INSURANCE COVERAGE: Superior Court denies motion to dismiss insurer’s action seeking declaration that policy was void

An insurer sought declaratory judgment that its policy covering the defendants was void, alleging that the defendants provided false and incomplete testimony to bolster the defendant’s brother’s claim against the policy.  The case arose out of a claim that the insured’s brother made against the insureds’ homeowner’s policy after he fell and suffered injuries while working on the insureds’ apartment building.  In the underlying suit, the insureds provided allegedly false testimony to bolster the brother’s claim.

The defendant insureds moved for dismissal of the declaratory judgment, arguing that an insurer may not refuse coverage on the basis of false statements made by the insured and the jury verdict in the underlying claim in favor of the insured’s brother implicitly found that the insureds were truthful.

The Court denied the defendants motion to dismiss, holding that the principle that the defendants relied upon was inapplicable where the allegedly false statements were made in proceedings prior to the declaratory judgment suit.  The Court found that the policy language was broad enough to allow the insurer to void coverage where the insured lied during the underlying claim proceedings. 

Vermont Mutual Ins. Co. v. Natiello, No. 3:17-cv-02050 (9/27/2018)