Opinion
No. C4-96-50.
Filed July 30, 1996.
Appeal from the District Court, Anoka County, File No. C6-93-12407.
Scott K. Goldsmith, Brian J. Slovut, Popham, Haik, Schnobrich Kaufman, Ltd., (for Appellant).
Robert Edwards, Edwards Malzahn, Ltd., (for Respondent).
Considered and decided by Davies, Presiding Judge, Parker, Judge, and Harten, Judge.
This opinion will be unpublished and may not be cited except as provided by Minn. Stat. § 480A.08, subd. 3 (1994).
UNPUBLISHED OPINION
Insurance company challenges the trial court's denial of its motion for JNOV or, alternatively, for a new trial. Insured challenges the trial court's denial of her request for postjudgment interest under both Minn. Stat. § 61A.011, subd. 1 and Minn. Stat. § 549.09, subd. 1(a). We affirm.
FACTS
In September 1991, Glenn Austin (Austin) consulted physicians at the Mork Clinic concerning chest pains and breathing difficulties. After taking two x-rays of Austin's lungs, physicians diagnosed pneumonia and prescribed antibiotics and cough syrup.
On October 15, 1991, Austin and his wife, respondent Mary Austin, met with Daniel Nelson, an insurance agent for appellant Farmers New World Life Insurance Company (insurer), for the purpose of procuring life insurance. Nelson asked questions from, and recorded Austin's answers on, the life insurance application form. In one particular instance, Nelson recorded that Austin had not had an x-ray in the last five years. Austin signed the application form without reading it.
On October 17, 1991, physicians at the Mork Clinic took a third x-ray of Austin's lungs, recommended that he see a pulmonary specialist, and told him that he was scheduled for a CT scan the next day. On the morning of October 18, 1991, Jana Erickson, a medical assistant retained by insurer, visited Austin's home to administer the Abbreviated Paramedical Exam (the APE). The APE form contained the following question:
1. Have you during the past 5 years consulted any physician, practitioner, hospital or medical facility for any reason including but not limited to routine examination or check-up?
Erickson made the following notations on the form:
Sept 26, 89 — Physical for work
Oct 2d 91 — 2 wks — Bad Cold — Given Antibiotic
Austin signed his name at the bottom of the form.
Later that same day, October 18, Austin had the scheduled CT scan, which revealed the presence of a mass in one of his lungs. The mass was confirmed as malignant cancer on October 24, 1991. Underwriting on Austin's insurance application was completed on November 21, 1991; the policy was issued that same day. Austin died on November 30, 1992, and insurer attempted to void the policy.
At trial, Nelson, the insurance agent, gave the following testimony on direct examination:
A I asked [Mr. Austin the] date of recovery [from pneumonia].
Q And it's written there 10-10-91, is that correct?
A October 10th, 1991.
Q And who provided that information?
A Mr. Austin.
Yet on cross-examination, Nelson testified:
Q When Mr. Austin was in your office on the 15th of October, did he tell you that he had fully and completely recovered from his pneumonia?
A No.
Furthermore, regarding the question about x-rays in the last five years, Nelson testified:
Q Did Mr. Austin advise you that he had a chest x-ray on September 24th, 1991 that showed a central infiltrate on the left? Does that sound right?
A Yes, it does.
Q [But] your answer was "No," * * *. Is that true? Is that what it says?
A That's what it says.
Furthermore, despite a previous trial court order prohibiting insurer from soliciting testimony concerning whether Question No. 1 on the APE form required disclosure of future medical appointments, insurer asked Erickson whether "the [future] scheduling of a cat scan and a need to have a pulmonary specialist consultation" would have been responsive to Question No. 1. Erickson answered, "Definitely." Yet, the following exchange occurred on cross-examination:
Q Now it doesn't specifically say, and there is no question on here that says, for example, do you have any future medical appointments scheduled, correct?
A That's correct.
* * * *
Q * * * [A]nd you read this question word for word, is that right?
A Yeah.
After a four-day trial, the jury found by special verdict that (1) Austin had neither knowingly made misstatements of fact nor knowingly failed to disclose information on the application or the APE form and (2) Austin had not, through the use of misrepresentations and material omissions, induced the insurer to issue the policy. Insurer moved for JNOV or, in the alternative, a new trial. The trial court denied these motions, stating that it was not at all clear that [Austin] knew he had cancer, or anything other than a bad cold" when he completed the insurance application on October 15, 1991. Moreover, the trial court added:
It was within the province of the jury here to determine that when [Erickson] administered the paramedical exam, [she] did not ask Mr. Austin the questions necessary to elicit the responses [insurer] maintains Mr. Austin should have given.
Finally, the trial court held that Austin's signature did not bind him to the contents of the insurance application or the APE form. Judgment for respondent was entered on December 18, 1995.
Respondent moved for postjudgment interest under both Minn. Stat. § 61A.011 and Minn. Stat. § 549.09. The trial court denied the motion. Insurer filed its notice of appeal from the denial of its post-trial motions and the judgment. Respondent noticed review of the court's denial of her motion for postjudgment interest.
DECISION 1. Motion for JNOV
In reviewing the facts in a case where a motion for judgment notwithstanding the verdict has been denied, we must affirm if there is any competent evidence reasonably tending to sustain the verdict.
Rettman v. City of Litchfield , 354 N.W.2d 426, 429 (Minn. 1984). We will not reverse "unless reasonable minds could reach but one conclusion against the verdict." Seidl v. Trollhaugen, Inc. , 305 Minn. 506, 507, 232 N.W.2d 236, 239 (1975). Finally, answers to special verdict questions will not be set aside unless they are perverse and palpably contrary to the evidence. Hanks v. Hubbard Broadcasting, Inc. , 493 N.W.2d 302, 309 (Minn.App. 1992), review denied (Minn. Feb. 12, 1993).
Insurer contends that because Austin signed his name to incorrect and incomplete information in both the application for life insurance and the APE form, the trial court erred by denying its motion for JNOV.
A. Insurance Application
When asked in the insurance application to explain medications prescribed in the last six months and medical treatment, including x-rays, in the last five years, the notations made by the insurance agent indicate that a doctor from the Mork Clinic prescribed 500 mg of Cipro to Austin for pneumonia, from which he recovered on October 10, 1991, and that Austin had not had an x-ray in the last five years. Insurer claims these are misrepresentations justifying cancellation of the contract.
No oral or written misrepresentation made by the assured, or in the assured's behalf, in the negotiation of insurance, shall be deemed material, or defeat or avoid the policy, or prevent its attaching, unless made with intent to deceive and defraud, or unless the matter misrepresented increases the risk of loss.
Minn. Stat. § 60A.08, subd. 9 (1994); Howard v. Aid Ass'n for Lutherans , 272 N.W.2d 910, 912-13 (Minn. 1978). In other words, an intent to deceive is not necessary before an insurer may void a contract; rather
[a]ll that is required is that the insured have full knowledge of the facts that are concealed and that the concealed facts probably would have precluded issuance of the policy if known to the insurance company.
Ellis v. Great-West Life Assurance Co. , 43 F.3d 382, 387 (8th Cir. 1994).
Generally, a person is bound by the contents of a contract he or she signs. See Sorenson v. New York Life Ins. Co. , 195 Minn. 298, 300, 262 N.W. 868, 869 (1935). However,
[w]here an application for insurance is made out by an insurance agent in the course of his agency and the insured truthfully gives the agent the correct answers, but the agent records the answers in the application incorrectly without the fault, knowledge, or collusion of the insured, and the insured signs the application without first having read it — although he had the opportunity to do so — in reliance upon the good faith of the agent, the insurance company is not relieved from liability on the policy.
Pomerenke v. Farmers Life Ins. Co. , 228 Minn. 256, 260, 36 N.W.2d 703, 706 (1949).
The record indicates that Nelson did not transcribe Austin's answers as they were given, (1) writing that Austin recovered from pneumonia on October 10 despite Austin's telling him he had not yet recovered and (2) indicating that Austin had not had an x-ray when, in fact, Austin told Nelson that he had. Therefore, pursuant to the Pomerenke exception, there is reasonable evidence to sustain the jury verdict that Austin did not make misrepresentations in the application form, even though he signed his name to it.
B. APE Form
Insurer argues that because Austin failed to disclose on the APE form both his doctor's recommendation that he see a specialist and his upcoming CT scan, cancellation of the contract is justified.
Insurer relies heavily on LeBus v. Northwestern Mut. Life Ins. Co. , 55 F.3d 1374 (8th Cir. 1995), a case remarkably similar to the instant case, in which coverage was denied. In LeBus , Martin LeBus consulted a physician for what he originally believed to be a cold. Id. at 1375. The doctor diagnosed an upper respiratory infection and prescribed antibiotics. Id. at 1376. After examining LeBus' x-rays, the doctor scheduled LeBus for a CT scan. Id. Later, the doctor informed LeBus that the CT scan showed "a significant abnormality highly suggestive of cancer." Id.
After learning of his possible cancer, LeBus completed, on his own , a request for reinstatement of insurance. Id. at 1375. The form asked whether Martin had consulted, been treated or advised to be treated by a physician or health practitioner for sickness, disease, injury or other reason.
Id. LeBus declared only that he had seen a doctor for a cold. Id. After LeBus' death less than two years later, the insurer refused to pay benefits because of alleged misrepresentations in the application for reinstatement. Id. at 1376. The Eighth Circuit affirmed summary judgment for the insurer, basing its opinion "on the objective facts of which Martin was aware yet failed to disclose on the request for reinstatement form." Id. at 1378.
Here, the trial court distinguished LeBus because (1) Austin did not complete the APE form on his own, but had the questions read to him, and (2) at the time of the APE, Austin did not have objective information indicating that he had anything other than pneumonia. Insurer contends that because Austin signed the APE form, he was able to see the questions and know what information they required. Therefore, in insurer's view, Austin should be bound by the questions and responses appearing on the form.
The Pomerenke exception does not apply to forms completed by medical assistants. Pomerenke , 228 Minn. at 261, 36 N.W.2d at 706 (stating that the exception to the signature rule, which applies to insurance agents, does not apply to applications completed by someone such as a physician employed to examine the insured). Given our standard of review, however, we cannot conclude that the jury's verdict is perverse. First, there is evidence that, although doctors recommended that Austin see a specialist, Austin did not have objective facts indicating that he had anything more serious than pneumonia. Second, Question No. 1 on the APE form elicits information about whether Austin ever consulted with a physician, not information about what a physician advised . Third, the plain meaning of the question does not require disclosure of future treatments. Accordingly, we conclude that there is competent evidence reasonably tending to sustain the verdict.
In LeBus , on the other hand, the question asked whether the applicant had "consulted, been treated or advised to be treated by a physician or health practitioner for sickness, disease, injury or other reason." LeBus , 55 F.3d at 1375 (emphasis added).
2. Motion for New Trial
Insurer argues in the alternative that the trial court erred by denying its motion for a new trial because the trial court (1) made an error of law by failing to give proper effect to Austin's signature on the APE form and (2) committed prejudicial error by excluding evidence of whether Question No. 1 on the APE form required disclosure of future medical appointments.
Ordinarily, the discretion to grant a new trial does lie within the sound discretion of the trial court and will not be disturbed absent a clear abuse of that discretion.
Halla Nursery v. Baumann-Furrie Co. , 454 N.W.2d 905, 910 (Minn. 1990). Where the trial court exercised no discretion, basing its order upon an error of law, a de novo standard of review applies. Id.
Entitlement to a new trial on the grounds of improper evidentiary rulings rests upon the complaining party's ability to demonstrate prejudicial error.
Uselman v. Uselman , 464 N.W.2d 130, 138 (Minn. 1990).
First, the trial court applied the Pomerenke exception to the statements made on the APE form. As previously discussed, the Pomerenke exception does not apply to forms completed by a medical assistant. Therefore, the trial court made an error of law. Nonetheless, no error or defect in any ruling or order or in anything done or omitted by the court or by any of the parties is ground for granting a new trial * * *, unless refusal to take such action appears to the court inconsistent with substantial justice. The court at every stage of the proceeding must disregard any error or defect in the proceeding which does not affect the substantial rights of the parties.
Minn.R.Civ.P. 61 (emphasis added). Because we conclude that there is competent evidence to sustain the jury's verdict, it follows that the trial court's erroneous application of Pomerenke is harmless.
Second, insurer argues that it was prejudicial error for the trial court to exclude evidence concerning whether Question No. 1 on the APE form required disclosure of future medical appointments. This argument is unpersuasive because insurer elicited such testimony despite the order excluding it. Therefore, any error in denying insurer's new trial motion on this basis is harmless.
3. Postjudgment Interest
Respondent argues that she is entitled to postjudgment interest under both Minn. Stat. § 61A.011, subd. 1 (1994) and Minn. Stat. § 549.09, subd. 1(a) (1994) — in essence, a double recovery. Respondent argues that a double recovery is permissible under these statutes because the "[e]xcept as otherwise provided by contract or allowed by law" restriction of Minn. Stat. § 549.09, subd. 1(b) is not present in subdivision 1(a). We disagree.
Respondent concedes that double recovery of prejudgment interest is prohibited by Minn. Stat. § 549.09, subd. 1(b) because of its limiting language.
To allow a double recovery of postjudgment interest simply because two separate statutes address postjudgment interest makes no sense. A single recovery will make respondent whole. Therefore, we do not interpret Minn. Stat. § 549.09, subd. 1(a) to allow a double recovery. See Minn. Stat. § 645.17 (1994) (providing that the legislature does not intend a result that is absurd or unreasonable); see also Motschenbacher v. New Hampshire Ins. Group , 402 N.W.2d 119, 125, (Minn.App. 1987), (denying double recovery of postjudgment interest under Minn. Stat. § 549.09, subd. 1(a) and Minn. Stat. § 65B.54), review denied (Minn. Apr. 29, 1987).