Insurer Wins Homeowners Association Policy Cancellation Decision
A federal appeals court on Monday ruled in favor of an insurer seeking to void its policy for a homeowners association, finding that the association failed to disclose a situation that could give rise to a claim in its application for blanket.
Farmington Hills, Michigan-based Atain Specialty Insurance Co. had filed a lawsuit against the Agoura Hills, Calif.-based Lake Lindero Homeowners Association in U.S. District Court in Los Angeles, claiming the association covered up facts in response to questions about his insurance policy application, according to the ruling of the 9th U.S. Circuit Court of Appeals in San Francisco in Atain Specialty Insurance Co. v. Lake Lindero HOA, Lordon Enterprises, Inc. d/b/a/Lordon Management.
In addition to voiding its policy, the insurer sought a waiver of its duty to defend or indemnify the association in litigation in state court arising from a breach of contract brought by his former property management company, which had been terminated, according to the decision.
Upholding the lower court and ruling in favor of the insurer, the appeals court’s three-judge panel said the association failed to disclose anything in response to a question about the insurer’s claim as to whether she was aware of a situation that could give rise to a claim. .
“But there is no real dispute” that the newly elected chairman of the board of directors had launched a platform for the termination of the association’s contract with his existing management company, and that before the filing of Following the request, he had sent the management company at least eight notices alleging a violation and threatening termination, according to the ruling.
“These circumstances clearly presented risks that claims would be brought against (the association) or its directors,” the ruling said. “It is irrelevant that these risks have not yet materialized; the purpose of the question was to enable Atain to assess the risks it was underwriting,” the ruling said that by ruling, the insurer had the right to void its policy and no longer had an obligation to defend or indemnify the association in the underlying litigation in state court.
Lawyers handling the case did not respond to a request for comment or could not be reached.