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STATE OF MICHIGAN COURT OF APPEALS

DEBRA L. LANGLEY, Plaintiff-Appellee/Cross-Appellant, v AUTO-OWNERS LIFE INSURANCE CO., Defendant-Appellant/CrossAppellee.

UNPUBLISHED June 28, 2012

No. 300517 Marquette Circuit Court LC No. 09-47171-CK

Before: MARKEY, P.J., and BECKERING and M. J. KELLY, JJ. PER CURIAM. In this insurance dispute, defendant Auto-Owners Life Insurance Co. appeals by right the trial court's opinion and order granting summary disposition in favor of plaintiff Debra L. Langley. On appeal, Auto-Owners argues that the trial court erred when it determined that Debra Langley's deceased husband, Eric Langley, did not--as a matter of law--make any misrepresentations on his application for life insurance that would void the policy. Auto-Owners maintains that there was, at the very least, a question of fact as to whether Eric Langley made one or more misrepresentations on the application. On cross-appeal, Debra Langley argues that the trial court erred when it ordered Auto-Owners to pay 6% interest on the judgment, rather than 12% interest. We conclude that the trial court did not err when it granted summary disposition in favor of Debra Langley with regard to whether Eric Langley misrepresented whether he had completed all the tests that he had been advised to take. However, we conclude that there was a question of fact as to whether Eric Langley knew or should have known that he had a heart disease when he answered that he did not have heart disease. As such, the trial court erred when it granted summary disposition as to that question. We also conclude that, if Debra Langley should prevail on her claim, she would be entitled to 12% interest. For these reasons, we affirm in part, reverse in part, and remand for further proceedings consistent with this opinion. I. BASIC FACTS AND PROCEDURAL HISTORY Jerry Garceau testified at his deposition that Eric Langley came to him to purchase life insurance in April 2007. Garceau originally had Eric fill out an application for $250,000 in life insurance from Cincinnati Life Insurance Company. After he submitted the application on Eric's behalf, Garceau explained, the insurance company would send someone to conduct a medical examination, and there was documentation to show that the examination occurred on April 20, -1-

2007. Garceau testified that Cincinnati approved Eric's $250,000 policy, but substantially raised the premium. Garceau stated that Eric did not want the policy at the revised rate. Bonnie L. Hafeman, M.D. testified at her deposition that Eric Langley had treated with her since 1993 or 1994 and that she was aware that he had had Hodgkin's disease when he was a child. She stated that she was also monitoring him for a mild mitral valve regurgitation--a heart murmur--since about 2002. Hafeman stated that Eric came to her on April 11, 2007. During that visit, she noticed that he had a louder murmur. She stated that the murmur was now "holosystolic", which she explained was "a different murmur than it had been previous to this. The sound of an aortic murmur and a mitral murmur are different, and it's a lot harsher murmur." She told him at that time that his "heart murmur had changed in quality", that it was "louder, and it was over the whole of the heart instead of more localized like it had been." She talked with him about the changes and told him that there was a "possibility that he had aortic stenosis"; she even "drew him a diagram to show him what it was." She stated that she "vividly" recalled the conversation with Eric and remembered that she told him that the heart murmur was "different", "had changed in quality", and that she was "concerned about it", "because it was into the neck, and that I thought it was aortic stenosis." She ordered an echocardiogram to verify her diagnosis. Eric had the echocardiogram on the same day. The imaging revealed that Eric's "[a]ortic valve cusps are heavily calcified" and that there was evidence of "moderate aortic stenosis." Hafeman testified that there was a note in Eric's file that her office had called and informed Eric's wife, Debra Langley, about the results on April 17, 2007. She stated that her office frequently informed Eric's wife because Eric "was fairly difficult to get ahold of because he worked, you know, long hours." Hafeman did not see Eric again until June 13, 2007, when he called to arrange an appointment after he had had a scan that revealed a pleural effusion in his lungs. She explained the extent of his aortic stenosis at that June 13 visit. Debra Langley averred that she was surprised when Cincinnati increased the annual premium for her husband's life insurance by $1,000 over just a murmur. She said that she called Hafeman's office on April 11, 2007 because she was concerned about the murmur. Debra Langley stated that Hafeman told her that it "was nothing to worry about", that it was just a "`funny noise in the heart'". On May 21, 2007, Eric Langley visited Emmy Lawrason, D.O. with concerns about significant pain on the left side of his back. In her report, Lawrason indicated that Eric had been having the pain for 5 or 6 months and had visited the hospital, a chiropractor, and tried physical therapy to solve the problem. Lawrason stated in the report that Eric thought that he might have aggravated an old rib injury. She prescribed osteopathic treatment with a reevaluation in one week. After the next visit, which was on May 29, 2007, Lawrason ordered a chest x-ray. Eric returned to see Lawrason on June 6, 2007. In her notes, Lawrason wrote that Eric's x-ray had revealed a "left pleural effusion." She also indicated that she ordered a CT scan and some lab work and stated that she would follow up with Eric on those labs and studies in one week. Eric had the CT scan on June 8, 2007. The CT scan revealed some pleural effusion,

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"pleural parenchymal scarring", vascular calcifications, and "[s]hotty lymph nodes." Lawrason did not address the results with Eric until his June 11, 2007 appointment. On June 11, 2007, Eric went to see Garceau about his life insurance options after the problem with Cincinnati. Eric apparently went to see Garceau before he went to his appointment with Lawrason. At the meeting, Eric filled out a simplified application for $50,000 in life insurance from defendant Auto-Owners Life Insurance Company. On the application there were a series of yes or no questions. Above these questions, in bold and upper case type, was a warning that the applicant could not use the simplified form if he or she answered yes to any question: "IF ANY OF THE FOLLOWING QUESTIONS ARE LEFT BLANK OR ANSWERED "YES," COVERAGE CANNOT BE ISSUED UNDER THIS APPLICATION, INSTEAD, PLEASE SUBMIT A REGULAR APPLICATION FOR UNDERWRITING." One question asked, "[d]o you have, or during the past 10 years, have you been diagnosed or treated by any medical professional for:" "Heart Disease including Heart Attack, Stroke, Angina, Arterial Disease of the Heart or Extremities or Congestive Heart Failure . . . ?" Another question asked, "have you been advised by any medical professional during the past 3 years, to have any surgery, additional diagnostic testing, hospital confinement, or nursing facility confinement, and have not yet done so?" Eric answered both questions by checking the boxes for "no." Finally, by signing the application, Eric agreed that his "statements and answers" were "true and complete" and he agreed that "they will form a part of any insurance policy issued hereon." He also stated that he "understood that the information on this application will be relied upon to determine insurability and that incorrect information may result in coverage being voided, subject to the policy Incontestability Provision." Auto-Owners accepted Eric's application and issued him a $50,000 life insurance policy with his wife, Debra Langley, as the primary beneficiary. In her notes from the June 11, 2007, appointment, Lawrason indicated that Eric needed to be closely monitored to see if his "anemia" and "shotty mesenteric lymph nodes" were indications of "another neoplastic process"--that is, a possible sign of cancer. She also ordered a series of tests, including tests to evaluate the cells in the "left pleural effusion." Eric had a thoracentesis done on June 14, 2007 and the results showed that the cells in the fluid were "malignant epithelial cells with glandular features." Lawrason's notes from a June 20, 2007 appointment show that Eric had been diagnosed with cancer and that he was going to the Mayo clinic to receive treatments for both the cancer and his aortic stenosis. Eric died from cancer on November 6, 2007. Because Eric died within 2 years of the date that he applied for life insurance, AutoOwners conducted an investigation before paying under the policy. At the conclusion of its investigation, Auto-Owners rescinded the policy on the ground that Eric had made two material misrepresentations in the application: he denied that he had been diagnosed with heart disease and he denied that he had been advised to take a diagnostic test and had not yet done so.

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Debra Langley sued Auto-Owners for payment on the policy in September 2009. AutoOwners moved for summary disposition in October 2009. The trial court, however, determined that--given the current evidence--there was a question of fact as to whether Eric Langley knew that he had heart disease. In addition, the court concluded that the evidence showed that he had done all the recommended diagnostic tests that he was advised to take as of the application date. In April 2010, after conducting discovery, Debra Langley moved for summary disposition. She argued that Auto-Owners had no evidence that her husband actually believed that he had heart disease when he denied having or having been diagnosed with heart disease. She also argued that there was no evidence that he had been advised to take a diagnostic test, which he had not done by the time he filled out the application. Auto-Owners argued that the evidence showed that Eric Langley had aortic stenosis, which is heart disease or an arterial disease of the heart or extremities, at the time that he filled out the application. It also argued that, although Eric might have submitted to the diagnostic tests, because he had not yet consulted with his physician about the results, the tests were not yet "done" when he filled out the application. Given the evidence, it maintained, Eric's answers to these questions amounted to a material misrepresentations. Accordingly, it asked the trial court to grant summary disposition in its favor under MCR 2.116(I)(2). The trial court agreed with Debra Langley and granted summary disposition in her favor. In July 2010, Debra Langley moved for entry of judgment with 12% statutory interest. The trial court entered judgment in her favor in September 2010, but refused to give her 12% interest on the judgment. Instead, it ordered Auto-Owners to pay 6% interest. These appeals followed. II. SUMMARY DISPOSITION A. STANDARD OF REVIEW On appeal, Auto-Owners argues that the trial court erred when it granted summary disposition in favor of Debra Langley and erred when it concluded that the questions at issue were ambiguous. This Court reviews de novo a trial court's decision on a motion for summary disposition. Barnard Mfg Co, Inc v Gates Performance Engineering, Inc, 285 Mich App 362, 369; 775 NW2d 618 (2009). This Court also reviews de novo, as questions of law, the proper interpretation of a contract and whether a contract is ambiguous. Henderson v State Farm Fire & Casualty Co, 460 Mich 348, 353; 596 NW2d 190 (1999). And, to the extent that this case involves the proper interpretation of statutes and the application of the common law, this Court reviews those issues de novo as well. Michigan Citizens for Water Conservation v Nestl

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