The Second Circuit Court of Appeals recently affirmed a United States District Court for the District of Connecticut’s judgment awarding summary judgment for an insurer seeking to rescind a life insurance policy on the basis that the policy application contained material misrepresentations of fact. Northwestern Mut. Life Ins. Co. v. Gil, 09-cv-0948; 09-cv-0959 (2nd Cir. Nov. 3, 2009), affirming Northwestern Mut. Life Inis. Co. v. Gil, 07-cv-00303 (D. Conn. Feb. 5, 2009).
The defendant insurer issued a $15 million life insurance policy to the decedent. According to the district court’s decision, after the decedent’s death, the insurer learned of numerous material misrepresentations of fact contained in the policy application, and gave notice to the administrator of decedent’s estate that the insurer sought rescission of the life insurance policy. The insurer brought a lawsuit in district court in Connecticut to enforce the equitable remedy of rescission. The insurer moved for summary judgment on its rescission claim, arguing that it was entitled to summary judgment because the decedent made material misrepresentations in his medical questionnaire submitted with his policy application. The estate argued against summary judgment.
The district court rejected the estate’s argument that the policy should not be rescinded because, even if the application contained material misrepresentations of fact, they were not attributable to the decedent and were filled in by his agent. The district court held that, even assuming arguendo that the decedent had no knowledge of any misstatements at the time he signed the applications, the insurer would still be entitled to rescind the policy because the decedent ratified the false statements.
The court also rejected the estate’s argument that the policy should not be rescinded because the material misrepresentations were not material to the cause of the decedent’s death, which was homicide. The district court held that Connecticut state court precedent is clear that matters of special inquiry requiring a “yes” or “no” answer are “conclusively deemed material” and therefore the decedent’s misstatements are grounds for rescission.
Finally, the district court rejected the estate’s argument that the insurer had notice through its agent of the falsity of the decedent’s statements and therefore did not rely upon them. The district court reasoned that the insurer “had no way of learning of the falsity of [decedent’s] statements because [decedent] concealed his medical and psychiatric history from every person with a duty to report to” the insurer. Accordingly, the district court held that the insurer was not charged with knowledge of the falsity of the statements and rescission must be granted. On appeal, the Second Circuit Court of Appeals affirmed summary judgment in favor of the insurer “for substantially the reasons stated in the district court’s opinion.”