ÿWPC" # ´UN¿ %  0˜U<«w@ç4';J 0JR 0Tœ 0^ð 0hN 0r¶ 0|( 0†¤ 0* 1uº 0d/ U>“ v~Ñ vÓO ˜HP LaserJet 4 Plus/4M PlusHPPCL5E,,,,0 (ÈhH  Z ‹6Times New Roman RegularX(püƒ$¡¡Ò°ÒÒ„°ÒÑTR[¤ AØ'ÿ Legal[¤ AØ'ÿ Legal AØ'ÿ Legal AØ'ÿ LegalTÑ-šBu Z‹$Arrus BT Roman [UED !U"î’mP!3|x"2 ÿÿ0Indent1Ô2ÔÔ3  Ô2" ÿÿ0Indent2à0 àÔ2ÔÔ3  Ô2, ÿÿ0Indent3à0 àà0 àÔ2ÔÔ3  Ô26 ÿÿ0Indent4à0 àà0 àà0 àÔ2ÔÔ3  Ô2@ ÿÿ0Indent5à0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2J ÿÿ0Indent6à0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2T ÿÿ0Indent7à0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô2^ ÿÿ0Indent8à0 àà0 àà0 àà0 àà0 àà0 àà0 àÔ2ÔÔ3  Ô  ÿÿ?AGMSYaioIndent0I.A.1.a.(1)(a)i)a)P ÿÿ8Mac DefaultMac DefaultÓ ` °šXÓ< Œ 9p`(&Times New RomanPtPtHHÚ(ÿáÿâùFG(üHHÚ(d'@Styl{WP}01•ÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃÃà Ãà Ãà Ãà Ãà ÃÃÃÃÃÃÃÃÃÃÃÐ ÐÐHHÐÐ  ÐÐ2ÐÐÿÿ¸æ$ÿÐÐHHÐÐÐÐÐÐÐÐ  ÐÐ ÐÐ ÐÑÑÑGenevaÑÑ ÑÑ € ÑÑ<Px–ÈÑÒÒÒ443!#4ÒÒ$ *$ÒÒ$*$ÒÒ ÿKK ÒÒ  Geneva ÒÒ  Geneva ÒÓ.,ÓÓÓÓ6ÓÓ ÓßßßßßßßßßßßßßßßßßßÑGenevaÑÑ ÑÒ  BA Op Geneva ÒÒ  BA Op Geneva ÒÝ ƒ!ÝÔ . ÔÔ€ÔÒ  ÒÒ „ ÒÑ\R AØ'\ÑÝ  ÝÑ7€>‰XXdðdÈ7ÑÑ  ÑÔ€ÔÓ  ÓÑ  Ñà@ àIN€THE€COURT€OF€APPEALS€OF€TENNESSEEÌà@ àWESTERN€SECTION€AT€KNOXVILLE€Ìà àà à€€€________________________________________________ÌÌò òGLENN€T.€McCOLPIN,€ó óÌÌà àPlaintiff„Appellant,Ìà àà àà àà àà àà àà àHamilton€Chancery€No.€73502ÌVs.à àà àà àà àà àà àà àC.A.€No.€03A01„9602„CH„00067ÌÌò òNORTH€ATLANTIC€CASUALTYÌ&€SURETY€INSURANCE€COMPANY,ÌINC.,€ó óÌÌà àDefendant„Appellee.Ì___________________________________________________________________________ÌÌà0 àà àà@ àFROM€THE€HAMILTON€COUNTY€CHANCERY€COURTÌà@ àTHE€HONORABLE€R.€VANN€OWENS,CHANCELLORÌÌÌÌà@ àHoward€B.€Barnwell,€Jr.,€of€ChattanoogaÌà@ àFor€Plaintiff„AppellantÌÌà@ àDonald€E.€Warner€and€Sean€Antone€Hunt€ofÌà@ àLeitner,€Warner,€Moffitt,€Williams,€Dooley€&€Napolitan,€PLLC,Ìà@ àof€Chattanooga,€For€Defendant„AppelleeÌÌÌÌÌÌà@ àò òòòAFFIRMED€AND€REMANDEDó óóóÌÌà@ àOpinion€filed:€€ÌÌÌÌà àÌà àÌÌà àà àà àà àà àà àà àà àò òW.€FRANK€CRAWFORD,Ìà àà àà àà àà àà àà àà àPRESIDING€JUDGE,€W.S.ÌÌÌCONCUR:ÌÌDAVID€R.€FARMER,€JUDGEÌÌWILLIAM€H.€INMAN,€SENIOR€JUDGEó óÌÌÌò ò›Ñ7€>‰XXdðXXdð7ÑÑ  ÑÓÓà àó óThis€is€a€suit€for€damages€against€an€insurance€company€for€the€allegedÏbreach€of€a€lawyerððs€professional€liability€insurance€policy.€€Plaintiff,€GlennÏMcColpin,€appeals€from€the€judgment€of€the€chancery€court€for€the€defendant,ÏNorth€Atlantic€Casualty€&€Surety€Insurance€Company,€Inc.€€(hereinafter,Ïð ðNorth€Atlanticðð).ò òÌà àó óOn€March€7,€1987,€McColpin,€a€Chattanooga€attorney€and€owner€ofÏAssociates€Title€Guaranty,€Inc.,€(hereinafter,€ð ðAssociates€Titleðð),€a€titleÏinsurance€company,€supervised€the€closing€of€a€real€estate€transaction.€€TheÏsubject€property€was€located€in€Catoosa€County,€Georgia.€€James€and€Ann€KingÏ(hereinafter,€ð ðthe€Kingsðð)€wished€to€purchase€a€house€in€Catoosa€County,ÏGeorgia,€but€they€were€unable€to€obtain€adequate€financing.€€Under€the€termsÏof€the€transaction,€Arden€and€Francis€Harwell€(hereinafter,€ð ðthe€Harwellsðð)€ofÍDayton,€Tennessee,€obtained€a€home€mortgage€loan€for€the€Kings.€€The€KingsÏwere€to€live€in€the€home,€make€the€mortgage€payments€and€pay€the€HarwellsÏ$5,000€for€obtaining€the€loan.€€The€deed€was€made€out€to€the€Harwells.€ÏMcColpin€prepared€a€contract€whereby€the€Harwells€would€convey€the€deed€toÏthe€Kings€after€the€mortgage€loan€had€been€closed€in€the€Harwellððs€name.€€AtÏthat€time,€the€deed€and€the€outstanding€indebtedness€would€be€conveyed€to€theÏKings.€€However,€this€contract€was€never€executed€by€the€parties.€€The€KingsÏstopped€making€payments,€reasoning€that€the€Harwells€had€the€deed€and€thatÏthe€Kings€had€no€proof€of€ownership.€€Ìà àThe€Kings€sought€the€services€of€Clifton€Patty€(hereinafter€ð ðPattyðð),€aÏGeorgia€attorney,€in€an€attempt€to€resolve€this€debacle.€€On€January€11,€1988,ÏPatty€wrote€a€letter€to€eight€individuals€including,€òòinter€aliaóó,€Glenn€T.€McColpin,ÏAssociates€Title,€and€Karen€S.€Hill,€the€representative€for€Associates€Title€whoÏhandled€the€closing€involving€the€property€in€question.€€The€letter€stated€inÏpertinent€part:ÌÓÓà8 àà8 àThe€specific€relief€sought€by€the€Kings€is€theÏconveyance€of€the€real€property€from€Arden€C.ÏHarwell€and€wife,€Francis€M.€Harwell,€to€James€L.€KingÏand€wife,€Ann€C.€King,€assuming€the€outstandingÏindebtedness€owing€to€United€Guaranty€FederalÏSavings€Bank€of€Tullahoma,€Tennessee.€€If€this€relief€isÍnot€forthcoming€on€or€before€January€19,€1988,€suitÏwill€be€filed€to€seek€an€equitable€decree€requiring€theÏconveyance€of€the€real€property€aforesaid€andò òÏó óappropriate€damages€from€òòò òeach€entity€and€personó óóóÏinvolved€in€this€transaction.€€(Emphasis€supplied).Ì€€ÌÓÓThe€relief€demanded€was€not€forthcoming.€€Therefore,€on€March€1,€1988,€theÏKings€filed€a€complaint€in€the€Superior€Court€of€Catoosa€County,€Georgia,Ïnaming€as€defendants€all€parties€mentioned€in€the€January€11,€1988€letterÏexcept€for€Glen€McColpin€and€two€others.€€Both€Associates€Title€and€itsÏrepresentative€Karen€Hill€were€named€in€the€Complaint.€€The€trial€of€that€causeÏresulted€in€a€judgment€entered€September€18,€1989,€against€both€AssociatesÏTitle€and€Hill€for€$1.00€in€compensatory€damages,€$25,000.00€in€punitiveÏdamages,€and€$6,732.19€in€attorneysðð€fees€and€litigation€expenses.€€TheÏjudgment€was€not€satisfied,€and€on€June€22,€1990,€Patty€took€McColpinððsÏdeposition€in€aid€of€execution€of€the€judgment€entered€in€the€aforementionedÏlawsuit.€€Ìà àIn€September€1990,€McColpin€applied€for€professional€malpracticeÏinsurance€with€North€Atlantic€on€behalf€of€himself€and€Chattanooga€Title,€theÏsuccessor€company€to€Associates€Title.€€The€application€inquired,€in€pertinentÏpart,€as€to€previous€claims,€and€McColpin€replied€as€follows:ÌÓÓà8 àà8 à(d)€Does€any€lawyer€named€in€Question€5(a)€know€ofÏany€facts,€circumstances,€acts,€errors,€or€omissionsÏthat€may€result€in€a€professional€liability€claim€againstÏhim€or€his€predecessors€in€business?€[€]€Yes€[X]€No.€ò òIfÏeither€9(c)€or€9(d)€areó ó€ò òanswered€YES,€submitÏSUPPLEMENTAL€CLAIM€INFORMATION€formÏand€copies€of€any€summons,€complaint€and€aÏnarrative€for€each€item.€€ó óÌÌÓÓMcColpin€did€not€make€any€reference€in€the€insurance€application€to€the€legalÏdisputes€arising€from€the€real€estate€transaction€involving€the€Kings.ò ò€€ó óIn€relianceÏon€McColpinððs€representations,€North€Atlantic€issued€a€ð ðclaims€madeðð€policyÏeffective€from€October€1,€1990,€until€October€1,€1991.€€Ìà àOn€January€9,€1991,€the€Kings€filed€a€second€lawsuit€in€the€SuperiorÏCourt€of€Catoosa€County,€Georgia,€alleging€legal€malpractice€against€GlennÏMcColpin€in€connection€with€the€March€7,€1987€real€estate€transaction€whichÏMcColpin€had€supervised.€€McColpin€gave€notice€and€submitted€the€claim€toÏNorth€Atlantic€for€defense.€€North€Atlantic€declined€to€provide€the€requestedÏdefense€based€on€Pattyððs€letter€of€January€11,€1988,€and€the€misrepresentationsÏin€the€insurance€application.ò ò€€ó óMcColpin€defended€the€suit€at€his€own€expense,Ïand€the€cause€was€ultimately€settled€for€$10,000.00€in€January€1994.€€Ìà àMcColpin€sued€North€Atlantic€on€July€30,€1993,€in€the€Chancery€Court€ofÏHamilton€County,€Tennessee,€for€$34,000.00€in€damages:€the€$10,000.00€paidÍto€settle€the€lawsuit€and€the€$24,000.00€for€attorneysðð€fees€incurred€byÏMcColpin€in€defending€the€lawsuit.€€The€case€was€tried€by€the€chancellor€onÏSeptember€14,€1995,€without€a€jury.€€The€chancellor€filed€a€MemorandumÏOpinion€on€September€20,€1995,€and€later€filed€a€Corrected€MemorandumÏOpinion€both€of€which€are€incorporated€in€the€Order€of€Judgment€enteredÏOctober€13,€1995.€€The€chancellor€determined€that€McColpinððs€knowledge€wasÏsuch€that€he€should€have€divulged€the€information€regarding€the€real€estateÏtransaction€and€given€North€Atlantic€the€option€of€determining€whether€anÏexclusion€in€the€insurance€policy€pertaining€to€the€real€estate€transaction€inÏquestion€should€have€been€included.€€Therefore,€the€chancellor€deniedÏMcColpinððs€claim,€entered€a€judgment€in€favor€of€North€Atlantic€and€dismissedÏthe€cause.€€McColpin€has€appealed€and€presents€one€issue€for€review€which,€asÏstated€in€his€brief,€is€as€follows:ÌÓÓà8 àà8 à1.€The€Trial€Court€erred€in€finding€that€the€AppellantÏhad€no€coverage€under€a€ð ðclaims€madeðð€typeÏmalpractice€insurance€policy€with€Appellee,€basedÏupon€a€finding€that€the€Appellant€had€a€reasonableÏbasis€for€prior€knowledge€of€the€claim€when€theÏAppellant€entered€into€the€contract€of€insurance.ÌÌà àIn€addition,€North€Atlantic€presents€two€issues€for€appeal€as€stated€in€itsÏbrief:ÌÌà8 àà8 à1.€Whether€the€evidence€preponderates€against€theÏChancellorððs€finding€that€Mr.€McColpinððs€knowledgeÏwas€of€such€significance€that€his€failure€to€provideÏinformation€surrounding€the€1988€letter€fromÏAttorney€Patty€on€the€application€for€coverageÏamounted€to€a€misrepresentation€allowing€NorthÏAtlantic€to€disclaim€coverage€for€the€event€since€theÏmisrepresentation€admittedly€increased€the€risk€ofÏloss.€€ÌÌà8 àà8 à2.€Whether€the€evidence€preponderates€against€theÏChancellorððs€finding€that€the€ð ðclaimðð€made€by€Mr.€&ÏMrs.€King€was€not€covered€by€the€policy€as€(1)€letterÏfrom€Mr.€Patty€to€Mr.€McColpin€of€January€11,€1988,Ïtogether€with€several€other€matters€in€which€Mr.ÏMcColpin€was€greatly€engrossed,€constituted€a€ð ðclaimððÏsuch€that€coverage€under€the€policy€is€not€providedÏsince€the€ð ðclaimðð€was€not€first€made€during€theÏeffective€dates€of€coverage€of€the€policy€and€(2)€theÏletter€from€Attorney€Patty€and€the€other€matters€inÏwhich€Mr.€McColpin€was€greatly€engrossed€providedÏMr.€McColpin,€prior€to€the€issuance€of€the€policy,Ïwith€a€reasonable€basis€to€believe€that€a€claim€mightÏbe€brought€against€him.€€€€€ÌÌÓÓà àBasically,€the€issue€presented€for€review€is€whether€the€chancellor€erred€inÏholding€that€the€defendant€insurance€company€was€not€obligated€to€provideÏcoverage€to€McColpin€under€its€policy.€€The€record€indicates€that€NorthÏAtlantic€declined€coverage€to€McColpin€because€of€the€express€policy€provisionÏpertaining€to€coverage€for€acts€occurring€prior€to€the€policy€effective€date,€i.e.,Ïthat€ð ðthe€insured€had€no€reasonable€basis€to€believe€that€the€Wrongful€Act€wasÍa€breach€of€professional€duty€or€might€result€in€a€claim.ððÌà àAlternatively,€North€Atlantic€asserts€that€McColpin€made€aÏmisrepresentation€of€fact€that€increased€the€risk€of€loss€and€is€thus€not€entitledÏto€coverage€pursuant€to€T.C.A.€€ðð€56„7„103€(1994).Ìà àWe€will€first€consider€coverage€provided€under€the€express€language€ofÏthe€policy.Ìà àThe€policy€in€question€is€a€ð ðclaims€madeðð€policy,€a€policy€providingÏinsurance€coverage€for€errors€and€omission€when€the€claim€is€made€during€theÏpolicy€period€even€though€the€alleged€wrongful€act€occurred€prior€to€theÏeffective€date€of€the€policy.€€See€generally,€òòò òStiefel€v.€Ill.€Union€Ins.€Co.ó óóó,€116€Ill.ÏApp.€3d€352,€452€N.E.2d€73,€75€(1983).€€Ìà àThe€North€Atlantic€policy€provides,€as€pertinent€to€the€issues€before€us,Ïas€follows:ÌÓÓà8 àà8 àò òINSURING€AGREEMENTSÌÌó óà8 àà8 àò ò1.€COVERAGEó ó€€ÌÌà8 àà8 àTo€pay€on€behalf€of€the€Insured€all€sums€which€theÏInsured€shall€become€legally€obligated€to€pay€asÏdamages€because€of€any€claim€or€claims,€first€madeÏagainst€the€Insured€during€the€policy€period€andÏreported€to€the€Company€during€the€policy€period,Ïarising€out€of€any€Wrongful€Act€by€the€Insured,€or€anyÍother€person€for€whose€Wrongful€Act€the€Insured€isÏlegally€responsible,€in€rendering€or€failing€to€renderÏProfessional€Services€for€others€as€defined€herein,Ïexcept€as€excluded€or€limited€by€the€terms,€conditionsÏand€exclusions€of€this€policy.ÌÌà8 àà8 àAny€services€performed€by€the€Insured€in€a€lawyer„client€capacity€on€behalf€of€one€or€more€clients€shallÏbe€deemed€to€be€the€performance€of€ProfessionalÏServices€although€such€services€could€be€performed€inÏwhole€or€in€part€by€nonlawyers.ÌÌà8 àà8 àThe€Wrongful€Act€must€happen:ÌÌà8 àà8 à(a)€during€the€policy€period;€orÌÌà8 àà8 à(b)€on€or€after€the€Retroactive€Date€shown€on€theÏDeclarations,€provided€that€prior€to€the€effective€dateÏof€this€policy;ÌÌà8 àà8 àà8 à(1)€the€Insured€did€not€give€notice€to€anyÏprior€insurer€of€any€such€Wrongful€Act;ÌÌà8 àà8 àà8 à(2)€the€Insured€had€no€reasonable€basisÏto€believe€that€the€Wrongful€Act€was€aÏbreach€of€professional€duty€or€mightÏresult€in€a€claim;€and,€ÌÌà8 àà8 àà8 à(3)€there€is€no€prior€policy€or€policiesÏwhich€provide€insurance€for€such€liabilityÏor€claim€whether€or€not€the€availableÏlimits€of€liability€on€such€prior€policy€orÏpolicies€are€sufficient€to€pay€any€liabilityÏor€claim€and€whether€or€not€theÏdeductible€provisions€and€amount€of€suchÏprior€policy€or€policies€are€different€fromÍthis€policy€and€whether€or€not€such€priorÏpolicy€or€policies€are€œcollectible€in€wholeÏor€part.ÌÌÓÓUnder€the€terms€of€North€Atlanticððs€insurance€policy,€a€ð ðclaimðð€is€defined€as€ð ðaÏdemand€received€by€the€Insured€for€money€or€services€.€.€.€.ðð€€Ìà àThe€letter€from€Attorney€Patty€expressly€stated:ÌÓÓà8 àà8 àThe€specific€relief€sought€by€the€Kings€is€theÏconveyance€of€the€real€property€from€Arden€C.ÏHarwell€and€wife,€Francis€M.€Harwell,€to€James€L.€KingÏand€wife,€Ann€C.€King,€assuming€the€outstandingÏindebtedness€owing€to€United€Guaranty€FederalÏSavings€Bank€of€Tullahoma,€Tennessee.€€If€this€relief€isÏnot€forthcoming€on€or€before€January€19,€1988,€suitÏwill€be€filed€to€seek€an€equitable€decree€requiring€theÏconveyance€of€the€real€property€aforesaid€andÏappropriate€damages€from€each€entity€and€personÏinvolved€in€this€transaction.€€ÌÌÓÓIt€is€undisputed€that€McColpin€admitted€responsibility€for€the€real€estateÏtransaction.€€Pattyððs€letter€notified€McColpin€that€a€lawsuit€might€be€filedÏagainst€him€and€others.€€In€view€of€this€letter,€McColpin€certainly€should€haveÏhad€a€reasonable€basis€to€believe€that€the€wrongful€act€was€a€breach€of€hisÏprofessional€duty€and€might€result€in€a€claim.€€The€Kings€filed€a€lawsuit€inÏMarch€1988,€against€those€individuals€named€in€the€January€11€letter,€with€theÏexception€of€McColpin€and€two€others.€€Among€the€named€defendants€in€theÍoriginal€suit€were€Associates€Title,€the€title€insurance€company€that€McColpinÏowned,€and€Karen€Hill,€a€lawyer€working€for€Associates€Title€whom€McColpinÏlater€married.€€On€September€18,€1989,€the€Kings€obtained€a€judgment€againstÏthe€defendants€in€an€amount€in€excess€of€$30,000.00€which€was€not€satisfied.€ÏThereafter,€McColpin€was€deposed€in€aid€of€execution€of€judgment€on€June€22,Ï1990,€which€was€only€two€and€one„half€months€before€McColpin€submitted€hisÏapplication€to€North€Atlantic.€€In€his€deposition€of€December€6,€1994,€AttorneyÏClifton€Patty€testified€that€he€thought€that€McColpin€was€culpable€from€theÏtime€McColpin€was€deposed€in€aid€of€execution€of€judgment€in€June€1990.€€Ìà àWe€agree€with€the€chancellor€that€the€evidence€in€this€case€establishesÏthat€McColpin€had€a€reasonable€basis€to€believe€that€his€act€for€which€he€seeksÏcoverage€was€a€breach€of€professional€duty€and€had€resulted€in€a€claim€by€virtueÏof€Mr.€Pattyððs€letter.€€Therefore,€this€act€is€not€within€the€coverage€provided€byÏthe€policy€in€question.€Ìà àWe€will€next€consider€North€Atlanticððs€assertion€that€there€was€aÏmaterial€misrepresentation€that€increased€the€risk€of€loss€and€thus€defeatsÏcoverage€under€the€policy.Ìà àThe€policy€of€insurance€provides:ÌÓÓà8 àà8 àò ò7.€€APPLICATION:ó ó€By€acceptance€of€this€policy€theÏInsured€agrees€that€the€statements€in€the€applicationÏare€his€representations,€that€they€shall€be€deemedÏmaterial€and€that€this€policy€is€issued€in€reliance€uponÏthe€truth€of€such€representations€and€that€this€policyÏembodies€all€agreements€existing€between€the€NamedÏInsured€and€the€Company€or€any€of€its€agents,€relatingÏto€this€insurance.€€ÌÌÓÓà àThe€application€for€the€policy€provides€immediately€above€the€signatureÏof€the€applicant€as€follows:ÌÓÓà8 àà8 àò òNOTICE€TO€APPLICANT€„€PLEASE€READÏCAREFULLYó ó€Ìà8 àà8 àò òREPRESENTATION:€I/We€represent€that€theÏinformation€contained€herein€is€true€and€that€itÏshall€be€the€basis€of€the€policy€of€insurance€andÏdeemed€incorporated€therein,€should€the€CompanyÏevidence€its€acceptance€of€this€application€byÏissuance€of€a€Policy.ó óÌò òÌÓÓà àó óThe€application€asks€the€following€specific€questions:ÌÓÓà8 àà8 à9.€(d)€Does€any€lawyer€named€in€Question€5(a)€knowÏof€any€facts,€circumstances,€act,€errors,€or€omissionsÏthat€may€result€in€a€professional€liability€claim€againstÏhim€or€his€predecessors€in€business?ÌÌÓÓà àMcColpin€answered€ð ðnoðð€to€this€question.Ìà àT.C.A.€€ðð€56„7„103€(1994)€provides:ò òÌÓÓà8 àà8 àMisrepresentation€or€warranty€will€not€avoidÏpolicy€„€Exceptions.€„ó ó€€No€written€or€oralÏmisrepresentation€or€warranty€therein€made€in€theÍnegotiations€of€a€contract€or€policy€of€insurance,€or€inÏthe€application€therefor,€by€the€insured€or€in€theÏinsuredððs€behalf,€€shall€be€deemed€material€or€defeat€orÏvoid€the€policy€or€prevent€its€attaching,€unless€suchÏmisrepresentation€or€warranty€is€made€with€actualÏintent€to€deceive,€or€unless€the€matter€representedÏincreases€the€risk€of€loss.€€ò òÌÌÓÓà àó óUnder€this€statute,€whether€the€answers€of€the€proposed€insured€on€theÏapplication€are€true€or€untrue€and€whether€the€false€answers€were€made€withÏactual€intent€to€deceive€are€questions€of€fact.€€ò òòòWomack€v.€Blue€Cross€and€BlueÏShield€of€Tennesseeó óóó,€593€S.W.2d€294€(Tenn.€1980).€€After€a€determination€thatÏthe€answers€made€by€the€insured€are€untrue,€it€then€becomes€a€question€of€lawÏfor€the€Court€as€to€whether€the€misrepresentation€made€by€the€insuredÏmaterially€increased€the€risk€of€loss.€€ò òòòMilligan€v.€MFA€Mutual€Ins.€Co.ó óóó,€497ÏS.W.2d€736€(Tenn.€App.€1973).€€In€ò òòòMilliganó óóó,€the€Court€said:ÌÓÓà8 àà8 àThe€rule€as€announced€and€followed€by€our€courts€isÏthat€a€misrepresentation€about€any€matter€ofÏsufficient€impor‚tance,€in€the€opinion€of€the€court,€toÏnaturally€and€reasonably€influence€the€judgment€of€theÏinsurer€in€making€the€contract,€is€a€misrepresentationÏthat€"increases€the€risk€of€loss"€within€the€sense€ofÏSection€56„1103€[now€56„9„103].€€òòò òHughes€Bros.€v.ÏAetna€Ins.€Co.€ó óóó(1923)€148€Tenn.€293,€255€S.W.€363;Ïòòò òTegethoff€v.€Metropolitan€Life€Ins.€Co.,€supraó óóó,€and€theÏcases€therein€cited.ÌÌ497€S.W.2d€at€739.ò òÌÌÓÓà àó óIn€the€instant€case,€McColpin€acknowledged€that€if€the€January€11,€1988Ïletter€from€Patty€was€a€claim,€then€a€misrepresentation€concerning€the€letterÏincreased€the€risk€of€loss.€€The€question€on€the€application€sought€ð ðany€facts,Ïcircumstances,€acts,€errors,€or€omissions€that€may€result€in€a€professionalÏliability€claim.ðð€€At€the€very€least,€Pattyððs€January€11,€1988€letter€memorializedÏfacts€and€circumstances€that€could€result€in€a€professional€liability€claim€againstÏMcColpin.€€Moreover,€subsequent€to€the€1988€letter,€other€events€certainlyÏmade€McColpin€aware€of€facts€and€circumstances€that€could€have€led€to€aÏpossible€claim€against€him.€€A€lawsuit€was€initiated€involving€the€underlying€realÏestate€transaction,€and€judgment€was€entered€against€McColpinððs€title€companyÏand€its€employee€who€is€now€McColpinððs€wife.€€McColpinððs€deposition€taken€inÏaid€of€execution€of€that€judgment€indicated€his€involvement.€€The€evidence€doesÏnot€preponderate€against€the€finding€of€the€trial€court€that€McColpin€was€awareÏof€facts€and€circumstances€that€should€have€been€disclosed€in€the€applicationÏfor€the€North€Atlantic€policy.€€Ìà àMcColpin€simply€did€not€correctly€answer€the€question€on€theÏapplication.€€Knowledge€of€these€facts€and€circumstances€are€of€sufficientÏimportance€to€ð ðnaturally€and€reasonably€influence€the€judgmentðð€of€NorthÍAtlantic.€€ò òòòMilliganó óóó,€at€739.€€Since€there€was€a€misrepresentation,€and€there€wasÏan€increase€in€the€risk€of€loss,€the€trial€court€was€correct€in€finding€no€coverageÏunder€the€policy.Ìà àAccordingly,€the€judgment€of€the€trial€court€is€affirmed,€and€this€case€isÏremanded€to€the€trial€court€for€such€further€proceedings€that€may€be€necessary.€€ÏCosts€of€the€appeal€are€assessed€against€the€appellant.ò òÌÓÓó óà àà àà àà àà àà àà à_________________________________Ìà àà àà àà àà àà àà àò òW.€FRANK€CRAWFORD,Ìà àà àà àà àà àà àà àPRESIDING€JUDGE,€W.S.ó óÌÌò ò_________________________________ÌDAVID€R.€FARMER,€JUDGEó óÌÌ_________________________________Ìò òWILLIAM€H.€INMAN,€SENIOR€JUDGEó óœÔ€Ô