The Reversal of an Arizona Divergence
One Arizona Court of Appeal has currently imposed on insurers faced with fraud a heavier burden of proof than that called for by the US Supreme Court in Coy R. Grogan v. Frank J. Garner (01/15/91) 498 U.S. 279, 111 S. Ct. 654, 112 L. Ed. 2d 755, 59 U.S.L.W. 4072. The Arizona Court of Appeal decision in American Pepper Supply Company v. Federal Insurance Company, No. 1 CA-CV 00-0549 (Ariz.App.Div.1 07/24/2003), attempts to distinguish an earlier decision of the Arizona Supreme court, Godwin v. Farmers Ins. Co. of America, 129 Ariz. 416, 418-19, 631 P.2d 571, 573-74 (1981), that stated the majority rule in the country.
The Arizona Supreme Court recently agreed and reversed the Arizona Court of Appeals’ decision. In American Pepper v. Federal Insurance Company,8 the Arizona Supreme Court, concluded that: The proper burden of proof applicable to a policy defense of concealment or misrepresentation is proof by a preponderance of the evidence.
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