The United States District Court for the Southern District of West Virginia, applying West Virginia law, has held that an insurer was entitled to rescind an insurance policy based on the insured's misrepresentations regarding disciplinary complaints and potential claims in a renewal application. Liberty Ins. Underwriters, Inc. v. Martin, 2025 WL 1298110 (S.D. W. Va. May 5, 2025).
Nine separate lawsuits were filed against an attorney due to alleged legal misconduct. The attorney's professional liability insurer filed suit against the attorney and the claimants seeking to rescind and declare the policy void ab initio, citing material misrepresentations in renewal applications. Following a stay due to the attorney's bankruptcy proceedings, the insurer moved for summary judgment.
The court granted the insurer's motion, holding that the attorney's misrepresentations were material as a matter of law. Under West Virginia law, "a misrepresentation of any fact which is material to the risk made by an applicant for insurance will avoid any policy issued pursuant thereto."
In reaching its decision, the court analyzed West Virginia Code ยง 33-6-7, which permits rescission based on fraudulent or material misrepresentations. The court stated that while "the question of materiality is generally a question for a jury, 'if the evidence excludes every reasonable inference except that the misrepresentation was material, then the question of materiality becomes one of law for the court.'" Here, the insurer submitted affidavits and underwriting documentation showing that the attorney knowingly failed to disclose at least 23 disciplinary complaints, two formal statements of charges, and a client demand letter. No counterarguments were raised, nor did the claimants respond to the motion. The court concluded that because the insurer demonstrated that the misrepresentations were material, and such materiality was undisputed, the misrepresentations were material as a matter of law.
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