999 F. Supp. 2d 1235
W.D. Wash.2014Background
- Plaintiff Christyanna Karpenski’s disability coverage was rescinded by American General Life Co. and US Life based on alleged misrepresentations in her Disability Insurance Application.
- The Court previously held the APTA master policy’s Virginia choice-of-law provision valid and denied preclusion of the Application; it also required supplemental briefing on Virginia vs. Washington law for the remaining contract claims.
- This order resolves Plaintiff’s motion for reconsideration, Defendants’ summary judgment on rescission and good-health, and Plaintiff’s partial summary judgment motion, with remaining factual disputes.
- The Court uses Washington choice-of-law rules for conflicts and recognizes that group-policy rights generally follow the master policy location, subject to potential Virginia law effects.
- The court finds no manifest error in the prior ruling; it addresses mend-the-hold estoppel and whether Defendants can shift bases for rescission after litigation has begun.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for rescission and contract claims | Washington rescission law governs; Virginia law should not apply. | Virginia law governs due to the Virginia choice-of-law clause; Washington law may apply only if real conflict exists. | Court applies Washington law for rescission analysis; no real conflict requiring Virginia law. |
| Mend-the-hold estoppel to new rescission grounds | Defendants cannot shift grounds after litigation starts; prejudiced plaintiff. | Grounds could be raised; no prejudice or bad faith shown. | Estoppel applies; Defendants cannot shift rescission grounds post-litigation. |
| Intent to deceive as element of rescission under RCW 48.18.090(2) | There is no evidence of intent to deceive; cannot prove element. | Evidence shows misrepresentation was knowingly made; presumption of intent to deceive applies. | Material issue of fact on intent; summary judgment denied for this prong. |
| Materiality of misrepresentations | Omitted history lacks material impact on risk; no underwriting documentation. | Omitted medical history was material; underwriting would be affected. | Materiality disputed; summary judgment denied on this basis. |
| Good health provision applicability | Provision enforces pre-litigation notice and timing; may bar coverage. | Provision applicable; not bound by post-litigation grounds. | Material facts remain; summary judgment denied on good health claim. |
Key Cases Cited
- Cutter & Buck, Inc. v. Genesis Ins. Co., 306 F.Supp.2d 988 (W.D. Wash. 2004) (materiality standard and post-claim underwriting considerations)
- Olson v. Bankers Life Ins. Co., 63 Wash.2d 547 (Wash. 1964) (materiality and misrepresentation standards)
- Ki Sin Kim v. Allstate Ins. Co., Inc., 153 Wash.App. 339 (Wash. App. 2009) (presumption of intent to deceive and innocent-motive rebuttal)
- Vision One, LLC v. Phila. Indem. Ins. Co., 174 Wash.2d 501 (Wash. 2012) (mend-the-hold estoppel in insurance context)
- Russell v. Stephens, 191 Wash. 314 (Wash. 1937) (rescission/restoration principles)
- Erickson v. Sentry Life Ins. Co., 43 Wash.App. 651 (Wash. App. 1986) (group policy choice-of-law considerations)
- Seizer v. Sessions, 132 Wash.2d 642 (Wash. 1997) (conflict-of-laws framework for choice of law)
- McKee v. AT&T Corp., 164 Wash.2d 372 (Wash. 2008) (Restatement §187 framework and choice-of-law analysis)