In American General Life Ins. Co. v. Schoenthal Family, LLC, the U.S. Court of Appeals for the Eleventh Circuit affirmed summary judgment in favor of the plaintiff life insurer. The case arose after the death of the insured in 2005, when the plaintiff insurer conducted a contestable claim investigation of the $7,000,000 life policy it issued less than two years earlier. The investigation revealed that the insured materially misrepresented his net worth as $10,700,000, with annual income of $150,000, when in fact his net worth was approximately $160,000, and his annual income $7,200. The company concluded that, had the insured been truthful, it would have declined to issue a policy in the amount requested. It then denied the beneficiaries’ claim, and filed an action in federal district court, naming the beneficiaries as defendants and seeking rescission of the policy based on the insured’s misrepresentations.
Both parties submitted expert testimony to the district court, and American General moved for summary judgment based on the undisputed facts. The district court admitted American General’s expert testimony, excluded the beneficiaries’ expert testimony, and granted summary judgment to American General. The beneficiaries appealed, claiming that their expert’s testimony was improperly excluded, the plaintiff’s expert testimony was improperly admitted, and summary judgment should have been denied because factual disputes remained pertaining to the materiality of the misrepresentations.
The Eleventh Circuit affirmed in all respects. It held that the decisions to admit and exclude the respective experts’ testimony were not an abuse of discretion, because American General’s expert was amply qualified to testify as to industry standards, and because the beneficiaries’ expert’s testimony, even if admitted, was equivocal and did not directly refute plaintiff’s expert’s testimony. The court held that summary judgment was properly granted on the rescission claim because (1) the undisputed expert testimony supported the company’s decision; and (2) the decision was proper according to widely recognized industry guidelines, which the beneficiaries themselves had described as a model of reasonable insurance practices.