Authored by: Joseph Ciollo
Superior Court – Uninsured Motorist Coverage – Fraud Or Misrepresentation Exclusion
In Chase et al v. Progressive Casualty Insurance Company, the plaintiffs were injured in a motor vehicle accident and filed an action for Uninsured Motorist (“UM”) benefits against the defendant. One of the defendant’s special defenses was that the plaintiffs could not recover UM benefits due to a violation of the applicable insurance policy’s Fraud or Misrepresentation exclusion. The Court conducted a bifurcated trial solely on that special defense. The defendant argued that its insured (not the plaintiffs) provided false information to the defendant’s agent in order to gain a more favorable premium. The defendant asserted that it relied on this false information in quoting its premium and, pursuant to the terms of the policy, it was entitled to rescind the policy and deny the plaintiffs’ claims for UM benefits. The evidence demonstrated that the relevant information for the insurance application was furnished to the defendant’s agent by a used car dealership salesman who had worked with the insured during her purchase of the insured vehicle. The information provided by the salesman was almost entirely incorrect. Consequently, the application prepared by the agent was replete with errors. After a premium quote was generated, the agent provided a signature page to the insured who signed it but did not date it. There was no evidence that the application was ever provided to the insured, nor any evidence that the insured was given the opportunity to review and correct the erroneous information provided to the agent by the salesman. In considering the burden of proof which the defendant needed to satisfy to succeed in its special defense of material misrepresentation / fraud, the Court found that the defendant failed to satisfy two of the three required elements. As to the element that there must be a misrepresentation or untrue statement by the applicant, there was no credible evidence that the insured was the source of the incorrect information. As to element that any such misrepresentation or any untrue statement must be made knowingly, the defendant failed for the same reason. The defendant did prove that it would have charged a substantially greater premium if it had been aware of the insured’s actual education, employment, marital status and, particularly, her resident teenage grandson who possessed a motor vehicle operator’s license and who regularly operated the insured vehicle. The Court found in favor of the plaintiffs against the defendant on the special defense and ordered the remaining causes of action to proceed to trial.
U.S. District Court – Bad Faith – Motion to Dismiss
In Curry v. State Farm Fire & Casualty Company et al, the plaintiff was injured in a motor vehicle accident and notified the defendant, as the tortfeasors’ liability insurer, of a claim. The defendant initially responded that it could neither accept nor deny the claim due to an unspecified coverage issue that had arisen. The plaintiff filed a civil action against the tortfeasors, and the defendant did not provide a defense. The tortfeasors did not appear in the underlying civil action, and a substantial default judgment ultimately entered against them. The plaintiff then filed a direct action against the defendant sounding in breach of contract for the defendant’s refusal to defend the tortfeasors in the underlying action. The plaintiff also alleged that the defendant breached its duty of good faith and fair dealing by refusing to provide an immediate defense to the tortfeasors, refusing to settle within the policy limits, and refusing to indemnify the tortfeasors for the judgment. The plaintiff further alleged that the defendant was unjustly enriched by accepting premium payments and then declining to defend the tortfeasors in the underlying action and refusing to pay the judgment. The defendant filed a motion to dismiss and argued that its duty to defend was excused because the tortfeasors engaged in intentional wrongful acts not covered by the policy and failed to cooperate with the defendant’s investigation. However, the Court could not determine on a motion to dismiss the contested factual issues of intentional wrongful conduct and failure to cooperate. Thus, the Court found that the plaintiff adequately pleaded that the defendant breached its duty to defend the tortfeasors in the underlying state court action. Based on the allegations of the complaint in the present action, the Court found that the plaintiff adequately pleaded a bad faith claim only to the extent he alleged that the defendant acted in bad faith by declining to promptly defend the tortfeasors in the underlying action. The Court did not find that the complaint plausibly stated a claim of bad faith relating to the defendant’s decision to invoke a policy exclusion as the basis for not settling the underlying lawsuit or indemnifying the tortfeasors. The Court disagreed with the defendant’s argument that the plaintiff cannot pursue an equitable claim of unjust enrichment as a judgment creditor. As a result, the motion to dismiss was denied granted in part and denied in part.
U.S. District Court – Property Coverage – Motion for Summary Judgment
In Williamson v. Amica Mutual Insurance Company, the plaintiffs sustained damage to their residence following a storm and submitted a claim to the defendant. A dispute arose as to the scope of the damage, particularly the source of damage to the property’s roof. The plaintiffs filed a complaint alleging the defendant breached its insurance contract. The defendant filed a counterclaim seeking declaratory judgment that (1) the defendant had fully indemnified the plaintiffs for the loss; (2) there was no coverage for roof damages related to the loss; and (3) that the plaintiffs had no right to appraisal related to the loss. The defendant filed a motion for summary judgment as to both the complaint and counterclaim. At the outset, the Court noted that the defendant failed to provide a required Statement of Undisputed Material Facts which included necessary specific citations to various attached exhibits. By way of example only, on multiple occasions the defendant cited to the insurance policy and several reports without providing specific page citations. The Court observed that the defendant encumbered the plaintiff’s ability to dedicate appropriate time and resources to responding to the substance of defendant’s assertions, instead obligating the plaintiff to check defendant’s work for them. In addition, the defendant unduly burdened this Court during its review of the summary judgment motion. The defendant attempted to cure these defects by way of a Reply Brief in response to the plaintiffs’ memorandum in opposition, but the Court found such procedure to be improper and denied the motion for that reason. The Court also noted that the defendant improperly used the Reply Brief to raise arguments which had not been raised in the motion for summary judgment, thus finding that those arguments were waived for purposes of the motion. Within its motion, the defendant also attacked the plaintiffs’ expert disclosure on the grounds that it ran afoul of Federal Rule of Evidence 702 and other applicable legal standards. Of note, the defendant did not attack the expert’s qualifications nor did the defendant style the argument as a motion to exclude. The Court found that the expert disclosure complied with the appliable rule and further found it inappropriate at the summary judgment stage to assess the credibility or persuasiveness of the expert’s findings, which are best suited to jury scrutiny at trial through cross-examination. As such, the Court declined to find that the expert’s report failed, as a matter of law, to demonstrate an issue of material fact as to the source of loss to the property’s roof. The motion for summary judgment was denied.
