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Homeowner
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Misrepresentation
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Duty to Cooperate
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DO MISREPRESENTATIONS BAR HOMEOWNERS
COVERAGE?
P.J. and Ann Lenhard purchased property in Altona, New
York, where they planned to build a house. They began
construction on the house in 1998 and arranged for its insurance. When the
original policy was due to expire, the Lenhards'
agent, Andree LaBarge,
contacted Edward Russell, an insurance underwriter, to obtain coverage with
Genesee Patrons Co-operative Insurance Company. When LaBarge
completed the Lenhards' application for them, he
erroneously represented that the house was located 5 miles from the fire
department. In fact, the distance was between 9 and 9.4 miles. Ann Lenhard signed the application form, but did not notice the
error. The application was processed, and construction of the house was
completed in late 2000.
P.J. and Ann both worked for
the Mohawk tribe in the Holistic Healing Clinic located in the Ganienkeh territory. In December 2000, P.J. left his job
under "acrimonious circumstances." P.J. eventually moved to Hawaii while Ann remained in New York to sell the Altona
property. On February 10, 2001, while Ann was visiting family, the Lenhard house burned to the ground. Local police
investigated the fire and found no evidence of arson. Genesee Patrons
interviewed Ann, who misrepresented P.J.'s
whereabouts. Later, she claimed she did this to protect P.J. from the Mohawks.
According to Ann Lenhard, she feared for her family's
physical safety and had been threatened by a member of the tribe.
When Genesee Patrons denied
coverage, the Lenhards filed a legal action. Genesee
Patrons moved for summary judgment, claiming that the Lenhards
were uncooperative and that they made material misrepresentations. The court
found in favor of the Lenhards; Genesee
appealed.
On appeal, Genesee
argued that the Lenhards' property was not 5 miles,
but 9 to 9.4 miles away from the nearest fire department. They claimed that
this fact was sufficiently material to justify noncoverage
because the property had been inaccurately classified as
"semi-protected." According to Genesee,
without this classification, it might have decided not to bind coverage on the
property. The Supreme Court, Appellate Division, Third
Department, New York, acknowledged
Genesee's arguments; however, it found that
the arguments were not sufficient to warrant dismissal of the case before it
went to trial. Neither Edward Russell, the insurance underwriter who worked
with LaBarge on the Lenhards'
policy, nor Francis Spiotta, vice president of Genesee
Patrons, claimed that they would not have underwritten the property if they had
know its distance was 9 to 9.4 miles from the fire station.
Genesee also argued that Ann Lenhard's
misrepresentations concerning P.J. Lenhard's
whereabouts were sufficient to establish that Ann materially breached her duty
to cooperate. Again, the court disagreed. Genesee Patrons did not establish
that she made these misrepresentations with the intent to defraud, or that her
deception, which caused a brief delay, could be found to justify dismissal of
the case before trial.
The court found in favor of
the Lenhards, and the decision of the lower court was
affirmed.
P.J. Lenhard
vs. Genesee Patrons Co-operative Insurance Company-Supreme Court, Appellate
Division, Third Department, New York-July 6, 2006-818 New York Supplement 2d
644 *