In 1990, the city of Worcester, Massachusetts, adopted an ordinance that required rooming houses to be equipped

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In 1990, the city of Worcester, Massachusetts, adopted an ordinance that required rooming houses to be equipped with automatic sprinkler systems no later than September 25, 1995. In Worcester, James and Mark Duffy owned a forty-eight room lodging house with two retail stores on the first floor. In 1994, the Duffys applied with General Star Indemnity Co. for an insurance policy to cover the premises. The application indicated that the premises had sprinkler systems. General issued a policy that required, among other safety features, a sprinkler system. Within a month, the premises were inspected on behalf of General. On the inspection form forwarded to the insurer, in the list of safety systems, next to the word sprinkler the inspector had inserted only a hyphen. In July 1995, when the premises sustained more than $100,000 in fire damage, General learned that there was no sprinkler system. The insurer filed a suit in a federal district court against the Duffys to rescind the policy, alleging misrepresentation in their insurance application about the presence of sprinklers. How should the court rule, and why?

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Business Law Text and Cases

ISBN: 978-0324655223

11th Edition

Authors: Kenneth W. Clarkson, Roger LeRoy Miller, Gaylord A. Jentz, F

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