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A Video Explaining Some Appellate Decisions on the Equitable Remedy of Rescission

See the full video at https://youtu.be/VCvRj0DsWoo

Resure, Inc. v. Superior Court

In Resure, Inc. v. Superior Court, 42 Cal.App.4th 156, 49 Cal.Rptr.2d 354 (Cal.App. Dist.2 01/31/1996) the California Court of Appeal dealt with a problem raised by statute and who won the race to the courthouse. Resure, Inc., filed a complaint for rescission and declaratory relief against respondents Dan Palmer and Geoffrey Palmer, doing business as G. H. Palmer Associates. The complaint alleged that the Palmers misrepresented material facts or failed to disclose facts concerning potential claims in their application for insurance which would have affected Resure’s decision to underwrite coverage. Resure’s offer to rescind and restore the premiums was stated in the complaint, but not in any notice or letter sent prior to filing it. Resure moved for summary judgment based on its claim for rescission.

The Legislature did not, as the plaintiffs argued in the Resure case, state it intended to abolish the insurers right to rescind. Since that language did not exist the court reasonably concluded that the only rational decision it could draw from the Legislature’s choice of words is that the Legislature did not understand “action on the contract” to mean equitable action to rescind an insurance contract. Rather, it only meant to describe an action brought at law to enforce the insurance policy and obtain as damages the benefits promised by the policy.

Whenever an insured attempts to avoid the effect of a rescission by an insurer it will allege that the insurer waived its right to rescind or is estopped – by its actions – to assert a right to rescind.

Also see descriptions of other cases dealing with the equitable remedy of rescission.


© 2020 – Barry Zalma

Barry Zalma, Esq., CFE, now limits his practice to service as an insurance consultant  specializing in insurance coverage, insurance claims handling, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He also serves as an arbitrator or mediator for insurance related disputes. He practiced law in California for more than 44 years as an insurance coverage and claims handling lawyer and more than 52 years in the insurance business. He is available at http://www.zalma.com and zalma@zalma.com.

Mr. Zalma is the first recipient of the first annual Claims Magazine/ACE Legend Award.

Over the last 52 years Barry Zalma has dedicated his life to insurance, insurance claims and the need to defeat insurance fraud. He has created the following library of books and other materials to make it possible for insurers and their claims staff to become insurance claims professionals.

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