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.
(c) 2025 Barry Zalma & ClaimSchool, Inc.
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Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
Policy Limits Demand Accepted Settles Claim
Post 5434
Posted on August 26, 2026 by Barry Zalma
See the full video at https://lnkd.in/g-ZtsSgK and at https://lnkd.in/ghMBdYWR
A Contingent Offer Accepted Ends the Dispute
In Farmers Insurance Exchange, a California Reciprocal Insurance Exchange, The Superior Court For The County Of San Bernardino, Kathleen Ann Wood, E087128, California Court of Appeals, (July 9, 2026) Farmers Insurance Exchange insured Doyle Archer under an automobile policy with bodily injury limits of $15,000 per person and $30,000 per accident.
FACTUAL BACKGROUND
Archer rear-ended Kathleen Ann Wood at a red light, causing Wood to assert a bodily injury claim against him. Wood’s counsel sent Farmers a pre-litigation settlement demand offering to resolve Wood’s claim for the available policy limits, stating that if the $100,000 demand exceeded the policy, the offer was for the policy limits.
Farmers timely responded in writing, agreed to pay Wood the $15,000 per-person policy limit, and provided the requested ...
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 ...
Communications with Arson Investigation is Privileged
Post 5488
Posted on September 11, 2026 by Barry Zalma
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional, and ACE’s retained expert concluded that gasoline had been poured in multiple areas and ignited. ACE retained coverage and subrogation counsel, National Subrogation Services, and a cause-and-origin expert ...
Arson for Profit is Ground to Deny Claim
Posted on September 11, 2026 by Barry Zalma
Communications with Arson Investigation is Privileged
Post 5488
ACE Was Not Required To Produce Any Disputed Document Because Each Was Protected By The Attorney-Client Privilege, or The Work-Product Doctrine.
See the full video at and at https://rumble.com/v7fbzvo-arson-for-profit-is-ground-to-deny-claim.html
In Rubesne Resources LLC, a Colorado Limited Liability Company v. ACE Property And Casualty Insurance Company, a Foreign Corporation, Civil Action No. 1:24-cv-02300-DDD-SBP, United States District Court, D. Colorado (August 30, 2026) Rubesne Resources LLC sought insurance coverage from ACE Property and Casualty Company after a January 5, 2024 fire destroyed its business.
South Metro Fire Rescue classified the ignition as intentional.
After reviewing the disputed documents in camera, the court found that each was protected.
LAW
Colorado Revised Statutes § 10-4-1003 requires ...
Referral of Claims to its SIU Is Not Bad Faith
Post 5487
Posted on September 10, 2026 by Barry Zalma
In WIZ Collision, LLC, on behalf of itself and as assignee of Jawara Small, Chester Street LLC, and Aziz Brooks v. GEICO Corporation, No. 25-cv-4201 (KAM)(JAM), United States District Court, E.D. New York (August 28, 2026) Wiz Collision, a New York City auto-body shop, regularly repaired vehicles and submitted insurance claims for customers. It alleged that GEICO repeatedly approved claims and repairs, then referred certain claims to its Special Investigations Unit, stopped issuing payments, and delayed resolution despite ultimately finding no fraud.
Wiz Collision sued on its own behalf and as purported assignee of three customers, asserting contract, good-faith, consumer-protection, and injunctive claims. GEICO removed the case and moved to dismiss under Rule 12(b)(6).
LAW
Under Rule 12(b)(6), a complaint must plead facts supporting a facially plausible claim. Article III standing requires a concrete injury, ...
