On March 1, 2017, the Second Department issued a decision in Estate of Gen Yee Chu v. Otsego Mutual Fire Insurance Co., 2017 NY Slip Op. 01536, affirming the grant of judgment as a matter of law to an insurer based on the insured’s misrepresentations, explaining:
A trial court’s grant of a CPLR 4401 motion for judgment as a matter of law is appropriate where the trial court finds that, upon the evidence presented, there is no rational process by which the fact trier could base a finding in favor of the nonmoving party. In considering such a motion, the trial court must afford the party opposing the motion every inference which may properly be drawn from the facts presented, and the facts must be considered in a light most favorable to the nonmovant.
Applying these principles here, the Supreme Court properly granted the defendant’s motion for judgment as a matter of law. In order to establish the right to rescind an insurance policy, an insurer must show that its insured made a material misrepresentation of fact when he or she secured the policy. A misrepresentation is material if the insurer would not have issued the policy had it known the facts misrepresented.
Here, the plaintiff’s own testimony established that his house was structurally configured as a three-family dwelling, and thus, the statement on his insurance application indicating that it was a two-family dwelling was a misrepresentation. Although the plaintiff testified that he believed his house was a legal two-family dwelling, an insurer may rescind a policy if the insured made a material misrepresentation of fact even if the misrepresentation was innocently or unintentionally made. Further, the defendant established that the plaintiff’s misrepresentation was material through the uncontroverted testimony of its witnesses and documentary evidence, including its underwriting guidelines, which established that the defendant did not insure three-family dwellings, and would not have issued the subject policy if the plaintiff and his wife had disclosed that the house contained three dwelling units. Thus, there was no rational process by which the jury could have found in favor of the plaintiffs.
(Internal quotations and citations omitted).