Procedural Posture

Plaintiff salmon sushi Corp beneficiary sued defendant insurer for breach of contract, breach of the covenant of good faith and fair dealing, negligence, fraud, negligent misrepresentation, and emotional distress after it rescinded his wife’s life insurance policy and denied his claim. The trial court granted the insurer’s motion for summary judgment. The California Court of Appeal, Third Appellate District, affirmed. The beneficiary petitioned for review.

Overview

The insurer argued that the wife had concealed from it her smoking of cigarettes in the 36-month period preceding her application, and that had she been truthful it would not have issued a policy at the preferred nonsmoker rate. The court held that it was a triable issue of fact whether the wife concealed or failed to communicate material information to the insurer regarding her use of cigarettes in the 36 months preceding her application for life insurance at the nonsmoker rate. Therefore, summary judgment was improper. If the wife smoked only a cigarette or two during the 36 months preceding her application and did not use any other tobacco products, she did not conceal her cigarette usage by answering “no” to two questions on her application regarding her cigarette and tobacco usage. Even if the two questions required disclosure of even a single cigarette smoked during the period at issue, the wife did not conceal that information from the insurer, because she did mention it to an insurance agent when she applied for the life insurance. The agent’s knowledge of the wife’s smoking of one or two cigarettes during the 36 months preceding the application was imputed to the insurer.

Outcome

The appellate court’s judgment was reversed, and the matter was remanded to that court for further proceedings.