Broker responsible for information in application
In 1990, St. Paul issued a liquor liability insurance policy to Chopsticks Restaurant. The evidence showed that it had relied on information contained in the application which had been prepared by an independent insurance broker, Feingold, and signed by the president of Chopsticks. The premiums were to be based on annual liquor receipts as shown by an audit.
During the policy period, a woman was injured in a motor vehicle accident allegedly caused by the negligence of a driver who had imbibed too much alcohol at Chopsticks. St. Paul denied liability because of intentional misrepresentations in the application which showed that the closing hour was 11:00 p.m. when, in fact, it closed at 12:30 a.m. on weekdays and 1:30 a.m. on weekends. In addition the application showed there was no doorman and that there was no entertainment or television. In fact, there was a doorman and the record showed there was a live band three nights each week, as well as a dance floor; and there were two television sets, one of which was a large screen suspended above the dance floor. Annual receipts from alcoholic beverages were shown as $180,000, but the insurance broker knew that those receipts for the year ending October 1988 had been in excess of $340,000.
St. Paul sought to rescind the policy because of the willful and intentional misstatements and errors in the application. It was shown that the policy would not have been issued if the company had known of the correct answers.
St. Paul filed an action against the broker, and the trial court entered judgment against the broker, who appealed. He contended that he had no duty to St. Paul inasmuch as only the president of Chopsticks had signed the application and that he had acted solely as the agent for the insured.
On appeal, the court agreed that the facts of this case showed that the insurance broker had known of the misrepresentations and had warranted the imposition of liability.
The owner and president of Chopsticks was born in China and had trouble reading and understanding English. He had signed the application in the broker's presence without reading it, and an employee of the broker had inserted the incorrect information in the application. The broker had visited the premises and knew there was dancing and a band and knew there were two television sets for the entertainment of the customers. He knew also that the annual sale of alcoholic beverages was much greater than the amount shown. The fact that only the president of Chopsticks signed the application did not relieve the broker from the consequences of his negligence and misrepresentations.
The higher court disagreed with the manner in which prejudgment interest was calculated, and the action was remanded for calculation of that interest, but the judgment against the broker was otherwise affirmed.
St. Paul Surplus Lines Insurance Company et al. v. Feingold & Feingold Insurance Agency, Inc.--Supreme Judicial Court of Massachusetts, Worcester--May 4, 1998--693 North Eastern Reporter 2d. 669.
Surviving sister can recover under own UIM coverage
On August 14, 1993, James Pettit was killed in an automobile accident caused by the negligence of the other driver, who had a policy with a $250,000 limit. His daughter, April, was appointed as administrator of his estate; and, in that capacity, she entered into a settlement with the negligent driver, which was approved by the court. She signed a release on behalf of "the other heirs and next of kin of James Pettit." His children and his mother consented to the settlement and distribution of the settlement of $250,000.
Joyce Ann Weiker was the decedent's sister, and she was never notified by the probate court that his estate was being administered. She testified that she knew, from conversations with April and her mother, that probate proceedings were pending but thought "they were only for the benefit of her mother and her brother's children." She was told by her mother that the attorney for the estate had said she did not have a claim, and she was not aware of the settlement.
She eventually consulted an attorney and found she could present a claim for James' wrongful death. In June 1995, she filed a motion in the probate court to vacate the release as to her and her brother. The motion was denied on August 4, 1995. She then submitted a claim to her own insurance company for UIM benefits since she had not received any portion of the settlement. She had two policies with Motorists, one personal and one commercial. She claimed she had suffered the loss of the society and companionship of her brother and had experienced severe emotional anguish over his death. The trial court found that her rights were extinguished by the settlement, and she had failed to notify Motorists promptly so it could protect its subrogation rights before the settlement was approved by the court. She appealed.
The higher court found that Weiker did not violate the notification provision in her policy, since she had shown that she had no knowledge of the settlement, was not a party to it, did not sign the agreement, and did not receive any part of the settlement. The court said that while she was aware that probate proceedings were pending, she did not know that the administrator was acting on her behalf or that the proposed settlement was being made on behalf of the next of kin. The settlement had already been approved by the probate court before she knew of it.
The court, on appeal, ruled that Weiker was entitled to file a claim for UIM under her personal policy. She conceded that her damages did not exceed $100,000 which would be covered under her personal policy, and she would have no claim under her commercial policy. The judgment in the lower court against the sister was reversed, and the action was remanded for proceedings consistent with this opinion.
Weiker, Appellant v. Motorists Mutual Insurance Company--No. 96-2095--Supreme Court of Ohio--June 17, 1998--694 North Eastern Reporter 2d 966. *
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