Following a five-day jury trial, the jurors went no further than the first question of the special verdict form, determining that Mr. Scavuzzo had committed fraud. On the basis of the jury's verdict, the trial court entered an order dismissing his action.

Mr. Scavuzzo appealed. He argued that the special verdict form and jury instructions failed to inform the jury that his alleged fraudulent statements had to be made directly to Auto-Owners and that the insurer had relied on his “non-statements to the IRS and the Social Security Administration.”

The Special Verdict Form

The first question on the special verdict form provided:

Did [Mr. Scavuzzo] make a fraudulent statement or engage in fraudulent conduct with respect to procurement of the insurance policy or to an occurrence for which coverage is sought?

Occurrence is defined as an accident that results in bodily injury or property damage and includes, as one occurrence, all continuous or repeated exposure to substantially the same generally harmful condition.

The jury answered “yes.”

The Appellate Court's Decision

The appellate court affirmed, finding Mr. Scavuzzo's argument “wholly lacking in merit.”

In its decision, the appellate court explained that, along with the language in question one of the special verdict form, the trial court instructed the jury that Auto-Owners had to show that Mr. Scavuzzo made a willful misrepresentation of fact, that the misrepresentation was material, that the representation was in fact false, that Mr. Scavuzzo knew that it was false when made or made it recklessly without knowledge of its truth, and that Mr. Scavuzzo made the misrepresentation with the intention that Auto-Owners act upon it.

The appellate court found that, with respect to the instructions to the jury, it was “implicit” that Auto-Owners had to be “the target or recipient of any fraudulent statements” because misrepresentations had to be made with the intention that the insurer act upon them.

The appellate court then ruled that Mr. Scavuzzo's insurance claim submitted to Auto-Owners included a request for wage loss, with Mr. Scavuzzo asserting lost wages of between $52,000 and $60,000 per year. Auto Owners presented evidence that Mr. Scavuzzo received disability benefits from the Social Security Administration (“SSA”) and that these benefits would be discontinued should he earn more than $1,170 per month. In conjunction with this evidence, the appellate court continued, Auto-Owners produced evidence that Mr. Scavuzzo failed to report any income to the IRS or the SSA.

The appellate court ruled that, contrary to Mr. Scavuzzo's “faulty reasoning,” evidence of his failures to disclose income to the IRS and the SSA supported Auto-Owner's position that he made fraudulent statements to Auto-Owners, where he directly claimed to the insurer that he had income ranging from $52,000 to $60,000. In the appellate court's opinion, the jury was not instructed in a manner that suggested that defrauding the federal government could serve as the basis for finding in favor of Auto-Owners. In sum, the appellate court concluded, there was no instructional error, no error with respect to the special verdict form, and no error as to the jury's verdict.

The case is Scavuzzo v. Auto-Owners Ins. Co., No. 339637 (Mich. Ct. App. April 25, 2019).