United States Life Ins. Co. v. Blumenfeld

• Decision Date: 14 February 2012
• Citation: 938 N.Y.S.2d 84,92 A.D.3d 487,2012 N.Y. Slip Op. 01103
• Parties: The UNITED STATES LIFE INSURANCE COMPANY IN the CITY OF NEW YORK, Plaintiff–Respondent, v. Rebeka BLUMENFELD, et al., Defendants–Appellants.
• Court: New York Supreme Court — Appellate Division

2012 N.Y. Slip Op. 01103
92 A.D.3d 487
938 N.Y.S.2d 84

The UNITED STATES LIFE INSURANCE COMPANY IN the CITY OF NEW YORK, Plaintiff–Respondent,
v.
Rebeka BLUMENFELD, et al., Defendants–Appellants.

Supreme Court, Appellate Division, First Department, New York.

Feb. 14, 2012.

[938 N.Y.S.2d 84]

Lipsius BenHaim Law, LLP, Kew Gardens (Ira S. Lipsius of counsel), for appellants.

Wilson Elser Moskowitz Edelman & Dicker LLP, White Plains (Michelle M. Arbitrio of counsel), for respondent.

GONZALEZ, P.J., MOSKOWITZ, ACOSTA, RICHTER, JJ.

[92 A.D.3d 487] Order, Supreme Court, New York County (Milton A. Tingling, J.), entered March 29, 2011, which, in a declaratory judgment action seeking rescission of a life insurance policy, denied defendants' motion for summary judgment dismissing the amended complaint, unanimously reversed, on the law, without costs, and the motion granted, and it is declared that the life insurance policy is valid.

On April 25, 2006, plaintiff insurer issued a life insurance policy with a $5,000,000 death benefit, requiring quarterly premiums of $70,658.25. Defendant

[938 N.Y.S.2d 85]

Rebeka Blumenfeld was the insured, and the beneficiary/policy owner was defendant the Blumenfeld Family Irrevocable Life Insurance Trust (the Trust). The policy included a two-year contestability clause, pursuant to New York Insurance Law § 3203(a)(3).

Defendant insured, who was retired and in her late 70s, represented in her January 2006 life insurance application to plaintiff that she had a net worth of $35–40 million and household income of $400,000–500,000 and that she was a beneficiary of two multi-million dollar life insurance policies. The application gave her address as an apartment in Williamsburg, Brooklyn. The Trust's address was given as 2 West 47th Street in Manhattan.

By letter dated April 22, 2008, plaintiff notified the Trust of its intent to rescind the policy because of material misrepresentations concerning the insured's financial status at the time of her signing the life insurance application. Plaintiff noted an ongoing fraud investigation. The letter cited a March 2007 investigative report that had revealed the insured owned no real estate and that she rented an apartment in a neighborhood in Brooklyn that had a median household income of $29,625. The letter further noted that plaintiff would refund any applicable premiums and that it would file a declaratory judgment action to rescind the policy unless it received additional information from the insured or a signed copy of the rescission agreement enclosed with the letter.

It is undisputed that after the insurer received the March 2007 investigative report, plaintiff retained and processed premium payments in April and May 2007, in the respective amounts of $43,452.50 and $130,387.50.

[92 A.D.3d 488] An investigative report from February 2008 identified the insured's residence as 2 West 47th Street, the same address the insured gave as the Trust's address in the policy application in January 2006.

Plaintiff commenced this action against the insured and the beneficiary/policy owner, on April 23, 2008, two days before the end of the policy's two year contestability provision. The insurer sought a declaratory judgment rescinding the policy based upon alleged...