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 ultimately affirmed the trial court’s decision, granting judgment in favor of the plaintiffs in the amount of $82,476.04.
LAW AND ANALYSIS
Insurance policies are contracts and, in the absence of an applicable statute, are subject to the same contract construction principles that apply to any other species of contract.
Seeking Policy Rescission Based Upon Alleged Fraud In The Application Or Procurement Process
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
The plaintiffs alleged that the defendant breached their automobile insurance contract by rescinding their policy based on an allegation of fraudulent misrepresentation in the application process. The rescission was attempted because plaintiff Justin Durga had two or more substance abuse convictions in seven years, his Michigan operator’s license was mandatorily revoked from June 9, 2007 “until requirements have been met.”
While defendant MemberSelect claimed that Desiree Durga’s application for insurance contained a material misrepresentation, it did not produce a copy of the June 2012 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 and that the plaintiffs had disclosed that Justin Durga did not have a valid driver’s license. The court also noted that the defendant’s reliance on underwriting guidelines that were not made available to the plaintiffs was not sufficient to support their claim .
The court ultimately affirmed the trial court’s decision, granting judgment in favor of the plaintiffs in the amount of $82,476.04.
LAW AND ANALYSIS
Insurance policies are contracts and, in the absence of an applicable statute, are subject to the same contract construction principles that apply to any other species of contract. An insurance policy must be enforced in accordance with its terms, which are given their commonly used meaning if not defined in the policy
Seeking Policy Rescission Based Upon Alleged Fraud In The Application Or Procurement Process
MemberSelect asserted the common law defense of fraudulent misrepresentation in plaintiff’s application for or procurement of the subject automobile insurance policy allowed it rescission of the policy ab initio in order to avoid its contractual obligations to pay on plaintiffs’ claim.
Because a claim to rescind a transaction is equitable in nature, it is not strictly a matter of right but is granted only in the sound discretion of the court.
The insurer, as the party asserting entitlement to the defense of fraudulent misrepresentation, bears the burden of proving the elements of rescission. At best, the question seeking license status of a proposed insured was ambiguous, such that it is construed against the drafter in favor of coverage. As a result the representation made by the plaintiffs did not constitute a false representation for purposes of establishing that prima facie element of a fraud in the application rescission claim.
DEFENDANT IS NOT ENTITLED TO RESCISSION
When people seek to procure insurance by making a clear material misrepresentation to the insurance company, thereby entitling the insurance carrier to rescind the subject policies of insurance, the insurer must produce admissible evidence of the misrepresentation. Not only has defendant not provided clear and convincing evidence of fraud in this case defendant provided no evidence of fraud. Therefore, it was not entitled to rescission.
ZALMA OPINION
Rescission is an equitable remedy that seeks to deal fairly with both parties to the insurance contract. The insurer claimed that the Durgas lied on the application which they could not produce because it did not exist. An insurer seeking rescission must do so fairly and in good faith with clear and unambiguous evidence of the misrepresentation. The insurer failed when it was unable to produce the allegedly false application.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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150 Months in Prison for Tax Fraud
Post 4846
Posted on September 17, 2026 by Barry Zalma
See the full video at https://lnkd.in/g8rh3JBX and https://lnkd.in/gmkdy-9C, In United States Of America v. Thomas Addaquay, Nos. 25-10609, 25-10611, United States Court of Appeals, Eleventh Circuit (September 9, 2026) the Eleventh Circuit affirmed all challenged convictions, the 150-month aggregate sentence, and the challenged $4,123,474.55 restitution award.
FACTS
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FACTS
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Post 5489
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Luis Manuel Garcia Salcedo, resulted in a $6 million settlement. Non-party Jose Hernandez allegedly worked as an assistant manager at Subin, operated Hernandez Associates, and owned litigation-funding companies that shared office space with Subin and provided services to its clients.
After Great American ...
Plaintiff’s Reading of the Policy is Plaintiff’s Reasonable Allegations
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Post 4868
CLASS ACTION THAT STATES A SIMPLE CLEAR AND PLAUSIBLE CAUSE OF ACTION SURVIVES
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She pleaded two theories: an “overcharge” theory and an “underpayment of interest” theory asked the Court to take judicial notice of historical Federal Funds Effective Rates.
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BLOCKCHAIN FRAUD
Mr. Madden was more than football. He was working to establish a program called “Fraud Protection Systems, Methods, and Computer Programs for Blockchain Financial Transactions.”
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Post 4866
Posted on October 21, 2026 by Barry Zalma
In Chad Lightfoot, et al. v. Progressive Direct Insurance Company, et al., Civil Action No. 26-434, United States District Court, E.D. Louisiana (October 9, 2026) Chad Lightfoot was involved in an Orleans Parish automobile accident in 2011 and filed claims with several insurers, including Progressive.
After a related civil dispute, Progressive counsel allegedly submitted a false affidavit stating that Lightfoot had fraudulently received a $50,000 payment. A New Orleans police detective relied on the affidavit to obtain an arrest warrant, and Louisiana State Police Lieutenant Alan Arcana allegedly reported that Lightfoot had received the payment. Lightfoot was arrested in 2015 and charged with theft, insurance fraud, and perjury.
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