New York District Court Denies Summary Judgment in Challenge to Electronically-Signed Application

In a recent case, a New York federal district court denied summary judgment on claims that the online submission of a life insurance policy violated the New York Electronic Signatures and Records Act (ESRA). The Prudential Ins. Co. of America v. Dukoff, No. 07-1080, 2009 WL 4884008 (E.D.N.Y. Dec. 18, 2009). In this case, The Prudential Insurance Company of America (Prudential) challenged the validity of a life insurance policy and alleged, among other things, that the applicant had made materially false statements on the application. The defendants (the spouse and estate of the deceased policy holder) counterclaimed for full payment under the insurance policy and argued that, among other things, the statements made in the application could not be used to rescind the contract because the application failed to comply with the requirements of ESRA. Both parties moved for summary judgment on various claims. In particular, the defendants argued that the purported material misstatements were barred because the application was not a “written instrument” signed by the policy holder, and pointed specifically to an interpretive opinion issued by the Office of General Counsel for the New York Insurance Department (Department), which stated that a checked box on an internet application is a valid electronic signature only if the insurer using the technology “is capable of verifying that the person providing the signature is actually the party to be charged.” The defendants argued that Prudential had no such verification ability. The court considered whether Prudential’s “click-through” electronic submission process satisfied the requirements for an electronic signature. The court first noted that the New York legislature had amended ESRA to remove a requirement that an electronic signature be accompanied by an “identifier,” that is capable verification that is unique to the person signing the electronic record; yet, nevertheless, the court afforded deference to the Department’s opinion. Thus, the court held that Prudential could use statements made in the application only if it could “reasonably identify” the person who made the statements. The court stated that while the final page of the insurance application does not require identifying information, “the applicant nonetheless transmits important identifying information to Prudential—including his or her address, social security number, and physical description—when he or she submits the application.” Consequently, the court denied the motion for summary judgment, finding that there was a triable issue of fact as to whether the application process satisfied the requirements of the Department’s opinion. The court further denied all other motions for summary judgment made by both parties.