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Lutheran Brotherhood v. Kraynak
Citation: 32 F. App'x 19Docket: No. 01-2285
Court: Court of Appeals for the Third Circuit; March 11, 2002; Federal Appellate Court
Lutheran Brotherhood initiated legal action against Raymond J. Kraynak to rescind an insurance policy due to fraudulent misrepresentations made by Kraynak on his application. Kraynak counterclaimed for benefits under the policy. The District Court granted Lutheran's motion for summary judgment and denied Kraynak's motions for judgment on the pleadings and for summary judgment. Kraynak appealed the decision. The District Court had jurisdiction under 28 U.S.C. § 1332, and the appellate court reviewed the case de novo. Pennsylvania law states that an insurance contract is void if (1) the representation was false, (2) the insured knew it was false or acted in bad faith, and (3) the representation was material to the risk. The court found three fraudulent misrepresentations by Kraynak: he failed to disclose existing disability insurance coverage, did not cancel other policies as promised, and omitted his diagnosis of arthritis within the last ten years. Additionally, the court ruled that the doctrine of laches did not prevent Lutheran from pursuing rescission, as there was no demonstrated prejudice to Kraynak due to Lutheran's lack of diligence. Lutheran had no obligation to investigate Kraynak’s representations, and knowledge of a district representative was not binding on the organization. Consequently, the appellate court affirmed the District Court's grant of summary judgment in favor of Lutheran and the denial of Kraynak's motions.