ATTORNEY FOR APPELLANT: ATTORNEY FOR APPELLEE:
ROBERT W. STROHMEYER, JR. LAURA S. REED
Mitchell Hurst Jacobs & Dick Riley Bennett & Egloff
Indianapolis, Indiana Indianapolis, Indiana
RICHARD L. DARST, UNITED STATES ) BANKRUPTCY TRUSTEE, IN RE: ) BERT SLOAN AND LAVONNA SLOAN, ) ) Appellant-Plaintiff, ) ) vs. ) No. 49A02-9809-CV-775 ) ILLINOIS FARMERS INSURANCE ) COMPANY, ) ) Appellee-Defendant. )
money in your pocket. It's only going to go in the attorney's pocket. It's up to you." Record
at 31. Further, during his deposition, Sloan was asked "[d]id [Gaumer] represent to you that,
in his opinion, he thought [$4,000] was fair -- a fair settlement?" Record at 31. In response,
Sloan answered, "[y]es. That's what he said." Record at 31. Thereafter, without contacting
an attorney, Sloan accepted Sagamore's offer and signed a form releasing Sagamore from
further liability for Sloan's personal injuries.
On appeal, Trustee contends that the trial court erroneously granted summary judgment in favor of Illinois Farmers on the claims for actual and constructive fraud,See footnote 2 negligent misrepresentation, and breach of an assumed duty to provide Sloan with accurate information. We review a trial court's grant of summary judgment using the same standard as the trial court. Gable v. Curtis (1996) Ind.App., 673 N.E.2d 805 (citations omitted). Summary judgment is appropriate only when there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law. Id. "A trial court's grant of summary judgment is 'clothed with a presumption of validity,' and the appellant bears the burden of demonstrating that the trial court erred." Id. at 809 (citing Rosi v. Business Furniture Corp. (1993) Ind., 615 N.E.2d 431, 434).
actually did pay a smaller claim regarding the property at issue prior to the fire that was the
basis for the claim being litigated. The statements made in Vernon were factual ones which
were made with regard to the coverage of certain items of personal property under the
insurance policy and "which would have been known to the Company's agent and field
representative before either made any statement concerning it." Id. at 669. The court further
explained that, "[i]f they were subjectively stating mere opinions they were reckless in
stating them as facts without first having ascertained their truth." Id. at 670.
A person reasonably expects that his insurance agent will be aware of what is covered under the insurance policy and that if the agent is unaware, such information can be easily obtained by the agent through examination of the policy. Thus, if an agent represents that an item is covered, a party may reasonably rely upon that representation. However, in this case, the advice given by Gaumer was not information which could have been ascertained easily by Gaumer. Sloan did not call to obtain factual information regarding his policy or coverage, but, rather, he testified that he called to obtain advice about the fairness of the settlement offer, meaning he called to get an opinion. The basis upon which a settlement may be determined to be fair is not written into any insurance policy. Rather, unless a person has expertise which allows him to measure the amount of a settlement against settlements commonly given in such circumstances, he can do no more than offer a subjective opinion with regard to whether a settlement is fair or not. As Sloan acknowledged in his deposition, he recognized Gaumer as a claims adjuster, who "takes care of automobiles." Record at 30. Clearly then, Sloan had no reasonable right to rely upon Gaumer's subjective opinion as a
representation of fact. That the opinion he solicited and chose to follow may have been ill-
advised is not actionable.See footnote
Trustee also cites to McDaniel v. Shepherd (1991) Ind.App., 577 N.E.2d 239, 242, wherein an insurance agent "advised an elderly, uneducated, and acutely disturbed woman [that she should not] hire an attorney" in pursuing her claim, that she would get ahead if she did not contact an attorney, and that the attorneys for the insurance company would give her any legal assistance she required. The agent failed to point out that the woman and the insurance company did not share the same interest with regard to the matter of inquiry. Further, in that case, the agent failed to fully explain the ramifications of signing a release agreement. In McDaniel, the plaintiff was told not to get an attorney, while here Gaumer advised Sloan that any extra money he received as a result of consulting an attorney would merely go into the attorney's pocket. However, Gaumer did maintain that it was up to Sloan to make the decision. Additionally, he did not attempt to further persuade Sloan not to hire an attorney by stating that the attorneys at Illinois Farmers would provide Sloan with legal assistance if he needed it. Further, the McDaniel court limited its holding to "the situation where an insurer induces an observably mentally disadvantaged person to rely on the insurer for legal advice, negligently represents the content of a legal document, and then relies on the document to the injured party's detriment and the insurer's gain." Id. at 245 n.10. In this
case, there is no evidence in the record suggesting that Gaumer made representations
regarding the release agreement that Sloan signed for Sagamore. The record demonstrates
that Sloan had a full understanding of the ramifications of signing the release agreement.
Moreover, there is no evidence which indicates that Sloan was mentally disadvantaged at the
time nor that Gaumer was attempting to induce Sloan to rely upon Illinois Farmers for legal
advice. Thus, we conclude that the reasoning of McDaniel is inapplicable to this case.
Further, in all three cases cited by Trustee, the misrepresentations were made regarding issues related to the essence of the relationship between the parties, i.e. misrepresentations regarding the coverage of or collection upon the policies that the plaintiffs in those cases had with the defendant companies. Thus, the plaintiffs in those cases had a reasonable right to rely upon the agents' representations. However, here, the advice sought was not related to the essence of the relationship between the two parties. It was not a fact related to the policy which Sloan maintained with Illinois Farmers, about which Gaumer should be expected to know. Rather, it was a request for the agent's advice as a matter outside the limited scope of their relationship. Thus, Sloan had no reasonable right to rely on Gaumer's opinions as assertions of fact. Therefore, because we conclude that Gaumer's statements to Sloan were clearly representations of opinion rather than fact and because we further find that Sloan had no reasonable right to rely on such statements as fact, we further conclude that the trial court properly granted summary judgment to Illinois Farmers upon the issues of actual and constructive fraud.
negligent misrepresentation. Short v. Haywood Printing Co., Inc. (1996) Ind.App., 667
N.E.2d 209, 213, trans. denied; Pugh's IGA, supra, 531 N.E.2d at 1199 n.1 (citing Wilson v.
Palmer (1983) Ind.App., 452 N.E.2d 426; Essex v. Ryan (1983) Ind.App., 446 N.E.2d 368).
In Short, we cited solely to Wilson v. Palmer (1983) Ind.App., 452 N.E.2d 426, 428. By not
acknowledging the limited recognition of the tort contained in Eby, our categorical statement
that Indiana does not recognize the tort of negligent misrepresentation may have been too
broad. Short, supra at 213. In Pugh's IGA, supra at 1199 n.1, the majority recognized the
holding of Eby and stated that it was limited to its own facts. However, the court then
inexplicably made the same categorical statement made in Short, citing not only Wilson v.
Palmer, supra, but also Essex, supra. The Eby court, far from being unaware of Wilson and
discussed the former cases extensively, apparently
in recognition that application of
the doctrine in a professional setting created an entanglement of . . . discrete problems but
that such problems did not inhere in the employer-employee relationship involved in Eby,
supra, 455 N.E.2d at 629. Therefore, notwithstanding the categorical pronouncements in
Short and in Pugh's IGA, Indiana has recognized the tort of negligent misrepresentation,
albeit in a limited factual setting
Be that as it may, without direction from our Supreme Court, we decline to extend the tort's application beyond the specific facts of Eby. Thus, we conclude that the trial court properly granted summary judgment to Illinois Farmers in regard to the claim of negligent misrepresentation.See footnote 6
any practical difference between the tort of negligent misrepresentation and the breach of an
assumed duty to provide accurate information.See footnote
Appellant's Brief at 18. Because we have
determined that the tort of negligent misrepresentation, to the extent that it exists, should not
be expanded beyond the holding of Eby, supra, and because we find no practical difference
between negligent misrepresentation and the breach of an assumed duty to provide accurate
information, we conclude that Trustee has not fulfilled his burden of demonstrating that the
trial court erred. The trial court properly granted summary judgment to Illinois Farmers on
the claim for breach of an assumed duty to provide accurate information.See footnote
The judgment is affirmed.
RILEY, J., concurs.
MATTINGLY, J., dissents with separate opinion.
COURT OF APPEALS OF INDIANA
RICHARD L. DARST, UNITED STATES )
BANKRUPTCY TRUSTEE, IN RE: )
BERT SLOAN AND LAVONNA SLOAN, )
vs. ) No. 49A02-9809-CV-775
ILLINOIS FARMERS INSURANCE )
MATTINGLY, Judge, dissenting
Had Illinois Farmers insured Sloan for only property damage to his vehicle, I could agree with the majority. However, Sloan had additional coverage with Illinois Farmers, including underinsured motorist and medical payment coverage. Because Gaumer's statement likely had the effect of relieving Illinois Farmers from any financial obligations toward Sloan under those coverages, I believe Gaumer may have had a duty not to misrepresent the information he provided to Sloan. As a result, genuine issues of material fact exist and I must respectfully dissent from the majority's decision affirming a summary judgment for Illinois Farmers.
insured. See Midwest Sec. Life Ins. Co. v. Stroup, 706 N.E.2d 201, 206 (Ind. Ct. App. 1999)
(addressing insurer's duty to deal with its insured in good faith).
In Eby, we recognized an action for negligent representation by an employer to an employee, though we did not expressly limit the availability of that cause of action to parties in such a relationship. We relied on the Restatement (Second) of Torts § 552, which recognizes an action for negligent misrepresentation when "[o]ne who, in the course of his business, profession, or employment, or in any other transaction in which he has a pecuniary interest, supplies false information for the guidance of others in their business transactions" (emphasis supplied) and when the other justifiably relies on the information and suffers pecuniary loss as a result of such reliance.
I believe the relationship between the insurer and the insured in the circumstances of the case before us is one which might give rise to a duty on the part of the insurer to provide accurate information. As explained above, Illinois Farmers likely had a pecuniary interest in providing false information which would encourage Sloan to accept the Sagamore settlement offer; Sloan's acceptance of the settlement may have relieved Illinois Farmers of substantial financial obligations it could otherwise incur by virtue of Sloan's underinsurance and medical payments coverage. As a result of his reliance on Gaumer's information, Sloan would suffer a pecuniary loss corresponding to Illinois Farmers' benefit.
Because the availability of the tort of negligent misrepresentation is not so restricted as the majority suggests, I believe there are genuine issues of material fact as to whether, when Gaumer made the representation to Sloan that Sagamore's offer was fair, Illinois
Farmers had any potential underinsurance liability to Sloan.See footnote
More specifically, if both
Sloan and Weger's policy limits were $25,000, then it is possible that Sloan could never
recover underinsurance benefits from Illinois Farmers.See footnote
If, however, Weger's policy limit
was $25,000 and Sloan's underinsurance policy limit was higher than $25,000, then,
provided that Sloan's injuries and damages were more than $25,000 and he obtained Weger's
policy limits from Sagamore, Illinois Farmers could have been liable for underinsurance
Further, since we are not aware of the amount of Sloan's medical bills, Illinois
Farmers could have been liable to Sloan for additional medical payment benefits. However,
as a result of Sloan's reliance on Gaumer's representations, Illinois Farmers was relieved
from any potential liability to Sloan for underinsurance benefits and further medical
I would reverse the summary judgment and remand for further proceedings.
must show that he has justifiably relied upon factual information. Restatement (Second) of Torts § 552, 126-27 (1977). A person cannot misrepresent his own opinion. In this case, we have concluded that Gaumer's statements clearly were not factual but were rather opinions and that Sloan could not have justifiably relied upon the statements. Thus, the tort of negligent misrepresentation would not be applicable to these facts.
Converted from WP6.1 by the Access Indiana Information Network