United States District Court, D. New Jersey
ROBERT F. WALSH, WHITE AND WILLIAMS LLP, PHILADELPHIA, PA, MICHAEL E. DI FEBBO, WHITE AND WILLIAMS LLP, PHILADELPHIA, PA, Attorneys for plaintiff Colony Insurance Company
MICHAEL W. KWASNIK, AVENTURA, FL, Pro se.
NOEL L. HILLMAN, District Judge.
Before the Court is Plaintiff's Combined Motion for Summary Judgment and for Default Judgment. For the reasons set forth below, the Motion will be granted in part and denied in part.
The Court has jurisdiction over this matter pursuant to 28 U.S.C. § 1332 because there is complete diversity of citizenship between the parties and the amount in controversy exceeds $75, 000.
Plaintiff Colony Insurance Company ("Colony") initiated this action to rescind an insurance policy and recover damages as a result of false statements made on an application for professional liability insurance. In February 2010, Defendant Michael Kwasnik ("Kwasnik") signed and submitted an application for professional liability insurance on behalf of his law firm, Kwasnik, Kanowitz, and Associates ("KKA"). (Decl. of Robert F. Walsh in Supp. Of Pl.'s Mot. For Summ. J. / Mot. To Enter Default J. [Doc. No. 80-3 to 12] (hereinafter Walsh Decl.) Ex. C, at 5.) The application contained three questions relating to past and possible future claims against the applicants for malpractice or ethical violations. (Id.) In particular, question thirteen of the application asked:
13(a): "[I]n the last seven (7) years, has any professional liability claim or suit ever been made against the Firm or any predecessor firm or any current or former member of the Firm or predecessor firm?"
13(b): "[D]o you know of any circumstances, acts, errors or omissions that could result in a Professional Liability claim?"
13(c): "[H]as an attorney for who [ sic ] coverage is sought ever been refused admission to practice... by any court, administrative agency or regulatory body or been [the] subject of a disciplinary complaint made to any of the aforementioned entities?"
(Id.) Kwasnik answered "no" to all three questions. (Id.) After reviewing the application and other supplemental materials, Colony issued KKA a lawyer's professional liability insurance policy ("Policy") that covered the firm and its comprising attorneys: Kwasnik, Howard Kanowitz ("Kanowitz"), and Robert Keltos ("Keltos"). (Walsh Decl. Ex. B.)
Colony commenced this action alleging Kwasnik and KKA committed fraud by giving false answers to questions 13(a) through (c). (Pl.'s Compl. [Doc. No. 1].) For relief, Colony seeks to rescind the Policy and recover damages under the New Jersey Insurance Fraud Prevention Act ("IFPA"), N.J.S.A. §§ 17:33a-1 to -34. (Id. at wherefore clause.) Kwasnik filed an answer on behalf of himself and KKA. (Def.'s Answer [Doc. No. 9].) However, the Court struck Kwasnik's answer and entered a default against him for violating an order compelling his deposition. (Order [Doc. No. 77] Sept. 12, 2013.) Colony now moves for a default judgment against Kwasnik and for summary judgment against KKA. (Pl.'s Mot. For Summ. J. / Default J. [Doc. No. 80].) Neither Kwasnik nor KKA responded to the motion.
I. Choice of Law
In diversity cases, federal courts apply the forum state's choice of law rules to determine which state's substantive laws are controlling. Maniscalo v. Brother Int'l (USA) Corp. , 709 F.3d 202, 206 (3d Cir. 2013)(citing Klaxon Co. v. Stentor Elec. Mfg. Co., Inc. , 313 U.S. 487 (1941)). However, defendants must raise choice of law issues or they are waived. Neely v. Club Med Mgmt. Servs., Inc., 63 F.3d 166, 180 (3d Cir. 1995) ( en banc ). At no point in the present case did any party question the applicability of New Jersey law, which is the basis of Colony's claims. Therefore, the Court will apply New Jersey substantive law.
II. Motion for Summary Judgment
Colony has asked for summary judgment against KKA on both its claim for rescission and its claim ...