Additional Insureds Can Intervene to Try to Defeat Suit to Rescind Policy
Post 5170
See the full video at https://lnkd.in/gYfHuADV and at https://lnkd.in/gnw6FFdX, and at https://zalma.com/blog plus more than 5150 posts.
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
(c) 2025 Barry Zalma & ClaimSchool, Inc.
Please tell your friends and colleagues about this blog and the videos and let them subscribe to the blog and the videos.
Subscribe to my substack at https://barryzalma.substack.com/subscribe
Go to X @bzalma; Go to Barry Zalma videos at Rumble.com at https://rumble.com/account/content?type=all; Go to Barry Zalma on YouTube- https://www.youtube.com/channel/UCysiZklEtxZsSF9DfC0Expg; Go to the Insurance Claims Library – https://lnkd.in/gwEYk.
The Largest Residential Burglary of All Time
Post 5407
Fraud & the Fear of Bad Faith Suits
Posted on July 22, 2026 by Barry Zalma
See the full video at https://lnkd.in/gWQQEySW and at https://lnkd.in/gyhdK6wv
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the Perpetrators than any Other Crime.
After ...
Chutzpah is not Enough
Post 5397
Posted on July 20, 2026 by Barry Zalma
See the video and at https://lnkd.in/gNUs2XzT and at https://lnkd.in/g2MawyzX
Magistrate Issues a Search Warrant if there is a Fair Probability that Contraband or Evidence of a Crime will be Found in a Particular Place.
In United States Of America v. Frank Suess, et al., CRIMINAL No. 3:24-308, United States District Court, M.D. Pennsylvania (July 16, 2026) a federal grand jury indicted Frank Suess, Melissa Driscoll, and others in a 55-count health care fraud and anti-kickback prosecution arising from an alleged scheme involving medically unnecessary prescription “foot baths.”
As part of the investigation, the FBI obtained an August 19, 2022 warrant to search Driscoll’s Sterling Pharmacy Yahoo email account for emails from January 1, 2018 through December 31, 2020. Driscoll moved to suppress the resulting evidence, arguing that the warrant lacked probable cause, was overbroad, and rested on material misstatements and omissions.
LAW:
The ...
Fraud Shouldn’t Pay
Post 5396
See the video and at https://rumble.com/v7ctgmq-the-great-jewel-theft.html at https://youtu.be/aRbQ2sJfGwA
This is a Fictionalized True Crime Story of Insurance Fraud explaining why Insurance Fraud is a “Heads I Win, Tails You Lose” situation for Insurers. The story is one of a collection designed to help to Understand How Insurance Fraud in America is Costing Everyone who Buys Insurance Thousands of Dollars Every year and Why Insurance Fraud is Safer and More Profitable for the ¬¬¬Perpetrators than any Other Crime.
The Insured purchased, for the first time in his life, a policy of Personal Articles Floater Insurance (PAF) scheduling $125,000 worth of ladies jewelry. He advised the insurer that the jewelry was always kept in a class E safe at his residence. He also told the insurer that he was employed full time as the owner of a gasoline service station and that he had never been canceled or suffered a previous loss.
One month after the policy was ...
Day Care Owner Loses Subsidies Because She Criticized State
Post 5421
Posted on August 11, 2026 by Barry Zalma
First Amendment Right Will be Allowed to Go to Trial
In Betsey J. Grant v. Maine State Department Of Heath And Human Services, No. 1:25-cv-00490-JAW, United States District Court, D. Maine (August 6, 2026), Betsey J. Grant, a licensed childcare provider and operator of Tiny Tikes Daycare in Trenton, Maine, sued Maine DHHS and several employees after she publicly criticized DHHS before Maine’s Government Oversight Committee and alleged that officials retaliated against her.
She claimed DHHS imposed and extended a conditional license, published stigmatizing information, interfered with subsidies and program funding, removed her from a food program, rescinded an expansion grant, and used biased or falsified evidence in licensing proceedings. Following the March 10, 2023, GOC testimony, Ms. Grant alleges that foster children's subsidies (approximately $30,000) were withheld; she was removed from the ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units. After an underlying personal injury action was filed, Union Mutual determined that the property actually contained three apartment units and rescinded the policies on the ground that the defendants had made a material misrepresentation in the applications.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true ...
Rescission for Material Misrepresentation
Post 5418
Posted on August 5, 2026 by Barry Zalma
An Insurer May Rescind An Insurance Policy Where The Applicant Made A Material Misrepresentation In The Application.
In Union Mutual Fire Insurance Company v. 844 Knickerbocker, LLC, et al. No. 2024-10359, Index No. 602824/22, 2026 NY Slip Op 04789, Supreme Court of New York, Second Department (July 29, 2026) Union Mutual Fire Insurance Company issued commercial insurance policies to 844 Knickerbocker, LLC, and Sanjaya Mallick based on applications stating that the insured property contained two apartment units.
LAW:
A misrepresentation is material if the insurer would not have issued the same policy, or would have issued it only on different terms, had the true facts been disclosed. To establish materiality as a matter of law, the insurer must submit documentation of its underwriting practices, such as manuals, guidelines, bulletins, or rules addressing similar risks.
DISCUSSION/ANALYSIS:
As a result, the...
