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Full Disclosure in Insurance Applications

BY Alicia G. Curran
July 02, 2015

In Illinois State Bar Association Mut. Ins. Co. v. Law Office of Tuzzolino and Terpinas , 5 N.E.3d 1123 (Ill. 2014), the Illinois Supreme Court held that an insurer could rescind a malpractice policy due to material misrepresentations made in the insurance application, even though the rescission left other attorneys who did not take part in the application and were not involved in the underlying misconduct (innocent insureds) without coverage.

Background Facts

Sam Tuzzolino and Will Terpinas, Jr. were law partners in a law firm organized as a limited liability entity. The legal matter that created the underlying application misconduct issues involved Sam Tuzzolino (Tuzzolino). He represented a client named Anthony Coletta (Coletta) in a variety of matters, including litigation arising from alleged mismanagement of a Chicago nightclub. In that litigation, Tuzzolino failed to timely disclose expert witnesses who would testify about valuation issues, and failed to retain an expert on forensic accounting issues. As a result, the designated experts were barred from testifying at trial.

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