MEMORANDUM AND ORDER
SIFTON, Chief Judge.
This is a diversity action brought by an insurer for rescission of an insurance contract based on alleged misrepresentation by the insured. Defendant has moved for summary judgment, and plaintiff has opposed this action and filed a cross-motion to amend its complaint to add a new claim for relief. For the reasons set forth below, both motions are granted.
This case involves a disability insurance policy purchased by defendant Thomas Morgan III ("Morgan") from plaintiff Massachusetts Casualty Insurance Company ("Massachusetts Casualty"). The following facts are taken from the initial complaint, from the affidavits of counsel, and from the various Rule 3(g) statements filed in this matter and are essentially undisputed as they bear on these motions.
In April 1988 defendant Morgan tested positive for HIV infection. He was diagnosed with Acquired Immune Deficiency Syndrome ("AIDS") in August 1990 and has been treated with AZT since August 1991.
On May 27, 1988, Morgan applied for individual disability income insurance from Massachusetts Casualty. In the application, Morgan indicated that he had recently been seen by a physician but did not explain the purpose of the visit or disclose the positive test for HIV infection. In July of 1988, Massachusetts Casualty issued the policy.
On October 22, 1992, Morgan's policy lapsed for nonpayment. Massachusetts Casualty required Morgan to file an application for reinstatement, which Morgan returned with payment on December 17, 1992. As part of the application for reinstatement, Morgan signed a declaration that (1) he was in the same status or condition of health as indicated in his original application and (2) since the date of the issuance of the policy he had suffered no injuries, ailments or illnesses and had not been sick from any cause, had not been consulted or been prescribed for or attended by a physician or practitioner for any cause and had not been hospitalized.
Massachusetts Casualty thereafter reinstated the policy.
On July 22, 1994, defendant submitted a claim for benefits under the policy, claiming disability due to AIDS. Morgan claimed that as of July 1994 his illness rendered him unable to continue to work. In the course of evaluating Morgan's claim, Massachusetts Casualty learned about Morgan's August 1990 AIDS diagnosis and subsequent treatment. While its investigation and evaluation were pending, Massachusetts Casualty made an initial payment of $ 3,000 under the policy.
On October 20, 1994, Massachusetts Casualty informed Morgan that it was investigating the possibility that he had made misrepresentations in his reinstatement application and that it was withholding further benefits while it continued its investigation. Shortly thereafter, on October 26, 1994, Morgan, through his attorney, requested a copy of the reinstatement application. Plaintiff did not provide this requested copy until February 10, 1995, in its opposition to the instant motion. On November 15, 1994, Massachusetts Casualty sent a letter to defendant reserving its rights to rescind the contract and returned all premiums paid since the reinstatement date. On December 21, 1994, plaintiff commenced this action to rescind the contract on the ground that the reinstatement was based on false representations by the defendant.
Defendant now moves for summary judgment in his favor, arguing that plaintiff's alleged failure to comply with New York Insurance Law § 3204(e) compels judgment in his favor.
Section 3204(e) provides as follows:
If any policy of life, accident and health insurance delivered or issued for delivery in this state is reinstated or renewed ... and the insured or the beneficiary or assignee of such policy makes written request to the insurer for a copy of the application, if any, for such reinstatement or renewal,... the insurer shall, within fifteen days after the receipt of such request at its home office or any branch office of the insurer, deliver or mail to the person making such request, a copy of such application or notice. If such copy is not delivered or mailed, the insurer shall be precluded from introducing such application or notice as evidence in any action or proceeding based upon or involving such policy or its reinstatement, renewal or change.
It is undisputed that Massachusetts Casualty did not provide the reinstatement application within fifteen days of defendant's request. Massachusetts Casualty, however, contends that this statute does not apply after an insurer has given notice of its intent to investigate a claim. Additionally, the insurer cross-moves for leave to amend its complaint to add a second cause of action.
Summary judgment must be granted if there is no genuine issue as to any material fact and if the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P.56(c). The moving party has the burden of demonstrating the absence of any disputed material facts, Thompson v. Gjivoje, 896 F.2d 716, 720 (2d Cir. 1990), and the court must resolve all ambiguities and draw all inferences in favor of the party against whom summary judgment is sought. Id. Summary judgment is appropriate "when the record taken as a whole could not lead a rational trier of fact to find for the non-moving party." Matsushita Elec. Indus. Co., Ltd. v. Zenith Radio Corp., 475 U.S. 574, 587, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986).
The showing needed on summary judgment reflects the burden of proof in the underlying action. The court must examine "the actual quantum and quality of proof" demanded by the underlying cause of action and consider which party is required to present such proof in the particular action. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 254, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
Where the ultimate burden of proof is on the nonmoving party, the moving party meets his initial burden for summary judgment by "'showing' -- that is, pointing out to the district court -- that there is an absence of evidence to support the nonmoving party's case." Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). To survive the motion, the nonmoving party must then "make a showing sufficient to establish the existence of [the challenged] element essential to [that party's] case." Id. at 322. In deciding a motion for summary judgment, ambiguities are to resolved against the moving party. Anderson, 477 U.S. at 249 (citing Adickes v. S.H. Kress & Co., Inc., 398 U.S. 144, 158-59, 26 L. Ed. 2d 142, 90 S. Ct. 1598 (1970)).
As an initial matter, both sides agree that New York law governs this lawsuit. Under Klaxon v. Stentor, 313 U.S. 487, 85 L. Ed. 1477, 61 S. Ct. 1020 (1941), this Court applies New York's choice of law rules, and New York looks to the law of the jurisdiction with the most significant contacts to the matter in dispute. Olin Corp. v. Insurance Co. of North America, 743 F. Supp. 1044, 1048-49 (S.D.N.Y. 1990), aff'd, 929 F.2d 62 (2d Cir. 1991); see also Hidary v. Maccabees Life Ins. Co., 155 Misc. 2d 993, 591 N.Y.S.2d 706, 708-09 (N.Y. Sup. 1992). When insurance contracts are involved, New York courts look to factors such as the location of the insured, the insurer's place of business, where the policy was issued and delivered, where the issuing broker is located, and where the premiums were paid. Olin Corp., 743 F. Supp. at 1049. Here, it is undisputed that the insured is a New York resident and that the policy was delivered in New York. The only non-New York contact is the location of the insurer, and Courts have applied New York law to out-of-state insurers when other factors point towards the use of New York law.
Section 3204(e) of New York's Insurance Law applies to disability policies. The statute refers to "any policy of life, accident and health insurance delivered or issued for delivery in this state." N.Y. Insur. Law § 1113(a)(3), which describes "the kinds of insurance which may be authorized in this state," specifically defines "accident and health insurance" to include "non-cancelable disability insurance, meaning insurance against disability resulting from sickness, ailment or bodily injury ... under any contract which does not give the insurer the option to cancel or otherwise terminate the contract at or after one year from its effective date or renewal date." N.Y. Insur. Law § 1113(a)(3). Section 3201, discussing approval of "life, accident and health, and annuity policy forms," refers to § 1113 to define the policies covered by that section. In context, it is clear that the phrase "accident and health insurance" used in § 3204(e) has the meaning set forth in § 1113(a)(3). Moreover, the statutory predecessor to § 3204, Insurance Law § 142, has been applied to disability policies. Mutual Life Ins. Co. of New York v. Hayden, 87 Misc. 2d 1039, 386 N.Y.S.2d 978, 980-81 (N.Y. Sup. 1976). Plaintiff does not contend that disability policies are excluded from the coverage of § 3204.
Since New York Insurance Law § 3204(e) covers the policy at issue here, the next question is whether the preclusive effect of that statute should be applied in this case.
Defendant argues that § 3204(e) should be applied as it is written and, thus, that plaintiff should be precluded from the use of the reinstatement application. Without this application, the plaintiff could not prove any misrepresentations, and thus summary judgment in defendant's favor is warranted. Plaintiff argues that the preclusion imposed by a violation of § 3204(e) does not apply to the instant case, where an insured requests a copy of his application after premiums had been paid, a benefits claim had been filed, an investigation had commenced, and an adversarial stance had been assumed.
Neither the parties nor the Court has been able to find any case law construing, interpreting, or even applying this particular subsection of the Insurance Law. Several cases have applied § 3204(a), however, and in interpreting § 3204(e), consideration of § 3204(a) is appropriate. It is true that the New York Court of Appeals generally "will not add words to a statute which has a rational meaning as written," Richmond Constructors v. Tishelman, 61 N.Y.2d 1, 6, 471 N.Y.S.2d 58, 60, 459 N.E.2d 167 (1983), rearg. den., 61 N.Y.2d 905, 474 N.Y.S.2d 1027 (1984), and that unambiguous statutes should be interpreted according to their plain meaning, avoiding any artificial or forced construction, Schmidt on Behalf of McNell v. Roberts, 74 N.Y.2d 513, 520, 549 N.Y.S.2d 633, 637, 548 N.E.2d 1284 (1989); nevertheless, the Court should not always find apparent clarity determinative of an issue of construction and should avoid a literal interpretation when to do so would result in injustice or absurdity, see Zappone v. Home Ins. Co., 55 N.Y.2d 131, 137, 447 N.Y.S.2d 911, 914, 432 N.E.2d 783 (1979). "Generally, inquiry must be made of the spirit and purpose of the legislation, which requires examination of the statutory context of the provision as well as its legislative history." Sutka v. Conners, 73 N.Y.2d 395, 403, 541 N.Y.S.2d 191, 194, 538 N.E.2d 1012 (1991). Section 3204(a) thus will provide necessary insight into the context within which § 3204(e) is to be read.
Section 3204(a) derives from Section 58 of the Insurance Law of 1909, which required that the insurance policy contain the entire contract between the parties. "The purpose of section 58 of the Insurance Law in requiring the whole contract to be stated in the policies, and not pieced out by documents included by mere reference, was not the relief of the insurer. It was the protection of those insured and of the beneficiaries claiming under them." See Bible v. John Hancock Mut. Life Ins. Co., 256 N.Y. 458, 464, 176 N.E. 838 (1931). In 1939, the Court of Appeals decided in Abbott v. Prudential Life Ins. Co. of America, 281 N.Y. 375, 380-81, 24 N.E.2d 87 (1939), that, although an application had not been attached to the policy, it could be admitted as extrinsic evidence in an action to show that the insured was aware of a limitation of the insurance agent's authority. Shortly thereafter, the New York State legislature amended the statute to provide that an application could not be admitted under any circumstances unless a true copy of the application was attached to the policy. Gozan v. Mutual Life Ins. Co. of New York, 40 N.Y.2d 707, 711-12, 389 N.Y.S.2d 816, 818-19, 358 N.E.2d 499 (1976). The current form of this statute now appears at § 3204(a), which provides as follows:
(1) Every policy of life, accident or health insurance, or contract of annuity, delivered or issued for delivery in this state, shall contain the entire contract between the parties, and nothing shall be incorporated therein by reference to any writing, unless a copy thereof is endorsed upon or attached to the policy or contract when issued.
(2) No application for the issuance of any such policy or contract shall be admissible in evidence unless a true copy [of the application] was attached to such policy or contract when issued.