New strategies for dealing with first party claims for bad faith

Andris, Robert P

I.

INTRODUCTION

By definition, bad faith claims - both first and third party - involve the same implied covenant of good faith and fair dealing. Breach of that implied covenant involves something more than a breach of the specific duties enumerated in the contract; it involves unfair dealing rather than simply a mistake.

First party bad faith cases are unique, however, in many respects. By definition: "The gravamen of a first party lawsuit is a breach of the implied covenant of good faith and fair dealing by refusing, without proper cause, to compensate the insured for a loss covered by the policy ... or by unreasonably delaying payments due under the policy."1 The trial of these cases, therefore, frequently involves teaching a jury either: (1) why "proper cause" existed for the company's denial of benefits, or (2) why the payments made were not "unreasonably" delayed.

First party bad faith actions are also distinct as to both coverage issues and the defenses available to an insurer. Suit limitation provisions, requests for rescission, incontestability clauses, and demands for arbitration or appraisal are most typically found only in first party claims. Likewise, coverage questions with respect to concurrent causation, actual cash value and replacement cost coverage carry their own unique body of law in the first party arena.

The following materials, therefore, will serve to highlight and reconcile some of the most recent evolving issues in the defense of first party bad faith actions. The article also examines areas of law that are currently unsettled in order to assist the practitioner in handling these claims.

II.

II.

SUIT LIMITATION PROVISIONS

Unlike liability policies, most first party property and life, health and disability policies contain a suit limitation provision designed to limit the period of time within which an insured may bring suit against an insurer "on the policy." Because the time periods involved (typically one or two years) are usually shorter than the applicable statutes of limitations (occasionally up to four years), these provisions can provide a carrier with a powerful defense that may occasion complete dismissal of a bad faith lawsuit. While these provisions have a long history, the courts have raised a number of issues pertaining to the enforceability and scope of these conditions during the past few years. The following analysis, therefore, will highlight these recent developments to assist the practitioner in determining whether the suit limitation provision of a particular policy is enforceable under the specific facts of the claim.

A. Equitable Tolling

Typically, the suit limitation provision begins to run from ". . . that point in time when appreciable damage occurs and is or should be known to the insured."2 In most states, the time period within which an insured may commence suit is tolled during the period of time between when the insured provides notice of loss to the insurer until the insurer denies coverage.' Thus, an insured who makes a timely claim is not compelled to file suit while the insurer is investigating the claim in order to avoid preclusion under the suit limitation provision.

Recently, a number of issues have surfaced regarding when the tolling period ends. Under California law, it is clear that in order to end the tolling period, the insurer's denial of the claim must be in writing.4 Other courts, however, have required something more than a verbal denial, but a formal denial need not always be in writing.5 The Ninth Circuit Court of Appeals has held that a letter may constitute a formal denial despite the fact that it expressed the insurer's willingness to consider additional information.6

The courts have also ruled that insurers may be estopped to assert either the statute of limitations or suit limitation provisions where the carrier was either obligated to notify the insured of the applicable time limit and the carrier failed to do so, or where the insurer's affirmative conduct caused the insured to delay filing suit. For example, in Spray, Gould & Bowers v. Associated International Insurance Co.,7 the court held that equitable estoppel might lie where the insurer was required to provide a warning of applicable time limits under California's Fair Claims Settlement Practices Regulations, yet did not do so.

Similarly, in Bank of America v. Allstate Insurance Co.,' the insurer allegedly requested that the insured delay filing suit on a forgery claim while the insurer attempted to recover the funds involved. Based on alleged assurances that the insured would be paid if it was patient, a triable issue of fact existed as to whether estoppel would lie.

In Golden v. Faust,9 an adjuster asked three liability claimants not to sue the insured because there was allegedly adequate coverage for all of the claims. The company settled the claims of one plaintiff and promised to settle the other two in the near future. After the statute of limitations had run, the insurance company was estopped to assert the statute as a defense.

The most recent dispute before the California Supreme Court arose from the Ninth Circuit Court of Appeals' request for certification in Vu v. Prudential Property & Casualty Insurance Co.10 Shortly after the Northridge earthquake, Vu had notified his insurer of resulting property damage. The insurer's adjuster inspected Vu's home and informed Vu that the damage he sustained fell significantly below the policy deductible. Vu took no action, but then discovered substantial damage caused by the earthquake after the contractual suit limitation had expired. The carrier denied the claim on the basis of the suit limitation provision. The question whether estoppel will lie under such facts is presently pending before the California Supreme Court.

B. Scope of the Suit Limitation Provision

Within this context, a frequent issue concerns whether a suit limitation provision will bar a bad faith or other related tort claim against an insurer when the underlying breach of contract claim is time-barred. Despite the differing views on this issue, as noted below, the modern trend holds these provisions enforceable not only as to pure contract claims, but also as to claims that are dependent on the breach of contract claim.

Some courts have held that the limitations provisions do not apply to claims for breach of the implied covenant of good faith and fair dealing. These courts have reasoned that the duty of good faith and fair dealing "is not strictly a contractual obligation."11

Other courts have adopted the view that the limitations provision in the policy applies to a claim for breach of the implied covenant of good faith and fair dealing when the "bad faith" claim stems from claims mishandling.12 However, more support is found for the view that suit limitation provisions should act to bar all implied covenant causes of action. First, it should be noted that the implied covenant is "rooted" in the insurer's contractual obligations; therefore, the implied covenant holds no life independent of its contractual underpinnings." As such, the court is not at liberty to imply a covenant directly at odds with the language of the contract itself.14

Further, the covenant of good faith is read into contracts in order to protect the expressed covenants or promises in the contract. The covenant does not protect some general public policy interest that is not directly tied to the contractual purpose.15 Hence, to the extent that any claim for breach of contract is barred by the suit limitation provision, so should any claim for breach of the implied covenant arising therefrom.

III.

MISREPRESENTATIONS AT APPLICATION OR DURING CLAIM: CAN THE CARRIER RESCIND?

By definition, when a carrier successfully rescinds an insurance policy, the insured's contract rights are extinguished as though the policy never had effect: "[A] rescission effectively renders the policy totally unenforceable from the outset so that there never was any coverage and no benefits are payable."6 While California Insurance Code section 650 only permits insurer rescission "at any time previous to the commencement of an action on the contract," this statute has been interpreted to allow a carrier to raise the ground for rescission as a defense to the insured's action on the policy."

While insurers may rescind a policy on grounds of mistake and breach of warranty, the following analysis considers the two predominant grounds for rescission, i.e., misrepresentations or concealment in the application process or during the course of the claims process itself. Of course, with respect to all of the grounds for rescission, the insurer bears the burden of proof to establish facts supporting rescission." In addition to the need to raise rescission as a defense to a suit for policy benefits, it should also be noted that, since rescission is an equitable remedy, it is subject to the equitable defense of laches.11 Special rules regarding policies that include what are known as "incontestability clauses" are also relevant to these discussions.

A. Misrepresentation in the Application - Subjective Materiality

In order to justify rescission on grounds of misrepresentation or concealment in the application process or the claims process, the representation made must be false in "material" part.10 The question of "materiality" differs, however, depending on whether the misstatement was made in the application process or during the course of the claim.

With respect to questions and answers in an insurance application, the materiality of a misrepresentation is analyzed by a "subjective" test.2" That is, would the particular insurer involved in the claim have issued the policy if truthful answers had been provided.22

Currently, the California courts are split on the issue of whether an insured's answers to questions in the insurance application must be considered material as a matter of law. Some courts have held that the very fact that the insurer put the questions in writing was proof that it deemed the answers material.23 Other courts have held that, despite an incorrect answer on an insurance application, the question to be resolved regarding materiality is whether the true facts, if known, would have made the contract less desirable to the insurer." However, the question whether a misrepresentation was "material" can itself become an issue of law where the facts are undisputed and reasonable minds could not disagree on their impact."

B. Misrepresentations During Claims Process - "Objective" Materiality

Unlike rescission for misrepresentations made during the application process, in order to rescind a policy based on the insured's misrepresentations during the claims process, the ". . . false statement must have been knowingly and willfully made with the intent ... of deceiving the insurer."26 Nevertheless, the "intent to deceive" can be implied from the fact that an insured made a statement that he or she knew to be false. For example, in Cummings v. Farmers,27 the insured's son caused damage to her property, but she was afraid her son would harm her if she told the insurance company. As such, the mother reported that the property loss was caused by vandalism. The court ruled that the insured's reason for making the misrepresentation to the insurance company was irrelevant. Since she knew she was making a false statement on a material point, the policy was void as a matter of law.

A misrepresentation is "material" if it concerns a subject reasonably relevant to the insurer's investigation, and if a reasonable insurer would attach importance to the fact misrepresented." Thus, it is said that materiality of a misstatement in the claims handling process is determined by an "objective" standard when assessing its effect upon a reasonable insurer.

One California court recently has held that misrepresentations which do not relate to the policy or to the cause of the loss are "non-material;" therefore, they cannot be used to rescind a policy. In Leasure v. MSI Insurance Co.,29 the insureds filed two claims that were settled by the insurer with checks written to the insureds and a lienholder. The insureds forged the lienholder's signature on the checks and negotiated the same. When the insureds presented a third claim, the insurance company discovered the two prior forgeries and attempted to rescind the policy. The court held, as a matter of law, that because the forgeries did not concern the claim at issue, the forgeries could not be used to void the policy.

C. Effect of Incontestability Clauses

Pursuant to statute, group life, individual life and disability insurance policies typically contain incontestability clauses. An incontestability clause prescribes a time limit within which the insurer must discover and assert any grounds it might offer to justify rescission based on misstatements or omissions in the insurance application.30 In essence, these provisions prohibit carriers from collecting premiums for many years and then investigating an insured's medical history only when a claim is submitted.

To further this policy, incontestability clauses are strictly enforced, oftentimes with harsh results. Even if the misrepresentation results from the insured's "gross fraud," the policies are enforceable.31

Despite the broad sweep of the incontestability clause, under specific circumstances, carriers may attempt to void the policy from its inception for lack of an insurable interest. For example, where one person uses the name of a seriously ill person when applying for life insurance and takes the physical examination for the applicant who is ill, no contractual relationship exists between the insurer and the seriously ill person. Therefore, the insurer can seek to void the policy even after the expiration of the contestability period.32 However, if the person who applies for insurance simply hires another person to appear for the medical exam, a contractual relationship exists, and the fraud of using an imposter must be discovered during the contestability period. In Amex Life v. Superior Court,33 for example, an applicant falsely represented that he had not contracted the AIDS virus. Despite the fact that he sent a healthy friend to take the physical examination, the carrier was barred from voiding the policy since that fraud was not discovered during the two-year contestability period.

IV.

CONCURRENT CAUSATION OR MULTIPLE CHARACTERIZATIONS WHICH IS WHICH?

In most states, first party claims are covered if an insured peril is the "efficient proximate cause" of a loss, even if non-insured perils may have contributed to the loss." The "efficient proximate cause" of a loss has been defined as the "predominating cause of the loss."35 In many cases, the question as to which of two or more causes of a loss should be considered the "efficient proximate cause" of the loss is for the jury.36

Under certain situations, however, an insurer is not required to engage in the "concurrent" causation analysis. Specifically, when a loss results from a single cause, the concurrent causation doctrine is inapplicable by definition. In these situations, insurers are frequently faced with various "characterizations" of the cause of loss in an effort by insureds or their counsel to create coverage where none exists.

Most recently, in Piper v. Commercial Underwriters Insurance Co.,37 an insured's home and art collection were destroyed by a fire that started seven miles from the insured residence and swept up a canyon, destroying the insured's home. The canyon fire had been set by an arsonist, and the insured's policy unambiguously excluded coverage for losses caused by a "brush fire."

The insureds contended that the fire was caused by "arson" and therefore covered by the policy. The insurer, on the other hand, argued that the loss was caused by an excluded peril, i.e., a "brush fire." The trial court awarded summary judgment to the carrier and the California Court of Appeal affirmed. The court held: "We find that the cause of the Pipers' loss, damage to their fine arts collection, was due to one cause, the brush fire. The cause of the brush fire under the circumstances in which it was ignited seven miles from the Pipers' residence is irrelevant to the issue of coverage."38

At least two other California cases have reached the same conclusion. In Chadwick v. Fire Insurance Exchange,30 the walls of the insureds' residence cracked as a result of negligent framing by the contractor who built the home. The policy excluded damage from "cracking," "latent defects," and "inherent vice." The appellate court rejected the insureds' characterization that the cracking and latent defects resulted from "contractor negligence" (a covered peril) and ruled that the specific exclusions for the true cause of loss precluded coverage.

Similarly, in Finn v. Continental Casualty Insurance Co.,' the insured's property was damaged by leaks from a broken sewer pipe. The policy at issue precluded coverage for damages resulting from seepage or leakage. Since there was no evidence that any external force caused the break, and since the only cause of the loss was leakage, the concurrent causation analysis never came into play. As noted by the Finn court, an efficient proximate cause analysis only applies when there are "two distinct or separate perils" which "could each, under some circumstances, have occurred independently of the other and caused damage."4 When the damage results only from a "single cause, albeit one susceptible to various characterizations," the efficient proximate cause analysis has no application:42

If every possible characterization of an action or event were counted as an additional peril, the exclusions in all-risk insurance contracts would be largely meaningless. An earthquake, it could be said, was merely the immediate cause of the loss and was itself the result of `changing tectonic force,' a non-excluded peril . . . An exclusion for freezing plumbing could be avoided by the simple observation the pipes would not have frozen absent `very low temperature,' a non-excluded, and hence covered peril.43

The critical analysis in these situations is determining whether the cause of the loss is encompassed within the scope of the exclusionary provision at issue. Efforts by the insured or counsel to re-characterize the cause of the loss should be rejected:

'[J]ust as a leak cannot occur without a break in a pipes [sic], a brush fire cannot occur without a source of ignition.' There are certain elements required to create a fire - oxygen, combustible material and a source of ignition. By labeling this fire as an "arson fire" the Piepers have artificially divided these elements into separate perils, which thereby flies in the face of common sense and the mutual intention of the parties.'

V.

ACTUAL CASH VALUE VERSUS REPLACEMENT COST COVERAGE

The Standard Form Fire Policy contained in California Insurance Code section 2071 requires insurers to pay the "actual cash value" of an insured fire loss. The phrase "actual cash value" has been interpreted to mean the "fair market value" of the property immediately before the loss. In turn, the phrase "fair market value" is defined as the price that a willing buyer would pay a willing seller.45

Recently, in Cheeks v. California Fair Plan Association,46 the policy at issue provided that it covered the "actual cash value at the time of loss but not more than the amount required to repair or replace the damaged property." Under such language, the appellate court held that the insurer was obligated to pay the full cost of repairs, subtracting no amount for depreciation.

Other issues arise under policies that agree to provide "replacement cost" coverage instead of "actual cash value" coverage. The phrase "replacement cost" is defined as meaning the cost of rebuilding the dwelling on the same site.48

Replacement cost coverage can often result in a windfall to the insured. Since these policies provide coverage for replacement cost without deduction for depreciation, the insured receives a betterment, i.e., the insured receives a new dwelling as replacement for an old dwelling.49 While actual cash value coverage effectively provides complete "indemnity" for the loss suffered by the insured, replacement cost coverage can result in payment of sums which greatly exceed the pre-loss value of the insured premises. This is especially true in situations involving mass losses to properties in highly populated areas, since the cost of rebuilding will generally increase exponentially (for example, the Oakland Hills fire and the Northridge earthquake).

Because of the nature of replacement cost coverage, some policies provide that the insurer will not pay more than the actual cash value for the damaged property until the repair or replacement is completed. That is, the insurance company is entitled to withhold or "hold back" a portion of the policy benefits until the replacement or repairs are made. The California courts, in particular, have enforced an insurer's right to withhold the difference of actual cash value and the replacement cost until the repair or replacement is complete.50

In Conway v. Farmers Home Mutual Insurand Co.,51 the Conways had owned a home which cost $230,000.00 and had obtained $100,000.00 in fire insurance on the property. When the home was damaged by fire, the appraisers assessed the replacement cost of the loss at $ 90,721.00 but the actual cash value of the property destroyed was $76,279.44.

During the appraisal process, instead of repairing the home, the Conways paid $230,000.00 for another home. After the appraisal, the insurer paid the Conways the actual cash value of the property destroyed. In response, the Conways sued for declaratory relief, arguing that the carrier was obligated to pay the replacement value of the loss rather than its actual cash value.

The California Court of Appeal hels that the term "replace" could mean restoring property to a former place, position or condition. However, the term also includes the notion of substituting for an original item another item which serves the same function as the original, but differs in nature from the original.52

VI.

DEMANDS FOR ARBITRATION OR APPRAISAL

Appraisal and arbitration provisions are typical components of both fire and automobile insurance policies. In California, the Standard Form Fire Insurance Policy requires that any dispute between the insured and the insurer regarding the amount of loss be resolved by appraisal. 53 Likewise, the California Insurance Code requires binding arbitration in uninsured and underinsured motorist claims when the insurer and the insured cannot agree about the uninsured motorist's liability or the amount of the insured's damages. 54 Contractual arbitration provisions are also typically found in agreements between patients and health maintenance organizations,ss

Despite the fact that public policy favors enforcing agreements to arbitrate, and even though statutes may prohibit litigating a carrier's election to arbitrate, the court in Hightower v. Farmers Insurance Exchange 16 has explained that an unreasonable demand for arbitration may constitute a breach of the implied covenant of good faith and fair dealing. In Hightower, the insured was involved in an automobile accident with an uninsured motorist. She made a claim for uninsured motorist benefits under a policy issued by Farmers Insurance Exchange ("FIE"). FIE disputed the claim and the matter was submitted to arbitration. The arbitration concluded in Hightower's favor, following which FIE paid the policy benefits to Hightower.

Hightower later filed suit against FIE for breach of contract, breach of the implied covenant and other related torts. FIE moved for judgment on the pleadings on grounds that Insurance Code section 11580.26 barred the imposition of liability against FIE for exercising its right to request arbitration. The trial court granted FIE's motion, but the appeals court reversed.

The Court of Appeal first noted that California Insurance Code section 11580.26(b) in fact states that no cause of action "...shall exist against either an insured or insurer from exercising the right to request arbitration of a claim under this section...".57 Nevertheless, the court rejected FIE's argument that that statute creates an absolute privilege to demand arbitration of any and all dosputes:

Under [FIE's] interpretation of the statute, an insurer could "stonewall" uninsured motorist claimants in every case but avoid bad faith liability through the simple act of requesting arbitration and refusing to pay until ordered to do so by an arbitrator. We cannot ascribe such an intent to the Legislature.58

On a related issue, the California Supreme Court also has ruled that a party can waive its arbitration right through substantial, unreasonable delay in the arbitration process itself. 59 Dilatory tactics such as stalling on the appointment of an arbitrator within a "reasonable time" after the dispute arises can waive the right to arbitrate. What is "reasonable" depends on the facts of the case and, particularly, whether the delay has prejudiced the opposing party.60

VII.

CONCLUSION

In many respects, true first party cases present the area of greatest exposure for insurers from the standpoint of jury sympathy and potential punitive exposure. The rules governing this relationship, as articulated by state courts and state regulations passed by their insurance departments, lend an additional sophistication to the relationship and the importance with which the insurer must treat that relationship.

1Waters v. USAA, 48 Cal. Rptr.2d 910, 914 (Ct. App. 1996) (citing Gruenberg v. Aetna Ins. Co., 510 P.2d 1032 (Cal. 1973)).

2Prodential-LMI Commercial Ins. Co. v. Superior Court, 798 P.2d 1230, 1232 (Cal. Ct. App. 1990).

3Prudential-LMI Commercial Ins., 798 P.2d at 1232; Ali, Inc. v. Generali, 954 F. Supp. 118, 120 (D.N.J. 1997); Ford Motor Co. v. Lumberman's Mut. Cas. Co., 319 N.W.2d 320, 325 (Mich. 1985)- Peloso v. Hartford Fire Ins. Co.,641 F. Sums. 40, 42 (E.D.Pa. 1985).

4Prudential-LMI Commercial Ins., 798 P.2d at 1238.

Bourke v. North River Ins. Co., 324 N.W.2d 52 (Mich. Ct. App. 1982). 6Doty v. State Farm, 985 F.2d 572 (9th Cir. 1993).

784 Cal. Rptr.2d 552, 556 (Ct. App. 1999).

829 F. Supp.2d 1129, 1137 (C.D.Cal. 1998). 9766 F.2d 1339, 1341 (9th Cir. 1985).

10 172 F.3d 725 (9th Cir. 1998), cert. granted July 28, 1999.

11 Frazier v. Metropolitan Life Ins. Co., 214 Cal. Rptr.2d 883, 890 (Ct. App. 1985) (quoting Murphy v. Allstate Ins. Co., 147 Cal. Rptr. 565, 574 (Ct. App. 1978)); see also Christiansen v. First Ins. Co. of Hawaii, 963 P.2d 345 (Haw. 1998); Emenyonu v. State Farm, 885 P.2d 320 (Colo. Ct. App. 1994); Thomas v. Allstate Ins. Co., 974 F.2d 706 (6th Cir. 1992); Flickinger v. Ninth Dist. Product Credit Assn. 824 P.2d 19 (Colo. Ct. Ann. 1991).

Velasquez v. Truck Ins. Exchange, 5 Cal. Rptr.2d 1,18 (Ct. App. 1991); see also Prito v. State Farm Ins. Co., 275 Cal. Rptr. 362 (Ct. App. 1990); CBS Broad. Co. v. Fireman's Fund Ins. Co., 83 Cal. Rptr.2d 197, 203 (Ct. App. 1999); Abari v. State Farm Mut. Ins. Co., 252 Cal. Rptr. 565, 568 (Ct. App. 1988); Sullivan v. Allstate Ins. Co., 964 F. Supp. 1407, 1415 (C.D.Cal. 1997); see also Zieba v. Middlesex Mut. Assurance. Co., 549 F. Supp. 1318 (D.Conn. 1982); Barrow Dev. Co. v. Fulton Ins. Co., 418 F.2d 316 (9th Cir. 1969).

Love v. Fire Ins. Exchange, 271 Cal. Rptr. 246 (Ct. App. 1990).

'4 New Hampshire Ins. Co. v. Rideout Roofing Co., 80 Cal. Rptr.2d 286 (Ct. App. 1998). 15 Foley v. Interactive Data Corp., 765 P.2d 373, 394 (Cal. 1988); see also Carma Developers v. Marathon Development California, Inc., 826 P.2d 710, 726 (Cal. 1992).

16 Imperial Cas. & Indem. Co. v. Sogomonian, 243 Cal. Rptr. 639, 645 (Ct. App. 1988); see also CAL. INs. CODE 650 (2000).

17 Resure, Inc. v. Superior Court, 49 Cal. Rptr.2d 354, 357 (Ct. App. 1996). 18 See Thompson v. Occidental Life Ins. Co., 513 P.2d 353, 362 (Cal. 1973). 19 Cole v. Calaway, 295 P.2d 84, 89 (Cal. Ct. App. 1956).

zu See CAL. INS. CODE 359, 10380 (2000).

2t Thompson v. Occidental Life Ins. Co., 513 P.2d 353, 359 (Cal. 1973); CAL. INS. CODE 334,360 (1999).

22 Imperial Cas. Co. v. Sogomonian, 243 Cal. Rptr. 639, 645 (Ct. App. 1988). 23 Thompson, 513 P.2d at 360; Cohen v. Penn Mut. Life Ins. Co., 312 P.2d 241,244 (Cal. 1957).

24 Imperial Casualty, 243 Cal. Rptr.2d at 645; Ransom v. Penn Mut. Life Ins. Co., 274 P.2d 633, 637 (Cal. 1954).

25 Imperial Casualty, 243 Cal. Rptr. at 645; Taylor v. Sentry Life Ins. Co., 729 F.2d 652, 654-55 (9th Cir. 1984) (where insured misrepresented weight by almost fifty percent and denied a history of diabetes, carrier was entitled to rescind as a matter of law); Williamson & Vollmer Eng'g v. Sequoia Ins. Co., 134 Cal. Rptr. 427,434 (Ct. App. 1976) (engineers withheld information regarding a pending malpractice claim when applying for malpractice insurance)

26 Cummings v. Farmers Ins. Exchange, 249 Cal. Rptr.2d 568. 571-72 (Ct. App. 1988).

27Id.

28Id. at 573.

2975 Cal. Rptr.2d. 900. 903 (Ct. App. 1998).

30 Amex Life Assurance Co. v. Superior Court, 930 P.2d 1264, 1267 (Cal. 1997); see also New York Life Ins. Co. v. Hollender, 237 P.2d 510 (Cal. 1951).

31 Metzinger v. Manhattan Life Ins. Co., 455 P.2d 391, 395 (Cal. 1969); see also John Hancock Mut. Life Ins. Co. v. Green 71 Cal. Rptr.2d 48, 50 (Ct. App. 1998) (incontestability clause barred rescission where disability insurance applicant falsely stated he had never been treated for a back injury); United Fidelity Life Ins. Co. v. Emert, 57 Cal. Rptr.2d 14, 17 (Ct. App. 1996) (where insured concealed disabling health problem when applying for insurance and intentionally delayed submitting his claim during the contestability period, incontestability clause prevented rescission).

"See Amex Life Assurance Co. v. Superior Court, 930 P.2d 1264, 1271 (Cal. 1997). 331d.

"CAL. INS. CODE 530,532; see also Garvey v. State Farm Fire & Cas. Co., 770 P.2d 704, 714 (Cal. 1998); Lynch v. Travelers Indem. Co., 452 F.2d 1065 (8th Cir. 1972); Wilkerson Shoe Co. v. Underwriters Ins. Co., 404 F. Supp. 1051 (N.D. Okla. 1975); Essex House v. St. Paul Fire & Marine Ins. Co., 404 F. Supp 978 (S.D. Ohio 1975).

35 Garvey, 770 P.2d at 707; see also Berry v. Commercial Union Ins. Co., 87 F.3d 387, 391 (9th Cir. 1996).

36 Garvey, 770 P.2d at 715.

37 69 Cal. Rptr.2d 551 (Ct. App. 1997).

38ID. at 560.

3921 Cal. Rptr.2d 871 (Ct. App. 1993).

40267 Cal. Rptr.2d 22 (Ct. App. 1990).

41Id. at 24.

42Chadwick. 21 Cal. Rptr.2d at 874.

43Id.

44Pieper v. Commercial Underwriters Ins. Co., 69 Cal. Rptr.2d 551, 560 (Ct. App. 1997).

45Jefferson Ins. Co. v. Superior Court, 475 P.2d 880, 882 (Cal. 1970).

4671 Cal. Rptr.2d 568 (Ct. App. 1998).

47Id. at 572.

48Conway v. Farmers Home Mut. Ins. Co., 31 Cal. Rptr.2d 883, 885 (Ct. App. 1994).

49Id. at 884.

50ID.

51Id. at 886.

52Id.

53CAL. INS. CODE (sec) 2017; Gebers v. State Farm Gen. Ins. Co., 45 Cal. Rptr.2d 725, 726 (Ct. App. 1995).

54See also CAL. INS. CODE (sec) 11580.2(f) (1999); Goulart v. Crum & Forester, 271 Cal. Rptr. 627, 628 (Ct. App. 1990).

55See generally Madden v. Kaiser Foundation Hospitals, 552 P.2d 1178, 1182 (Cal. 1976); Wolitarsky v. Blue Cross of California, 61 Cal. Rptr.2d 629, 634 (Ct. App. 1997).

56Hightower v. Farmers Ins. Exchange, 45 Cal. Rptr.2d 348 (Ct. App. 1995).

57CAL. INS. CODE (sec) 11580.26(b) (2000).

See generally Madden v. Kaiser Foundation Hospitals, 552 P.2d 1178, 1182 (Cal. 1976); Wolitarsky v. Blue Cross of California, 61 Cal. Rptr.2d 629, 634 (Ct. App. 1997).

56 Hightower v. Farmers Ins. Exchange, 45 Cal. Rptr.2d 348 (Ct. App. 1995). 57 CAL. INS. CODE 11580.26(b) (2000).

Bald. at 354; see also Singer v. State Farm Mut. Auto. Ins. Co., 116 F.3d 373 (9th Cir. 1997). 59 Engalla v. Permanente Medical Group, Inc., 938 P.2d 903, 922 (Cal. 1997).

See Spear v. California State Auto. Assn, 831 P.2d 821, 826 (Cal. 1992).

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