Chet M. Bonar III v. Southern Farm Bureau Casualty Insurance Company

ca05-850

ARKANSAS COURT OF APPEALS
NOT DESIGNATED FOR PUBLICATION

DIVISION III

CA05-850

February 22, 2006

CHET M. BONAR III

APPELLANT

v.

SOUTHERN FARM BUREAU

CASUALTY INSURANCE COMPANY

APPELLEE

APPEAL FROM SEBASTIAN COUNTY CIRCUIT COURT

[NO. CV-2004-1536]

HONORABLE JAMES MARSCHEWSKI,

CIRCUIT JUDGE

AFFIRMED

Andree Layton Roaf, Judge

Appellant Chet Bonar III brought suit against his automobile insurance carrier, appellee Southern Farm Bureau Casualty Insurance Company (Southern Farm Bureau), seeking judgment for $3050, the cash value of his vehicle that was totaled in an accident plus attorney's fees and a twelve-percent penalty. Southern Farm Bureau asserted the affirmative defense of misrepresentation, claiming that the insurance policy was void based upon Bonar's failure to disclose in his insurance application that he had had a prior DWI conviction. The trial court found in favor of Southern Farm Bureau and dismissed Bonar's complaint. On appeal, Bonar argues (1) that the trial court erred when it allowed Southern Farm Bureau to present evidence of his prior DWI conviction and his failure to disclose this information to Southern Farm Bureau and (2) that the trial court erred when it ruled that, if Bonar would have disclosed his prior DWI conviction, the insurance agent would have rejected his application. We affirm.

Bonar sought automobile insurance from Southern Farm Bureau in September 1994. Richard Boyett, a senior agent for Southern Farm Bureau, accepted Bonar's application for insurance. On the application, Bonar made at least two misrepresentations when he responded negatively to the following questions:

Has anyone in the household ever been sued or arrested?

Has Operators License for any driver ever been suspended or revoked?

Bonar had been arrested for driving while intoxicated in July 1991, and upon his subsequent conviction, his driver's license was suspended.

Bonar was involved in an automobile accident in September 2003 when his 1993 Nissan Maxima and a motorcycle collided. The motorcycle operator was injured and the motorcycle passenger was killed. At the time of this accident, Bonar's driver's license was suspended because of an additional DWI conviction. Bonar's vehicle was damaged in the accident. During Southern Farm Bureau's investigation of the accident, it found out that Bonar had a DWI conviction in 1991 that had not been disclosed in his insurance application. Based upon Bonar's failure to disclose this information, Southern Farm Bureau voided Bonar's coverage and denied his claim for damage to his vehicle.

The personal representative of the estate of the motorcycle passenger asserted a wrongful death and survival claim against Bonar. Southern Farm Bureau settled that claim and obtained a full release of Bonar for any claims arising out of the death of the passenger. The motorcycle operator asserted a personal injury claim against Bonar, and the owner of the motorcycle asserted a property damage claim against Bonar. At the time of the trial concerning Bonar's claim for damage to his vehicle, Southern Farm Bureau was defending these two claims on behalf of Bonar.

On the day of trial, Bonar moved in limine to exclude evidence of his prior DWI conviction. He argued that the statute of limitations barred Southern Farm Bureau from offering any evidence of misrepresentations that he made on the insurance application in 1994. The trial court denied Bonar's motion.

Richard Boyett, a senior agent for Southern Farm Bureau at the time Bonar applied for insurance, testified that, had he known about Bonar's 1991 DWI conviction, he would not have submitted the application to Southern Farm Bureau for coverage. According to Boyett, he asked Bonar each and every question on the application and filled in the application in accordance with Bonar's answers. The boxes indicating whether or not Bonar had previously been arrested and whether or not Bonar's driver's license had ever been suspended were both checked "no." Boyett submitted the application, and Southern Farm Bureau issued Bonar an insurance policy on his vehicle.

The application instructed the agents to submit a trial application if an applicant had ever been arrested or if his or her driver's license had ever been revoked. Boyett testified that this instruction did not require him to turn in a policy on a trial basis, because he had the discretion to accept or reject applications. Boyett explained that, if he were going to submit an application for someone who had been convicted of a DWI or had his or her license suspended, then he had to do so on a trial basis. He also stated that it was his practice not to submit trial applications for persons who had DWI convictions unless he personally knew them. He testified that Southern Farm Bureau did on occasion issue policies to people who had DWI convictions.

Eddie Nichols, a Regional Underwriting Manager for Southern Farm Bureau, explained the application process for someone with a prior arrest:

[I]f someone came in to submit a policy and was speaking with an agent and disclosed a prior arrest, the agent would be required to submit at that time if he submitted an application, it would be on a trial basis, that it would be a nonbinding application for submission and review by Underwriting and than at that point it would be determined if there would be, whether the decision would be to allow the agent to go back and bind the coverage at that point.

John Driggers, an adjuster for Southern Farm Bureau, handled the claim involving Bonar's automobile. Bonar admitted to Driggers that he had previously been convicted of a DWI. Driggers explained that Southern Farm Bureau checks DWI records during the application process but that the traffic violation report generated for each person only goes back for a period of three years. Because Bonar's DWI conviction was in 1991, this prior conviction would not have shown up on the report in 1994. The trial court ruled in Southern Farm Bureau's favor and dismissed Bonar's complaint. It found that Bonar made a material misrepresentation in his insurance application, because, if Bonar had been truthful in his interview with Boyett, then Boyett would not have issued him an insurance policy.

For his first point on appeal, Bonar argues that that trial court erred when it allowed Southern Farm Bureau to present evidence of his prior DWI conviction and his failure to disclose this information on his insurance application. Bonar asserts that the applicable standard of review is whether the judge's findings were clearly erroneous. In a bench trial, the standard of review is whether the trial court's findings were clearly erroneous or clearly against the preponderance of the evidence. Chavers v. EPSCO, Inc., 352 Ark. 65, 98 S.W.3d 421 (2003). A finding is clearly erroneous when, although there is evidence to support it, the reviewing court on the entire evidence is left with a firm conviction that a mistake has been committed. Id.

Southern Farm Bureau points out that this standard of review would be correct if Bonar had challenged the trial court's factual findings. Instead, Bonar challenges the trial court's decision to admit certain evidence. The decision whether or not to admit relevant evidence rests in the sound discretion of the trial court, and the standard of review is whether the trial court abused its discretion. Williams v. First Unum Life Ins. Co., 358 Ark. 224, ___ S.W. 3d ___ (June 24, 2004).

Bonar moved in limine to exclude evidence of his prior 1991 DWI conviction and of his failure to disclose this information to Southern Farm Bureau on his insurance application in 1994, and the trial court denied this motion. Bonar now essentially argues that the trial court erred when it denied his motion in limine. Southern Farm Bureau asserts that Bonar's motion in limine was an improper use of such a motion.

Motions in limine are not to be used as a sweeping means of testing issues of law. Turner v. Northwest Ark. Neurosurgery Clinic, P.A., 84 Ark. App. 93, 133 S.W.3d 417 (2003) (citing Schichtl v. Slack, 293 Ark. 281, 737 S.W.2d 628 (1987)). A motion in limine is not designed to choke off an entire claim or defense. Jones v. Coker, ___ Ark. App. ___, ___ S.W.3d ___ (March 2, 2005). Bonar attempted to "choke off" Southern Farm Bureau's affirmative defense of material misrepresentation through his motion in limine. Because Bonar's use of the motion in limine was improper, the trial court did not abuse its discretion when it denied the motion.

Moreover, on the merits, the trial court's decision to deny the motion in limine was correct. Bonar argues that the statute of limitations bars Southern Farm Bureau's affirmative defense of material misrepresentation, because the misrepresentation occurred in 1994, which was ten years after the cause of action accrued and seven years after the statute of limitations had expired. Bonar's argument, however, seems to confuse an affirmative defense with a cause of action.

Bonar relies upon Martin v. Equitable Life Assurance Soc'y of the U.S., 344 Ark. 177, 40 S.W.3d 733 (2001), in which the Arkansas Supreme Court held that the statute of limitations barred an insured's cause of action based upon misrepresentations made by an agent when a policy was issued. The court did not address the use of an affirmative defense in Martin, and Bonar cites no authority for the proposition that the assertion of an affirmative defense may be barred by the passage of time. The authorities upon which Bonar relies deal only with the time within which a plaintiff may assert a cause of action. A statute of limitations controls when a cause of action may be asserted, Martin, supra, and is for a defendant's protection. Smith v. St. Paul Fire & Marine Ins. Co., 76 Ark. App. 264, 64 S.W.3d 764 (2001). At issue here is Southern Farm Bureau's assertion of Bonar's misrepresentations as an affirmative defense to Bonar's cause of action. Southern Farm Bureau is not asserting a cause of action; therefore, Bonar's argument that the trial court erred in allowing evidence of Bonar's prior DWI conviction and his misrepresentation in the insurance application is misplaced.

Bonar's second point on appeal is whether the trial court erred when it ruled that Bonar's insurance application would have been rejected by Boyett. The trial court found that, if Bonar had not made the misrepresentation, Boyett would not have submitted the application. Bonar asserts that Boyett, as a soliciting agent, had no authority to refuse to send his insurance application to Southern Farm Bureau's underwriting department. He bases his argument in part on authorities that distinguish between soliciting agents and general agents and their duties as a matter of law. Bonar has changed his argument on appeal, as he argued below only that Southern Farm Bureau company policy required Boyett to submit a trial application. At trial, Bonar never mentioned the distinction between soliciting agents and general agents. It is well-settled that an appellant may not change the basis of his or her argument or raise issues for the first time on appeal. T&T Chem., Inc. v. Priest, 351 Ark. 537, 95 S.W.3d 750 (2003).

Moreover, the trial court's determination that Boyett would have rejected the application is supported by the evidence. Boyett repeatedly testified that he was the "first line of underwriting." Bonar's argument is based upon its understanding of language found in Section 5 of the application that states, "If answer to any of the questions in red is `yes,' submit a trial application." This language refers to the answers to certain questions on the application, including the following:

Has anyone in the household ever been sued or arrested?

Has Operators License for any driver ever been suspended or revoked?

Boyett explained that the company required him to submit such an application on a trial basis, only if he decided to submit the application. According to the specific facts of this case, it is clear that Boyett had the authority (or at the very least believed he had the authority) to reject Bonar's application for insurance. Boyett even testified that, had he known about Bonar's prior DWI, he would not have submitted the application to the underwriting department. Determinations of credibility are within the province of the fact-finder. Chavers v. Epsco, Inc., 352 Ark. 65, 98 S.W.3d 421 (2003). The trial court therefore did not err when it found that Boyett would have rejected Bonar's application had Bonar not made the misrepresentation.

Affirmed.

Pittman, C.J., and Glover, J., agree.