737 S.E.2d 857
S.C. Ct. App.2013Background
- Shenandoah sought to void Lorenzo Smallwood's life policy on grounds of misrepresentation on the medical history section of the application.
- The circuit court granted partial summary judgment to Shenandoah, leaving trial to resolve fraud-intent issues.
- At trial, Shenandoah obtained a directed verdict based on the claim that Lorenzo intended to defraud Shenandoah.
- Lakeisha Smallwood appeals, arguing the issue of fraudulent intent should have gone to a jury.
- Lorenzo's medical history included a 2006 ED visit citing sleep problems and potential PTSD, plus later notes indicating alcohol and cocaine use; Lorenzo did not disclose these details on the application.
- The application asked about recent mental disorders, alcohol or drug dependency, and cocaine use; Lorenzo answered No to all.
- Lorenzo died September 18, 2008; Shenandoah denied the claim arguing misrepresentations voided the policy.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether fraudulent-intent is a jury issue | Shenandoah argues intent to defraud can be shown clearly and convincingly from the misrepresentations. | Shenandoah asserts the facts allow only one inference of fraud as a matter of law. | A jury could reasonably find no fraudulent intent; issue should be decided by a jury. |
| Whether the evidence supports clear and convincing proof of fraud | The insured knowingly concealed material information to defraud Shenandoah. | The record supports multiple reasonable inferences, including non-fraudulent concealment. | Recorded evidence permits multiple reasonable inferences; not legally conclusive. |
| Whether signing a false response on the application proves fraudulent intent | Signing a false application indicates intent to defraud. | A false answer alone does not prove fraudulent intent beyond dispute. | Not conclusive; intent to defraud must be proven by clear and convincing evidence. |
| Whether the insurer’s burden was met given alternative plausible explanations | Record shows concealment to hide information from wife and aunt. | Other plausible explanations exist for nondisclosure. | Evidence supports plausible non-fraudulent explanations; no directed verdict warranted. |
Key Cases Cited
- Lanham v. Blue Cross & Blue Shield of S.C., Inc., 349 S.C. 356 (2002) (five-element fraud-in-insurance-proof standard; intent to defraud required)
- Johnson v. N.Y. Life Ins. Co., 165 S.C. 494 (1932) (rare cases where undisputed facts compel fraud finding as matter of law)
- Winburn v. Minn. Mut. Life Ins. Co., 261 S.C. 568 (1973) (directed verdict proper where concealment indicates fraud as a matter of law)
- Parker v. Pacific Mutual Life Ins. Co. of California, 179 S.C. 117 (1935) (concealment of known serious illness to obtain insurance implies fraud)
- Smiley v. Woodmen of the World Life Ins. Soc., 249 S.C. 461 (1967) (fraud not presumed from mere inaccurate answers; requires clear inference)
- Metro. Life Ins. Co. v. Bates, 213 S.C. 269 (1948) (ambiguous results; not every inaccuracy equates to fraud)