Edson, Brockman & Whang Obtain Rescission Judgment In Federal Court

In a case involving a major insurance company (hereinafter “The Insurance Company”), a commercial general liability (CGL) policy was issued to an insured in reliance of information contained in an insurance application submitted to The Insurance Company and its general agent.  The insured's business operations included leasing out employees to a third-party general contractor.  However, in response to a specific question in the insurance application asking whether the insured leased employees to a third-party, the insured checked the box "no."  The insured also requested that The Insurance Company add the general contractor as an additional insured. 

After The Insurance Company policy was issued, an employee leased by the insured to the additional insured was injured while working at its premises.  The employee sued the additional insured for her injuries and the additional insured tendered the lawsuit to The Insurance Company.  The Insurance Company agreed to defend the additional insured subject to reservation of rights and filed a rescission and declaratory relief action in the United States District Court for the Central District of California while the underlying lawsuit was pending.  The Insurance Company argued that the material misrepresentations contained in the insured's application allowed it to rescind the policy and that the rescission applied to both the insured and additional insured. 

On Wednesday, September 13, Selman Breitman attorneys for The Insurance Company: Eldon Edson, Elizabeth Brockman, and Calvin Whang, prevailed. The Honorable John Walter granted The Insurance Company’s motion for summary judgment against the additional insured on all grounds, including for rescission and declaratory relief that The Insurance Company has no obligation to defend the additional insured in the underlying lawsuit.

For additional details about this case, please contact Eldon, Elizabeth, or Calvin.

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