Lettieri v. Equitable Life Assurance Society Of The United States

627 F.2d 930 (9th Cir. 1980)

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Nature of the Case

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Facts

The decedent, Alfredo, a resident of New Jersey, while in poor health. Alfredo bought a $400,000 five-year term life insurance policy from an agent Alfredo met in a New York City bar. Alfredo named his estate and his son Anthony, a California resident, as beneficiaries. Alfredo obtained his required medical examination in New York City from Dr. Martin, a physician on the insurer's approved medical examiner list. Neither the medical history nor medical examination reports, which were completed and signed by Dr. Martin, revealed Alfredo's current or past ailments. Alfredo had been addicted to heroin as a youth, had been hospitalized for alcohol-related treatment, was at the time of the examination suffering from liver disease and alcoholism, and had other abnormalities that should have been obvious to a medical examiner. The company issued the insurance policy in reliance upon the application, which included the medical reports. Alfredo's signature certified the truthfulness of the application's contents. Four months later, Alfredo died of a bleeding ulcer in part caused by excessive use of alcohol. D conducted an investigation and uncovered the falsehoods and omissions in the insurance application. D denied liability asserting a right to rescind the policy upon discovery of the concealment or misrepresentation of material facts by the insured with respect to his medical history and the state of his health. Ps sued D in California where the choice of law was in their favor. Under New York law the insurer has an absolute right to rescind a life insurance policy if the application, signed by the insured and attached to the policy, contains false statements or omissions about medical history that the insured failed to correct. Under New York law, false statements or omissions about health are conclusively presumed to be material misrepresentations. California law permits Ps to offer a plausible explanation for the falsehoods appearing in the insurance application, an explanation which the insurer then may rebut in order to avoid liability on the policy. Choice-of-law was at issue. Both states allowed the insurer to avoid liabilities based on material misrepresentations. Under New York law false statements about health were conclusively presumed to be material misrepresentations. California allowed an opportunity to rebut the presumption. Here, Ps claims that Alfredo was honest but he and Dr. Martin tendered a medical history that was to be supplemented by a confidential and accurate history in order to keep the information hidden from Alfredo’s family. Applying the governmental interest test, the court held New York law applied. Ps appealed.