The opinion of the court was delivered by: Mills, Justice
DATE OF JUDGMENT: 9/23/92
TRIAL JUDGE: HON. JOHN C. ROSS, JR.
COURT FROM WHICH APPEALED: PONTOTOC COUNTY CHANCERY COURT
NATURE OF THE CASE: CIVIL - INSURANCE
DISPOSITION: REVERSED AND REMANDED - 2/25/99
MOTION FOR REHEARING FILED: 4/24/96
¶1. The present case was considered by this Court in Monticello Insurance Co. v. Mooney, No. 92-CA-01096-SCT (decided April 4, 1996). After full consideration, we grant Monticello Insurance Company's motion for rehearing. The original opinion is withdrawn and this opinion is substituted therefor.
¶2. This appeal arose from a September 23, 1992 order of the Pontotoc County Chancery Court finding that Joyce Mooney ("Mooney") had materially complied with the terms of her property insurance contract and ordering the insurers, Monticello Insurance Company ("Monticello") and Acceptance Insurance Company ("Acceptance"), to pay Mooney the difference between the amount of her policies ($130,000.00) and the amount paid to the mortgagee, First National Bank of Pontotoc ($98,216.62). In its initial opinion, this Court concluded the chancellor did not abuse his discretion in determining that Mooney had materially complied with the conditions of coverage as stated in the insurance contracts. We now reverse our earlier decision and find that Joyce Mooney materially breached the conditions of her policies with Monticello and Acceptance through her failure to supply financial records to the companies as required under the language of the policies.
¶3. On February 3, 1990 a building owned by Joyce Mooney was destroyed by fire. Until about a year before the fire, the single-story structure located in Ecru, Mississippi had housed a meat packing operation, Little Rebel Meats, and a crafts shop. At the time of the blaze, the building was used to store unused equipment from Mooney's previous butchering operation and various items of personal property.
¶4. The building was insured under two policies: one issued by Monticello Insurance Company and the other issued by Acceptance Insurance Company, each in the amount of $65,000.00, providing total coverage of $130,000.00. The insurers paid $98,216.62 to First National Bank, the mortgagee, as full payment of its mortgage interest in the property as of April 6, 1990.
¶5. Joyce Mooney was listed as the sole insured on each policy. In addition, she was the sole owner of the property, and the mortgage on the building held by First National Bank of Pontotoc was in her name alone.
¶6. Mooney's policy provided:
"This entire policy shall be void if, whether before or after a loss, the insured has wilfully concealed or misrepresented any material fact or circumstance concerning this insurance or the subject thereof, or the interest of the insured therein, or in case of any fraud or false swearing by the insured relating thereto."
"The insured, as often as may be reasonably required, shall exhibit to any person designated by this Company all that remains of any property herein described and submit to examinations under oath by any person named by this Company, and subscribe the same; and, as often as may be reasonably required, shall produce for examination all books of account, bills, invoices and other vouchers, or certified copies thereof if originals be lost, at such reasonable time and place as may be designated by this Company or its representative, and shall permit abstracts and copies thereof to be made." [emphasis added].
Pursuant to these provisions, on March 21, 1990 the insurers' attorneys notified Mooney and her husband, Ralph Mooney, that both would be required to submit to examinations under oath, and further, that they were required by the policy to produce personal, business and tax records and related financial information. Joyce Mooney submitted to an examination under oath on April 18, 1990. Ralph Mooney did not attend. The Mooneys argued he was not required to submit to an examination under oath because he was not a named insured under either policy. No financial records were produced at the examination or at any other time. Mooney explained this failure to produce the required records by asserting that any records pertaining to Little Rebel Meats had been burned in the fire. Additionally, Mooney explained that the records documenting their personal finances as well as records concerning her husband's business, Pontotoc Stockyard, were immaterial to the investigation.
¶7. Through correspondence, the insurers urged Mooney to reconsider her position with regard to the production of financial documents and her husband's testimony. She refused, asserting the records were immaterial, and production would be burdensome, time consuming and difficult.
¶8. On July 5, 1990, Monticello and Acceptance filed a Complaint for Declaratory Relief in the Pontotoc County Chancery Court, asking the court to declare that due to Mooney's failure to produce the requested documents and to answer financial questions asked during the examination under oath, she had breached conditions of the insurance policies and could not recover under them. They further sought to recover from Mooney the $98, 216.62 paid to First National Bank.
¶9. In her response filed August 9, 1990, Mooney offered to cure the breach by complying with the insurers' requests for documents. However, her pleadings included a counter-claim for bad faith refusal to pay the entire claim. She sought to recover the $31,783.38 difference between the amount paid and the face value of the policies as well as $100,000.00 in punitive damages.
¶10. Monticello and Acceptance then filed a motion for summary judgment on November 1, 1990. They further requested permission to file an interlocutory appeal if the motion for summary judgment was denied. Mooney also filed a motion for summary judgment on January 28, 1991.
¶11. In an order filed March 5, 1991, the chancellor denied both motions for summary judgment and dismissed Mooney's claim for punitive damages with prejudice. In his order, the chancellor classified the information requested by the plaintiffs as material to the investigation, and instructed Mooney to produce all documents and information requested within thirty (30) days of the order. He further granted the insurers' request to file an interlocutory appeal, which was denied by this Court on September 19, 1991. Mooney never produced any of the requested records.
¶12. On September 25, 1992, the chancellor issued his final order. Relying on documentary evidence as well as trial testimony, he found Joyce Mooney had not materially breached the conditions of her policies with Monticello and Acceptance. Accordingly, the insurers were ordered to pay her the difference between the face value of the policies ($130,000.00) and the amount paid to ...