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American General Life Insurance Co. v. Countrywide Home Loans

August 9, 2007

AMERICAN GENERAL LIFE INSURANCE COMPANY, PLAINTIFF,
v.
COUNTRYWIDE HOME LOANS, STEPHANY LOPEZ, NORBERTO LOPEZ, INDIVIDUALLY AND AS THE ADMINISTRATOR OF THE ESTATE OF BETTY LOPEZ, AND THE ESTATE OF BETTY LOPEZ, DEFENDANTS.



The opinion of the court was delivered by: Hon. Joseph H. Rodriguez

Memorandum Opinion and Order

This matter comes before the Court on motion of Plaintiff American General Life Insurance Company ("Insurer") seeking entry of default judgment pursuant to Fed. R. Civ. P. 55 against Defendant Norberto Lopez ("Mr. Lopez"), individually and as the Administrator of the Estate of Betty Lopez. For the reasons stated below, Insurer's motion will be granted.

Factual History

Decedent Betty Lopez ("Decedent") applied to Insurer on April 22, 2004, seeking the issuance of a policy of term life insurance, with an initial death benefit of $100,000. (Complaint at 3.) Decedent named as her primary beneficiary "Countrywide Home Loans and/or its successors, balance to Stephanie Lopez." (Id.; Exhibit A, Application Part A at 1.) Decedent named Mr. Lopez as a contingent beneficiary. (Id.)

In executing the application for life insurance, Decedent provided material information to Insurer. (Complaint at 3.) Specifically, Decedent responded "no" to a question that asked if she had ever had cancer. (Id. At 4; Exhibit A, Application Part A at 1.) Decedent also responded "no" to a question asking if she had ever used any form of tobacco or nicotine products. (Complaint at 5; Exhibit A, Application Part A at 1.) As part of her execution of the application, Decedent agreed:

I understand that any representation made in this application and relied on by the insurer issuing the policy may be used to reduce or deny a claim or void a policy if: (1) it is within its contestable period; and (2) such misrepresentation materially affects the acceptance of the risk.

(Exhibit A, Application Part A at 5.)

The application process required Decedent to submit to a paramedical exam, at which time Decedent was required to answer truthfully additional questions about her medical history. (Complaint at 5.) In response to an inquiry seeking the reason for her last medical treatment, Decedent stated only "Gyn exam- normal." (Id. at 6-7; Exhibit A, Application Part B at 1.) Moreover, Decedent responded "no" to questions asking (1) if she had ever been treated for cancer, tumors, masses or cysts; (2) if she was currently taking any medication, treatment or therapy or otherwise under medical observation; (3) if she had, in the last ten years, been hospitalized, or had illness, injury or surgery; (4) if she had, in the last ten years, had laboratory tests, treatments or diagnostic procedures, and (5) if she had knowledge of other conditions that the application had not specifically asked her to disclose. (Complaint 7-8; Exhibit A, Application Part B at 2-3.) As part of the paramedical exam, which was part of the application, Decedent acknowledged that by providing fraudulent or misleading information on the application, she could become subject to criminal or civil penalties. (Id. at 5-6; Exhibit A, Application Part B at 4.)

Insurer alleges that based on the representations made by Decedent in her application, it issued Decedent a life insurance policy on July 28, 2004, at the non-tobacco standard rate, with a benefit amount of $100,000. (Complaint at 8; Exhibit B, Policy.) Insurer thereafter received a benefits claim, with a Death Certificate dating Decedent's death as July 26, 2005. (Complaint at 8; Exhibit C, Death Certificate.) The Death Certificate listed cause of death as "cardiopulmonary arrest, sepsis, brain metastasis (cancer), breast cancer." (Id.) Since Decedent had died within two years of the policy being issued, Insurer conducted a contestability investigation. (Complaint at 8.)

As a result of the contestability investigation, Insurer learned, for the first time, that Decedent had the following medical history undisclosed on her application for life insurance:

A. On May 2, 2001, Decedent underwent a gynecological examination, where a breast mass was noted in her doctor's records.

B. On May 30, 2001, Decedent underwent a mammogram, which resulted in the identification of an irregular lump, measuring almost two centimeters on the right breast.

C. At the time of the mammogram, doctors recommended that an ultrasound be performed.

D. On August 6, 2001, Decedent's physician advised her that the ...


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