Prior Conviction for Insurance Fraud Material to Decision of Insurer
Post 4857
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Jose Palma appealed the trial court’s summary judgment in favor of Allied Trust Insurance Co that found a lie about a prior insurance fraud conviction was a material misrepresentation causing the insurer to rescind the policy.
In Jose Palma v. Allied Trust Insurance Co., No. 14-23-00063-CV, Court of Appeals of Texas, Fourteenth District (August 13, 2024) the Court of Appeals agreed with the insurer.
BACKGROUND
Palma purchased an insurance policy for his home with Allied. During the policy period, there was a fire at Palma’s home. Palma submitted an insurance claim under the policy only to be faced with the discover of a prior conviction for insurance fraud that was not disclosed on his application for insurance. Allied rescinded the policy stating that Palma’s misrepresentation rendered the policy void and that it would not have insured Palma had Palma disclosed his prior insurance fraud conviction.
Palma sued Allied for breach of contract, and a litany of bad faith charges. Allied answered and asserted the defense that it rescinded the policy because of Palma’s “material misrepresentation” among other affirmative defenses.
THE MOTION FOR SUMMARY JUDGMENT
Allied moved for summary judgment concluding that the policy issued to Palma is void due to Palma’s material misrepresentation in the policy application that he was never convicted of insurance fraud. Allied argued that Palma misrepresented material facts and in support of these elements, Allied submitted five exhibits: the policy application; the policy; the “DocuSign certification of completion;” correspondence with insurance agent; and Palma’s criminal conviction for insurance fraud.
The trial court rendered a final summary judgment in favor of Allied.
Misrepresentation in Insurance Application
Palma argued that whether a misrepresentation is material is a question of fact both under the Insurance Code and common law and, therefore, summary judgment was improper. Allied countered that there was ample, undisputed evidence in the record to show that Palma’s misrepresentation was material and no evidence to the contrary.
ANALYSIS
The policy application included a statement that Palma agreed the policy would be void “if such information is false or misleading in any way that would affect the premium charged or eligibility of the risk based on company underwriting guidelines.”
The purpose of a summary judgment is to provide a method of summarily terminating a case when it clearly appears that only a question of law is involved and that there is no genuine issue of fact. Various elements of claims may be a “question of fact” where there is an actual, genuine dispute between the parties about the facts. However, when no genuine issues of material facts exist, a court may properly grant summary judgment because there are no facts to find.
Allied submitted its undisputed evidence establishing its affirmative defense. Palma did not respond with evidence to dispute the facts as stated by Allied.
Put simply, the plain language of the statute indicates that a policy provision rendering the policy void or voidable for any false statement is a defense if the insurer demonstrates the misrepresentation was material to the risk or contributed to the contingency or event on which the policy became payable or due. None of these requirements obviates the insurer’s ability to obtain summary judgment on its defense when the facts are undisputed.
ZALMA OPINION
A convicted insurance criminal lied on an application for insurance, obtained a policy based on the lie, only to have his home catch fire and burn resulting in a major claim. The insurer learned of the conviction by searching public records and, based on the lie, rescinded the policy from its inception because of the material misrepresentation about the plaintiff’s criminal record and prior conviction for insurance fraud. The court affirmed the rescission.
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Concealing a Weapon Used in a Murder is an Intentional & Criminal Act
Post 5002
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In Howard I. Rosenberg; Kimberly L. Rosenberg v. Chubb Indemnity Insurance Company Howard I. Rosenberg; Kimberly L. Rosenberg; Kimberly L. Rosenberg; Howard I. Rosenberg v. Hudson Insurance Company, No. 22-3275, United States Court of Appeals, Third Circuit (February 11, 2025) the Third Circuit resolved whether the insurers owed a defense for murder and acts performed to hide the fact of a murder and the murder weapon.
FACTUAL BACKGROUND
Adam Rosenberg and Christian Moore-Rouse befriended one another while they were students at the Community College of Allegheny County. On December 21, 2019, however, while at his parents’ house, Adam shot twenty-two-year-old Christian in the back of the head with a nine-millimeter Ruger SR9C handgun. Adam then dragged...
Renewal Notices Sent Electronically Are Legal, Approved by the State and Effective
Post 5000
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Washington state law allows insurers to deliver insurance notices and documents electronically if the party has affirmatively consented to that method of delivery and has not withdrawn the consent. The Plaintiffs argued that the terms and conditions statement was not “conspicuous” because it was hidden behind a hyperlink included in a single line of small text. The court found that the statement was sufficiently conspicuous as it was bolded and set off from the surrounding text in bright blue text.
In James Hughes et al. v. American Strategic Insurance Corp et al., No. 3:24-cv-05114-DGE, United States District Court (February 14, 2025) the USDC resolved the dispute.
The court’s reasoning focused on two main points:
1 whether the ...
Rescission in Michigan Requires Preprocurement Fraud
Post 4999
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Lie About Where Vehicle Was Garaged After Policy Inception Not Basis for Rescission
This appeal turns on whether fraud occurred in relation to an April 26, 2018 renewal contract for a policy of insurance under the no-fault act issued by plaintiff, Encompass Indemnity Company (“Encompass”).
In Samuel Tourkow, by David Tourkow v. Michael Thomas Fox, and Sweet Insurance Agency, formerly known as Verbiest Insurance Agency, Inc., Third-Party Defendant-Appellee. Encompass Indemnity Company, et al, Nos. 367494, 367512, Court of Appeals of Michigan (February 12, 2025) resolved the claims.
The plaintiff, Encompass Indemnity Company, issued a no-fault insurance policy to Jon and Joyce Fox, with Michael Fox added as an additional insured. The dispute centers on whether fraud occurred in...
Insurance Fraud Leads to Violent Crime
Post 4990
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CRIMINAL CONDUCT NEVER GETS BETTER
In The People v. Dennis Lee Givens, B330497, California Court of Appeals, Second District, Eighth Division (February 3, 2025) Givens appealed to reverse his conviction for human trafficking and sought an order for a new trial.
FACTS
In September 2020, Givens matched with J.C. on the dating app “Tagged.” J.C., who was 20 years old at the time, had known Givens since childhood because their mothers were best friends. After matching, J.C. and Givens saw each other daily, and J.C. began working as a prostitute under Givens’s direction.
Givens set quotas for J.C., took her earnings, and threatened her when she failed to meet his demands. In February 2022, J.C. confided in her mother who then contacted the Los Angeles Police Department. The police ...
Police Officer’s Involvement in Insurance Fraud Results in Jail
Post 4989
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Von Harris was convicted of bribery, forgery, and insurance fraud. He appealed his conviction and sentence. His appeal was denied, and the Court of Appeals upheld the conviction.
In State Of Ohio v. Von Harris, 2025-Ohio-279, No. 113618, Court of Appeals of Ohio, Eighth District (January 30, 2025) the Court of Appeals affirmed the conviction.
FACTUAL BACKGROUND
On January 23, 2024, the trial court sentenced Harris. The trial court sentenced Harris to six months in the county jail on Count 15; 12 months in prison on Counts 6, 8, 11, and 13; and 24 months in prison on Counts 5 and 10, with all counts running concurrent to one another for a total of 24 months in prison. The jury found Harris guilty based on his involvement in facilitating payments to an East Cleveland ...
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To Dispute an Arbitration Finding Party Must File Dispute Within 20 Days
Post 4988
EXCUSABLE NEGLECT SUFFICIENT TO DISPUTE ARBITRATION LATE
In Howard Roy Housen and Valerie Housen v. Universal Property & Casualty Insurance Company, No. 4D2023-2720, Florida Court of Appeals, Fourth District (January 22, 2025) the Housens appealed a final judgment in their breach of contract action.
FACTS
The Housens filed an insurance claim with Universal, which was denied, leading them to file a breach of contract action. The parties agreed to non-binding arbitration which resulted in an award not
favorable to the Housens. However, the Housens failed to file a notice of rejection of the arbitration decision within the required 20 days. Instead, they filed a motion for a new trial 29 days after the arbitrator’s decision, citing a clerical error for the delay.
The circuit court ...
