and prior losses were material as a matter of law.
Under Federal Rule of Civil Procedure 56(c), summary judgment is warranted if, after reviewing all the evidence, there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986); Celotex Corp. v. Catrett, 477 U.S. 317, 323, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Once the moving party has set forth the basis for its motion, it is incumbent on the non-moving party to come forth with specific facts showing that there are genuine issues. See Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The court must resolve all ambiguities and draw all reasonable inferences in favor of the non-moving party. See id.
Additionally, under Local Rule 7.1(f), upon bringing a summary judgment motion, the moving party must serve and file a statement of undisputed material facts.
See N.D.N.Y.L.R. 7.1(b)(f). In response, the non-moving party is required to submit a statement listing the material facts the non-moving party contends are in dispute.
See id. If the non-moving party fails to do this, the material facts as set forth in the moving party's statement are deemed admitted. See id.
In this case, Nationwide, as the movant, submitted its Rule 7.1(f) Statement of Undisputed Material Facts. Defendants, however, did not file a responding statement. Therefore, Defendants admit the following material facts as set forth in Nationwide's statement: (1) Defendants made misrepresentations in the insurance applications; and (2) Nationwide relied on these false statements by issuing both policies. Thus, the only issue before the Court is whether the misrepresentations were "material" as a matter of law.
I. The Automobile Insurance Policy
Nationwide argues that Defendant Serafina Pascarella falsely represented that there were no outstanding judgments against her or any member of her household. Under the underwriting guidelines for the Century II Auto Policy, Nationwide contends it is prohibited from issuing a policy to any individual who has any outstanding judgments within the past seven years. Defendants have not set forth any arguments to dispute the materiality of the misrepresentations on the application for automobile insurance.
Under New York law, an insurance company is entitled to the rescission of a policy if the company relied on a material misrepresentation made by the insured in his or her application by issuing the policy. See N.Y. Ins. Law § 3105(a); Tannenbaum v. Provident Mutual Life Ins. Co., 53 A.D.2d 86, 386 N.Y.S.2d 409, 417 (1st Dep't 1976); Mutual Benefit Life Ins. Co. v. JMR Electronics Corp., 848 F.2d 30, 32 (2d Cir. 1988). Rescission is available even if the material misrepresentation was innocently or unintentionally made. See Mutual Benefit Life Ins. Co., 848 F.2d at 32. A misrepresentation will be "material" if knowledge by the insurance company of the misrepresented fact would have resulted in a refusal to issue the same exact policy. See N.Y. Ins. § 3105(b); Christiania General Ins. Corp. v. Great Am. Ins. Co., 979 F.2d 268, 279 (2d Cir. 1992). Generally, the determination of materiality is a question of fact for the jury; however, when the evidence is clear and uncontroverted, a court may decide the issue as a matter of law. See Tannenbaum, 386 N.Y.S.2d at 417; Christiania, 979 F.2d at 278.
Materiality as a matter of law may be established on a summary judgment motion through the submission of documentation such as the insurer's underwriting manual which pertains to insuring similar risks, and testimony of the insurer's underwriter or other qualified employee. The evidence must clearly show that the misrepresentation substantially thwarted the purpose for which the information was demanded and induced an action which the insurer would not have otherwise taken. See Wittner v. IDS Ins. Co., 96 A.D.2d 1053, 466 N.Y.S.2d 480, 481 (2d Dep't 1983); Cohen v. Mutual Benefit Life Ins. Co., 638 F. Supp. 695, 697 (E.D.N.Y. 1986); see also Gibbons v. John Hancock Mutual Life Ins. Co., 227 A.D.2d 963, 643 N.Y.S.2d 847, 848 (4th Dep't 1996).
With regard to the automobile insurance policy, Nationwide has submitted the affidavit of James R. Wiginton, an underwriting specialist. In this affidavit, Mr. Wiginton unequivocally stated that the existence of outstanding judgments against a proposed insured or household member is essential to assessing the risk Nationwide was willing to accept because the underwriting policies of the Century II Auto Policy prohibits the issuance of the policy to anyone with outstanding judgments. Furthermore, Nationwide submitted the policy's underwriting standards which corroborates Mr. Wiginton's statements. (Wiginton Aff. Ex. D).
In this case, there were four outstanding judgments totaling $ 15,153.49 which were entered against Defendant Antonio Pascarella, a member of the applicant Defendant Serafina Pascarella's household.
Therefore, Nationwide has submitted clear and uncontroverted evidence, that if the true facts were known, a Century II Auto Policy would not have been issued to an individual with a similar financial history as the Defendants.
II. The Homeowners Insurance Policy
Nationwide argues that Defendant Antonio Pascarella falsely represented that there were no outstanding judgments against himself or any member of his household and that no prior losses in connection with the Defendants' residence. Nationwide further contends that under its underwriting manual for the Golden Blanket Homeowners Insurance Policy, it was prohibited from issuing a policy to individuals with a similar history. Again, Defendants did not argue that the misrepresentations were immaterial.
Applying the same legal standard for determining materiality as a matter of law as noted in the previous section, the Court finds that Nationwide has submitted sufficient clear and uncontroverted evidence of the materiality of the misrepresentations contained in the homeowners insurance policy. Nationwide submitted the affidavit of Mr. Wiginton and the underwriting standards for the Golden Blanket Homeowners Insurance Policy. (Wiginton Aff. Ex. F.) Based on this evidence, prior losses and outstanding judgments are controlling factors in deciding whether to issue the policy as the underwriting manual prohibits the issuance of the Golden Blanket policy if there are prior losses or outstanding judgments.
Clearly, the homeowners policy would not have been issued to applicants, like Defendants, who had six outstanding judgments totaling $ 28,082.20
and six prior loss claims in the past three years in connection with the property totaling $ 12,403.89.
In sum, the evidence submitted by Nationwide unequivocally shows that the misrepresentations regarding the lack of outstanding judgments and prior losses were material as a matter of law. Nationwide was induced to accept risks which it might have otherwise refused to insure because of the Defendants' material misrepresentations in their applications. Therefore Nationwide's motion for summary judgment is granted.
After reviewing the entire file in this matter, the submissions of the parties, and the applicable law, it is hereby
ORDERED that the summary judgment motion brought by Plaintiffs, Nationwide, is GRANTED; it is further
ORDERED that Golden Blanket Homeowners Policy number 6631HO116451 and Century II Auto Policy number 66P479310 are RESCINDED.
IT IS SO ORDERED.
Dated: February 6, 1998
Syracuse, New York
Frederick J. Scullin, Jr.
United States District Court Judge