North East Insurance v. Young, 2011 ME 89

Hutchinson asked her 16-year-old son Weeks to drive her to a location, and Weeks was involved in the fatal collision that injured all passengers in the car.
North East Insurance filed a declaratory judgment action against Hutchinson, Weeks, Young, Alley, and others to deny duties to defend or indemnify Hutchinson/Weeks; Young and Alley cross-claimed.
The trial court granted North East summary judgment on duty to defend/indemnify based on alleged fraudulent omissions by Hutchinson about Weeks in the insurance application.
The undisputed record showed Hutchinson answered questions about household residents as if Weeks did not live there or drive, creating a dispute about intentional deception.
Hutchinson later added/dropped vehicles and drivers without disclosing Weeks; the policy defined an insured to include family members and any person using the vehicle with permission.
The court ultimately vacated its judgment and remanded for fact-finding on whether Hutchinson fraudulently omitted material information and whether North East would have issued the policy or charged a higher premium

Issue	Plaintiff's Argument	Defendant's Argument	Held
Whether there are genuine issues of material fact about Hutchinson’s omission of Weeks	Young/Alley contend Hutchinson intentionally omitted Weeks to obtain a lower premium	North East argues undisputed facts show fraudulent omission	Yes; material disputes require fact-finding on intent and omissions
Whether North East had a duty to defend or indemnify Weeks/Hutchinson	Insurer should be estopped from denying coverage if fraud is not proven	Rescission may be proper if misrepresentation was fraudulent and material	Remanded for fact-finding on coverage issues rather than granting summary judgment
Whether summary judgment was appropriate given possible reliance on the application questions	Record supports fraud-based denial of coverage	Record shows factual disputes about question phrasing and responses	Remand to resolve material factual questions before determining duties to defend/indemnify
Whether the court properly treated declaratory relief before liability for the underlying torts	Coverage dispute can be resolved via declaratory judgment without liability adjudication	Traditional sequence is liability first, then defense/indemnity	Remand to determine coverage issues in light of ongoing fact-finding

Kinney v. Me. Mut. Group Ins. Co., 2005 ME 70 (Me. 2005) (facts material to omissions and misrepresentation in applications may require trial)
Picher v. Roman Catholic Bishop of Portland, 2009 ME 67 (Me. 2009) (elements of fraudulent omission; clear and convincing evidence required)
Randall v. Conley, 2010 ME 68 (Me. 2010) (fraudulent misrepresentation proof and reliance needed)
Garcia (Patrons Oxford Mut. Ins. Co. v. Garcia), 1998 ME 38 (Me. 1998) (coverage disputes arising from nonpayment/other non-merit issues may be declaratory-judgment appropriate)
Stewart-Dore v. Webber Hosp. Ass’n, 2011 ME 26 (Me. 2011) (de novo review of summary-judgment determinations with factual disputes)
Liberty Ins. Underwriters, Inc. v. Estate of Faulkner, 2008 ME 149 (Me. 2008) (fraud/omission elements; materiality required for denial of recovery)
Commercial Union Ins. Co. v. Alves, 677 A.2d 70 (Me. 1996) (duty to defend determined by policy and underlying allegations)
Smith v. Allstate Ins. Co., 483 A.2d 344 (Me. 1984) (injured party's right to see insurer defend after liability established)