Golden Rule Ins. Co. v. Lease
| Decision Date | 09 January 1991 |
| Docket Number | Civ. A. No. 89-B-2163. |
| Citation | 755 F. Supp. 948 |
| Parties | GOLDEN RULE INSURANCE COMPANY, Plaintiff, v. E. Jay LEASE, Sr., Defendant and Third-Party Plaintiff, v. Claudio REBOLLO, Third-Party Defendant. |
| Court | U.S. District Court — District of Colorado |
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James E. Gigax, Banta, Hoyt, Greene & Everall, P.C., Englewood, Colo., and Guy E. McGaughey, Jr., McGaughey and McGaughey, Ltd., Lawrenceville, Ill., for plaintiff Golden Rule Ins. Co.
Fred W. Vondy, Pferdesteller, Vondy, Horton & Coren, P.C., Denver, Colo., for defendant and third-party plaintiff E. Jay Lease, Sr.
Kenneth L. Levinson, Balaban & Levinson, Denver, Colo., for third-party defendant Claudio Rebollo.
Hearing was held on January 9, 1991 on four motions: (1) plaintiff Golden Rule Insurance Company's (Golden Rule) motion for summary judgment on its claim against defendant E. Jay Lease, Sr. (Lease) seeking rescission of an insurance policy; (2) thirdparty defendant Claudio Rebollo's (Rebollo) motion to dismiss the third and fourth claims in third-party plaintiff Lease's thirdparty complaint; (3) Rebollo's motion for summary judgment on Lease's third-party complaint; and (4) Rebollo's motion to strike relief sought in Lease's third-party complaint.
This action arises from a health insurance policy purchased by Lease from Golden Rule through Rebollo. Golden Rule claims that Lease failed to disclose material portions of his medical history. When Lease submitted a claim for costs incurred from hospitalization, Golden Rule investigated and discovered Lease's undisclosed medical history. Golden Rule then refused to pay Lease's claim. Golden Rule seeks a declaration that it acted properly in denying claims under the policy and rescission. Golden Rule has amended its complaint to add a claim for intentional misrepresentation.
Rebollo was joined as a third-party defendant. According to Lease's third-party complaint, Rebollo had knowledge of, and access to, records reflecting Lease's medical history. Lease alleges that Rebollo assumed the task of completing the Golden Rule insurance policy application forms for him. Further, Lease alleges that he believed that Rebollo "would complete the Application form in conformity to all standards, procedures, details and degrees of completeness as were required by Golden Rule in these regards." Third-Party Complaint at 3 ¶ 12. According to Lease, Rebollo may be liable for all or part of Golden Rule's claim against Lease. By impleading Rebollo, Lease seeks indemnity from any liability found against him and in favor of Golden Rule.
In its complaint, Golden Rule claims that it has no duty to honor the insurance policy it issued to Lease because Lease concealed material information on his application for the policy. Golden Rule seeks summary judgment on this claim.
Because Golden Rule would bear the burden of proving its rescission claim at trial, Adams-Arapahoe Joint School Dist. v. Continental Ins. Co., 891 F.2d 772, 778 (10th Cir.1989), to obtain summary judgment, Golden Rule must provide credible evidence, using any of the materials specified in Rule 56(c), that would entitle it to a directed verdict if the evidence went uncontroverted at trial. If Golden Rule meets this burden, the burden of production shifts to Lease, the party opposing the motion. Lease must then either produce evidentiary materials that demonstrate the existence of a genuine issue of material fact for trial on Golden Rule's complaint, including his affirmative defenses, or submit an affidavit requesting additional time for discovery. Anderson v. Department of Health & Human Serv., 907 F.2d 936, 947 (10th Cir.1990); see Celotex Corp. v. Catrett, 477 U.S. 317, 331, 106 S.Ct. 2548, 2556, 91 L.Ed.2d 265 (1986) (White, J., concurring). Furthermore, Golden Rule, as the movant and the party that would bear the burden of proof at trial, must meet the same substantive evidentiary burden in its motion for summary judgment as would be required at trial. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 253, 106 S.Ct. 2505, 2512, 91 L.Ed.2d 202 (1986).
Rescission of an insurance policy is proper under Colorado law if: (1) the applicant made a false statement or concealed a fact concerning his past medical history on his application for insurance; (2) the applicant made the false statement or concealed the fact knowingly; (3) the false statement or concealed fact was material to the issuance of the policy or the risk undertaken by the insurer; (4) the insurer had no knowledge of the false statement or concealed fact and is not chargeable with knowledge; and (5) the insurer relied on the false statement or concealed fact in the application for insurance by issuing the insurance policy. Hollinger v. Mutual Benefit Life Ins. Co., 192 Colo. 377, 560 P.2d 824, 827 (1977); Spencer v. Kemper Investors Life Ins. Co., 764 P.2d 408, 412 (Colo.App.1988); Jacobs v. Prudential Ins. Co., 41 Colo.App. 33, 582 P.2d 697, 698 (1978).
Golden Rule contends that Lease failed to complete truthfully the application for the insurance policy. Specifically, Golden Rule alleges that when asked on the application, Lease concealed (1) the names of certain physicians with whom he had consulted or visited and (2) that Lease's physicians had diagnosed him as having cardiovascular, neurologic, gastrointestinal and urologic disorders.
To support this, Golden Rule offers the application itself and the depositions of Lease and his wife. Lease does not contest that the application was inaccurate. Indeed, he stipulates to this element in his deposition, admitting that much of the information on the application was wrong. Lease Deposition at 55, 65 & 139-41. There being no dispute as to this, as a matter of law, Golden Rule has established the first element of its claim for rescission.
Golden Rule also submits the application to establish that Lease knowingly concealed or knowingly misrepresented the facts. It is undisputed that Lease signed the application. In doing so, Lease represented that "I have personally completed this application and I represent that the answers and statements on this application are true, complete, and correctly recorded to the best of my knowledge." See Commercial Ins. Co. v. Smith, 417 F.2d 1330, 1335 (10th Cir.1969).
There is also no dispute that Lease knew of his true, but undisclosed, medical history. He contends, however, that he signed the application in blank and gave the application to Rebollo to fill out. Even assuming this is true however, as a matter of law, Lease at least had constructive knowledge of the contents of the application. See Pete's Satire, Inc. v. Commercial Union Ins. Co., 698 P.2d 1388, 1391 (Colo.App.1985), aff'd, 739 P.2d 239 (Colo. 1987). Lease's wife stated in her deposition that Rebollo delivered the original policy to her. The policy had a note on it which stated Lease Deposition at 96.
Lease received the policy and his wife placed it in a file in his office. Lease Deposition at 97-98. Whether Lease bothered to read the policy or not, he had the duty, opportunity, and indeed was requested by Golden Rule, to review the application which was in his possession. He cannot now rely on his failure to confirm the contents of the application that he adopted as his own. See Commercial Ins. Co., 417 F.2d at 1335. Golden Rule need not show that Lease intended to deceive in submitting the application. Hollinger, 560 P.2d at 827.
Lease argues that he relied on Rebollo to fill out the application. An insured may defend against an insurance company's misrepresentation claim where the insured was mislead by an agent of the insurance company. Wade v. Olinger Life Ins. Co., 192 Colo. 401, 560 P.2d 446, 449-51 (1977). In this case, however, Rebollo was not acting as Golden Rule's agent, but as a broker.
Under Colorado law, an "insurance broker" is one who, "not being a licensed insurance agent for the company in which a policy of insurance is placed, acts or aids in any manner in negotiating contracts of insurance or placing risks or effecting insurance for a party other than himself." Colo. Rev.Stat. § 10-2-201. Rebollo falls squarely within this definition. The contract between Golden Rule and Rebollo expressly states that Rebollo is an independent broker and not an agent. Rebollo testified that he acts as a broker with many insurance companies. Rebollo Deposition at 19, 27 & 36. Indeed, Lease testified that Rebollo provided for many of his insurance needs and obtained policies for him from various insurance companies. Lease Deposition at 133 & 143-44. Before settling on Golden Rule as his insurance carrier, Rebollo presented Lease with a variety of proposals from other insurance companies. Rebollo deposition at 39 & 73. Lease actually held a policy with Durham Life Insurance Company on which Rebollo was making a commission. Lease himself, during his deposition, referred to Rebollo as his "agent," "insurance man" and "insurance representative." Lease Deposition at 101, 146 & 159.
In an attempt to show that Rebollo was Golden Rule's agent, Lease points to a clause in Rebollo's contract with Golden Rule which states that, although Golden Rule or others may refer to Rebollo as an "agent" or "sub-agent," "it is expressly intended and agreed that you are a broker, or independent agent, acting as the agent of your clients, the applicants and insured." From this, Lease argues that he could not be expected to know that Rebollo was not an agent of Golden Rule. First, it is not clear that Rebollo's legal status depends...
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