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Case Briefs
Insurer May Sue Broker for Misrepresentations in Application
In Century Surety Co. v. Crosby Insurance, Inc., 2004 Cal. App. LEXIS 1923 (Cal. Ct. App. Nov. 17, 2004), a California court of appeal addressed an insurer's claim against a broker regarding misrepresentations in an insured's application for coverage. The insurer claimed that the broker knew that the insured was working as a general contractor, but submitted an application for insurance stating that it worked only as a drywall contractor. The insurer claimed that once the insured had been sued, it undertook the insured's defense until it learned that the insured had provided false loss history information in its application. At that point, the insurer withdrew from the defense. It was then sued by the insured for breach of contract and bad faith. At that point, the insurer filed a cross-complaint against the broker, asserting claims for fraud and negligence.
The trial court concluded that the insurer could not sue the broker for those claims. The court of appeal reversed. The court noted that: “it would be an unreasonable, if not perverse, result if the law allowed an insurer no remedy against a broker who has … actively forged documents to support an insurance application.” It noted that courts and jurisdictions outside of California “have imposed liability on an insurance broker in an insurer's action to recover for losses incurred as a result of the broker's fraud.” It concluded that California case law “does not provide any basis for exempting an insurance broker from the consequences of its own fraud.” The court also rejected the broker's argument that the insurer's exclusive remedy for fraud in the application was to rescind the policy. It noted that neither California's Insurance Code nor case law precludes an insurer's action against a broker for misrepresentation. The court of appeal also concluded that insurance brokers have a duty “to exercise reasonable care in preparing insurance applications” and that if a broker breaches that duty, it may be liable for negligence to the insurer. However, it qualified that holding as follows:
We emphasize that our holding should not be construed as treating an insurance broker as a guarantor of information in an insurance application or as imposing a duty on a broker to independently investigate information provided by the insured. However, when the broker knows of actual misstatements, the broker may be held liable for transmitting those misrepresentations in an insurance application knowing the insurer will reasonably rely on them.
Thus, the court recognized that a broker may be liable not only to the insured for fraud and negligence, but also to an insurer.
Major Differences In UK, U.S. Copyright Laws
This article highlights how copyright law in the United Kingdom differs from U.S. copyright law, and points out differences that may be crucial to entertainment and media businesses familiar with U.S law that are interested in operating in the United Kingdom or under UK law. The article also briefly addresses contrasts in UK and U.S. trademark law.
The Article 8 Opt In
The Article 8 opt-in election adds an additional layer of complexity to the already labyrinthine rules governing perfection of security interests under the UCC. A lender that is unaware of the nuances created by the opt in (may find its security interest vulnerable to being primed by another party that has taken steps to perfect in a superior manner under the circumstances.
Strategy vs. Tactics: Two Sides of a Difficult Coin
With each successive large-scale cyber attack, it is slowly becoming clear that ransomware attacks are targeting the critical infrastructure of the most powerful country on the planet. Understanding the strategy, and tactics of our opponents, as well as the strategy and the tactics we implement as a response are vital to victory.
Removing Restrictive Covenants In New York
In Rockwell v. Despart, the New York Supreme Court, Third Department, recently revisited a recurring question: When may a landowner seek judicial removal of a covenant restricting use of her land?
Legal Possession: What Does It Mean?
Possession of real property is a matter of physical fact. Having the right or legal entitlement to possession is not "possession," possession is "the fact of having or holding property in one's power." That power means having physical dominion and control over the property.