The Court granted leave in this case to address whether an insurance carrier may reform an insurance policy on the ground of misrepresentation in the application for insurance where the misrepresentation is “easily ascertainable” and the claimant in an injured third party. The order is attached here: Titan Ins Co v Hyten et al. Order.
This case will address important issues concerning the expectation of contracting parties, the common law of reformation of contracts and the rules applicable thereto, and the extent to which prejudice arises to a third party who had nothing to do with the contract which was impaired by the misrepresentation made by the applicant. It will also address the ability of a court to refuse the equitable remedy of reformation based on the urging party’s ability to know the facts underlying the misrepresentation.
The Court of Appeals ruled that since the insurance company could have ascertained the misrepresentation in the contract (that the insured had no valid license even though she represented that she did) the trial court was correct in refusing to reform the insurance contract to extend only the minimum benefits allowed to the injured third parties. Read the Court of Appeals opinion here: Titan Ins Co v Hyten (COA Opinion).