Liberty Insurance Underwriters, Inc. v. Estate of Peter D. Faulkner

Summary

The Maine Supreme Judicial Court considered whether 24-A M.R.S. § 2411 requires proof of both fraud and materiality, actual reliance, and whether a renewal professional liability policy may be rescinded based on a misrepresentation in the original application. The court answered all three questions affirmatively, discharged questions concerning partial summary judgment on reliance and fraud, and remanded for further proceedings, including determining whether the policy was in fact a renewal policy.

Holdings

1. Under 24-A M.R.S. § 2411, an insurer seeking rescission of a professional liability insurance policy must prove both fraud and materiality.
2. An insurer must show actual reliance on the misrepresentation in order to rescind a policy under 24-A M.R.S. § 2411.
3. Section 2411 permits rescission of a renewed lawyer's professional liability policy based on a misrepresentation in the original application, provided the policy is in fact a renewal policy under the governing statutory and contractual principles.
4. The Law Court discharged the questions concerning entitlement to partial summary judgment on actual reliance and fraud because those questions required fact-specific determinations that should first be made by the trial court.

Questions Presented

1. Whether 24-A M.R.S. § 2411 requires an insurer seeking rescission of a professional liability insurance policy to prove both fraud and materiality.
2. Whether 24-A M.R.S. § 2411 requires an insurer to prove actual reliance on the misrepresentation.
3. Whether 24-A M.R.S. § 2411 permits rescission of a renewal professional liability policy based on a misrepresentation in the original application.
4. Whether either party was entitled to partial summary judgment on actual reliance.
5. Whether either party was entitled to partial summary judgment on fraud.

Disposition

remanded