Provident Life & Accident Insurance V. Chandrasena

MEMORANDUM *

Chandrasena appeals the district court’s grant of summary judgment rescinding his Provident Life insurance policies on the ground that he fraudulently misrepresented his income on his insurance application. There is a genuine issue of material fact with respect to the following: (1) whether Chandrasena had the requisite *746 fraudulent intent and (2) whether Provident Life justifiably relied upon Chandrasena’s misstatements with respect to his income.

In order to prevail in its action, Provident Life is required to show that Chandrasena’s misstatements were made with knowledge and with intent to defraud. Fraker v. Sentry Life Ins. Co., 19 Cal.App.4th 276 , 23 Cal.Rptr.2d 372, 377 (1993); Witkin, Summary of California Law § 676 (9th ed.1988). Intent is ordinarily a highly fact-intensive question. Here, there are several pieces of evidence that would indicate that Chandrasena’s misstatements were not made with fraudulent intent. For example, neither the application form Chandrasena was asked to till out nor the insurance broker who was assisting Chandrasena made any reference to the particular business expense or class of expenses Provident Life claims he was to have…

dissenting.

I respectfully dissent. Chandrasena came forward with nothing to support his argument — and that’s all it is, an unsubstantiated argument — that he somehow believed that all business expenses were deductible from gross receipts except for the cost of goods sold. Furthermore, as the district judge correctly pointed out, even if Chandrasena truly labored under that odd misunderstanding, it still would not come close to explaining the magnitude of the discrepancy between what he told Provident and what he told the IRS.

I also disagree with the majority’s conclusion that there are material facts in dispute concerning the reasonableness of Provident’s reliance on Chandrasena’s misrepresentations. The undisputed facts show that Provident made several inquiries of Chandrasena about his income and that Chandrasena repeatedly confirmed his previous representations. He also supplied what he represented to be an unsigned copy of his 1989 tax return. In underwriting the policy, Provident did not have to assume that it was dealing with a crook. It had the right to rely on Chandrasena’s repeated representations. Robinson v. Occidental Life Ins., 131 Cal.App.2d 581 , 281 P.2d 39…