Preview
FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024
NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024
23-IN-721 BLM
SUPREME COURT OF THE STATE OF NEW YORK
COUNTY OF NASSAU
_______________________________________Ç
INTEGON INDEMNITY CORPORATION, Index No.:
Date Purchased:
Petitioner,
-against- PETITION TO
STAY ARBITRATION
WILFRED CACERAS VENTURA,
Respondent,
Petitioner, INTEGON INDEMNITY CORPORATION, by its attorneys McCabe, Collins,
McGeough, Fowler, Levine & Nogan, LLP by, BARRY L. MANUS, ESQ. alleges:
1. That at all times relevant hereto, petitioner was a foreign corporation authorized to
transact insurance business within the State of New York.
2. Upon information and belief respondent is an individual presently domiciled within
the County of Nassau, State of New York.
3. Upon information and beliefat all times hereinafter mentioned petitioner, INTEGON
INDEMNITY CORPORATION (hereinafter "lNTEGON") was and still is an insurance company
authorized and/or licensed to do business and/or transacting business in the State of New York
4. Respondent alleges to have been injured in a motor vehicle accident which occurred
on July 3, 2021 in Nassau County, New York.
5. Respondent alleges that the adverse/culpable motor vehicle responsible for the subject
occurrence was underinsured as defined within the INTEGON policy of insurance.
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6. Respondent served the Demand for Arbitration on December 12, 2023,via Certified
mail and fax, a copy of which is annexed hereto as Exhibit 'A". The Demand for Arbitration was
received by INTEGON on Decemberl9, 20223. A copy of the US Postal Service tracking
confirmation of delivery is attached hereto as Exhibit "B". Therefore, this proceeding has been
timely commenced under CPLR Section 7503. [See also, Knickerbocker Insurance Company v.
Gilbert, 28 NY 2d 57, 320 NYS 2d 12, 268 NE 2d 758 (1971); Allstate v. Metayer, 137 AD 2d 454,
525 NYS 2d 32 (1st Dept. 1988)].
7. That the aforementioned Demand requests an arbitration hearing to determine the
extent of damages allegedly sustained by the respondent, who was the driver of a motor vehicle
insured by Petitioner, INTEGON, and owned by Sandra Ayala, a non-party to this proceeding.
"C"
8. Annexed hereto as Exhibit is a copy of the Police Accident Report.
9. Respondent has demanded arbitration with petitioner, INTEGON pursuant to the
uninsured/underinsured motorist coverage section contained within INTEGON's policy of insurance,
a copy of which is annexed hereto as Exhibit "D".
10. A copy of the Declarations Page concerning policy number 2009576857 issued to
"E."
Sandra M. Ayala-Melendez is annexed hereto as Exhibit
11. As will be shown below, the insurance policy issued by INTEGON was reformed
under North Carolina based on a material misrepresentation of fact made at the inception of the
policy period to include eliminating underinsured motorist coverage.
REFORMATION OF INSURANCE POLICY
"I"
12. Annexed hereto as Exhibit is an Affidavit of Todd Gregory, an Injury Consultant
for National General Insurance Company.
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13. As reflected in Mr. Gregory's Affidavit, prior to the subject incident, a policy of
insurance was issued by Petitioner to Sandra Ayala, providing coverage for the 2009 Honda involved
in the subject accident.
14. The policy of insurance was issued to Sandra Ayala based upon a North Carolina
"F"
Personal Automobile Insurance Application, a copy of which is annexed hereto as Exhibit
representing that her principal residence was in North Carolina and that the vehicle insured, i.e. the
2009 Honda, was to be garaged in the State of North Carolina for a period of at least six months per
year.
15. After the incident of July 3, 2021, an investigation was undertaken by INTEGON,
which included obtaining a recorded statement of the insured, Sandra Ayala, a copy of which is
"G"
annexed hereto as Exhibit revealing that she was not residing in North Carolina and that the
vehicle was not garaged in North Carolina for a period of at least six months prior to the time of the
accident.
16. At the time that Sandra Ayala applied for insurance coverage with the Petitioner, I
represented that the vehicle; i.e., the 2009 Honda, was being garaged in North Carolina for a period
of at least six months.
17. The statements made by Sandra Ayala in procuring the policy of insurance with the
Petitioner were false and material misrepresentations.
18. The Petitioner relied upon the representations made by Sandra Ayala in the North
Carolina personal automobile insurance application in the issuance of the policy.
19. Additionally, Sandra Ayala was under a continuing duty to notify Petitioner of any
change of her address and location of the vehicles insured under the North Carolina personal
automobile policy.
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20. Sandra Ayala failed to advise the Petitioner she was not residing in North Carolina
and that the vehicle was being garaged outside of North Carolina; specifically, in New York.
21. That had the petitioner known that the insured vehicle; i.e., the 2009 Honda, was
being garaged in New York, it would not have issued a policy of insmance to Sandra Ayala.
22. Per the Affidavit of Todd Gregory, based upon INTEGON's investigation into the
accident of July 3, 2021 and the residency of the insured and the garaging of the vehicle insured
under the policy of insurance outside ofNorth Carolina, INTEGONreformed the policy ofinsurance
pursuant to North Carolina law and disclaimed any coverage for an underinsured motorist claim.
"G"
23. Attached hereto as Exhibit is a copy of a disclaimer of coverage letter dated
August 24, 2021 from INTEGON concerning reformation of the policy ofinsurance issued to Sandra
Ayala and disclaiming Underinsured Motorist Coverage.
24. In view ofthe foregoing, INTEGON does not provide underinsured motorist coverage
to the Respondent with respect to the accident of July 3, 2021.
CONFLICT OF LAW
NEW YORK LAW
25. When addressing conflict of law issues regarding an insurance policy issued out of
state, and an accident occurring within the State of New York, under the choice of law principal, the
Courts of New York will normally apply the law of the state where the policy was issued.
26. In a case concerning an uninsured motorist claim, the Second Department held that
Virginia law, allowing retroactive cancellation of an automobile insurance policy based on
misrepresentations in the application for insurance, was applicable. Eagle Insurance Company v.
Singletary, 229 A.D.2d 56, 717 N.Y.S.2d 351 (2d Dept., 2000). The Court stated that Virginia's
interest in the policy that was issued there, pursuant to the applicant's alleged misrepresentation that
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he resided in Virginia and would principally garage the vehicle there, exceeded New York's interest
in protecting injured motorists.
27. In another case, the Second Department held that the law in Florida, rather than New
York, applied to the issue of whether a retroactive disclaimer of automobile insurance coverage after
an accident on the grounds of material misrepresentation in the application for insurance, where the
only connection between the policy and New York was that the insured was driving the vehicle in
New York at the time of the accident. Government Employees Insurance Company v. Nichols, 8
A.D3d 564, 780 N.Y.S.2d 19 (2d Dept., 2004).
28. In a Federal Court action, the Court held that an automobile insurer who sought in
a declaratory judgment action to rescind the policy as to the insured and the accident victims based
on the insured's fraud would apply South Carolina law permitting recision of an automobile
insurance policy based on fraud in the application rather than New York law prohibiting such
cancellation. The Court permitted the South Carolina insurer to rescind the policy following a New
York accident based on the insured's misrepresentation that he resided in South Carolina. American
Centennial Insurance Company v. Sinkler, 903 F. Supp. 408 (New York, 1995).
29. Accordingly, this Court must apply North Carolina law relative to the reformation of
coverage of the policy of insurance issued by INTEGON and the disclaimer of coverage for
respondent's underinsured motorist claim based on material misrepresentations in the North
Carolina Personal Auto Insurance Application of Sandra M. Ayala-Melendez.
NORTH CAROLINA LAW
30. In the case at bar INTEGON learned of the accident of July 3, 2021 shortly afterward,
at which time it conducted an investigation and discovered that the named insured made a material
misrepresentation in her application for insurance.
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31. The standard in North Carolina to rescind and or reform a policy due to material
misrepresentation is whether a misrepresentation was made by the applicant/insmed and that the
misrepresentation was material if the insurer would not have issued the policy had it known the truth.
32. North Carolina General Statute §58-30 provides that all statements or descriptions
in any application for a policy of insurance, or in the policy itself, shall be deemed representations
and not warranties, and a representation, unless material or fraudulent, will not prevent recovery on
the policy.
33. Accordingly, pursuant to North Carolina General Statute §58-30, when a
representation is material or fraudulent, recovery under the policy is not proper.
34. The Courts in North Carolina have held that it is necessary and pertinent to determine
what constitutes a material misrepresentation. As a general rule, the North Carolina Supreme Court
held that a misrepresentation is material "if the insurer would not have issued the policy had it
known the truth ...". Swartzberg v. Reserve Life Insurance Company, to 52 N.C.150, 113 S.E.2d
270 (1960).
35. In Swartzberg, where an insured made a false statement in an application for
insurance to the effect that he never had diabetes constituted a material misrepresentation as a matter
of law, entitling the insured to rescind the policy upon tender of the premiums paid, nothing else
appearing.
36. The North Carolina Supreme Court upheld the same rule in Goodwin v. Investors Life
Insurance Company, 332 N.C.326, 419 S.E.2d (1992)concerning the rescission by the insurer of a
life insurance policy.
37. In Goodwin, the application inquired if the husband was involved in any traffic
accidents and the response was "No". The husband later died in a car accident, and upon further
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investigation, the insurer uncovered the driving record, which included several traffic violations.
The Court held that the plaintiff and her husband made false representations in the application for
insurance and that the insurer established that the policy premium would have been higher had the
insurer known of the husband's driving record. The Court held that the insurer was entitled to a
directed verdict as a matter of law. The Court in Goodwin ultimately implemented an additional
general rule as follows:
Representation in an application for an insurance policy is deemed
material if the knowledge or ignorance of it would naturally influence
the judgement of the insurer in making the contract, or in estimating
degree and character of the risk, or in fixing the rate of the premium.
38. The Court in Goodwin commented that the standard in determining whether a
misrepresentation is material is not an objective standard. Rather, the determining factor is whether
the answer would have influenced the company in deciding for itself, and its own interest, the
important question of accepting the risk and what rate of premium should be charged.
39. The Court in Goodwin also clarified the question of materiality stating that if there
is strong logical relationship between the question asked, assessing the risk, and the ultimate
determination of an actuarially sound premium, rescission/avoidance of the policy is proper.
40. The Courts in North Carolina also held that even if the insured claims that he was not
aware of the contents of the application signed, North Carolina does not justify ignorance. The
North Carolina Supreme Court held in a case concerning a rescission that the law presumes that the
plaintiff knew the contents ofthe application he/she signed. Weddington v. Insurance Company, 141
N.C.234, 54 S.E.271 (1906).
41. TheNorth Carolina Court of Appeals held the insurer was not precluded from seeking
to avoid a claim for UIM coverage where the insured's fraudulently misrepresented material facts
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concerning their state of residence on which the insurance company reasonably relied in providing
coverage. HartfordUnderwriters Ins. Co. v. Becks, 123 N.C. App. 489, 494, 473 S. E. 2d 427, 430
(1996).
42. Based on the documents and Affidavits annexed hereto, the decision of Integon
Indemnity Corporation to reform the policy of insurance issued to Sandra M. Ayala-Melendez , was
proper pursuant to both the North Carolina statute and case law.
43. It is clear from the foregoing, based on the Affidavit of Todd Gregory, that the
material misrepresentation of Sandra M. Ayala-Melendez, in the Application for Insurance was a
strong, relevant and very influential factor in issuing the insurance policy, and INTEGON would
not have assumed the risk of issuing of the policy of insurance, but for the material misrepresentation
of Sandra M. Ayala-Melendez.
44. Based on the material misrepresentations, the Application for Insurance regarding
both her principal residence and the garaging of the Honda insured under the policy of insurance,
made it an unacceptable risk warranting the reformation of the policy of insurance and the disclaimer
of underinsured motorist's coverage.
45. Accordingly, INTEGON did not provide underinsured motorist coverage to
respondent, WILFRED CACERAS VENTURA, on July 3, 2021.
THE INTEGON POLICY ISSUED IN THE STATE OF NORTH CAROLINA DOES NOT
PROVIDE FOR ARBITRATION WITH THE AMERICAN ARBITRATION
ASSOCIATION
46. The INTEGON policy at issue (Exhibit "D") does not contain a provision for
arbitration with the American Arbitration Association.
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47. Although the Respondent served a demand for arbitration with the American
Arbitration Association, the policy at issue does not provide for uninsured motorist arbitration with
the American Arbitration Association.
48. The pertinent policy provision are found in Part C-2 Combined
Uninsured/Underinsured Motorist Coverage of the aforementioned policy (Exhibit "D"). Under the
heading "Arbitration", the endorsement provides in summary as follows:
"insured"
A. If we and an do not agree:
"insured"
Whether that is legally entitled to recover damages from the
vehicle"
owner or operator of an "uninsured motor or an
"underinsured motor vehicle", then the matter may be arbitrated. If
both parties agree to arbitration, each party will select an arbitrator.
The two arbitrators will select a third. If they cannot agree within 30
days, either may request that selection be made by a judge of a court
having jurisdiction.
49. It is clear from the language of the uninsured motorist endorsement set forth above,
that both parties must agree to arbitration and the procedure involves the selection of arbitrators by
each party followed by the selection of a third arbitrator.
50. The Second Department in addressing general principles of an arbitration agreement,
in a proceeding to stay arbitration of a partnership dispute when there was a written arbitration
agreement, held that there must be sufficient proof that the parties actually agreed to arbitration.
Neiman v. Backer, 167 A.D.2d 403, 561 N.Y.S.2d 811 (1990).
51. In another arbitration matter, the Second Department held that because arbitration is
a creature of contract, where the parties did not make an agreement to arbitrate, a Stay of Arbitration
will be granted. Matter of We're Associates Co., 163 A.D.2d 393, 557 N.Y.S.2d 930 (1980).
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52. In an action for a permanent stay of arbitration, the Second Department held that the
party against whom arbitration was sought was entitled to a Stay of the Arbitration where the
agreement of the parties expressly provided for submission of the dispute to arbitration only if
neither party objected to the submission and the party against whom arbitration was sought, clearly
expressed its objection to submission of the dispute in arbitration. Allstate Insurance Company v.
Kuper, 134 A.D.2d 256, 520 NT.S.2d 591 (2nd Dept., 1987).
53. There has been no agreement or consent by the Petitioner to arbitrate this matter and,
therefore, a permanent stay of arbitration must be granted to prevent arbitration ofthis matter before
the American Arbitration Association.
54. That the arbitration of Respondent's claim against Petitioner under the
Uninsured/Underinsured Motorist Endorsement of Petitioner's policy should be permanently stayed
premised upon the fact that there was no coverage under policy of insurance issued by INTEGON.
55. It is respectfully submitted that respondent has no right to proceed to arbitration on
the ground that there is no coverage under the INTEGON policy.
INTEGON IS ENTITLED TO DISCOVERY PRIOR TO ANY
SCHEDULED ARBITRATION HEARING
56. In the event that there is a finding that Respondent is entitled to proceed with
arbitration in the State of New York, respondent must comply with the policy provisions applicable
to discovery, as a pre-condition to proceeding to arbitration.
57. As part of the terms and conditions of the insurance policy under which the
Respondent seeks underinsured motorist benefits, the Respondent must submit to Examinations
under Oath as well as independent medical examinations and furnish all authorizations to enable
Petitio
Preview
FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 23-IN-721 BLM SUPREME COURT OF THE STATE OF NEW YORK COUNTY OF NASSAU _______________________________________Ç INTEGON INDEMNITY CORPORATION, Index No.: Date Purchased: Petitioner, -against- PETITION TO STAY ARBITRATION WILFRED CACERAS VENTURA, Respondent, Petitioner, INTEGON INDEMNITY CORPORATION, by its attorneys McCabe, Collins, McGeough, Fowler, Levine & Nogan, LLP by, BARRY L. MANUS, ESQ. alleges: 1. That at all times relevant hereto, petitioner was a foreign corporation authorized to transact insurance business within the State of New York. 2. Upon information and belief respondent is an individual presently domiciled within the County of Nassau, State of New York. 3. Upon information and beliefat all times hereinafter mentioned petitioner, INTEGON INDEMNITY CORPORATION (hereinafter "lNTEGON") was and still is an insurance company authorized and/or licensed to do business and/or transacting business in the State of New York 4. Respondent alleges to have been injured in a motor vehicle accident which occurred on July 3, 2021 in Nassau County, New York. 5. Respondent alleges that the adverse/culpable motor vehicle responsible for the subject occurrence was underinsured as defined within the INTEGON policy of insurance. 1 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 6. Respondent served the Demand for Arbitration on December 12, 2023,via Certified mail and fax, a copy of which is annexed hereto as Exhibit 'A". The Demand for Arbitration was received by INTEGON on Decemberl9, 20223. A copy of the US Postal Service tracking confirmation of delivery is attached hereto as Exhibit "B". Therefore, this proceeding has been timely commenced under CPLR Section 7503. [See also, Knickerbocker Insurance Company v. Gilbert, 28 NY 2d 57, 320 NYS 2d 12, 268 NE 2d 758 (1971); Allstate v. Metayer, 137 AD 2d 454, 525 NYS 2d 32 (1st Dept. 1988)]. 7. That the aforementioned Demand requests an arbitration hearing to determine the extent of damages allegedly sustained by the respondent, who was the driver of a motor vehicle insured by Petitioner, INTEGON, and owned by Sandra Ayala, a non-party to this proceeding. "C" 8. Annexed hereto as Exhibit is a copy of the Police Accident Report. 9. Respondent has demanded arbitration with petitioner, INTEGON pursuant to the uninsured/underinsured motorist coverage section contained within INTEGON's policy of insurance, a copy of which is annexed hereto as Exhibit "D". 10. A copy of the Declarations Page concerning policy number 2009576857 issued to "E." Sandra M. Ayala-Melendez is annexed hereto as Exhibit 11. As will be shown below, the insurance policy issued by INTEGON was reformed under North Carolina based on a material misrepresentation of fact made at the inception of the policy period to include eliminating underinsured motorist coverage. REFORMATION OF INSURANCE POLICY "I" 12. Annexed hereto as Exhibit is an Affidavit of Todd Gregory, an Injury Consultant for National General Insurance Company. 2 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 13. As reflected in Mr. Gregory's Affidavit, prior to the subject incident, a policy of insurance was issued by Petitioner to Sandra Ayala, providing coverage for the 2009 Honda involved in the subject accident. 14. The policy of insurance was issued to Sandra Ayala based upon a North Carolina "F" Personal Automobile Insurance Application, a copy of which is annexed hereto as Exhibit representing that her principal residence was in North Carolina and that the vehicle insured, i.e. the 2009 Honda, was to be garaged in the State of North Carolina for a period of at least six months per year. 15. After the incident of July 3, 2021, an investigation was undertaken by INTEGON, which included obtaining a recorded statement of the insured, Sandra Ayala, a copy of which is "G" annexed hereto as Exhibit revealing that she was not residing in North Carolina and that the vehicle was not garaged in North Carolina for a period of at least six months prior to the time of the accident. 16. At the time that Sandra Ayala applied for insurance coverage with the Petitioner, I represented that the vehicle; i.e., the 2009 Honda, was being garaged in North Carolina for a period of at least six months. 17. The statements made by Sandra Ayala in procuring the policy of insurance with the Petitioner were false and material misrepresentations. 18. The Petitioner relied upon the representations made by Sandra Ayala in the North Carolina personal automobile insurance application in the issuance of the policy. 19. Additionally, Sandra Ayala was under a continuing duty to notify Petitioner of any change of her address and location of the vehicles insured under the North Carolina personal automobile policy. 3 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 20. Sandra Ayala failed to advise the Petitioner she was not residing in North Carolina and that the vehicle was being garaged outside of North Carolina; specifically, in New York. 21. That had the petitioner known that the insured vehicle; i.e., the 2009 Honda, was being garaged in New York, it would not have issued a policy of insmance to Sandra Ayala. 22. Per the Affidavit of Todd Gregory, based upon INTEGON's investigation into the accident of July 3, 2021 and the residency of the insured and the garaging of the vehicle insured under the policy of insurance outside ofNorth Carolina, INTEGONreformed the policy ofinsurance pursuant to North Carolina law and disclaimed any coverage for an underinsured motorist claim. "G" 23. Attached hereto as Exhibit is a copy of a disclaimer of coverage letter dated August 24, 2021 from INTEGON concerning reformation of the policy ofinsurance issued to Sandra Ayala and disclaiming Underinsured Motorist Coverage. 24. In view ofthe foregoing, INTEGON does not provide underinsured motorist coverage to the Respondent with respect to the accident of July 3, 2021. CONFLICT OF LAW NEW YORK LAW 25. When addressing conflict of law issues regarding an insurance policy issued out of state, and an accident occurring within the State of New York, under the choice of law principal, the Courts of New York will normally apply the law of the state where the policy was issued. 26. In a case concerning an uninsured motorist claim, the Second Department held that Virginia law, allowing retroactive cancellation of an automobile insurance policy based on misrepresentations in the application for insurance, was applicable. Eagle Insurance Company v. Singletary, 229 A.D.2d 56, 717 N.Y.S.2d 351 (2d Dept., 2000). The Court stated that Virginia's interest in the policy that was issued there, pursuant to the applicant's alleged misrepresentation that 4 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 he resided in Virginia and would principally garage the vehicle there, exceeded New York's interest in protecting injured motorists. 27. In another case, the Second Department held that the law in Florida, rather than New York, applied to the issue of whether a retroactive disclaimer of automobile insurance coverage after an accident on the grounds of material misrepresentation in the application for insurance, where the only connection between the policy and New York was that the insured was driving the vehicle in New York at the time of the accident. Government Employees Insurance Company v. Nichols, 8 A.D3d 564, 780 N.Y.S.2d 19 (2d Dept., 2004). 28. In a Federal Court action, the Court held that an automobile insurer who sought in a declaratory judgment action to rescind the policy as to the insured and the accident victims based on the insured's fraud would apply South Carolina law permitting recision of an automobile insurance policy based on fraud in the application rather than New York law prohibiting such cancellation. The Court permitted the South Carolina insurer to rescind the policy following a New York accident based on the insured's misrepresentation that he resided in South Carolina. American Centennial Insurance Company v. Sinkler, 903 F. Supp. 408 (New York, 1995). 29. Accordingly, this Court must apply North Carolina law relative to the reformation of coverage of the policy of insurance issued by INTEGON and the disclaimer of coverage for respondent's underinsured motorist claim based on material misrepresentations in the North Carolina Personal Auto Insurance Application of Sandra M. Ayala-Melendez. NORTH CAROLINA LAW 30. In the case at bar INTEGON learned of the accident of July 3, 2021 shortly afterward, at which time it conducted an investigation and discovered that the named insured made a material misrepresentation in her application for insurance. 5 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 31. The standard in North Carolina to rescind and or reform a policy due to material misrepresentation is whether a misrepresentation was made by the applicant/insmed and that the misrepresentation was material if the insurer would not have issued the policy had it known the truth. 32. North Carolina General Statute §58-30 provides that all statements or descriptions in any application for a policy of insurance, or in the policy itself, shall be deemed representations and not warranties, and a representation, unless material or fraudulent, will not prevent recovery on the policy. 33. Accordingly, pursuant to North Carolina General Statute §58-30, when a representation is material or fraudulent, recovery under the policy is not proper. 34. The Courts in North Carolina have held that it is necessary and pertinent to determine what constitutes a material misrepresentation. As a general rule, the North Carolina Supreme Court held that a misrepresentation is material "if the insurer would not have issued the policy had it known the truth ...". Swartzberg v. Reserve Life Insurance Company, to 52 N.C.150, 113 S.E.2d 270 (1960). 35. In Swartzberg, where an insured made a false statement in an application for insurance to the effect that he never had diabetes constituted a material misrepresentation as a matter of law, entitling the insured to rescind the policy upon tender of the premiums paid, nothing else appearing. 36. The North Carolina Supreme Court upheld the same rule in Goodwin v. Investors Life Insurance Company, 332 N.C.326, 419 S.E.2d (1992)concerning the rescission by the insurer of a life insurance policy. 37. In Goodwin, the application inquired if the husband was involved in any traffic accidents and the response was "No". The husband later died in a car accident, and upon further 6 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 investigation, the insurer uncovered the driving record, which included several traffic violations. The Court held that the plaintiff and her husband made false representations in the application for insurance and that the insurer established that the policy premium would have been higher had the insurer known of the husband's driving record. The Court held that the insurer was entitled to a directed verdict as a matter of law. The Court in Goodwin ultimately implemented an additional general rule as follows: Representation in an application for an insurance policy is deemed material if the knowledge or ignorance of it would naturally influence the judgement of the insurer in making the contract, or in estimating degree and character of the risk, or in fixing the rate of the premium. 38. The Court in Goodwin commented that the standard in determining whether a misrepresentation is material is not an objective standard. Rather, the determining factor is whether the answer would have influenced the company in deciding for itself, and its own interest, the important question of accepting the risk and what rate of premium should be charged. 39. The Court in Goodwin also clarified the question of materiality stating that if there is strong logical relationship between the question asked, assessing the risk, and the ultimate determination of an actuarially sound premium, rescission/avoidance of the policy is proper. 40. The Courts in North Carolina also held that even if the insured claims that he was not aware of the contents of the application signed, North Carolina does not justify ignorance. The North Carolina Supreme Court held in a case concerning a rescission that the law presumes that the plaintiff knew the contents ofthe application he/she signed. Weddington v. Insurance Company, 141 N.C.234, 54 S.E.271 (1906). 41. TheNorth Carolina Court of Appeals held the insurer was not precluded from seeking to avoid a claim for UIM coverage where the insured's fraudulently misrepresented material facts 7 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 concerning their state of residence on which the insurance company reasonably relied in providing coverage. HartfordUnderwriters Ins. Co. v. Becks, 123 N.C. App. 489, 494, 473 S. E. 2d 427, 430 (1996). 42. Based on the documents and Affidavits annexed hereto, the decision of Integon Indemnity Corporation to reform the policy of insurance issued to Sandra M. Ayala-Melendez , was proper pursuant to both the North Carolina statute and case law. 43. It is clear from the foregoing, based on the Affidavit of Todd Gregory, that the material misrepresentation of Sandra M. Ayala-Melendez, in the Application for Insurance was a strong, relevant and very influential factor in issuing the insurance policy, and INTEGON would not have assumed the risk of issuing of the policy of insurance, but for the material misrepresentation of Sandra M. Ayala-Melendez. 44. Based on the material misrepresentations, the Application for Insurance regarding both her principal residence and the garaging of the Honda insured under the policy of insurance, made it an unacceptable risk warranting the reformation of the policy of insurance and the disclaimer of underinsured motorist's coverage. 45. Accordingly, INTEGON did not provide underinsured motorist coverage to respondent, WILFRED CACERAS VENTURA, on July 3, 2021. THE INTEGON POLICY ISSUED IN THE STATE OF NORTH CAROLINA DOES NOT PROVIDE FOR ARBITRATION WITH THE AMERICAN ARBITRATION ASSOCIATION 46. The INTEGON policy at issue (Exhibit "D") does not contain a provision for arbitration with the American Arbitration Association. 8 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 47. Although the Respondent served a demand for arbitration with the American Arbitration Association, the policy at issue does not provide for uninsured motorist arbitration with the American Arbitration Association. 48. The pertinent policy provision are found in Part C-2 Combined Uninsured/Underinsured Motorist Coverage of the aforementioned policy (Exhibit "D"). Under the heading "Arbitration", the endorsement provides in summary as follows: "insured" A. If we and an do not agree: "insured" Whether that is legally entitled to recover damages from the vehicle" owner or operator of an "uninsured motor or an "underinsured motor vehicle", then the matter may be arbitrated. If both parties agree to arbitration, each party will select an arbitrator. The two arbitrators will select a third. If they cannot agree within 30 days, either may request that selection be made by a judge of a court having jurisdiction. 49. It is clear from the language of the uninsured motorist endorsement set forth above, that both parties must agree to arbitration and the procedure involves the selection of arbitrators by each party followed by the selection of a third arbitrator. 50. The Second Department in addressing general principles of an arbitration agreement, in a proceeding to stay arbitration of a partnership dispute when there was a written arbitration agreement, held that there must be sufficient proof that the parties actually agreed to arbitration. Neiman v. Backer, 167 A.D.2d 403, 561 N.Y.S.2d 811 (1990). 51. In another arbitration matter, the Second Department held that because arbitration is a creature of contract, where the parties did not make an agreement to arbitrate, a Stay of Arbitration will be granted. Matter of We're Associates Co., 163 A.D.2d 393, 557 N.Y.S.2d 930 (1980). 9 of 15 FILED: NASSAU COUNTY CLERK 01/09/2024 03:29 PM INDEX NO. 600511/2024 NYSCEF DOC. NO. 1 RECEIVED NYSCEF: 01/09/2024 52. In an action for a permanent stay of arbitration, the Second Department held that the party against whom arbitration was sought was entitled to a Stay of the Arbitration where the agreement of the parties expressly provided for submission of the dispute to arbitration only if neither party objected to the submission and the party against whom arbitration was sought, clearly expressed its objection to submission of the dispute in arbitration. Allstate Insurance Company v. Kuper, 134 A.D.2d 256, 520 NT.S.2d 591 (2nd Dept., 1987). 53. There has been no agreement or consent by the Petitioner to arbitrate this matter and, therefore, a permanent stay of arbitration must be granted to prevent arbitration ofthis matter before the American Arbitration Association. 54. That the arbitration of Respondent's claim against Petitioner under the Uninsured/Underinsured Motorist Endorsement of Petitioner's policy should be permanently stayed premised upon the fact that there was no coverage under policy of insurance issued by INTEGON. 55. It is respectfully submitted that respondent has no right to proceed to arbitration on the ground that there is no coverage under the INTEGON policy. INTEGON IS ENTITLED TO DISCOVERY PRIOR TO ANY SCHEDULED ARBITRATION HEARING 56. In the event that there is a finding that Respondent is entitled to proceed with arbitration in the State of New York, respondent must comply with the policy provisions applicable to discovery, as a pre-condition to proceeding to arbitration. 57. As part of the terms and conditions of the insurance policy under which the Respondent seeks underinsured motorist benefits, the Respondent must submit to Examinations under Oath as well as independent medical examinations and furnish all authorizations to enable Petitio