Smith v. The Guardian Life Ins. Co. of America
Cite as: Smith v. The Guardian Life Ins. Co. of America, 8794/10, NYLJ 1202585424299, at *1 (Sup., WE, Decided July 25, 2012)
Justice Lester Adler
Decided: July 25, 2012
Attorneys for Plaintiffs by: Anthony J. Pirrotti, Jr., Esq., Pirrotti Law Firm LLC, Scarsdale, NY.
Attorneys for Defendant by: Thomas J. Dougherty, Esq., Peter Smishauser, Esq., And One Beacon Street, Boston, Massachusetts, Skadden, Arps, Slate, Meagher & Flom, LLP, New York, NY.
The following papers numbered 1 through 87 were read on defendant's motion for summary judgment and plaintiffs' cross-motion for summary judgment (see CPLR §3212):
Papers Papers Numbered
Notice of Motion1
Affidavit of Gary F. Barron2
Transmittal Affidavit of Peter Smishauser3
Exhibits to Transmittal Affidavit4-31
Affidavit of Michael Lynch; Exhibits32-41
Memorandum of Law42
Affidavit of Service43
Notice of Cross-Motion; Affirmation of Anthony Pirrotti, Jr., Esq.; Affidavit of Lisa Leigh Smith; Exhibits44-761
Supplemental Transmittal Affidavit of Peter Simshauser. Esq.; Exhibits77-80
Reply Memorandum of Law in Support of Defendant's Motion for Summary Judgment; Exhibit81-82
Reply Affirmation of Anthony Pirrotti, Jr., Esq. In Support of Plaintiffs' Cross-Motion; Exhibits83-87
DECISION & ORDER
In this action to recover the proceeds of two term life insurance policies, defendant The Guardian Life Insurance Company of America a/k/a Guardian ("Guardian") has counterclaimed for rescission of the policies which were issued to Daniel Selmonosky ("Selmonosky") on the basis that he allegedly misrepresented material information in his application for insurance. Guardian now moves for summary judgment on its counterclaim for rescission or, in the alternative, for summary judgment on the ground that plaintiffs' claims are precluded by the suicide exclusion contained in these policies. Plaintiffs oppose the motion and further cross-move for summary judgment.
On or about April 30, 2008, Selmonosky submitted an application to Guardian for a "whole" life insurance policy with a face amount of $10,000,000.00 (the "Application"). The Application was comprised of two parts: the "Application for Life Insurance Part 1," and "Representations to the Medical Examiner (Part 2)." In connection with the completion of Part 2, on or about May 24, 2008, Selmonosky met with Guardian's medical examiner, at which time he answered numerous questions regarding both his physical and mental health. The Application, which named plaintiff Lisa Leigh Smith a/k/a Lisa Selmonosky ("Smith"), as the beneficiary, was approved on or about August 7, 2008.
Guardian issued two polices to Selmonosky in its best underwriting class, "Elite Premium", to wit: policy no.: 6359167 in the face amount of $17,500,000.00 and policy no.: 6359169 in the face amount of $7,500,000.00 (the "Elite Policies"). Guardian's approval of the Application and issuance of the Elite Policies was based upon multiple
representations and statements made by Selmonosky in response to questions presented on the Application and during the examination by the medical examiner, including representations that he had not been treated for or received consultation for depression or stress after May of 1998, and had not had symptoms of depression subsequent to May of 2007.
On or about May 18, 2009, Guardian was advised that Selmonosky had died, and in October of 2009 Guardian received a copy of his death certificate which indicated that the manner of death was suicide. Since Selmonosky died within the contestability period of the Elite Policies, a contestability investigation was ordered to be conducted. During this investigation, Guardian reviewed Selmonosky's medical and pharmacy records which revealed, among other things, that Selmonosky had prescriptions for the antidepressants Trazadone and Fluoxetine. In January of 2010, Guardian received the records of Dr. Jesse Rosenthal which indicated prior treatment for depression in January of 2009. Based on this notation, Guardian attempted to obtain further information from Dr. Rosenthal. The investigator's note of February 18, 2010 states that Guardian was unable to obtain any further information from Dr. Rosenthal and, in the absence of such information, Guardian was unable to say that material misrepresentations were made by Selmonosky on the Application. Consequently, a determination was made to pay the suicide benefit for the Elite Policies.
By letter dated March 1, 2010, Guardian advised Smith that their review of the claim had been completed and that it had determined to make payments under the suicide benefit provisions of the Elite Policies. Accordingly, included with the letter was one check in the amount of $10,517.32 and one check in the amount of $23,286.52. The
checks were marked "Rejected" and were returned to Guardian by Smith's attorney under cover letter dated March 3, 2010. It was Smith's position then, as it is now, that Guardian had determined that Selmonosky had not made any material misrepresentations on the application. Smith further claimed entitlement to the entire face amount of the Elite Policies on the ground that Selmonosky was insane at the time he committed suicide. Guardian remitted replacement checks to Smith's attorney under cover dated March 25, 2010, which checks were also marked "Rejected" and returned by Smith's attorney.
Plaintiffs then commenced this action for breach of contract based upon Guardian's failure to disburse the insurance proceeds by the filing of a summons and complaint with the Westchester County Clerk's Office on May 14, 2009. Guardian served a verified answer containing a counterclaim in which it seeks rescission of the Elite Policies on the ground that Selmonosky made material misrepresentations or omissions in Part 2 of the Application.
In order to prevail on a motion for summary judgment, the moving party "must make a prima facie showing of entitlement to judgment as a matter of law, tendering sufficient evidence to demonstrate the absence of any material issues of fact" (Alvarez v. Prospect Hosp., 68 N.Y.2d 320, 324, 508 N.Y.S.2d 923, 501 N.E.2d 572 [citations omitted]). Failure to make that initial showing requires denial of the motion, regardless of the sufficiency of the opposing papers (Winegrad v. New York University Med. Ctr., 64 N.Y.2d 851, 853, 487 N.Y.S.2d 316, 476 N.E.2d 642). However, once this showing has been made, the burden shifts to the party opposing the motion to "produce evidentiary proof in admissible form sufficient to require a trial of material questions of fact on which
he [or she] rests his [or her] claim or must demonstrate an acceptable excuse" for his or her failure to do so (Zuckerman v. City of New York, 49 N.Y.2d 557, 560, 427 N.Y.S.2d 595, 404 N.E.2d 718). In making this determination, the evidence must be viewed in the light most favorable to the non-moving party (Pearson v. Dix McBride, 63 A.D.3d 895, 883 N.Y.S.2d 53, 53), and inferences that may be drawn therefrom must be accepted as true (Dykeman v. Heht, 52 A.D.3d 767, 769, 861 N.Y.S.2d 732).
In support of its motion, Guardian claims that in question number 3(x) of Part 2 of the Application, Selmonosky denied being treated for "anxiety, depression, nervousness, stress, mental or nervous disorder, or other emotional disorder" in the ten years preceding his application for life insurance.2 Guardian further claims that Selmonosky made material misrepresentations by answering "No" in response to questions numbered 12 and 13 of Part 2 of the Application, and by omitting information in response to question numbered 16. All of these questions related to symptoms and/or treatment for anxiety, depression, nervousness, stress, mental or nervous disorder, or
other emotional disorder.3 Guardian argues in the alternative that plaintiffs' claim for the face amount of the Elite Policies is precluded by the suicide exclusion contained therein.
An insurer is entitled to rescind an insurance policy if it establishes that the insured made a material representation when he secured the policy (Novick v. Middlesex Mut. Assur. Co., 84 A.D.3d 1330, 1330, 924 N.Y.S.2d 296; Kiss Const. NY, Inc. v. Rutgers Cas. Ins. Co., 61 A.D.3d 412, 413, 877 N.Y.S.2d 253). "A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented" (Varshavskaya v. Metropolitan Life Ins. Co., 68 A.D.3d 855, 856, 890 N.Y.S.2d 643; see also Novick v. Middlesex Mut. Assur. Co., 84 A.D.3d at 1330; Insurance Law §3105[b]). While materiality is generally a question of fact for the jury (Barkan v. New York Schools Inc. reciprocal, 65 A.D.3d 1061, 1064, 886 N.Y.S.2d 414; Parmar v. Hermitage Ins. Co., 21 A.D.3d at 540), "it becomes a matter of law for the court's determination when the evidence concerning materiality is clear and substantially uncontradicted" (Kiss Const. NY, Inc. v. Rutgers Cas. Ins. Co., 61 A.D.3d at 413-414, citing Process Plants Corp. v. Beneficial Natl. Life Ins. Co., 53 A.D.2d 214, 216-217, 385 N.Y.S.2d 308, affd. 42 N.Y.2d 928, 397 N.Y.S.2d 1007, 366 N.E.2d 1361). In order to
establish that a misrepresentation is material as a matter of law, "the insurer must present documentation concerning its underwriting practices, such as underwriting manuals, bulletins, or rules pertaining to similar risks, that show that it would not have issued the same policy if the correct information had been disclosed in the application" (Novick v. Middlesex Mut. Assur. Co., 84 A.D.3d at 1330).
Initially, the Court notes that Guardian has not waived the defense of material misrepresentation (compare Agrawal v. Metropolitan Life Ins. Co., 89 A.D.3d 503, 932 N.Y.S.2d 72). Turning now to the merits of the motion, the Court finds that Guardian has proffered sufficient evidence to establish as a matter of law that Selmonosky made material misrepresentations on his application. Guardian has submitted, inter alia, the affidavit of Michael Lynch, its vice-president and chief underwriter and relevant portions of both its underwriting manual and the underwriting policies of the reinsurer. Lynch avers that had Selmonosky disclosed his treatment for depression or stress, Guardian would not have classified him as eligible for the Elite Policies, its best underwriting class, which entitled him to the lower premiums, but would have placed him in a lower rating classification requiring Selmonosky to pay higher premiums (see Gugleotti v. Lincoln Sec. Life Ins. Co., 234 A.D.2d 514, 515, 651 N.Y.S.2d 600; Gentile v. Continental Am. Life Ins. Co., 215 A.D.2d 626, 627, 628 N.Y.S.2d 138). This statement is corroborated by the internal underwriting documentation (see Interboro Ins. Co. v. Fatmir, 89 A.D.3d 993, 994, 933 N.Y.S.2d 343; Sirius Amer. Ins. Co. v. Burlington Ins. Co., 81 A.D.3d 562, 563, 917 N.Y.S.2d 192; Shapiro v. Allstate Life Ins. Co. of New York, 202 A.D.2d 659, 609 N.Y.S.2d 323).4
The burden having been shifted, plaintiffs offered inadequate evidence to raise a triable issue of fact as to whether they are entitled to the insurance proceeds. Therefore, defendant is entitled to rescind the Elite Policies (see Insurance Law §3105[b]).5
Accordingly, it is hereby
ORDERED, that defendant's motion for summary judgment is GRANTED; and it is further
ORDERED, that the policy of life insurance bearing Policy No.: 6359167 is hereby declared null and void and rescinded ab initio; and it is further
ORDERED, that the policy of life insurance bearing Policy No.: 6359169 is hereby declared null and void and rescinded ab initio; and it is further
ORDERED, that plaintiffs' cross-motion for summary judgment is DENIED.
The foregoing constitutes the Decision and Order of the Court.
1. In rendering its determination on the respective motions, the Court did not consider the affirmations/affidavits of the plaintiffs' experts.
2. The language contained in question 3 as pertinent to Guardian's counterclaim is as follows:
"3. In the last ten years, have you had, been treated for or received a consultation or counseling for:
x. Anxiety, depression, nervousness, stress, mental or nervous disorder, or other emotional disorder?"
3. The specific language contained in these questions is as follows:
"12. Within the past 12 months, have you had symptoms of any condition listed, except those conditions listed in question 5, for which you have not sought medical attention or advice?
13. Other than as previously stated on this Representations, in the last five years have you received medical advice from physicians, medical or mental health professionals, counselors, psychotherapists, or other practitioners, or have you been a patient in a hospital, clinic, sanatorium, or other medical facility?"
"16. DETAILS OF "YES" ANSWERS. IDENTIFY QUESTION & NUMBER. CIRCLE APPLICABLE ITEMS:
Give diagnosis or symptoms, tests performed (except HIV), dates, types and amounts of medication, length of disability, degree of recovery, and names and addresses of all physicians, medical or mental health professionals, counselors, psychotherapists, practitioners or hospitals. Additional paper may be attached if necessary to explain details."
4. Moreover, he avers that had Selmonosky answered truthfully, Guardian would not have approved the Application without further information.
5. Based upon the Court's finding that Guardian is entitled to summary judgment on its counterclaim to rescind the Elite Policies on the ground of material misrepresentations, the Court has not considered the alternative argument regarding the applicability of the Elite Policies' suicide exception.