Opinion by
On July 19, 2005, a house in Denver owned by plaintiff, Joe Silver, suffered extensive fire damage. He sued the company that insured the property, defendant, Colorado Casualty Insurance Company, after it denied coverage. The district court granted summary judgment in Colorado Casualty's favor on the basis that Colorado Casualty had lawfully rescinded the insurance policy. Silver appeals, and we reverse and remand.
I. Background
Silver bought the property in July 2008. Shortly thereafter, he contacted Deanna Smith, an employee of the insurance brokerage firm of Brown & Brown, Inc., an authorized agent of Colorado Casualty, for the purpose of obtaining insurance coverage on the property. Silver and Smith spoke on the telephone on a few occasions, following which Smith sent Silver an application for insurance that she had completed.
The application represented that the house was in good housekeeping condition and occupied by а single-family tenant. The application contained an affirmation stating: "I have read the above application and I declare that, to the best of my knowledge and belief, all of the foregoing statements are true, and that these statements are offered as an inducement to the company to issue the policy for which I am applying." Silver signed the application and returned it to Smith, who forwarded it to Colorado Casualty. There, an underwriter, Christy Williams, examined the application and determined that it met Colorado Casualty's underwriting guidelines. Williams, on behalf of Colorado Casualty, issued Silver a policy covering the property.
It appears to be undisputed that the house was vacant and uninhabitable at the time Silver submitted the application for insurance coverage (though two individuals may have oceupied the back porch for a time). In fact, two months after Silver submitted his application, the City and County of Denver cited him for maintаining property that was a neighborhood nuisance. The City's reasons included that the property was unsafe, was boarded up, and had not been occupied for at least three consecutive months.
Following the fire, Colorado Casualty learned that the property was not as represented in the application at the time Silver submitted it-for example, it was not in good condition and was uninhabited. Colorado Casualty notified Silver that based on the alleged misrepresеntations in the application it was rescinding the policy and would not pay any insurance benefits.
Silver filed suit against Colorado Casualty alleging breach of contract and bad faith breach of insurance contract. Following discovery, Colorado Casualty filed a motion for summary judgment asserting that it had lawfully rescinded the policy, and, therefore, there was no policy on which Silver could base his claims.
The district court granted Colorado Casualty's motion for summary judgment. The cоurt concluded that the undisputed evidence established that Silver had made material misrepresentations in the application, rejecting as unsupported by evidence or contrary to law Silver's arguments in opposition.
IIL Discussion
Silver contends that: (1) Colorado Casualty waived its defense of rescission by failing to plead the basis for the defense-fraud-with specificity; (2) the district court erred in granting summary judgment because there are genuine issues of material fact as to Colorado Casualty's entitlement to rescind the policy; and (3) in granting summary Judgment, the district court improperly relied on inadmissible evidence. Although we are not persuaded that Colorado Casualty waived its rescission defense, we agree with Silver that there is a genuine issue of material fact as to whether Colorado Casualty is estopped to rescind the policy.
A. Standard of Review
Summary judgment is appropriate if the pleadings and supporting documents show that there is no genuine issue as to any material faсt and that the moving party is
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entitled to judgment as a matter of law. CRCP. 56(c); West Elk Ranch, L.L.C. v. United States,
We review an order granting a motion for summary judgment de novo. West Elk Ranch,
B. Waiver of Defense
As a threshold matter, we address and reject Silver's contention that Colorado Casualty waived the defense of rescission by failing to plead fraud specifically in its answer to the complaint.
In its answer, Colorado Casualty asserted, as affirmative defenses, that it had properly rescinded the policy and that Silver could not recover on the policy because he had made "material misrepresentations" in the application. Almost eleven months later, after Colorado Casualty's motion for summary judgment was at issue, Silver filed an objection to thе motion and moved to strike it, claiming, for the first time, that because Colorado Casualty's rescission defense was based on an allegation of fraud, and Colorado Casualty had failed to plead fraud with particularity in its answer as required by C.R.C.P. 9(b), Colorado Casualty had waived the defense. The court did not address Silver's waiver argument in its order granting Colorado Casualty's motion for summary judgment.
On appeal, Silver again argues that Colorado Casualty waived its rescission defense by failing to pleаd it with particularity as required by Rule 9(b). Colorado Casualty responds that Silver waived his right to assert its noncompliance with the rule. We agree with Colorado Casualty.
Rule 9(b) provides that "in all aver-ments of fraud ..., the cireumstances constituting fraud ... shall be stated with particularity." Although the rule does not require that the party claiming fraud provide detailed allegations of evidentiary fact, Northwest Dev., Inc. v. Dunn,
For the purpose of addressing Silver's argument, we assume, without deciding, that a defense of rescission based on an allegation of fraud is subject to the pleading requirements of Rule 9(b). See generally 5A Charles Alan Wright & Arthur R. Miller, Federal Practice and Procedure § 1297, at 182-83 & n. 28 (Bd ed.2004) (all defenses based on fraud are subject to Fed.R.Civ.P. 9(b)); 2 James Wm. Moore et al., Moore's Federal Practice § 9.03[1][d], at 9-21 (8d ed.2008) (same).
In O.K. Uranium Dev. Co. v. Miller,
While a motion to dismiss was filed in the trial court, it was not argued or ruled upon and the defendants thereafter filed an answer in which the motion to dismiss was not repeated. Trial proceeded on the is *328 sues made by the complaint and answer without objection, and without the sufficiency of the complaint being again challenged.
Id. at 492-98,
The federal courts, in applying Fed. R.Civ.P. 9(b), have consistently held that a party waives its right to object to another party's failure to comply with the rule by neglecting to raise the objection in a responsive pleading or a timely motion. See, eg., Prakash v. Pulsent Corp. Employee Long Term Disability Plan,
In this case, as noted, Silver did not object to Colorado Casualty's alleged failure to comply with Rule 9(b) in pleading rescission until after Colorado Casualty's motion for summary judgment-which was based on the rescission defense-was at issue. In the intervening eleven months between Colorado Casualty's filing of its answer and Silver's objection to the rescission defense, the parties conducted substantial discovery, filed several motions, and prepared and signed a trial management order, which specifically noted that the rescission defense was to be tried. Silver's response to Colorado Casualty's motion for summary judgment did not raise the Rule 9(b) issue, nor did he object to the rescission defense in the trial management order.
Under these cireumstances, we conclude that Silver waived any right to claim that Coloradо Casualty failed to comply with Rule 9(b) in asserting its affirmative defense of rescission. Accordingly, we do not reach the merits of his Rule 9(b) argument.
C. Genuine Issue of Material Fact
To rescind an insurance policy on the basis of an alleged misrepresentation by the applicant, the insurer must prove that:
(1) the applicant made a false statement of fact or concealed a fact in his application for insurance; (2) the applicant knowingly made the false statement or knowingly concealed the fact; (8) the false statement of fact or the concealed fact materially affected either the acceptance of the risk or the hazard assumed by the insurer; (4) the insurer was ignorant of the false statement of fact or concealment of fact and is not chargeable with knowledge of the fact; [and] (5) the insurer relied, to its detriment, on the false statement of fact or concealment of fact in issuing the policy.
Hollinger v. Mut. Benefit Life Ins. Co.,
Silver contends that genuine issues of material fact exist as to: (1) whether he made false statements in the application; (2) whether he knew the statements were false; (3) whether Colorado Casualty was ignorant of the falsity of the statements; and (4) whether Colorado Casualty detrimentally relied on the false statements. (He does not argue on appeal that there is a genuine issue of material fact as to whether the false statements were material.)
His challenges to four of the five elements of the Hollinger test are based essentially on two arguments: (a) Colorado Casualty could *329 not rescind the policy because he gave correct information to Colorado Casualty's agent, Smith, but Smith put the false information in the application (as discussed below, an estoppel defense); and (b) Colorado Casualty could not reasonably rely on false information in the application because it had a duty to investigаte the truthfuiness of that information, but did not do so. We agree with Silver's first argument, but reject the second.
1. Estoppel
a. Preservation of the Issue
Colorado Casualty contends that Silver failed to preserve his estoppel defense because he did not raise it in the district court. See Estate of Stevenson v. Hollywood Bar & Cafe, Inc.,
In his response to Colorado Casualty's motion for summary judgment, Silver asserted that he gave Smith correct information, and therefore Colorado Casualty must have known of the discrepancies between the information he conveyed to Smith and the information she put down in the application. Colorado Casualty understood Silver's argument well enough to reply that Silvеr was bound by the representations in the application because he signed it, notwithstanding that he claimed to have given correct information to Smith As discussed more fully below, Silver's ability to successfully invoke the estoppel defense turns on whether he or Colorado Casualty is correct as a matter of Colorado law as to which party is deemed more at fault in these circumstances. Therefore, the issue was presented to the district court. See Paratransit Risk Retentiоn Group Ins. Co. v. Kamins,
b. Merits
Under long-standing Colorado law, an insurer is estopped from rescinding an insurance contract and denying coverage on the basis of a misrepresentation in the application when the applicant acted in good faith and gave truthful information to the insurer's agent, but the agent inserted false information into the application. New York Life Ins. Co. v. Fukushima,
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A contrary rule applies, however, if the applicant gave the insurer's agent false information, or did not give the agent any information, and the agent inserted falsе information into the insurance application. In such circumstances, the insurer may rescind (or otherwise avoid Hability on) the insurance contract based on any material misrepresentations contained therein. Koin v. Mut. Benefit Health & Accident Ass'n,
We reject Colorado Casualty's contention that the Wich rule, rather than the Van Fleet rule, applies here because Silver signed the application and the application contained an affirmation attesting to the truth of the information therein. In Van Fleet itself, as in this case, the applicant signed the application and warranted in the application that the information therein was true. Further, the application at issue in Van Fleet said that the insurer would not be bound by anything said to the agent unless it was written in the application. Van Fleet,
Colorado Casualty relies on one out-of-state case, Foster,
Foster is contrary to the Van Fleet rule as applied in Van Fleet itself and other cases cited above. Though Foster is a much more recent decision than even the most recent decision applying the Van Fleet rule, we are not at liberty to disregard that rule absent some clear indication that the Colorаdo Supreme Court has overruled it. Bernal v. Lumbermens Mut. Cas. Co.,
We acknowledge that there are a number of decisions of the Colorado appellate courts holding that a person who signs a document is bound by its contents, even if he claims not to have read it. E.g., Rasmussen v. Freehling,
Though Silver does not cast his argument in terms of estoppel, that is how the cases on which he relies, including Van Fleet,
The following evidence submitted in connection with the summary judgment motion supports Silver's contention that the Van Fleet rule, rather than the Wick rule, applies in this case:
e Silver testified in his deposition that he had several telephone conversations with Smith concerning the application.
e A "Property Quote" sheet Smith prepared based on her conversations with Silver contains her handwritten notations "partially gutted" and "vacant for 80."
eSilver testified in his deposition that "some of the things that [Smith] put down [in thе application] were not correct and [he] never told her those answers."
This evidence reasonably could give rise to an inference that Silver told Smith that the property was partially gutted and vacant, but Smith put contrary information in the application.
On appeal, Colorado Casualty contends that we should not consider the Property Quote because it "bore no relevance on the issues presented by the [mJotion [for summary judgment] and failed to satisfy the requirements of Colo. R. Civ. P. 56(e)" In light of our assessment of the applicable law, the relevance of the Property Quote is clear. Colorado Casualty did not object to the authenticity or admissibility of the Property Quote in the district court, and therefore waived any such objections to that document for summary judgment purposes. Catrett v. Johns-Manville Sales Corp.,
Because Silver established the existence of a genuine issue of material fact as to whether Colorado Casualty is estopped to assert its rescission defense, we must reverse the summary judgment.
2. Duty to Investigate
Though we reverse the summary judgment based on Silver's estoppel defense, we address his argument that Colorado Casualty had a duty to investigate the property before issuing the policy because the issue may arise on remand.
Colorado appellate courts have not addressed directly the question whether an insurer has a duty to investigate information contained in an insurance application. The general rule, however, adopted in the clear majority of jurisdictions, is that an insurer has a duty to investigate representations in an application only if it has sufficient information that would put a reasonably prudent insurer on notiсe of a possible misrepresentation and would have caused the insurer to begin an inquiry, which, if carried out with reasonable thoroughness, would have revealed the truth. E.g., Miguel v. Metropolitan Life Ins. Co.,
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law); CenTrust Mortgage Corp. v. PMI Mortgage Ins. Co.,
We agree with this view. It is consistent with Colorado case law addressing the duty to investigate in other contexts. CJ M.D.C./ Wood, Inc. v. Mortimer,
In light of our conclusion that there is a genuine issue of material fact as to whether Silver told Smith the property was partially gutted and vacant, we also conclude that there is a genuine issue of material fact
as to whether Colorado Casualty was on inquiry notice that the contrary statements in the application were false. CJL Hardy,
D. Evidence Supporting the Motion for Summary Judgment
Silver contends that the district court erred in relying on several documents that were not authenticated. In light of our disposition of his primary contentions and our resulting reversal of the summary judgment, we need not address this contention.
The judgment is reversed and the case is remanded for further proceedings.