Admiral Ins. Co. v. Debber
| Decision Date | 20 July 2006 |
| Docket Number | No. CIV S-05-343 FCD PAN.,CIV S-05-343 FCD PAN. |
| Parties | ADMIRAL INSURANCE COMPANY, a Delaware corporation, Plaintiff, v. J. Dale DEBBER, Lorna Martin, Data Control Corporation, et al., Defendants. |
| Court | U.S. District Court — Eastern District of California |
Robert D. Hoffman, Charlston Revich and Chamberlin LLP, Los Angeles, CA, for Plaintiff.
Heather M. Noelte, Dennis Fredrickson and Associates, San Diego, CA, for Defendants.
This matter is before the court on (1) plaintiff Admiral Insurance Company's ("Admiral") motion for summary adjudication, on its first and second claims for relief, to rescind the employment practices liability insurance policies issued by Admiral to defendant Data Control Corporation ("DCC") (the "Admiral EPLI Policies") and (2) defendants DCC, J. Dale Debber ("Debber"), Lorna Martin ("Martin"), Aristos Academy, Compline, LLC ("Compline"), Providence Publications, LLC ("Providence"), Real Consulting & Software Development, LLC ("Real Consulting") and Debber Family Foundation's (sometimes collectively, "defendants") cross-motion for summary adjudication on their affirmative defense of laches.1 By its motion, Admiral seeks an order rescinding the Admiral EPLI Policies because DCC failed to disclose in its applications for the policies two prior lawsuits, filed in Nevada County Superior Court by former DCC employees, containing claims for sexual harassment and retaliation against DCC and its Chief Executive Officer, defendant Debber, among others. Defendants oppose the motion, arguing that they did not fail to disclose material information in applying for the Admiral EPLI Policies, and alternatively, seek a finding that the doctrine of laches provides an absolute defense to Admiral's claims for rescission.
For the reasons set forth below, the court GRANTS Admiral's motion; the Admiral EPLI Policies are rescinded and void ab initio.2 Defendants' cross-motion on their defense of laches is DENIED; Admiral did not unreasonably delay moving to rescind the Admiral EPLI Policies, and there is no substantial prejudice to defendants.
On November 26, 2002, Monitor Liability Managers, Inc. ("Monitor"), underwriting agent for Admiral, provided a quotation to DCC's broker Swett & Crawford ("S & C") for the issuance of an Admiral EPLI policy to DCC.4 On December 13, 2002, S & C sent an e-mail to Monitor requesting Monitor to bind EPLI coverage for DCC and stating a "completed application" would be "forthcoming." (SUF ¶ 9.) That same day, Monitor issued a binder for an EPLI policy to DCC for the policy period December 13, 2002 to December 13, 2003 which stated that a condition precedent to coverage was Monitor's "Meceipt, review and underwriting acceptance of [a] properly completed, signed and currently dated" original Admiral proposal form for an EPLI policy. (SUF ¶ 10.)
On February 27, 2003, S & C provided Monitor with said proposal form (the "2002 Application"). (SUF ¶ 11.) The 2002 Application, dated February 11, 2003, was signed by Debber, as Chief Executive Officer of DCC, and by defendant Martin, Chief Technical Officer of DCC. (SUF ¶ 11-12.) Under the heading, "Litigation and Claim Information," Question No. 13 of the application asked DCC whether "[i]n the last 5 years has any current or former employee or third party made any Claim or otherwise alleged discrimination, harassment, wrongful discharge and/or Wrongful Employment Act(s) against the Insured Entity or its directors, officers, or Employees." (SUF ¶ 13.) Question No. 13 specified that a "Claim" was "not limited to the filing of a lawsuit or a complaint with the EEOC or similar state or local agency," but also included a "written demand or a threat by any current or former Employee seeking relief in connection with an employment related dispute or grievance." (Id.)
Question No. 14 of the 2002 Application asked DCC whether "[d]uring the last 5 years, has the Insured Entity or any of its directors, officers or Employees thereof known of, or been involved in any lawsuit, charges, inquiries, investigations, grievances, or other administrative hearings or proceedings before any of the following agencies and/or under any of the following forums[:]"—the National Labor Relations Board, Equal Employment Opportunity Commission, Office of Federal Contract Compliance Programs, U.S. Department of Labor, any state or local government agency such as the Labor Department or fair employment agency or "U.S. District or state court." (SUF ¶ 14.) If the answer to Question No. 13 or 14 was "yes," the application required the applicant to complete a claim supplemental form, "even if such matter has since been settled or otherwise resolved." (capitalization omitted.) (SUF ¶ 15.)
DCC, through Debber and Martin, answered "no" to both Question No. 13 and 14. (SUF ¶ 17.) Martin attests that she was instructed by DCC's agent/broker to use a previous renewal application for an EPLI policy from another carrier as a template to complete the Admiral application. (Defs.' Stmt. of Disputed Facts ("DDF"), filed June 5, 2006, ¶ 30.) That renewal application did not list any prior claims or lawsuits against DCC, since DCC had previously described certain such claims and lawsuits in the original application for coverage from the other company, and the renewal application only requested information about additional claims. (DDF ¶ s 3, 6, 8.)
In answering and signing the Admiral application, Debber and Martin, "declar[ed] to the best of their knowledge the statements set forth [in the application] are true and correct and that reasonable efforts have been made to obtain sufficient information to facilitate the proper and accurate completion of this Proposal Form." (SUF ¶ 16.) They further agreed that "the particulars and statements contained in the [application] and any material submitted herewith are their representations and that they are material and are the basis of the insurance contract." (Id.) Finally, Debber and Martin agreed that "any Policy, if issued, will be in reliance upon the truth of such representations...." (Id.)
On September 3, 2003, Monitor issued an EPLI policy to DCC for the policy period December 13, 2002 to December 13, 2003, bearing Policy No. 4343312/1 (the "2002 Policy"). (SUF ¶ 18.)
On December 4, 2003, Monitor received a faxed copy of a proposal form for the renewal of the 2002 Policy. (SUF ¶ 20.) On December 15, 2003, Monitor issued a binder for the renewal of the 2002 Policy for the policy period December 13, 2003 to December 13, 2004 which stated that a condition precedent to coverage was Monitor's "[r]eceipt, review and underwriting acceptance of [a] properly completed, signed and currently dated" original Admiral proposal form for an Admiral EPLI renewal policy. (SUF ¶ 21.) On December 22, 2003, F.C. Morgan and Company Insurance Services, Inc. ("F.C.Morgan"), an insurance broker, submitted to Monitor, on behalf of DCC, the signed original Admiral EPLI proposal form for the renewal policy, dated December 12, 2003 (the "Renewal Application"). (SUF ¶ 22.)
Under the heading "Litigation and Claim Information," the Renewal Application contained Question No. 12 that was nearly identical to Question No. 14 in the 2002 Application. Question No. 12 asked DCC whether "[d]uring the last 5 years, has the Insured Entity or any of its directors, officers or Employees thereof known of, or been involved in any lawsuit, charges, inquires, investigations, grievances or other administrative hearings or proceedings before any of the following agencies and/or in any of the following forums" including any "U.S. District or state court." (SUF ¶ 23.) Like the 2002 Application, if the answer to Question No. 12 was "yes," the applicant was required to provide a claim supplemental form, even for those matters which had since been settled or otherwise resolved. (SUF ¶ 24.) Finally, the Renewal Application contained the same representations by the undersigned(s) as the 2002 Application. (SUF ¶ 25.)
DCC, through Debber and Martin, answered "no" to Question No. 12. (SUF ¶ 27.) Martin attests that prior to filling out the Renewal Application, she provided complete details of DCC's claims and loss history to Karrie Branson of Placer Insurance Agency ("Placer"), DCC's agent/broker at the time, who then communicated the information to F.C. Morgan (a wholesale brokerage firm through which DCC and Placer were required to route all of their communications with Admiral). (DDF ¶ s 34, 35, 36, 39-42.) Ultimately, Martin declares that F.C. Morgan confirmed Placer's opinion that DCC's prior claims did not have to be listed on the Renewal Application because they were too old (the claims were first made more than five years earlier) and thus, no claim supplemental form was required. Martin states that she filled out the Renewal Application consistent with Placer and F.C. Morgan's advice. (Martin Decl., filed June 5, 2006, ¶ s 11-17.)
On January 27, 2004, Monitor issued an Admiral EPLI Policy to DCC for the policy period December 13, 2003 to December 13, 2004, bearing Policy No. 4343312/2 (the "2003 Policy"). (SUF ¶ 29.)
On May 11, 2004, Vickie Altman and her husband, Scott Altman (the "Altmans"), filed a complaint in the Nevada County Superior Court, entitled Vickie Altman, et al. v. J. Dale Debber, et al., Case No. 69850 (the "Altman Complaint"), against defendants Debber, DCC, Martin, Aristos Academy, Compline, Providence, Real Consulting and Debber Family Foundation (sometimes collectively, the "Altman defendants"). (SUF 1133.) At the time, Debber was Chief Executive Officer and a shareholder of DCC, Managing Director and a shareholder of Compline, Providence and Real Consulting, the...
To continue reading
Request your trial
-
Commercial Money Center v. Illinois Union Ins., 06-3767.
...for material misrepresentation voids the policy as to all insureds unless the policy provides to the contrary. Admiral Ins. Co. v. Debber, 442 F.Supp.2d 958, 966 (E.D.Cal.2006); see also TIG Ins. Co. of Mich. v. Homestore, Inc., 137 Cal.App.4th 749, 40 Cal.Rptr.3d 528, 533 (2006) (holding i......
-
Firemen's Ins. Co. of Wash. D.C. v. Glen-Tree Invs., LLC
...Oct. 28,2009) (unpublished) (denying laches because notice of reservation of rights obviated prejudice); Admiral Ins. Co. v. Debber, 442 F. Supp. 2d 958, 970-72 (ED. Cal. 2006) (same); All Am. Ins. Co. v. Broeren Russo Constr.. Inc., 112 F. Supp. 2d 723, 729-31 (CD. 111. 2000) (same). Walia......
-
Groat v. Global Hawk Ins. Co., 1:11–CV–1412.
...an application for insurance entitled plaintiff insurer to rescission under California law (emphasis added)); Admiral Ins. Co. v. Debber, 442 F.Supp.2d 958, 966 (E.D.Cal.2006) (stating that pursuant to the California Insurance Code, “a material misrepresentation or concealment in an insuran......
-
Starr Indem. & Liab. Co. v. Amguard Ins. Co.
...for insurance is in itself usually sufficient to establish materiality as a matter of law.”); see also Admiral Ins. Co. v. Debber, 442 F.Supp.2d 958, 967 (E.D. Cal. 2006) (granting summary judgment on insurer's claim for recission and holding insured made material misrepresentation by answe......
-
A Reformation Remedy for Educators Professional Liability Insurance Policies
...Ins. xvii, § 7 cmt. j.41. Nat'l Union Fire Ins. Co. v. Sahlen, 999 F.2d 1532, 1536 (11th Cir. 1993).42. Admiral Ins. Co. v. Debber, 442 F. Supp. 2d 958, 967 (E.D. Cal. 2006), aff'd, 295 Fed. App'x 171 (9th Cir. 2008).43. Id. (espousing a permissive definition of materiality, stating that "w......