CNA Insurance v. DiPaulo

Michael and Kathy Gregg entered into a real estate contract to buy a house from the defendants, Silvio and Judy DiPaulo. When the Greggs moved in they began redecorating the house. They made a heart-sinking discovery: termites. The house was infested with termites. CNA paid the Greggs for the costs of repair and replacement pursuant to their homeowner’s policy. Then CNA, as the Greggs’ subrogee, sued the DiPaulos for common law fraud based on false statements and concealment.

The trial judge granted summary judgment to the defendants, finding CNA could not subrogate to its insureds’ collateral…