Safeco allowed to void insurance policy issued to landlord; claim against agent dismissed
Cheyenne Usewick and her husband purchased homes and sold or rented them for a number of years. They insured the homes through Safeco and a local agent, the Marsh Agency in Genessee County. In 2008, a home they owned in Davison was severely damaged by fire. When Usewick made a claim under the policy, Safeco filed suit to void the policy, claiming that the application for coverage contained material misrepresentations.
The trial judge agreed and granted summary disposition, and Usewick appealed. Safeco pointed to four statements it deemed "material misrepresentations:" Under "maintenance condition," a box had been marked "excellent," a fact that the insureds agreed was inaccurate. The agent had checked this box after a "drive-by" investigation and a review of the appraisal. He later testified that if he had checked the interior of the dwelling, he would have described the condition as "poor."
Safeco argued that although the condition of the interior played no role in causing the fire, it would not have underwritten coverage on the home if it new the interior was in poor condition and the dwelling unoccupied. The insureds argued that they did not describe the interior as "excellent" and did not notice that their agent had. The Court held that it did not matter where the misrepresentation originated: having signed the application for insurance, the insureds were responsible for the misrepresentation and it allowed Safeco to rescind the coverage.
The Court also pointed out additional misrepresentations that would have entitled Safeco to rescind: the application box asking whether the property was currently "for sale" had been marked "no," which the Court deemed incorrect. The home was occupied by a renter who had signed a contract to purchase the property from Usewick. Furthermore, the Court pointed to the fact that the Usewicks testified they had a general intent to sell every investment home they purchased and the husband had identified another potential buyer for the instant home. Based on these facts, the Court "inferred" that the home was, in fact, for sale at the time of the fire. Again, the fact that the property may have been intended for sale was unrelated to the fact of the fire.
Next, the Court pointed to the box on the application that asked whether the property was "vacant." Although the Court looked to the fact that a tenant had moved in and signed a purchase agreement as demonstrating the property was for sale, it also noted that the tenant testified that he moved in about one month after the Usewick purchase of the home to hold that the home was actually "vacant" when it was insured. The insureds maintained that Safeco's position failed to take into account prior rulings holding that rented dwellings will always be vacant for a temporary period between tenants, making the question of "vacancy" one of timing and intent.
Lastly, the Court pointed to the fact that the application box addressing "under construction or significant renovation." The box had been marked "no" and the Usewicks claimed that restoring the kitchen did not qualify factually, and that, in any event, they did not make this entry or give this information to their agent. They considered this entry to be the agent's professional opinion. The Court deemed the entry to be a material misrepresentation given that substantial drywall work needed to be done on the first floor and the kitchen had been gutted.
Lastly, the Court held that the lower court had not erred in summarily dismissing the Usewick claim against the local insurance agent. The court held that since Usewick did not supply any evidence that she had provided the agent with more accurate information, she could not argue that the agent was responsible for errors he had included in the application that Usewick signed.