Summary Judgment Upheld Based on Material Misrepresentation in Application – A Rescission Success Story for Insurers
I was at the Advanced Insurance Law CLE meeting a few years back and a speaker took the podium to discuss rescission of insurance contracts. Before he gave his presentation about the current state of the law, he first asked if anyone in the audience had successfully won a summary judgment based on a material misrepresentation in an application. Not one person in the crowd of hundreds answered yes. I still have yet to meet a lawyer who actually has won such a summary judgment, which is why the recent opinion of Robles v. Cox Insurance Group, 2022 WL 188377 (Tex.App. – Fort Worth, January 20, 2022) caught my eye.
Robles involved an appeal of the trial court’s granting of a summary judgment in favor of the insurer in an automobile insurance recission case. On appeal, Robles argued that because there was a fact issue as to whether or not she made a material misrepresentation on her application, summary judgment was improper. On the application, Robles had listed herself and another adult driver but answered “no” to the following questions: 1) are there any residents aged fourteen and over who are not listed as drivers or as excluded drivers, and 2) does anyone else regularly drive your vehicle other than those listed? Robles certified with her electronic signature that the answers to these questions were true and correct and that she understood them to induce the insurer into issuing the policy. The policy was in effect when Robles’ minor, unlicensed son got into an accident.
In response to the insurer’s summary judgment motion based on rescission, Robles submitted an affidavit which sought to raise a fact question as to whether or not the 2020 application asked about additional household residents over the age of fourteen. Robles contended that she originally was insured by another company and that her policy was subsequently transferred to Cox/Old American County Mutual. Robles argued that her original 2013 application never asked about her children and that she never received any other correspondence from Cox/Old American County Mutual. However, the court rejected Robles’ contention that she was unaware of the questions in the 2020 application as “…the law presumes otherwise because it is undisputed that Robles signed the application.” Id. at *4. The court also emphasized that Robles’ conceded “…that the application was completed via a phone call with Appellants and a representative of Appellees” and signed electronically. Id. Therefore, based on established Texas law, since all applications for insurance are attached to and made a part of the policy and is accepted and retained by the insured, the insured is conclusively presumed to have knowledge of its content and to have ratified it contents. In re Int’l Profit Assocs., 286 S.W.3d 921,923 (Tex. 2008)(orig. proceeding).
While the facts at issue in the Robles case are limited, a summary judgment in favor of an insurer on rescission due to a material misrepresentation in an insurance application is still noteworthy. The court’s opinion reinforces that applicants are tasked with confirming the truth of all information on each application and any later claimed ignorance will not be tolerated. As we transition more and more to a digital and zoom world with less personal interaction between insurer’s representative and potential insureds, this long-standing rule of law bears repeating and can *miraculously* work to support a summary judgment on the basis of rescission.