Additional Insureds Can Intervene to Try to Defeat Suit to Rescind Policy
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Posted on August 18, 2025 by Barry Zalma
The case involves Accelerant Specialty Insurance Company (“Accelerant”) seeking a declaratory judgment against Big Apple Designers, Inc. (“Big Apple”), declaring that the insurance policies issued by Accelerant to Big Apple are invalid and do not create a duty to defend or indemnify Big Apple in several personal injury actions currently pending in New York State Supreme Court. M&R Construction Group, Inc. (“M&R”) and Continental Indemnity Company (“Continental”) filed a motion to intervene, asserting that M&R is entitled to coverage from Accelerant as an additional insured.
In Accelerant Specialty Insurance Company v. Big Apple Designers, Inc., No. 24-CV-7793 (ARR) (RML), United States District Court, E.D. New York (August 6, 2025) the USDC ruled to allow intervention to dispute the claim of rescission.
BACKGROUND
Indemnification and Duty to Defend:
The court discussed the distinction between an insurer’s duty to defend and its duty to indemnify. The duty to defend is triggered by the initiation of a claim under which the insured may eventually be found liable, while the duty to indemnify is contingent upon a liability finding.
INTERVENTION:
The court granted the motion to intervene by M&R and Continental, allowing them to assert counterclaims against Accelerant. The court found that intervention will promote efficiency and prevent inconsistent judgments to allow proper defense of Accelerant’s claim of rescission.
DECLARATORY JUDGMENT AND RESCISSION:
Accelerant sought a declaratory judgment that the insurance policies were void due to Big Apple’s material misrepresentations in its insurance application. The court discussed the principles of rescission and the impact of misrepresentations on the validity of insurance policies but did not rule on the issue.
COURT’S DECISION:
The court granted the motion to intervene by M&R and Continental, allowing them to assert their proposed counterclaims against Accelerant, with the exception of any claims seeking indemnification. The court declined to exercise jurisdiction over M&R’s claim for indemnification under the Declaratory Judgment Act, as liability has not yet been determined in the underlying Yunga Action.
ANALYSIS
Accelerant’s first and second claims both sougt declaratory judgments that disclaim Big Apple’s entitlement to coverage under the Accelerant Policies. The first claim asserts a breach of contract-that Big Apple’s misrepresentations in its insurance application breached the Accelerant Policies’ contractual warranties.
Intervention as a Matter of Right
To establish intervention as of right pursuant to Rule 24(a)(2), an intervenor must show that (1) the motion is timely; (2) the applicant asserts an interest relating to the property or transaction that is the subject of the action; (3) the applicant is so situated that without intervention, disposition of the action may, as a practical matter, impair or impede the applicant’s ability to protect its interest; and (4) the applicant’s interest is not adequately represented by the other parties.
The decision to permit intervention is not unlimited, however. Intervenors seek a declaration that Accelerant owes a duty to defend and indemnify M&R in the Yunga Action. As the Second Circuit has explained, even in circumstances when a declaratory judgment would serve a useful purpose in clarifying and settling the legal relations in issue, district courts retain broad discretion to decline jurisdiction under the DJA.
An insurer’s duty to defend an additional insured is triggered by the initiation of a claim under which its insured may eventually be found liable. It is not contingent upon a liability finding.
DECLARATORY JUDGMENT AND RESCISSION:
The court concluded that the named insured did not represent the interests of the additional insured in disputing the rescission and so granted leave to intervene.
ZALMA OPINION
Rescission, if granted, puts the parties back to the place where they were before the inception of the policy. The court noted that the named insured was not interested, nor were they trying to defeat the rescission, but that the additional insured who intervened would put in the effort so the court granted intervention and left the issue of rescission for a more detailed consideration. If Accelerant can prove the policy was obtained by fraud or material misrepresentation the policy will be void from its inception and neither the named nor the additional insureds will be allowed defense or indemnification.
You can find a permanent public version of the document here: https://public.fastcase.com/jaEE2PXzRXmZ99jOLMt1Il4uCbo8ZFJ5okOMj4HOg56hikcK0S3TPNmeOPNAlT7%2fWbJynHYMpBbNuraQPgltZA%3d%3d
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Death by Self-Administered Dialysis is Excluded
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Clear & Unambiguous Exclusion Effective
Dana Kleinsteuber died while administering her own dialysis at home. MetLife now agrees that tragedy was an accident but refused to pay because of an exclusion for losses caused or contributed to by the treatment of a physical illness.
In Charles M. Kleinsteuber v. Metropolitan Life Insurance Company, CIVIL No. 23-3494 (JRT/DTS), United States District Court, D. Minnesota (August 19, 2025) the USDC was faced with the interpretation of an exclusion in an ERISA plan.
KEY FACTS:
Dana Kleinsteuber’s Death:
Dana Kleinsteuber, diagnosed with end-stage renal disease (ESRD), was self-administering dialysis at home when she suffered acute blood loss and died. The cause of death was listed as ESRD and natural causes.
Insurance Claims:
Charles Kleinsteuber, Dana’s husband, filed claims for both ...
Not Wise to Attempt Rescission Without Evidence
Post 5173
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Desiree Durga and Justin Durga v. Memberselect Insurance Company, No. 371891, Court of Appeals of Michigan (August 13, 2025) Desiree Durga and Justin Durga (plaintiffs) claimed the insurer wrongfully attempted to rescind an auto policy.
THE ALLEGATIONS
MemberSelect claimed that Desiree Durga’s application for insurance contained a material misrepresentation, it did not produce a copy of the application. In fact defendant admitted the application for insurance no longer exists.
Trial Court Decision
The trial court granted the plaintiffs’ motion for summary disposition on their breach of contract claim and denied the defendant’s cross-motion for summary disposition, which argued that it was entitled to rescind the policy. The court found that the defendant failed to provide clear and convincing evidence of fraud
The court ...
Improper Joinder of Multiple Party Criminal Fraud Case With Co-Defendants Charged with Murder
Post 5172
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Murder Defendants Must be Tried Separately from Fraud Defendants
A case that involved allegations of a years-long scheme by over a dozen individuals to stage fake automobile collisions in the New Orleans metropolitan area and file fraudulent insurance claims and lawsuits based on the staged collisions. The key individuals involved included Cornelius Garrison, who began cooperating with the federal government in 2019 and was subsequently murdered on September 22, 2020.
FACTS
In United States Of America v. Ryan Harris, et al., CRIMINAL ACTION No. 24-105, United States District Court, E.D. Louisiana (July 25, 2025) the USCA dealt with motions to sever some defendants from the massive and admittedly complex case. There are 11 defendants charged with a multi-year conspiracy involving ...
Is Injury in the Course of Self-Defense an Occurrence?
Post 5171
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When There is no Accident the Intentional Acts Exclusion is Irrelevant
The case involves a tragic incident where Kimberly Mollicone was killed during a gunfight between her husband, Matthew Mollicone, and Daniele Giannone. The central issue is whether Giannone’s actions, taken in self-defense, are covered under his State Farm homeowner’s insurance policy.
In State Farm Fire And Casualty Company v. Daniele Giuseppe Giannone; Heidi C. Aull, personal representative for the estate of Kimberly Ann Mollicone, Nos. 24-1264, 24-1265, United States Court of Appeals, Sixth Circuit (August 5, 2025) resolved the dispute.
THE INSURANCE COVERAGE
Although rare in insurance contracts the policy in question provides coverage for the insured’s liability to third parties who are injured ...
Rulings on Motions Reduced the Issues to be Presented at Trial
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CASE OVERVIEW
In Richard Bernier v. State Farm Mutual Automobile Insurance Company, No. 4:24-cv-00002-GMS, USDC, D. Alaska (May 28, 2025) Richard Bernier made claim under the underinsured motorist (UIM) coverage provided in his State Farm policy, was not satisfied with State Farm's offer and sued. Both parties tried to win by filing motions for summary judgment.
FACTS
Bernier was involved in an auto accident on November 18, 2020, and sought the maximum available UIM coverage under his policy, which was $50,000. State Farm initially offered him $31,342.36, which did not include prejudgment interest or attorney fees.
Prior to trial Bernier had three remaining claims against State Farm:
1. negligent and reckless claims handling;
2. violation of covenant of good faith and fair dealing; and
3. award of punitive damages.
Both Bernier and State Farm dispositive motions before ...
ZIFL Volume 29, Issue 10
The Source for the Insurance Fraud Professional
See the full video at https://lnkd.in/gK_P4-BK and at https://lnkd.in/g2Q7BHBu, and at https://zalma.com/blog and at https://lnkd.in/gjyMWHff.
Zalma’s Insurance Fraud Letter (ZIFL) continues its 29th year of publication dedicated to those involved in reducing the effect of insurance fraud. ZIFL is published 24 times a year by ClaimSchool and is written by Barry Zalma. It is provided FREE to anyone who visits the site at http://zalma.com/zalmas-insurance-fraud-letter-2/ You can read the full issue of the May 15, 2025 issue at http://zalma.com/blog/wp-content/uploads/2025/05/ZIFL-05-15-2025.pdf
This issue contains the following articles about insurance fraud:
Health Care Fraud Trial Results in Murder for Hire of Witness
To Avoid Conviction for Insurance Fraud Defendants Murder Witness
In United States of America v. Louis Age, Jr.; Stanton Guillory; Louis Age, III; Ronald Wilson, Jr., No. 22-30656, United States Court of Appeals, Fifth Circuit (April 25, 2025) the Fifth Circuit dealt with the ...
