CERTAIN UNDERWRITERS AT LLOYDS, LONDON

v.

ANCHOR INSURANCE HOLDINGS, INC.

In the application, Question 9 asked whether there were “any pending claim(s)” against Anchor, any director, officer or employee. Question 10 asked whether Anchor, any director, officer, or employee knew “of any act, error or omission, which could give rise to a claim(s) [or] suit(s).” Anchor answered “No” to both questions. The application included a warranty that the “information furnished in this application is complete, true, and correct” and provided that “[a]ny misrepresentation, omission, concealment or incorrect statement of material fact, in

Anchor as a defendant on November 19, 2020. Legal Standard Summary judgment is appropriate “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A properly supported motion for summary

The moving party bears the initial burden of showing that there are no genuine issues of material fact. Hickson Corp. v. N. Crossarm Co., Inc., 357 F. 3d 1256, 1260 (11th Cir. 2004). When the moving party has discharged its burden, the nonmoving party must then designate specific facts showing the existence of genuine issues of material fact. Jeffery v. Sarasota White Sox, Inc., 64 F. 3d 590, 593-94 (11th Cir. 1995). If there is a conflict between the parties’ allegations or evidence, the nonmoving party’s evidence is presumed to be true and all reasonable inferences must be drawn in the nonmoving party’s favor. Shotz v. City of Plantation, 344 F. 3d 1161, 1164 (11th Cir. 2003). The standard for cross-motions for summary judgment is not different from the standard applied when only one party moves for summary judgment. Am. Bankers Ins. Grp. v. United States, 408 F. 3d 1328, 1331 (11th Cir. 2005). The Court must consider each motion separately, resolving all reasonable inferences against the party whose motion is under consideration. Id. “Cross-motions for summary judgment will not, in themselves, warrant the court in granting summary judgment unless one of the parties is entitled to judgment as a matter of law on facts that are not genuinely disputed.” United States v. Oakley, 744 F. 2d 1553, 1555 (11th Cir. 1984) (quoting Bricklayers Int’l Union, Local 15 v. Stuart Plastering Co., 512 F. 2d 1017 (5th Cir. 1975)). Analysis Under Florida law, a misrepresentation in an insurance application can result in rescission if: (a) “[t]he misrepresentation, omission, concealment, or statement is material either to the acceptance of the risk or to the hazard assumed by the insurer[,]” or (b) “[i]f the true facts had been known the insurer […], the insurer in good faith would not have issued the policy or contract . . .” § 627.409, F.S.; see also Miguel v. Metro Life Ins., 200 F. App’x 961, 965 (11th Cir. 2006). “[E]ven an unintentional misstatement or omission in an insurance application can constitute grounds for recission.” Id. at 966.

The record is clear that prior to October 16, 2018, when it submitted its application to Plaintiff, Anchor had actual knowledge of the potential claims against it by the Investors, including a claim for recission of the investment. On March 14, 2018, Bowman (the chairman) acknowledged to Moench and Hooker (directors) that the Investors wanted their money back. Moreover, on April 6, 2018, counsel for the Investors sent a demand letter addressed to Bowman as the chairman of Anchor. Bowman himself has even acknowledged that he did not believe the Investors were going to walk away from their $11.7 million investment and not sue Anchor. This knowledge is imputable to Anchor. See Beck v. Deloitte & Touche, 144 F. 3d 732, 736 (11th Cir. 1998). And yet, in its insurance application, Anchor answered that there were no pending claims against Anchor, any director, officer or employee, and that none were aware of any act, error, or omission that could give rise to a claim or lawsuit. Although Anchor attempts to argue that any potential claims were against the THD entities and not Anchor, no reasonable jury could find this to be true due to the corporate structures of the entities and the extensive personal involvement of Bowman, Moench, and Hooker in both the THD entities and Anchor.⁴ This information was not complete, true, or correct. Moreover, even if Anchor believed any claims against it lacked merit, the insurance application still required that those claims or potential claims be disclosed. Travelers Cas. v. Mader Law, No. 8:13-cv-2577-T-26TGW, 2014 WL 5325745, at *8 (M.D. Fla. Oct. 20, 2014) (“It is irrelevant to answering the question that the attorney applicant believed the complaints lacked merit.”).

John Lepire, an expert in insurance writing, opined that if Plaintiff “had been aware of the Investors’ numerous recission demands prior to the issuance of [the Policy], it would have been able to […] reject Anchor’s application for directors and officers insurance coverage.” (Doc. 110, Ex. BB). Scott Simmons, Plaintiff’s Rule 30(b)(6) representative,5 confirmed that he would not have issued the policy if he had any idea that the Investors were threatening to sue to rescind their $11.7 million dollar investment in Anchor. (Doc. 110, Ex. CC). Because Plaintiff was deprived of the opportunity to meaningfully underwrite the exposures it was being

GRANTED.

(3) The parties are directed to confer and submit a proposed final judgment on or before December 30, 2022. If, after conferring, they cannot agree on a proposed judgment, each party may submit a separate proposal. DONE and ORDERED in Chambers, in Tampa, Florida, this 19th day of December, 2022.

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UNITED STATES DISTRICT JUDGE