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About an Essential Element of the Rescission Remedy   

https://zalma.com/blog 

Every rescission requires proof that the facts misrepresented or  concealed were material.  Different courts have characterized the element of materiality  differently.  For example, in Connecticut:  A fact is material . . . when . . . it would so increase the degree or  character of the risk of the insurance so as to substantially influence  its issuance, or substantially affect the rate of premium.  Davis-Scofield v. Agricultural Insurance Co., 109 Conn. 673 at p. 678,  145 A. 38 at p. 40 (1920). 

 In Indiana:  The representations of the insured are material to the risk if a  truthful answer would lead the insurer to decline issuing insurance or  charge a higher premium.  Holtzclaw v. Bankers MutualInsurance Co., 448  N.E. 2d 55 at p. 58 (Ind. App. 3d Dist., 1983).  Imperial Casualty and Indemnity Co. v. Sogomonian, 198 Cal. App. 3d 169,  243 Cal. Rptr. 639 (Cal.App.Dist.2 02/04/1988).  Although not relevant to the issues here presented, Imperial in the same  complaint also sought damages from another defendant, Larklo  Dersarkisian, dba Derian Insurance Agency (Derian), for alleged  negligence and fraud committed by said defendant in the preparation and  submission of the defendants\\u2019 June 7, 1982, application to Imperial.  That claim was not affected by the award of summary judgment against the  defendants and is still awaiting trial in this action. In declarations  filed in his successful opposition to Imperial\\u2019s contemporaneous motion  for summary judgment against him, Derian stated that he had prepared the  application based upon information given him by the defendants.  Our conclusion here should not result in an assumption by insurers that  policy liability can, with impunity, be avoided or delayed by assertion  of a claim for rescission. That is a tactic which is fraught with peril.  Where no valid ground for rescission exists, the threat or attempt to  seek such relief may itself constitute (1) a breach of the covenant of  good faith and fair dealing which is implied in the policy (Fletcher v.  Western National Life Ins. Co. (1970) 10 Cal. App. 3d 376, 392, 401 [89  Cal. Rptr. 78, 47 A.L.R.3d 286]) and/or (2) the commission of one or  more of the unfair claims settlement practices proscribed by Insurance  Code section 790.03, subdivision (h). (Emphasis added)  

Mr. Sogomonian was not a nice man. He became, among others, the subject  of hearings before the Congress of the United States, in S. Hrg.  104-604, May 15, 1996, Russian Organized Crime in the United States, [http://www.archive.org/stream/russianorganized00unit/russianorganized00unit_djvu.txt]  where some of the testimony provided included that from U.S. Customs.  Had the insurers known about the information reported to the U.S. Senate  they would have been more careful in their dealings with Mr.  Sogomonian. The fact that the suit was resolved by proof of rescission  eliminated the need for evidence of criminal activity and arson.  The author testified in the trial which, in 40 years as a litigator and  expert witness, is the first and only time he observed three armed  bailiffs in the courtroom who never took their hands off their weapons.  In addition, after testimony was completed, the bailiff offered to  escort the author safely to the elevator;.  

\\xa9 2021 \\u2013 Barry Zalma