National Insurance Law Forum : Insurance Litigation Lawyer & Attorney : National Insurance Law Forum : Insurance Coverage, Bad Faith Litigation

With respect to timeliness, the policies contained a two-year incontestability clause as required by Section 3203(a) of the New York Insurance Law; however, the action was commenced two years and two days after the policies were dated. Security Mutual argued that since the two-year anniversary fell on a Saturday, New York General Construction Law § 25 (extending contractual deadlines falling on weekends and holidays) and § 25-a (extending statutory deadlines falling on weekends and holidays), applied to extend the time to file the action by two days. Defendants countered that § 25-a was only applicable to statutory deadlines and since the incontestability clause was written into the contract, the only applicable provision was § 25, which applies to contractual deadlines. Defendants further argued that there was no applicable extension under § 25 because it only applies to performance of a contractual "condition," and the incontestability clause was not a “condition” within the meaning of the General Construction Law.

The Appellate Division agreed with Security Mutual, holding that §25-a applied because the incontestability clause was required by statute. The Court reasoned that if the insurance policy had failed to contain the incontestability provision, it would have been read into the policy since it is required by statute. Under this reasoning, a ruling that §25 (as opposed to §25-a) governed would produce an anomalous result: “[A]n insurer that complies with the law and includes in its life insurance policies the clause it is required by law to include will have a shorter period of time in which to contest the policies than it would have if it omitted the clause from the policies.” Therefore, the Court concluded the action was timely filed.

Defendants argued that the rescission claim should be dismissed, reasoning that Security Mutual was estopped from seeking that relief because it had accepted premiums after learning of grounds for rescission. Finding that Security Mutual had collected and retained nine premium payments totaling $40,000 since the action was commenced, the Appellate Division agreed. The Court rejected arguments that commencement of a rescission action prevented estoppel as contrary to N.Y. precedent. Rodriguez, 2009 WL 144524 (discussing Continental Ins. Co. v. Helmsley Enters., 211 A.D.2d 589 (1st Dep’t 1995) (holding that plaintiff waived right to seek rescission of insurance contract when it knowingly accepted premium payments for several months following discovery of alleged misrepresentations) and Scalia v Equitable Life Assurance Soc’y, 251 A.D.2d 315 (2d Dep’t 1998) (holding that that insurer’s continued acceptance of premiums after learning of facts permitting rescission of policy constitutes an estoppel against right to rescind)).

As for the fraud claims, the Court held that they were pled with sufficient detail under CPLR 3016(b), since the complaint included allegations of misstatements of net worth, falsity of medical statements, and the proffering of fictitious accountant and medical records. Thus, the Court concluded that the motion to dismiss the fraud claims was properly denied.
 

In this case, a claim for life insurance was rejected on the basis that the insured committed suicide. After a non-jury trial, the court found that the insured had committed suicide and dismissed the complaint. Evidence at trial supported a finding that the insured committed suicide, but there was also evidence that suicide was not the cause of death. In a 3-2 decision, an appellate court reversed, holding that “the evidence failed as a matter of law to overcome the presumption against suicide.” The appellate court reasoned that because “there are other reasonable conclusions that may be drawn from the evidence, aside from suicide," the "application of the law regarding the presumption against suicide necessitated a directed verdict in this case.”

New York’s high court reversed, holding that the presumption against suicide, which “springs from strong policy considerations as well as embodying natural probability,” is not a rule that requires rejection of suicide as a matter of law, but is merely a guide for the fact finder. ... Where the evidence leaves open two possible findings, it is the jury's business to resolve the doubt.”

The court clarified the New York Pattern Jury Instructions, which state: "You may make a finding of suicide only if you are satisfied from the evidence, and taking into consideration the presumption against suicide, that no conclusion other than suicide may reasonably be drawn.” “This language,” held the court, “should not be taken to mean that, where more than one conclusion is reasonably possible, suicide is excluded as a matter of law.” Instead, the instruction “is directed at jurors deciding facts, not at judges deciding the law; it is a way of impressing on jurors' minds that the presumption against suicide is a strong one—of telling them they should not find suicide unless the evidence shows suicide to be highly probable.”

Thus, because there was evidence legally sufficient to support the trial court’s decision, the appellate court was found in error for rejecting the finding of suicide as a matter of law.