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MT. AIRY INS. CO. v. THOMAS E. ANGST & ASSOCS.

January 22, 1997

MT. AIRY INSURANCE CO., Plaintiff,
v.
THOMAS E. ANGST & ASSOCIATES, P.C., et al., Defendants.



The opinion of the court was delivered by: REED

 Reed, J.

 January 22, 1997

 Thomas E. Angst ("Angst"), the president of Thomas E. Angst & Associates P.C., a law firm, completed and submitted to Mt. Airy Insurance Company ("Mt. Airy") an application for professional liability insurance on behalf of the professional corporation in May 1994. In response to a question on the application form, Angst indicated that the law firm knew of no professional liability claims or suits made against any lawyer in the firm and that no lawyer in the firm knew of any circumstances, acts, errors or omissions that could result in a professional liability claim against any attorney in the firm. Mt. Airy alleges that at the time Angst submitted the application on behalf of the law firm, already he had misappropriated and stolen $ 148,869.42 from the estate of William J. Glosser ("Glosser"), a client of Angst. Angst died in September 1994, before Mt. Airy filed its complaint seeking a declaratory judgment that it is entitled to rescind the policy of professional liability insurance issued by it to Thomas E. Angst & Associates, P.C. Pending before this Court is the motion for summary judgment of Mt. Airy. Upon consideration of the motion of plaintiff and the response of defendants thereto, and for the following reasons, the motion for summary judgment will be granted.

 LEGAL STANDARD

 The standard for a summary judgment motion in federal court is set forth in Rule 56 of the Federal Rules of Civil Procedure. Rule 56(c) states that:

 
the judgment sought shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.

 Fed. R. Civ. P. 56(c). A fact is material if it might affect the outcome of the suit under the governing substantive law. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 255, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986). In addition, a dispute over a material fact must be "genuine," i.e., the evidence must be such "that a reasonable jury could return a verdict in favor of the non-moving party." Id.

 The moving party has the initial burden to identify evidence that it believes shows an absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 324, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). When the non-moving party will bear the burden of proof at trial, the moving party's burden can be "discharged by 'showing'--that is, pointing out to the District Court--that there is an absence of evidence to support the non-moving party's case." Id. at 325. If the moving party establishes the absence of a genuine issue of material fact, the burden shifts to the non-moving party to "do more than simply show that there is some metaphysical doubt as to the material facts." Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586, 89 L. Ed. 2d 538, 106 S. Ct. 1348 (1986). The non-moving party may not rely merely upon bare assertions, conclusory allegations or suspicions. Fireman's Ins. Co. of Newark v. DuFresne, 676 F.2d 965, 969 (3d Cir. 1982). The court must consider the evidence of the non-moving party as true, drawing all justifiable inferences arising from the evidence in favor of the non-moving party. Anderson, 477 U.S. at 255. Yet, if the evidence of the non-moving party is "merely colorable," or is "not significantly probative," summary judgment may be granted. Id. at 249-50. To defeat the motion for summary judgment, the non-moving party must offer specific facts contradicting those set forth by the movant, thereby showing that there is a genuine issue for trial. Lujan v. National Wildlife Fed'n, 497 U.S. 871, 888, 111 L. Ed. 2d 695, 110 S. Ct. 3177 (1990).

 DISCUSSION

 To rescind an insurance policy due to misrepresentation in the application, the insurer must prove the following:

 
(1) the statements made by the applicant were false;
 
(2) the statements made were material;

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