ORLOFSKY, District Judge:
Plaintiff and Defendants have filed cross-motions for summary judgment on Plaintiff's claims for reformation and rescission of a group professional liability policy issued by Plaintiff to Defendants for coverage during the period from December 2, 1993, to December 1, 1994 ("the 1994 Policy"). This Court is vested with subject matter jurisdiction pursuant to 28 U.S.C. § 1332, based upon diversity of citizenship and alleged damages in excess of fifty thousand dollars, exclusive of interest and costs.
The primary issues raised in Plaintiff's motion for summary judgment are: (1) whether a Praecipe to Issue Writ of Summons is a "claim" or a "circumstance which may result in a 'claim' within the meaning of the 1994 Policy;" and (2) if so, whether the Defendants' failure to include any reference to the Praecipe in the application for the 1994 Policy amounts to a material misrepresentation entitling the Plaintiff to rescind the Policy. For the reasons that follow, I conclude that the answer to both questions raised by Plaintiff's motion is yes. Accordingly, Plaintiff's motion for summary judgment on his claim for rescission of the 1994 Policy will be granted. Defendants' motion for summary judgment on Plaintiff's claim for rescission will be denied, and Defendant's motion for summary judgment on Plaintiff's claim for reformation will be dismissed as moot.
I. Facts and Procedural Background
Plaintiff, Stephen Bruce Booker, is the Lead Reresentative for Certain Underwriters at Lloyd's of London subscribing to a master policy of insurance issued in connection with an insurance plan sponsored by the American Society of Civil Engineers ("ASCE"). (Amended Complaint P1). Members of ASCE can apply for professional liability insurance under the ASCE-sponsored plan through the plan's broker/administrator, Kirke-Van Orsdel, Inc. ("KVI").
Defendant, Terry Blackburn, is the sole principal, engineer, owner, director and officer of Defendant, Blackburn Engineering Associates, P.A. ("Blackburn Engineering"). (Certification of Terry Blackburn in Opposition to Plaintiff's motion for summary judgment ("Blackburn Cert.") P1).
In 1985, the University of Pennsylvania entered into a contract with an architectural firm known as the Hillier Group to design the Steinberg Conference Center ("SCC"), a large multi-story building on the campus of the University. On February 5, 1985, the Hillier Group then contracted with Blackburn Engineering to provide the structural engineering services for the SCC. (Blackburn Cert., Ex.A, p. 14).
Shortly after the completion of the construction of the SCC, the University expressed concerns regarding leaking in the brickwork and water infiltration through the masonry causing damages to the interior. (Id. at 18, 21). Blackburn was aware of the University's concerns and attended meetings during which the University discussed its concerns with the various participants in the construction of the SCC. (Id. at 21-22).
On September 1, 1993, Defendant, Blackburn, received a certified letter, dated August 24, 1993, from counsel for the University of Pennsylvania stating, "enclosed please find your service copy of the University of Pennsylvania's Praecipe to Issue Writ of Summons and Summons with regard to the above-captioned matter. If you need any additional information, please feel free to contact me." (Kallianis Cert., Ex.1). Enclosed with the letter was a Praecipe
bearing the caption "The Trustees of the University of Pennsylvania . . ., Plaintiff, vs. The Hillier Group,. . . Blackburn Engineering . . . Defendants," filed with the Court of Common Pleas, Philadelphia County, Trial Division, file-stamped as received on August 23, 1993, and designated "August Term 1993, No. 3187." Id.
In December, 1993, Defendant, Blackburn, submitted a "Civil Engineers Professional Liability Insurance Application" ("the Application") to KVI. (Kallianis Cert. Ex.3). In response to the application, on December 14, 1993, KVI issued an Evidence of Insurance form ("EOI") notifying Blackburn that coverage had been effected under the plan for him and Blackburn Engineering, for the period from December 1, 1993, to December, 1994. (Kallianis Cert., Ex.5).
Included with the EOI was a specimen policy form that set forth the terms, conditions and exclusions of the ASCE master policy. (Kallianis Cert., Ex. 5).
On June 30, 1994, the University of Pennsylvania filed the complaint against Blackburn Engineering and the various other defendants named in the action commenced by the Praecipe in August, 1993. (Blackburn Cert. P21). The allegations in the complaint against Blackburn Engineering relate to Blackburn Engineering's provision of structural engineering services for the University in connection with the construction of the SCC facility on its campus during the time period from 1986 to 1989. As was the Praecipe, the complaint, captioned The Trustees of the University of Pennsylvania v. The Hillier Group; Lehrer/McGovern/Bovis; Blackburn Engineering; Davis-Giovinazzo Construction Co.; US Roofing Corp., et al., No. 3187, was filed in the Court of Common Pleas of Philadelphia County. (Kallianis Cert., Ex. 5).
Shortly thereafter, on August 8, 1994, Blackburn sent a copy of the complaint to KVI for the provision of a defense pursuant to the 1994 Policy.
On October 5, 1995, Plaintiff filed in this Court the original complaint in this action, alleging that he is entitled to a reformation of the 1994 Policy due to a material variance between the bargain reached between the parties and the terms of the policy. Specifically, Plaintiff contended that Blackburn Engineering was included as an insured on the policy of Terry Blackburn as a result of a mutual mistake and the 1994 Policy should be reformed to omit Blackburn Engineering as a named insured. (Original Complaint PP18-22).
Plaintiff was granted leave to file and did file an amended complaint on August 14, 1996, incorporating the earlier reformation claim and adding a claim for rescission of the insurance policy. In the amended complaint, Plaintiff alleges that rescission is appropriate based on "intentional material misrepresentations made in the Application on which Certain Underwriters relied in issuing the EOI in connection with the Master Policy." (Amended Complaint P39).
Defendants now move for summary judgment on Plaintiff's claims for reformation and rescission,
while Plaintiff cross-moves for summary judgment on its rescission claim.
II. Summary Judgment Standard
A party seeking summary judgment must "show that there is no genuine issue as to any material fact and that [he or she] is entitled to judgment as a matter of law." Fed. R. Civ. P. 56 (c). See also Orson, Inc. v. Miramax Film Corp., 79 F.3d 1358, 1366 (3d Cir. 1996); Hersh v. Allen Products. Co., 789 F.2d 230, 232 (3d Cir. 1986); Lang v. New York Life Ins. Co., 721 F.2d 118, 119 (3d Cir. 1983). In deciding whether there is a disputed issue of material fact the Court must view all inferences, doubts and issues of credibility in favor of the non-moving party. See Pennsylvania Coal Ass'n v. Babbitt, 63 F.3d 231, 236 (3d Cir. 1995); Helen L. v. DiDario, 46 F.3d 325, 329 (3d Cir.), cert. denied, 116 S. Ct. 64 (1995); Hancock Indus. v. Schaeffer, 811 F.2d 225, 231 (3d Cir. 1987) (citation omitted); Meyer v. Riegel Prods. Corp., 720 F.2d 303, 307 n.2 (3d Cir. 1983), cert. denied, 465 U.S. 1091, 79 L. Ed. 2d 910, 104 S. Ct. 2144 (1984). The threshold inquiry is whether there are "any genuine factual issues that properly can be resolved only by a finder of fact because they may reasonably be resolved in favor of either party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 250, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).
Moreover, Federal Rule of Civil Procedure 56(e) provides:
When a motion for summary judgment is made and supported as provided in this rule, an adverse party may not rest upon the mere allegations or denials of the adverse party's pleading, but the adverse party's response, by affidavits or as otherwise provided in this rule, must set forth specific facts showing that there is a genuine issue for trial. If the adverse party does not so respond, summary judgment, if appropriate, shall be entered against the adverse party.
Fed. R. Civ. P. 56 (e).
Under this rule, a party must be awarded summary judgment on all properly supported issues identified in its motion, except for those for which its opponent has provided evidence to show that a question of material fact remains. Put another way, once the moving party has properly supported its motion, "its opponent must do more than simply show that there is some metaphysical doubt as to material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). A summary judgment movant may meet its burden by showing that the opposing party is unable to meet its burden of proof at trial. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). Nonetheless, the moving party bears the initial responsibility of demonstrating the absence of a genuine issue of material fact. Id.
A. Plaintiff's Motion for Summary Judgment
Plaintiff moves for summary judgment on his claim for rescission of the 1994 Policy contained in his amended complaint. Under New Jersey law,
an insurer may rescind a policy when the insured makes a false statement in the insurance application that materially affects the acceptance of the insurance risk. Scalia v. Lafayette Life Ins. Co., 1995 U.S. Dist. LEXIS 15944, No. 92-3714, 1995 WL 631841 (D.N.J. Oct. 23, 1995)(applying New Jersey law); Ledley v. William Penn Life Ins. Co., 138 N.J. 627, 637-38, 651 A.2d 92 (1995); Massachusetts Mut. Ins. Co. v. Manzo, 122 N.J. 104, 111, 584 A.2d 190 (1991).
Thus, in order for Plaintiff to succeed on his motion for summary judgment on his claim for rescission, Plaintiff must establish that the Defendants' application for insurance contained misrepresentations which were both knowing and material.
(i) Defendants' Misrepresentations
Plaintiff claims that the Defendants knowingly misrepresented information on the application for insurance by failing to include in the application any reference to the Praecipe filed by the University of Pennsylvania naming Blackburn Engineering as a defendant. The undisputed facts contained in the summary judgment record reveal that on September 1, 1993, Defendant, Blackburn, received a certified letter, dated August 24, 1993, from counsel for the University of Pennsylvania stating, "enclosed please find your service copy of the University of Pennsylvania's Praecipe to Issue Writ of Summons and Summons with regard to the above-captioned matter. If you need any additional information, please feel free to contact me." (Kallianis Cert., Ex.1). Enclosed with the letter was the Praecipe filed with the Court of Common Pleas, Philadelphia County, Trial Division, file-stamped as received on August 23, 1993, and designated "August Term 1993, No. 3187." Id.
Blackburn applied for the 1994 Policy through the ASCE program on December 8, 1993, just over three months after his receipt of the Praecipe. (Kallianis Cert., Ex.3). When asked the following two questions on the application for the 1994 policy, Blackburn made no reference whatsoever to the Praecipe filed by the University of Pennsylvania:
15K. Are you aware of any circumstances which may result in a claim being made against you?
16. Have any claims been made or legal actions been brought against you in the past five years?