Opinion ID: 157046
Heading Depth: 3
Heading Rank: 2

Heading: Materiality of False Statements and American Community's

Text: Reliance on Them 27 Ms. Lips also argues that American Community has failed to establish several other elements of its recission defense. In particular, she contends that American Community has failed to establish that the false statements about her medical history were material to the issuance of her policy, see Aplt's Opening Br. at 23, and that it has also failed to establish that it rescinded the policy because of her false answers, see id. at 11. We read Ms. Lips's brief as challenging both the materiality and reliance elements of American Community's defense. In light of our conclusion that Ms. Lips falsely answered questions 7B and 7K, we must therefore determine whether American Community has established that these false answers were material to the issuance of the policy and that American Community relied on them. 28 In concluding that American Community had established these elements, the district court did not identify the particular false statements that it deemed material to the issuance of the policy to Ms. Lips or the particular false statements on which American Community had relied in issuing the policy. See Aplt's App. at 114-15. However, in arguing that the district court properly assessed the evidence pertaining to these elements, American Community points to the affidavit of Donna Yemc, one of its senior underwriters. See Aple's Br. at 14. 29 Ms. Yemc's affidavit refers to the September 1995 letter from American Community to Ms. Lips explaining the grounds for its rescission of the policy and states that the symptoms and conditions identified in that letter were material to ... [the] issuance of the policy. Aplt's App. at 54. Those symptoms and conditions are described in the September 1995 letter as follows: 30 During routine claims handling records were obtained from Dr. Aschenbrener, Dr. Ford, Dr. O'Rourke, and Dr. Bland. Information in those records indicated that [Ms. Lips] had multiple symptoms and conditions which were not disclosed on the application. Dr. Aschenbrener's records indicate that [Ms. Lips had] been diagnosed and treated for depression, had symptoms of arthralgias, myalgia, weakness, fatigue and a scleroderma like disease onset age 44, a heart murmur which you were told of on and off during the years, blurred vision, spastic colon, [in] 1987 a worsening of symptoms which included loss of word finding and long and short term memory, difficulties with gait and balance, and continued depression. [Dr. Aschenbrener] also indicated that [Ms. Lips was] seen by multiple physicians none of which were disclosed on [her] application. 31 Id. at 54, 58. According to Ms. Yemc's affidavit, [h]ad this information been disclosed on the Application, based upon the underwriting guidelines utilized by American Community, [Ms. Lips's application] ... would have been denied. Id. at 54. 32 Some of the information to which Ms. Yemc refers is clearly insufficient to establish the materiality and reliance elements of American Community's recission defense. In particular, three of the four physicians to which the referenced letter alludes--Dr. Aschenbrener, Dr. O'Rourke, and Dr. Bland--did not treat Ms. Lips until after she completed the American Community application in February 1994. See Aplt's App. at 148, 182. Thus, at the time that Ms. Lips completed the application, she could not have listed these physicians in relating her medical history. As to the fourth physician, Dr. Ford, Ms. Lips has offered evidence that, when she completed the application in February 1994, she disclosed the diagnosis that Dr. Ford had given her (i.e. that she was suffering from normal symptoms of menopause). Because American Community has not established as a matter of law that Ms. Lips made false statements on her application about her treatment by these four physicians, American Community cannot rely on these physicians' records to establish the materiality and reliance elements of its defense on summary judgment. 33 To be sure, Dr. Aschenbrener's report discusses Ms. Lips's longstanding medical problems and indicates that many of these problems had surfaced before Ms. Lips completed the American Community application (e.g. arthralgias, myalgias, weakness and fatigue, and depression, as well as mental status changes ... [and] a scleroderma like disease). See Aplt's App. at 176. However, as we have noted, in light of the evidence offered by Ms. Lips regarding Dr. Ford's diagnosis of normal symptoms of menopause, American Community has failed to establish as a matter of law that Ms. Lips should have reported these conditions in responding to the questions on the American Community application. 34 The only other information identified by Ms. Yemc in support of the materiality and reliance elements is that Ms. Lips was seen by multiple physicians none of which were disclosed on your application. See Aplt's App. at 54, 58. However, although it is uncontroverted that Ms. Lips answered question 7B falsely by failing to list Drs. Brightwell and Weller, Ms. Yemc's affidavit and the referenced letter do not establish that these false responses, standing alone, were material to the issuance of the policy or that American Community relied on these false responses in issuing the policy. In other words, the affidavit and letter do not establish as a matter of law that, if Ms. Lips had reported that she had seen Dr. Brightwell and Dr. Weller, American Community would then have refused to issue the policy to her. 2 35 As a result, we conclude that the district court erred in finding that American Community established the materiality and reliance elements of its rescission defense and therefore erred in granting summary judgment to American Community on Ms. Lips's breach of contract claim. 3