District Court Finds It Cannot Decide Rescission Claim As A Matter Of Law Due To Discrepancy Between Witness Deposition Testimony and Subsequent Errata
Ill. Union Ins. Co. v. Intuitive Surgical, Inc., 2016 U.S. Dist. LEXIS 70234 (N.D. Cal. May 27, 2016)
Categories: Rescission – Relevant Knowledge Date – Triable Issue of Material Fact
In Intuitive Surgical, the districtcourt concluded that the relevant date for assessing an insurer’s knowledge of concealed facts for the insurer’s rescission claim is the date the policy was issued when later than the policy’s inception date; further, the court found that a difference between the underwriters’ deposition testimony and later notices of errata concerning the date they first learned of the allegedly concealed facts precluded a summary determination.
Intuitive Surgical’s products liability insurers sought to rescind certain policies on the basis that it had allegedly concealed the existence and number of tolling agreements regarding potential claims involving Intuitive Surgical’s primary product line. Intuitive Surgical, in turn, sued the insurers for breach of contract and breach of the implied covenant of good faith and fair dealing.
Illinois Union filed a summary judgment motion on its rescission claim. The relevant policy was issued April 29, 2013 but had an earlier March 1, 2013 inception date. The insured argued that the alleged concealment should be determined as of April 29, 2013, the date the policy was issued, and emphasized that all three of Illinois Union’s underwriters testified in deposition that they learned of the tolling agreements in March or April of 2013 (although each later submitted deposition errata indicating that they did not have knowledge of the tolling agreements until at least May 23, 2013). Illinois Union contended the concealment should be determined as of the March 1, 2013 inception date.
The district court ruled that the relevant date for evaluating concealment is the later April 29, 2013 date on which the policy was issued. Based on that, the district court held that a material dispute existed regarding Illinois Union’s knowledge prior to April 29, 2013. The district court found that the discrepancy between the underwriters’ initial testimony and the deposition errata created a triable factual dispute regarding when the insurer first learned about the tolling agreement, and whether Illinois Union waived its right to rescind the policy.
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