Keith Warkentin v. Federated Life Ins. Co.
690 F. App'x 559
| 9th Cir. | 2017Background
- Warkentin purchased a disability income insurance policy from Federated Life and later sued Federated when it stopped making further benefit payments.
- Federated counterclaimed for rescission and declaratory relief, alleging Warkentin made fraudulent misrepresentations on his insurance application about his health.
- Warkentin argued Federated waived the right to rescind by not asserting it promptly; Federated contended it lacked knowledge of the fraud until late and that Warkentin’s misrepresentations concealed the truth.
- The district court granted summary judgment for Federated on the rescission and declaratory-judgment counterclaims, finding no genuine dispute that Warkentin made material false statements knowingly.
- The court held rescission voided the policy ab initio, extinguishing Warkentin’s policy-based claims.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether Federated waived right to rescind by delay | Warkentin: Federated waited too long to seek rescission | Federated: lacked knowledge of fraud earlier; misrepresentations concealed facts | No waiver; delay excused because Federated lacked requisite knowledge |
| Whether Warkentin made material false representations on application | Warkentin: application statements were not fraudulent or material | Federated: he knowingly misrepresented health (e.g., denied recent chiropractic care) | Court: material, willful misrepresentations proven; no factual dispute |
| Whether fraud entitled Federated to rescind policy | Warkentin: rescission improper; other claims survive | Federated: fraud permits rescission under California law | Rescission appropriate; policy void ab initio |
| Effect of rescission on plaintiff’s other claims | Warkentin: other causes of action remain | Federated: rescission extinguishes policy-based rights | Held: rescission voids policy and destroys dependent claims |
Key Cases Cited
- United Fid. Life Ins. Co. v. Emert, 49 Cal. App. 4th 941 (Cal. Ct. App. 1996) (fraudulent application statements permit rescission)
- Celotex Corp. v. Catrett, 477 U.S. 317 (U.S. 1986) (summary judgment standards)
- Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (U.S. 1986) (burden to show genuine dispute of material fact)
- Cummings v. Fire Ins. Exch., 202 Cal. App. 3d 1407 (Cal. Ct. App. 1988) (insured’s false statements and rescission)
- Imperial Cas. & Indem. Co. v. Sogomonian, 198 Cal. App. 3d 169 (Cal. Ct. App. 1988) (rescission voids policy ab initio)