Procedural Posture

Plaintiff executors of insured’s estate appealed the judgment of the Superior Court of Santa Clara County (California) denying plaintiffs’ motion for summary adjudication of their breach of contract and negligence claims against defendant insurer and granting summary judgment in favor of defendant.

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Overview

Plaintiff executors of the deceased insured’s estate appealed the grant of summary judgment in favor of defendant insurer on plaintiffs’ claims that defendant wrongfully rescinded the insurance policy it had issued on the life of the insured. The court affirmed, holding that defendant validly rescinded the policy pursuant to Cal. Ins. Code §§ 331 and 359 because the insured had concealed and misrepresented his medical condition during the application period. Specifically, after defendant’s physician examined the insured and found him to be in good health, but prior to the delivery of the policy, the insured was diagnosed with leukemia. Despite language in the application conditioning the policy’s effectiveness on continuing good health, the insured never informed defendant of the diagnosis. Although defendant could have performed additional tests that might have revealed the leukemia, the insured still had a good faith obligation to disclose the diagnosis, a “material” matter to insurability, and thereby correct misstatements in his application.

Outcome

The court affirmed the grant of summary judgment in defendant’s favor, holding that defendant validly rescinded the policy because plaintiffs’ decedent concealed and misrepresented his medical condition during the application period.