Not Wise to Attempt Rescission Without Evidence
Post 5173
See the full video at https://lnkd.in/gMsRrCPj and at https://lnkd.in/g2hq9VtW, and at https://zalma.com/blog plus more than 5150 posts.
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.
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The operative dispute concerned State Farm Auto’s motion to exclude or limit opinions from plaintiffs’ insurance-industry expert, Aaron Castillo. Castillo.
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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
Posted on September 14, 2026 by Barry Zalma
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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 ...
Claims of Res Judicata and Procedural Default Defeats Habeas
Post 5543
Posted on November 13, 2026 by Barry Zalma
A Health Insurance Fraud Conviction Rested On Knowingly Submitting Materially False Or Misleading Claim Information With Specific Intent To Defraud.
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FACTS
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Theft of Confidential Information
Post 4581
Posted on November 12, 2026 by Barry Zalma
In People Center, Inc. v. Deel, Inc., et al., No. 25-cv-02576-CRB (LJC), United States District Court, N.D. California (November 7, 2026) People Center, doing business as Rippling, and Deel compete in payroll and human-resource management software. Rippling alleges that Deel and its executives recruited Rippling employee Keith O’Brien, based in Ireland, to disclose confidential information and trade secrets.
THE IRISH SUIT
Rippling sued O’Brien in Ireland and Deel in the United States. O’Brien subsequently retained separate counsel, supplied an affidavit describing the alleged espionage, and entered into a Cooperation Agreement with Rippling. In exchange for his cooperation, Rippling agreed to provide financial assistance, indemnification, and conditional dismissal of the Irish proceedings. The agreement also permitted renewed proceedings or a monetary judgment upon a material breach.
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Post 4580
If A Proposed Amendment Is Not Clearly Futile, Then Denial Of Leave To Amend Is Improper
In John Hancock Life & Health Insurance Company v. Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim, Civ. No. 25-7574 (MAS)(JBD), United States District Court, D. New Jersey (November 6, 2026) John Hancock sued Caring Connections LLC, Arthur Feldheim, and Blime a/k/a Vera Feldheim on June 5, 2025, asserting thirteen claims, including fraud, breach of contract, and aiding and abetting fraud.
On March 26, 2026, this Court entered an order granting Caring Connections’ motion to dismiss and granting in part and denying in part the Feldheims’ motion to dismiss. The dismissed claims were dismissed without prejudice, and John Hancock timely sought leave to amend.
They also argued that the New ...
