Twogood v. North American Company for Life Health Ins

Full title: CHRISTOPHER J. TWOGOOD, MATTHEW B. TWOGOOD, individually and as…

Court: United States District Court, D. Colorado

Date published: Mar 8, 2006

Civil Action No. 02-cv-1351-JLK (D. Colo. Mar. 8, 2006)

Opinion

Civil Action No. 02-cv-1351-JLK.

March 8, 2006

ORDER RE JURY INSTRUCTION 3.2, 3.3

JOHN KANE JR., Senior District Judge

Upon consideration of the issues raised at Monday's Final Trial Preparation conference regarding the elements of North American's affirmative defense of material misrepresentation, and upon review of the authorities cited by both sides, I have determined to instruct the jury in accordance with the five Hollinger v. Mutual Benefit Life Ins. Co., 560 P.2d 824 (1977). Plaintiffs point that the return of premiums paid — or at a minimum the offer to return them — is a condition precedent to asserting the defense is a valid one, however, and will need to be addressed.

While the issue is not specifically addressed in Hollinger or in later cases applying the Hollinger factors, this appears to be because insurance companies routinely return such moneys in denying payment and whether this was a prerequisite to asserting a material misrepresentation defense was not at issue. In both Murray v. Montgomery Ward Life Ins. Co., 584 P.2d 78, 80 (1978) and Spencer v. Kemper Investors Life Ins. Co., 764 P.2d 408, 410 (Colo.App. 1988), for example, the courts applied the Hollinger factors to insurance companies' material misrepresentation defenses under circumstances where the companies had tendered a return of premiums paid at the time they refused payment as part of the facts giving rise to plaintiffs' claims. Because the gist of any insurer's defense under Hollinger is to void an insurance policy on grounds the insurer would not have issued it absent the insured's knowing misrepresentations or concealment of facts, the defense clearly is in the nature of a rescission. Under no circumstances, then, would an insurer be able to avoid liability under Hollinger while retaining premiums paid under a "void" policy. Should North American prevail on its Hollinger-based defense, then, principles of both law and equity will demand that it return to the Twogood's the total amount of premiums paid under Claude Twogood's policy, with interest from the date it first refused payment.