Life Insurance Lawyer Needed

Dallas life insurance attorneys need to read and know this case. It is an opinion issued by the Texas Supreme Court in 1990. The style of the case is Koral Industries v. Security Connecticut Life Insurance Co.
Here are some of the facts:
Koral Industries sought a new life insurance policy for one of its key employees, Lewis Lindsey, in 1984. Lindsey did not disclose damaging medical history regarding treatment over the five years prior to his application, a history which included hospitalization in 1981, 1982, and 1983, and counseling and treatment for depression and excessive use of alcohol. A medical information agency had reported treatment for mental or nervous disorders from 1976-78, and Lindsey’s physician reported treatment for anxiety.
Relying on the information provided to it, Security issued a $1,000,000 policy on Lindsey’s life. When Lindsey died within what the insurer claimed was the contestable period of the policy, General American Life Insurance Company, the reinsurer on the policy, was hired to investigate the claim. This investigation led to discovery of the material omissions and misrepresentations made by Lindsey. Security then tendered all premiums with interest to Koral, declaring the policy null and void.
The jury found that Lindsey had knowingly made false representations to Security to induce Security to issue the policy; that Security had relied on those representations; that Security was aware of facts that would have caused a prudent person to make an inquiry; and that such an inquiry, if made with due diligence, would have uncovered Lindsey’s fraud. The general rule was stated in Isenhower v. Bell, and dates back to 1888:
When one has been induced to enter into a contract by fraudulent representations, the person committing the fraud cannot defeat a claim for damages based upon a plea that the party defrauded might have discovered the truth by the exercise of proper care. An affirmative answer to the requested special issue based upon what Isenhower should have known would not, therefore, have constituted a defense to the alleged fraud.
Failure to use due diligence to suspect or discover someone’s fraud will not act to bar the defense of fraud to the contract. It is not the rule that a person injured by the fraudulent and false representations of another is held to the exercise of diligence to suspect and discover the falsity of such statements. In the absence of knowledge to the contrary, he would have a right to rely and act upon such statements, and certainly the wrongdoer in such a case cannot be heard to complain that the other should have disbelieved his solemn statements.
Therefore, only the insurer’s actual knowledge of the misrepresentations would have destroyed its defense of fraud. “The test always is, to avoid the defense of fraud as to a material fact upon the score of waiver, the company must know the identical statement as made is untrue.”
This Supreme Court agreed with the court of appeals that Security’s defense of fraudulent inducement and misrepresentation was a valid defense to Koral’s breach of contract claims. The jury answers, as related to Security, negated any breach of good faith and fair dealings violations under the Insurance Code and any actions for unconscionability under the DTPA.
Accordingly, the application for Writ of Error of Koral Industries is denied.
This case might be hard to understand. The insurance attorney won at trial but lost on appeal. The loss resulted from an improper jury charge and illustrates how the wording in a jury charge is vital to a case.