Affirmed; Case Remanded.


D. MICHAEL SWINEY, J., delivered the opinion of the court, in which HOUSTON M. GODDARD , P.J.,
and CHARLES D. SUSANO, JR., J., joined.


J. Arnold Fitzgerald, Dayton, Tennessee, for the Appellants Robert Westmoreland and Elizabeth
Westmoreland.


David R. Swafford, Pikeville, Tennessee, for the Appellee Tennessee Farmers Mutual Insurance
Company.
                                                     OPINION

                                                   Background

                This lawsuit arises out of a fire which occurred at Defendants’ home. Plaintiff filed
suit seeking to void the homeowner’s insurance policy because of material misrepresentations in the
answers to three of the questions contained in the insurance application dated June 25, 1999.
Defendants denied any material misrepresentations had been made, and filed a counter-claim seeking
the proceeds from the insurance policy.1

                Defendants obtained a homeowner’s insurance policy from Plaintiff on their home
approximately six months prior to the fire. The three questions at issue involved whether Mr.
Westmoreland had suffered a fire loss in the past, whether he had ever been convicted of a felony,
and whether a business was being operated out of his home. The answers on the application stated
that Mr. Westmoreland had no previous fire loss, that he had no felony conviction, and that he was
not operating a business out of his home. After the fire occurred, Mr. Westmoreland stated under
oath that he had a home in Mississippi which had been completely destroyed by fire and this loss was
paid through Farm Bureau in Mississippi. He also had a fire claim on a Jeep.2 Mr. Westmoreland
had two prior felony convictions, although he apparently received a pardon on one of these
convictions. These fire losses and felony convictions were prior to the date the application was
completed. Mr. Westmoreland also was operating a used car business out of his home when the
application was completed. In fact, he sold 44 used cars in just one month during 1999.

               The insurance application provides: “I declare the foregoing statements provided by
me are true, correct, and complete for all proposed insureds. I understand that any
misrepresentations will void this insurance.” The application was signed by Mr. Westmoreland.

                The disputed facts center around who was responsible for the incorrect answers on
the application. In support of its motion for summary judgment, Plaintiff filed the affidavit of Justin
Wilson (“Wilson”), Plaintiff’s sales agent who assisted Defendants in obtaining the homeowner’s
insurance policy. Wilson stated that he met with Mr. Westmoreland in person at his (Wilson’s)
office where he asked Mr. Westmoreland each question contained on the one page application and
recorded his responses. After the application was completed, it was given to Mr. Westmoreland
which he signed. Wilson stated that Mr. Westmoreland never told him about the previous fire losses,
the prior felony convictions, or the fact that he was operating a used car business out of his home.
Wilson swore that had these questions been answered accurately by Mr. Westmoreland, the
insurance policy would not have been issued.


         1
            Any claim by the loss payee on the insurance policy, Rhea County N ational Ba nk, was settled p rior to this
litigation and is not at issue here.

         2
           Mr. Westmoreland also testified that he had a fire loss on a storage building sometime around September of
1999, but this would have occurred after he completed the application for insurance in the present case.

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               Plaintiff also filed the affidavit of Vickie Knight (“Knight”), Plaintiff’s Vice-
President of Property Underwriting. Knight stated that:

               If Mr. Westmoreland’s application had indicated an affirmative
               response to any one or any combination of the three questions … the
               application would have been declined. Tennessee Farmers Mutual
               Insurance Company was deprived of the opportunity to fairly assess
               the risk presented since the fire loss history, the felony convictions,
               and the presence of a used car business on the premises were not
               revealed.

                In response to the summary judgment motion, Mr. Westmoreland filed his own
affidavit. Mr. Westmoreland claimed that he did explain the previous prior fire losses to Wilson,
but Wilson did not read back to him the answers Wilson actually was writing down on the
application. He further claimed that he answered all questions truthfully and he remembered signing
the application. Mr. Westmoreland stated under oath that he did not read the application after it was
filled out by Wilson. The crux of Mr. Westmoreland’s testimony is that Wilson incorrectly wrote
down his responses, and Mr. Westmoreland didn’t read the completed application before signing it.

               The Trial Court granted Plaintiff’s summary judgment motion. In its order, the Trial
Court indicated that after considering the affidavits, sworn testimony of Mr. Westmoreland,
Plaintiff’s summary judgment motion and Defendant’s response, and assuming Mr. Westmoreland’s
statements in his affidavit to be true, it was required to follow this Court’s holding in Giles v.
Allstate Insurance Company, 871 S.W.2d 154 (Tenn. Ct. App. 1993) and grant Plaintiff’s summary
judgment motion. Defendants appeal.

                                            Discussion

             The standard for review of a motion for summary judgment is set forth in Staples v.
CBL & Associates, Inc., 15 S.W.3d 83 (Tenn. 2000):

                      The standards governing an appellate court’s review of a
               motion for summary judgment are well settled. Since our inquiry
               involves purely a question of law, no presumption of correctness
               attaches to the lower court’s judgment, and our task is confined to
               reviewing the record to determine whether the requirements of Tenn.
               R. Civ. P. 56 have been met. See Hunter v. Brown, 955 S.W.2d 49,
               50-51 (Tenn. 1997); Cowden v. Sovran Bank/Central South, 816
               S.W.2d 741, 744 (Tenn. 1991). Tennessee Rule of Civil Procedure
               56.04 provides that summary judgment is appropriate where: (1) there
               is no genuine issue with regard to the material facts relevant to the
               claim or defense contained in the motion, see Byrd v. Hall, 847
               S.W.2d 208, 210 (Tenn. 1993); and (2) the moving party is entitled


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               to a judgment as a matter of law on the undisputed facts. See
               Anderson v. Standard Register Co., 857 S.W.2d 555, 559 (Tenn.
               1993). The moving party has the burden of proving that its motion
               satisfies these requirements. See Downen v. Allstate Ins. Co., 811
               S.W.2d 523, 524 (Tenn. 1991). When the party seeking summary
               judgment makes a properly supported motion, the burden shifts to the
               nonmoving party to set forth specific facts establishing the existence
               of disputed, material facts which must be resolved by the trier of fact.
               See Byrd v. Hall, 847 S.W.2d at 215.

                       To properly support its motion, the moving party must either
               affirmatively negate an essential element of the non-moving party’s
               claim or conclusively establish an affirmative defense. See McCarley
               v. West Quality Food Serv., 960 S.W.2d 585, 588 (Tenn. 1998);
               Robinson v. Omer, 952 S.W.2d 423, 426 (Tenn. 1997). If the moving
               party fails to negate a claimed basis for the suit, the non-moving
               party’s burden to produce evidence establishing the existence of a
               genuine issue for trial is not triggered and the motion for summary
               judgment must fail. See McCarley v. West Quality Food Serv., 960
               S.W.2d at 588; Robinson v. Omer, 952 S.W.2d at 426. If the moving
               party successfully negates a claimed basis for the action, the non-
               moving party may not simply rest upon the pleadings, but must offer
               proof to establish the existence of the essential elements of the claim.

                       The standards governing the assessment of evidence in the
               summary judgment context are also well established. Courts must
               view the evidence in the light most favorable to the nonmoving party
               and must also draw all reasonable inferences in the nonmoving
               party’s favor. See Robinson v. Omer, 952 S.W.2d at 426; Byrd v.
               Hall, 847 S.W.2d at 210-11. Courts should grant a summary
               judgment only when both the facts and the inferences to be drawn
               from the facts permit a reasonable person to reach only one
               conclusion. See McCall v. Wilder, 913 S.W.2d 150, 153 (Tenn.
               1995); Carvell v. Bottoms, 900 S.W.2d 23, 26 (Tenn. 1995).

Staples, 15 S.W.3d at 88-89. A fact is “material” for summary judgment purposes, if it “must be
decided in order to resolve the substantive claim or defense at which the motion is directed.” Luther
v. Compton, 5 S.W.3d 635, 639 (Tenn. 1999)(quoting Byrd v. Hall, 847 S.W.2d at 211).

              In State Farm General Insurance Co. v. Wood, 1 S.W.3d 658 (Tenn. Ct. App. 1999),
this Court concluded that the insured’s failure to disclose a recent fire loss in her application for
insurance rendered the policy void. In Wood, this Court explained the applicable Tennessee law as
follows:


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               T.C.A. § 56-7-103 provides that

                       [n]o written or oral misrepresentation or warranty
                       therein made in the negotiations of a contract or
                       policy of insurance, or in the application therefor, by
                       the insured or in the insured’s behalf, shall be deemed
                       material or defeat or void the policy or prevent its
                       attaching, unless such misrepresentation or warranty
                       is made with actual intent to deceive, or unless the
                       matter represented increases the risk of loss.

               (Emphasis added.) It is clear that the language of the statute is
               disjunctive, i.e., the insurer may show either 1) that the
               misrepresentation was made with the intent to deceive, or 2) that the
               matter represented increased the risk of loss. Id.; see Clingan v.
               Vulcan Life Ins. Co., 694 S.W.2d 327, 331 (Tenn. App. 1985). In this
               case, it is not disputed that the representation in the application
               regarding prior losses was false; thus, the question for the court was
               whether, as a matter of law, the misrepresentation increased State
               Farm’s risk of loss.

Wood, 1 S.W.3d at 661. Wood went on to explain that a misrepresentation increases the risk of loss
when “it is of such importance that it ‘naturally and reasonably influences the judgment of the
insuror in making the contract.’” Id. at 661, 662 (citing Sine v. Tennessee Farmers Mut. Ins. Co., 861
S.W.2d 838, 839 (Tenn. Ct. App. 1993); Seaton v. National Grange Mut. Ins. Co., 732 S.W.2d 288,
288-89 (Tenn. Ct. App. 1987); Loyd v. Farmers Mut. Fire Ins. Co., 838 S.W.2d 542, 545 (Tenn. Ct.
App. 1992)). Moreover, Wood held that:

               [i]t is not necessary to find that the policy would not have been issued
               if the truth had been disclosed. It is sufficient that the insurer was
               denied information which it sought in good faith and which was
               deemed necessary to an honest appraisal of insurability.

Wood, 1 S.W.3d at 662 (quoting Loyd v. Farmers Mut. Fire Ins. Co., 838 S.W.2d 542, 545 (Tenn.
Ct. App. 1992)). Untrue statements as to a prior fire loss are material on an application for fire
insurance coverage and will preclude recovery. Id.; Loyd, 838 S.W.2d at 545 (quoting 45 C.J.S.
Insurance, § 534).

               In the present case, we conclude that the incorrect responses on the application for
insurance increased Plaintiff’s risk of loss. This has been established by the affidavits of Wilson and
Knight, and Defendants have offered no proof to the contrary.




                                                 -5-
                We now turn to Defendants’ argument surrounding the reason for the incorrect
responses. Defendants assert that Mr. Westmoreland gave accurate responses, but the answers were
incorrectly recorded by Wilson. Thereafter, Mr. Westmoreland signed the application without
reading it and verifying the accuracy of the responses. In reviewing the grant of summary judgment,
we will assume, as we must, that Defendants’ factual allegations are true.

                 We agree with the Trial Court that resolution of this issue is controlled by Giles v.
Allstate Insurance Co., 871 S.W.2d 154 (Ten. Ct. App. 1993). In Giles, the insured brought suit
seeking to recover under her homeowner’s insurance policy for items that were stolen. Allstate
claimed that the policy was void due to misrepresentations made by Giles on the application.
Specifically, Giles did not reveal a previous fire loss on the home. As in the present case, the insured
and the insurance agent in Giles blamed each other for the inaccurate response on the insurance
application. Likewise, the insured did not read but did sign the completed application. In affirming
the trial court’s verdict for Allstate, this Court stated that if, without being the victim of fraud, a party

                fails to read the contract or otherwise to learn its contents, he signs
                the same at his peril and is estopped to deny his obligation, will be
                conclusively presumed to know the contents of the contract, and must
                suffer the consequences of his own negligence. Beasley v.
                Metropolitan Life Ins. Co., 190 Tenn. 227, 229 S.W.2d 146 (1950) at
                148. Also see DeFord v. National Life & Accident Ins. Co., 182
                Tenn. 255, 185 S.W.2d 617, 621 (Tenn. 1945); Hardin v. Combined
                Insurance Company, 528 S.W.2d 31 (Tenn. App. 1975); Montgomery
                v. Reserve Life Ins., 585 S.W.2d 620 (Tenn. App. 1979).

Giles v. Allstate Insurance Co., 871 S.W.2d 154, 156 (Tenn. Ct. App. 1993). This Court in Giles
further noted that to allow a party to admit he signed a contract, but deny it expresses the agreement
he made, or to allow him to admit he signed it but did not read it or know its stipulations “would
absolutely destroy the value of all contracts.” Giles, 871 S.W.2d at 157 (citations omitted). There
is no proof in the record that Mr. Westmoreland failed to read the application or learn its contents
because of fraud by Wilson. Thus, we must presume Mr. Westmoreland knew the contents of the
application, including the inaccurate responses to the three questions at issue, and Defendants must
suffer the consequences of same.

               Viewing the evidence in the light most favorable to Defendants and drawing all
reasonable inferences in their favor, we conclude there is no genuine issue as to any material fact and
summary judgment was properly granted to Plaintiff as a matter of law.




                                                    -6-
                                            Conclusion

                The judgment of the Trial Court is affirmed. This case is remanded to the Trial Court
for such further proceedings as may be required, if any, consistent with this Opinion. Costs of appeal
are taxed to the Appellants Robert and Elizabeth Westmoreland and their surety.




                                                       ____________________________________
                                                       D. MICHAEL SWINEY




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