Material Misrepresentation on Application for Insurance Supports Rescission

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Karen Macko (“Mrs. Macko”) and William Stephen Mackos (“Mr. Macko”) (together, the “Mackos”) moved the court to dismiss a suit brought by their insurer seeking confirmation of the rescission of an insurance policy. In Safeport Insurance Company v. Karen Macko and William Stephen Macko, No. 9:21-cv-00131-DCN, United States District Court, D. South Carolina, Beaufort Division (December 8, 2021) the USDC resolved the claims.


During its investigation, SafePort discovered two alleged misrepresentations in Mrs. Macko’s application for the First Policy. First, Mrs. Macko was married, contrary to the statements in her application identifying her as unmarried and owning the Home in full. Second, Mr. Macko had been convicted of felony insurance fraud, contrary to statements in the application that no member of the household had been convicted of a felony or other serious crime. As a result, SafePort mailed Mrs. Macko a letter purportedly rescinding the First Policy ab initio based on Mrs. Macko’s “provision of inaccurate information and/or omission of accurate information in the [] application.”

On March 15, 2021, the Mackos filed a motion to dismiss this federal action pursuant to the abstention doctrine claiming the two suits deal with the same issues.


Two conditions must be present for a court to decline jurisdiction: First, there must be parallel proceedings in state and federal court. Second, exceptional circumstances warranting abstention must exist.

Parallel Proceedings

Because SafePort’s rescission cause of action is not asserted in the State Court Action, the State Court Action would not resolve all of the claims before this court, which supports a finding that the actions are not parallel.

The court found it was required to support its virtually unflagging obligation to exercise its jurisdiction over the instant matter properly before it.


People who defraud insurance companies or obtain insurance under false pretenses prefer to litigate against their insurer in state court.  The attempt to avoid federal court properly failed and the rescission action can be resolved in federal court and, based on the record of misrepresentations and concealment of material facts – the prior insurance fraud conviction of Mr. Macko – should be dispositive. The jurisdictional ploy to avoid federal court failed.

© 2022 – Barry Zalma

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