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Skarzynski Marick Prevails in Seventh Circuit Rescission Case
Skarzynski Marick & Black LLP attorneys Mike Marick and Joel Vander Vliet secured an appellate victory for Grinnell Mutual Reinsurance Company affirming the lower court’s ruling on summary judgment entitling Grinnell to rescission.
Grinnell filed suit in the United States District Court for the Northern District of Illinois, seeking rescission of general liability and commercial auto insurance policies issued to S.B.C. Flood Waste Solutions, Inc. based on material misrepresentations in the company’s insurance applications. The court granted summary judgment in Grinnell’s favor, holding that the insurance application failed to disclose: (1) uninsured business operations by the company and its founders through an alter ego company; and (2) circumstances that could lead to a claim, namely a long-running dispute with their former employer, a competing company with a similar name operated by members of their family. The court also held that the misrepresentations were material based on the uncontroverted testimony of Grinnell’s underwriter.
The United States Court of Appeals for the Seventh Circuit affirmed, finding the failure to disclose “an ongoing dispute with a former employer concerning use of its company name, in the same industry, in the same geographic area, and that results in a lawsuit alleging exactly this” was a misrepresentation. Grinnell Mutual Reinsurance Company v. S.B.C. Flood Waste Solutions, Inc., 113 F.4th 768, 775 (7th Cir. 2024). Finding “no difficulty determining that the misrepresentations were material,” Judge Joshua Kolar wrote for panel: “Objectively, failing to disclose a dispute that already had led to the parties exchanging letters threatening litigation is material.” Id.
Grinnell filed suit in the United States District Court for the Northern District of Illinois, seeking rescission of general liability and commercial auto insurance policies issued to S.B.C. Flood Waste Solutions, Inc. based on material misrepresentations in the company’s insurance applications. The court granted summary judgment in Grinnell’s favor, holding that the insurance application failed to disclose: (1) uninsured business operations by the company and its founders through an alter ego company; and (2) circumstances that could lead to a claim, namely a long-running dispute with their former employer, a competing company with a similar name operated by members of their family. The court also held that the misrepresentations were material based on the uncontroverted testimony of Grinnell’s underwriter.
The United States Court of Appeals for the Seventh Circuit affirmed, finding the failure to disclose “an ongoing dispute with a former employer concerning use of its company name, in the same industry, in the same geographic area, and that results in a lawsuit alleging exactly this” was a misrepresentation. Grinnell Mutual Reinsurance Company v. S.B.C. Flood Waste Solutions, Inc., 113 F.4th 768, 775 (7th Cir. 2024). Finding “no difficulty determining that the misrepresentations were material,” Judge Joshua Kolar wrote for panel: “Objectively, failing to disclose a dispute that already had led to the parties exchanging letters threatening litigation is material.” Id.