Court Opinion

ID: 9746791
Source: CourtListenerOpinion
Date Created: 2023-08-27 14:38:32.542601+00
Date Added: 2024-06-11T12:43:24.284839
License: Public Domain

WIEAND, Judge,
concurring and dissenting:
Although I concur in the decision of the majority to vacate the award of counsel fees, I dissent from the majority’s holding that a fraudulently obtained policy of automobile insurance cannot be rescinded. In the absence of a controlling decision by the Supreme Court, I would adopt and follow the reasoning of the Concurring Opinion authored by Chief Justice Nix in Metropolitan Property and Liability Insurance Co. v. Insurance Commissioner, Commonwealth of Pennsylvania, 517 Pa. 218, 535 A.2d 588 (1987) and hold that an insurer may assert the well recognized right to rescind ab initio a policy of insurance upon learning that the application therefor contained misrepresentations material to the risk.
In this declaratory judgment action, the parties have stipulated to most of the facts. On February 7, 1985, Richard D. Klopp and Sylvia J. Klopp applied to Keystone Insurance Co. (Keystone) for a policy of insurance providing coverage for their 1981 Subaru station wagon. Keystone issued a binder the same day. On February 8, 1985, Sylvia Klopp was involved in a vehicular accident while driving the insured vehicle. The policy was issued and received by the Klopps on February 27, 1985.
On April 4, 1985, less than sixty days after issuance of the binder, Keystone returned the premium and gave notice that it had rescinded the policy ab initio because of material misrepresentations contained in the application. Despite requests for information regarding driving histories, the applicants failed to disclose that Richard Klopp had been issued two speeding tickets within the preceding three *612years and that Sylvia Klopp had been involved in a prior accident within the same period. The parties, as part of their stipulation, agreed that these misrepresentations had been material to the risk, and that if this information had been known to Keystone, a policy of automobile insurance would not have been issued.
Whether a policy of vehicular insurance issued upon material misrepresentations by the applicant can be rescinded ab initio or merely cancelled upon discovery of the fraud, as the majority has observed, was considered by the Supreme Court in Metropolitan Property and Liability Insurance Co. v. Insurance Commissioner, Commonwealth of Pennsylvania, supra. With respect to this issue, however, the Court could not agree. Two justices were of the opinion that, by statute, the legislature had determined to limit an insurer’s relief, where it had been fraudulently induced to issue a policy, to cancellation. Three justices, however, were of the opinion that the well recognized right to rescind ab initio under such circumstances had not been abrogated by the legislature. Nevertheless, they concurred in the decision to disallow rescission because, in their judgment, the applicant’s misrepresentations had not been material to the risk. A single justice concurred in the result without opinion. Thus, although the Court’s decision was unanimous, the members thereof did not agree upon the rationale for their decision. The Court’s decision, therefore, does not have precedential value with respect to the issue now before this Court.
A majority of this panel would follow the opinion of the two justices who opined that the right of rescission had been abrogated by the legislature. I would follow the view that the false procurement of a policy of insurance, which may well be a criminal act, is also grounds for rescinding the policy ab initio. Any other result can serve only to encourage fraud. This, in my judgment, was not the intent of the legislature.
In the instant case, the parties are agreed, and the majority of this Court concedes, that the misrepresentations *613made by the applicants pertained to their driving records and were material to the risk which Keystone was being asked to assume. Under these circumstances I would hold that Keystone is entitled to rescind its policy ab initio. To the extent that the majority of this Court holds otherwise, I respectfully dissent.