Reading: it's not just a pastime, it's your duty

Besides Fulghum, there was another decision yesterday, one that doubtless has made many insurance lawyers in Mississippi very happy, and deprived many plaintiff attorneys of one of their workhorse precedents.

Mladineo v. Schmidt is another Katrina case, this time alleging that the homeowners thought their policy covered any and all wind and water damage from a "named storm," and that the agent supposedly told them their property wasn't in a flood zone (and hence needed no flood insurance), even tho in fact part of it was. Summary judgment for all defendants.

The Court held that the agent had no affirmative duty to advise the homeowners on what insurance they needed, but once he did give advice, he assumed a duty and could be held liable for negligence. So SJ reversed on that count. (Note to insurance agents: don't give advice!)

However, the Mladineos were SOL otherwise, because the (Nationwide) policy stated what it did and didn't cover, and they couldn't claim to rely on what the agent told them it said.

That's where the fun part comes in. Plaintiffs relied on Chuck McRae's opinion in American Income Life Insurance Co. v. Hollins (Miss. 2002), which the Mladineo Court quotes:

That [the plaintiff] did not read it does not alter the fact that she relied on [the agent’s] statements before the policy was provided to her. The exclusion contained in the policy, while unambiguous, was not made available until after she had purchased the insurance in reliance on [the agent’s] statement. Because [the plaintiff] was not informed otherwise prior to relying on [the agent’s] statement, her reliance on the statement that her [pre-existing] condition would be covered was reasonable.

Hollins, 830 So. 2d at 1237-1238.

This holding in Hollins directly contradicts our well-settled precedent regarding an insured’s duty to read his or her policy. See e.g. Gulf Guar. Life Ins. Co. v. Kelley, 389 So. 2d 920, 922 (Miss. 1980) (“[An insured] may not neglect or purposely omit acquainting himself with the terms and conditions of the insurance policy and then complain of his ignorance of them.”) Where Hollins is contradictory to the “duty-to-read” and “imputed knowledge” doctrines, it is hereby overruled.

Hollins has been heavily relied on as negating any "duty to read." Not any more though.

The lineup in Hollins was Diaz, Easley, and Graves joining; Pittman concurring only in the result; and Smith, Waller, Cobb, and Carlson dissenting.

Graves, the only remaining justice who joined McRae's opinion, dissents in Mladineo ... because he would've let off the agent as well, on a duty-to-read basis.

As stated by the majority, this Court repeatedly has held that knowledge of an insurance policy is imputed to an insured regardless of whether he has read the policy. See Stephens v. Equitable Life Assurance Soc’y of U.S. , 850 So. 2d 78, 83 (Miss. 2003); Oaks v. Sellers, 953 So. 2d 1077, 1083-84 (Miss. 2007); Cherry v. Anthony, 501 So. 2d 416, 419 (Miss. 1987); and Atlas Roofing Mfg. Co. v. Robinson & Julienne, Inc., 279 So. 2d 625, 629 (Miss. 1973).

* * * The majority fails to adequately explain how it carves out an exception to the duty to read and the imputed-knowledge provisions under only the negligence theory.

No reference to Hollins at all, let alone to Graves's casting a decisive vote therein. We call that "chutzpah." (The majority, while disagreeing that they are "carving out" any exceptions to the duty to read, is too gracious to observe who *did* carve out an exception to it.)