Julien Pinette and Norma Pinette v. Assurance Company of America, 52 F.3d 407, 2d Cir. (1995)

52 F.
3d 407
Julien PINETTE and Norma Pinette, Plaintiffs-Appellants

v.
ASSURANCE COMPANY OF AMERICA, DefendantAppellee.
No. 739, Docket 94-7622.
United States Court of Appeals,

Second Circuit.
Argued Nov. 16, 1994.
Decided April 7, 1995.
David S. Grossman, Brookfield, CT, for plaintiffs-appellants.

Linda L. Morkan, Robinson & Cole, Hartford, CT, for defendant-appellee.
Before: OAKES, ALTIMARI, and WALKER, Circuit Judges.
WALKER, Circuit Judge:
Julien and Norma Pinette (the "Pinettes") brought this diversity action against
Assurance Company of America ("Assurance") seeking payment under a
homeowners insurance policy after their house was completely destroyed by
fire. Plaintiffs appeal from an order of the United States District Court for the
District of Connecticut (Alfred V. Covello, Judge ) granting summary judgment
on the defendant's counterclaim for rescission of the policy due to plaintiffs'
material misrepresentation in the insurance application as to their prior loss
history. On appeal, plaintiffs contend that they did not make a
misrepresentation since the insurance agent filled in the information regarding
loss history and Julien Pinette signed the application without reading it; that any
misrepresentation they may have made was not material as a matter of law;
and, finally, that because any misrepresentation was made not to defendant but
to defendant's parent corporation, it cannot be used by defendant to avoid the
contract.
For the reasons that follow, we affirm the judgment of the district court.
BACKGROUND
3
In early August, 1990, plaintiff Julien Pinette contacted Stephen Cooper, an

insurance agent with North American Underwriters of Bloomfield, Connecticut,
to obtain fire insurance for the Pinettes' residence. During the telephone
conversation, Cooper asked for and received from Pinette much of the
information necessary to prepare the application.
On August 10, 1990, Pinette and Cooper met in Cooper's office and discussed
the policy further. Cooper then presented Pinette with a completed application
and asked him to sign it. In the space marked "Company/Plan," Cooper had
written "Maryland Casualty/Pref," referring to a policy with preferred rates
offered by the Maryland Casualty Company ("Maryland Casualty"). Pinette
signed the application and gave Cooper a check made out to Maryland Casualty
for the first year's premium.
The application filled out by Cooper and signed by Pinette contained two
incorrect responses. In the section labelled "loss history" the word "none" was
written. In fact, the home that the Pinettes were seeking to insure had been
rebuilt after it had been destroyed by fire in May of 1988. In response to
question 9, which asked if "[a]ny insurance [had been] declined, cancelled, or
non-renewed" in the last three years, the box below the answer "no" was
marked. In July of 1990, however, a previous insurance policy of the Pinettes
had been cancelled on the ground that their loss history prevented them from
meeting that company's underwriting standards.
Shortly thereafter, Pinette received a copy of the policy, which covered the
period from August 25, 1990 through August 25, 1991. The policy was issued
by the defendant Assurance, a wholly owned subsidiary of Maryland Casualty.
On December 27, 1990, the Pinettes' home was again completely destroyed by
fire. A few days later, Maryland Casualty advanced the Pinettes $20,000 for
emergency living expenses. It denied further coverage for the fire, however, on
the ground that the two incorrect answers on the Pinettes' application
constituted material misrepresentations that rendered the contract voidable.
Plaintiffs initially sued Maryland Casualty in Connecticut Superior Court on

October 29, 1991. Maryland Casualty later removed the case to the United
States District Court for the District of Connecticut and substituted its
subsidiary, Assurance, as the proper defendant. In its answer, Assurance
counterclaimed for rescission based on plaintiffs' material misrepresentations.
Thereafter both sides moved for summary judgment. On April 13, 1994, the
district court denied plaintiffs' motion for summary judgment and granted
summary judgment in favor of defendant. Plaintiffs appealed.
DISCUSSION
9
Under Connecticut law, an insurance policy may be voided by the insurer if the
applicant made "[m]aterial representations ..., relied on by the company, which
were untrue and known by the assured to be untrue when made." State Bank &
Trust Co. v. Connecticut Gen. Life Ins. Co., 109 Conn. 67, 72, 145 A. 565, 567
(1929). To prevail on its defense, Assurance must therefore prove three
elements: (1) a misrepresentation (or untrue statement) by the plaintiff which
was (2) knowingly made and (3) material to defendant's decision whether to
insure.
10
Plaintiffs raise three principal arguments on appeal: first, that because the
insurance agent put the incorrect information in the application without
plaintiffs' knowledge, plaintiffs did not make a "knowing" misrepresentation;
second, that any misrepresentations made were not material; and finally, that
Assurance cannot obtain rescission for a material misrepresentation made to its
parent, Maryland Casualty. If any of these arguments raises a genuine issue of
material fact, summary judgment for defendant should not have been granted.
See Fed.R.Civ.P. 56(c); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256,
106 S.Ct. 2505, 2514, 91 L.Ed.2d 202 (1986). We address each contention in
turn.
I. "Knowing Misrepresentation"
11
12
For a material misrepresentation to render a contract voidable under

Connecticut law, the misrepresenting party must know that he is making a false
statement. "Innocent" misrepresentations--those made because of ignorance,
mistake, or negligenceare not sufficient grounds for rescission. See Middlesex
Mut. Assurance Co. v. Walsh, 218 Conn. 681, 691-92, 590 A.2d 957, 963
(1991). According to plaintiffs' version of the events, Julien Pinette informed
the insurance agent about the previous loss of their residence during their initial
phone conversation in early August, 1990. Cooper then filled in the incorrect
information on his own, and Julien Pinette failed to detect the error because he
neglected to read the application before signing it. Under these circumstances,
the Pinettes contend, there is at least a genuine issue of material fact as to
whether the misrepresentations were innocent rather than knowing.
13
When Connecticut courts speak of "innocent" misrepresentations, they
generally have in mind the situation in which the applicant does not know that
the information he is providing is false. See, e.g., Middlesex Mut., 218 Conn.
at 692, 590 A.2d at 963-64 ("[I]n order to constitute a misrepresentation
sufficient to defeat recovery on an automobile insurance policy, a material
representation on an application for such a policy must be known by the
insured to be false when made."); Lazar v. Metropolitan Life Ins. Co., 290
F.Supp. 179, 181 (D.Conn.1968) (finding an applicant's misrepresentations on
an application not "knowing" as a matter of law where the agent stated that the
false answers were not within the scope of the question). Plaintiffs raise a
different point: they argue that, even though they knew the information to be
false, they did not knowingly represent it to the defendant.
14
Under Connecticut law, however, a person may not claim that a

misrepresentation is "innocent" solely because the person failed to read the
application before signing it. "The law requires that the insured shall not only,
in good faith, answer all the interrogatories correctly, but shall use reasonable
diligence to see that the answers are correctly written." Ryan v. World Mut.
Life Ins. Co., 41 Conn. 168, 172 (1874) (holding the defendant not to be liable
under an insurance policy when plaintiff claimed that she gave defendant's
agent the right information but he recorded the wrong answer). Thus, at least in
Connecticut, an applicant for insurance has the affirmative duty "to inform
himself of the content of the application signed by him, under penalty of being
bound by the representations as recorded therein." 7 George J. Couch,
Cyclopedia of Insurance Law Sec. 35:231, at 358 (2d ed. 1985) [hereinafter
Cyclopedia of Insurance Law] (citing Ryan ).
15
This rule was followed in Kelly v. John Hancock Mutual Life Ins. Co., 131
Conn. 106, 38 A.2d 176 (1944). In Kelly, the plaintiff's mother applied for life
insurance and signed an application stating that she was in sound health. The
plaintiff conceded the statement's falsity, but claimed that the agent had
completed the application and that her mother had signed it without reading it.
The court permitted the fraudulent misrepresentation defense, stating that "
[u]nder these circumstances the assured was under a duty to know the contents
of the application signed by her. Failure to do so was inexcusable negligence."
131 Conn. at 110, 38 A.2d at 177. In Bahr v. Prudential Ins. Co., 5
Conn.Cir.Ct. 620, 624-28, 260 A.2d 422, 424-26 (1969), the court upheld a
judgment setting aside a verdict in favor of the plaintiff where the plaintiff
failed to read the application before signing it even though the plaintiff could
not speak or read English.
16
There is an exception to this rule in Connecticut if the insurance agent induces

the applicant to sign the application without reading it. See Lewis v. John
Hancock Mut. Life Ins. Co., 443 F.Supp. 217, 219 (D.Conn.1977) ("If through
the conduct of defendant's agent, [plaintiff] failed to read over the questions and
answers in the applications, he would in effect have made no
misrepresentations at all...."). In order to avail themselves of this exception,
however, the Pinettes must offer some evidence that Cooper actively
encouraged Julien Pinette to sign the application without reviewing the
answers. See Kelly, 131 Conn. at 110, 38 A.2d at 177 (without evidence of
"fraud or misrepresentation on the part of the agent," the applicant was charged
with knowledge of the contents of the signed application). That Pinette supplied
the correct information to the agent, who then wrote down the wrong answer, is
insufficient standing alone to relieve plaintiffs of responsibility for the
misrepresentation. See Bahr, 5 Conn.Cir.Ct. at 627-28, 260 A.2d at 426; Ryan,
41 Conn. at 171-72.
17
The record in this case is bare of any allegations of active inducement on the
part of Cooper. In fact, plaintiffs admit that Julien Pinette's failure to review the
application was due to his own "carelessness." Under these circumstances, the
district court correctly held that plaintiffs made a knowing misrepresentation as
to their loss history.
II. Materiality
18
Plaintiffs next contend that the district court erred in finding their
misrepresentations material because Assurance has not shown that it would
have denied them coverage had it known of their prior loss history. We
disagree.
19
Under Connecticut law, a misrepresentation is material "when, in the judgment

of reasonably careful and intelligent persons, it would so increase the degree or
character of the risk of the insurance as to substantially influence its issuance,
or substantially affect the rate of premium." Davis Scofield Co. v. Agricultural
Ins. Co., 109 Conn. 673, 678, 145 A. 38, 40 (1929); see also Pacific Indem. Co.
v. Golden, 985 F.2d 51, 56 (2d Cir.1993).
20
Common sense tells us that an applicant's prior loss history is material to a

reasonable insurance company's decision whether to insure that applicant or
determination of the premium. Connecticut courts have evaluated similar
misrepresentations and found them material as a matter of Connecticut law.
See, e.g., Lazar, 290 F.Supp. at 180 ("Under Connecticut law, a
misrepresentation in the application for life or health insurance concerning the
applicant's prior medical history is material to the risk as a matter of law...."
(footnote omitted)). Furthermore, Connecticut caselaw strongly suggests that an
answer to a question on an insurance application is presumptively material. See

State Bank & Trust, 109 Conn. at 70, 145 A. at 566 (Where a misrepresentation
is in answer to a question on an application, inquiry and answer are tantamount
to agreement that the matter is material.); see also Cyclopedia of Insurance Law
Sec. 35:140, at 237 & n. 2 (citing State Bank & Trust ). Thus, in addition to the
character of the information misrepresented, the fact that the application in this
case specifically requested the information supports the district court's finding
of materiality.
21
Assurance also submitted ample evidence that loss history plays a critical role
in its own decision whether to provide insurance. The guidelines for its
preferred policy state that an applicant that has suffered any loss within the
previous three years (aside from one "Act of Nature" loss) should be denied
coverage. In addition, Maryland Casualty's Underwriting Manager submitted an
affidavit stating that Assurance would have turned the plaintiffs down had they
known of the earlier fire loss. This uncontradicted evidence further confirms
our conclusion that the district court's finding of materiality was not erroneous.
III. To Whom the Misrepresentation Was Made

22
The Pinette's final argument on appeal is that Assurance may not rescind the
contract on the basis of material misrepresentations made to Maryland
Casualty. We agree with the district court that this contention lacks merit.
23
The cases cited by plaintiffs do not hold, as they claim, that a wholly owned
subsidiary that carries an insurance policy on behalf of its parent may not object
to an applicant's material misrepresentations made to the parent. Rather, the
cases simply stand for the proposition that an applicant is not responsible for
misstatements unless and until he adopts or endorses the particular application
containing them. See Bristol v. Commercial Union Life Ins. Co., 211 Conn.
622, 629, 560 A.2d 460, 464 (1989); Cleavenger v. Franklin Fire Ins. Co., 47
W.Va. 595, 35 S.E. 998 (1900). In this case, it is clear that Julien Pinette, by
signing the application in question, endorsed the misrepresentations it
contained.
24
The Pinettes' application was signed by Julien Pinette and then, without
alteration, submitted for Maryland Casualty's Preferred policy as the Pinettes
intended. That as a matter of internal corporate operations it was the wholly
owned subsidiary Assurance rather than Maryland Casualty that issued the
preferred policy did not alter either the application or plaintiffs' endorsement of
it. As the district court pointed out, the plaintiffs received the exact policy for
which they applied. We find no reason in this context to bar Assurance from
claiming rescission due to plaintiffs' material misrepresentations.

CONCLUSION
25
Because plaintiffs have failed to demonstrate a genuine issue of material fact

sufficient to defeat defendant's counterclaim for rescission based on material
misrepresentation, the judgment of the district court is affirmed.

Julien Pinette and Norma Pinette v. Assurance Company of America, 52 F.3d 407, 2d Cir. (1995)

Uploaded by

Copyright:

Available Formats

Julien Pinette and Norma Pinette v. Assurance Company of America, 52 F.3d 407, 2d Cir. (1995)

Uploaded by

Document Information

Original Description:

Copyright

Available Formats

Share this document

Share or Embed Document

Sharing Options

Did you find this document useful?

Is this content inappropriate?

Copyright:

Available Formats

Julien Pinette and Norma Pinette v. Assurance Company of America, 52 F.3d 407, 2d Cir. (1995)

Uploaded by

Copyright:

Available Formats

52 F.

Julien PINETTE and Norma Pinette, Plaintiffs-Appellants

United States Court of Appeals,

David S. Grossman, Brookfield, CT, for plaintiffs-appellants.

In early August, 1990, plaintiff Julien Pinette contacted Stephen Cooper, an

Plaintiffs initially sued Maryland Casualty in Connecticut Superior Court on

For a material misrepresentation to render a contract voidable under

When Connecticut courts speak of "innocent" misrepresentations, they

Under Connecticut law, however, a person may not claim that a

There is an exception to this rule in Connecticut if the insurance agent induces

Under Connecticut law, a misrepresentation is material "when, in the judgment

Common sense tells us that an applicant's prior loss history is material to a

answer to a question on an insurance application is presumptively material. See

III. To Whom the Misrepresentation Was Made

claiming rescission due to plaintiffs' material misrepresentations.

Because plaintiffs have failed to demonstrate a genuine issue of material fact

You might also like