Brawley v. Northwestern Mutual Life Insurance Company et al
Filing
47
MEMORANDUM OPINION AND ORDER The court GRANTS IN PART and DENIES IN PART Northwesterns motion for summary judgment. The court GRANTS Northwesterns motion for summary judgment on Counts II through IV of the complaint, GRANTS IN PART Northwesterns mo tion for summary judgment on Count V of the complaint to the extent the count asserts a claim arising from Northwesterns February 2015 denial of benefits, and DENIES IN PART Northwesterns motion for summary judgment on Count V of the complaint to the extent the count asserts a claim arising from Northwesterns June 2016 denial of benefits. Signed by Judge Annemarie Carney Axon on 12/21/2018. (TLM, )
FILED
2018 Dec-21 PM 04:07
U.S. DISTRICT COURT
N.D. OF ALABAMA
UNITED STATES DISTRICT COURT
NORTHERN DISTRICT OF ALABAMA
SOUTHERN DIVISION
GLEN L. BRAWLEY, DMD,
Plaintiff,
v.
NORTHWESTERN MUTUAL
LIFE INSURANCE COMPANY,
et al.,
Defendants.
]
]
]
]
]
]
]
]
]
]
]
Case No.: 2:17-cv-01513-ACA
MEMORANDUM OPINION AND ORDER
Plaintiff Glen Brawley, an orthodontist, had five disability income policies
with Defendant Northwestern Mutual Life Insurance Company (“Northwestern”).
(Doc. 1-1 at ¶¶ 7–12). After he severely injured his dominant hand in a brush saw
accident, Dr. Brawley filed a claim under each of the policies. (Id. at ¶¶ 19–25,
34). Until January 1, 2015, Northwestern paid Dr. Brawley disability benefits
under all five policies, but in February 2015, it reassessed his condition and
discontinued all disability payments. (Id. at ¶¶ 34–40). Dr. Brawley timely filed
an appeal of the denial, which Northwestern denied. (Id. at ¶¶ 41–42). In March
2016, Dr. Brawley submitted a second claim for disability benefits. (Doc. 1-1 at
¶ 43). After its review of the second request, Northwestern determined it was
“unable to re-open [Dr. Brawley’s] prior claim or approve a new claim.” (Doc. 324). This lawsuit followed.
Currently pending before the court is Northwestern’s motion for partial
summary judgment. (Doc. 27). Northwestern argues that Counts II through V of
Dr. Brawley’s complaint are time-barred under either Alabama’s twenty-year rule
of repose or the applicable statute of limitations. (Doc. 28 at 6). For the reasons
explained below, the court GRANTS IN PART AND DENIES IN PART
Northwestern’s motion.
I.
STANDARD OF REVIEW
“The court shall grant summary judgment if the movant shows that there is
no genuine dispute as to any material fact and the movant is entitled to judgment as
a matter of law.” Fed. R. Civ. P. 56(a). The court views the evidence in the light
most favorable to the non-moving party. Baas v. Fewless, 886 F.3d 1088, 1091
(11th Cir. 2018).
II.
FACTUAL BACKGROUND
Dr. Brawley purchased five disability income policies from Northwestern.
The first policy was issued on April 10, 1981 (the “1981 Policy”). (Doc. 1-1 at
¶ 7). The second policy was issued on November 10, 1987 (the “1987 Policy”).
(Id. at ¶ 11). The third policy was issued on January 10, 1990 (the “1990 Policy”).
(Id. at ¶ 12).
The fourth and fifth policies were issued on March 1, 2002
2
(collectively, the “2002 Policies”). (Id. at ¶ 14). All five of the policies remained
in effect at all relevant times. (Doc. 1-1 at ¶¶ 7, 11, 12, 14).
Dr. Brawley did not actually read any of the disability policies; he “looked”
at the 1981, 1987, and 1990 Policies “close enough to verify the premium and
benefits were as represented” and relied on the Northwestern agent’s
representations about the terms of the 2002 Policies. (Doc. 1-1 at ¶ 15; Doc. 11 at
12–13). Based on discussions he had with the Northwestern agent who sold him
the policies, Dr. Brawley believed that the 1987 Policy provided “true ‘own
occupation’” protection in the event he “could not perform, on a full-time basis, the
primary activities of his specific specialty (orthodontics).” (Doc. 1-1 at ¶¶ 9–11).
He believed the 1990 Policy was “virtually identical” to the 1981 and 1987
Policies (id. at ¶ 12), and when he purchased the 2002 Policies, he understood them
to be “essentially the same as the three previous policies” (id. at ¶ 15).
Dr. Brawley did not compare the language in the 2002 Policies to the three earlier
policies. (Id.).
In 2013, after a severe injury to his dominant hand impacted his ability to
work, Dr. Brawley applied for disability benefits under all five policies. (Doc. 1-1
at ¶¶ 19, 34). Northwestern approved the claim, subject to continuing proof of
disability requirements, and paid Dr. Brawley monthly disability benefits under the
policies through January 2015.
(See id. at ¶¶ 34, 35).
3
In February 2015,
Northwestern denied Dr. Brawley’s claim for disability benefits beyond what had
already been paid. (Id. at 40).
In February 2016, Dr. Brawley sold his orthodontics practice and stopped
practicing. (Id. at ¶¶ 43, 47). He then submitted, in March 2016, a second claim
based on his updated employment status and included additional medical records
regarding a condition in his right elbow. (Doc. 1-1 at ¶ 43).
In April 2016, Northwestern sent Dr. Brawley a letter acknowledging receipt
of the claim and informing him that Northwestern would “be re-evaluating [his]
claim from [the] original submission in 2013 to see if [it] can change that decision
and, if not, [determine] whether [it] can establish a current period of disability.”
(Doc. 32-3). In June 2016, Northwestern concluded its “review of [Dr. Brawley’s]
claim both with regard to [his] current limitations and possible limitations
continuing from [the] original claim.”
(Doc. 32-4).
Based on its review,
Northwestern determined that it was “unable to either re-open [Dr. Brawley’s]
prior claim or approve a new claim.” (Id.).
Dr. Brawley sued Northwestern and two insurance agents in state court,
asserting various state law claims. (Doc. 1-1). The Defendants removed the case
to this court based on diversity jurisdiction. (Doc. 1 at ¶ 6). The court (Hopkins,
J.) dismissed the two insurance agents as fraudulently joined, concluding that the
4
rule of repose barred some of the claims against them and the statute of limitations
barred the rest. (Doc. 19 at 2–3, 36–37).
The only remaining Defendant is Northwestern. Count I alleges
Northwestern breached the terms and provisions of all five policies issued to Dr.
Brawley. (Doc. 1-1 at ¶ 51). Counts II, III, and IV assert claims with respect to
the 1987, 1990, and 2002 Policies. (Id. at ¶¶ 54, 58, 61). Count V alleges
Northwestern twice denied Dr. Brawley’s disability claims in bad faith. (Id. at
¶ 69).
III.
DISCUSSION
Northwestern’s motion for partial summary judgment seeks to dispose of
Counts II through V of Dr. Brawley’s complaint. Northwestern argues that claims
asserted with respect to the 1987 and 1990 Policies are barred by Alabama’s Rule
of Repose. Northwestern alleges claims made pursuant to the 2002 Policies, and
those alleging a bad faith denial of benefits, are barred by the statute of limitations.
A.
Alabama’s Rule of Repose Bars Dr. Brawley’s Fraud and Negligence
Claims Against Northwestern Under the 1987 and 1990 Policies
Northwestern moves for summary judgment on Counts II, III, and IV to the
extent they arise from the 1987 and 1990 Policies, on the basis that the rule of
repose bars those claims. (Doc. 28 at 6–9).
Under Alabama law, the common-law rule of repose “bars actions that have
not been commenced within 20 years.” Owens-Illinois, Inc. v. Wells, 50 So. 3d
5
413, 416 (Ala. 2010) (quoting Tierce v. Ellis, 624 So. 2d 553, 554 (Ala. 1993)).
“The rule of repose begins running on a claim as soon as all of the essential
elements of that claim coexist so that the plaintiff could validly file suit.” Am.
Gen. Life and Acc. Ins. Co. v. Underwood, 886 So. 2d 807, 812 (Ala. 2004).
Because Dr. Brawley’s alleged injury resulted from the payment of premiums for
an insurance policy, “the rule of repose began running . . . as soon as [Dr. Brawley]
paid the first premium for [each] policy because that payment supplied the last
essential element necessary for all essential elements of the particular claim to
coexist so that [he] could file suit.” Id. at 813.
Dr. Brawley began paying premiums for the 1987 Policy on November 10,
1987 (doc. 29-1 at 24), and for the 1990 Policy on January 10, 1990 (id. at 47).
But, he did not file his state court complaint until August 1, 2017. (Doc. 1 at 1,
¶ 8). Because more than twenty years elapsed between the payment of the first
premium under each policy and the filing of this lawsuit, the court finds that the
rule of repose bars Dr. Brawley’s negligence and fraud based claims arising from
the 1987 and 1990 Policies.
B.
Alabama’s Two-Year Statute of Limitations Bars Dr. Brawley’s Fraud
Claims Against Northwestern Under the 2002 Policies
Northwestern seeks summary judgment on Counts II and IV as they relate to
the 2002 Policies, on the basis that Alabama’s two-year statute of limitations bars
those claims. (Doc. 28 at 9–17).
6
Under Alabama law, claims for fraud and suppression are subject to a twoyear statute of limitations. Ala. Code §§ 6–2–38, 6–2–3. A fraud claim accrues,
and the running of the statutory limitations period commences, “upon the earlier
of: (1) actual discovery of the alleged fraud; or (2) receipt of a document or
contract alerting the plaintiff to the possibility of fraud, if the plaintiff could have
read and understood such document and chose to ignore its written terms.” Owens,
289 F. Supp. 2d at 1325 (citing Foremost Ins. Co. v. Parham, 693 So. 2d 409, 421
(Ala. 1997)).
Dr. Brawley admits that he received copies of the 2002 Policies in March
2002 (doc. 1-1 at ¶ 15), but argues that the limitations period should run from the
date he discovered the fraud and not from the date he received the policies (doc. 18
at 4, ¶ 5). Although he agrees that the earlier date typically triggers the running of
the statute of limitations, Dr. Brawley contends that under an exception created by
Alabama Supreme Court precedent, the statute of limitations runs from the time he
discovered the alleged fraud because he had a “special relationship” with the
Northwestern agent. (Id.) (citing Potter v. First Real Est. Co., Inc., 844 So. 2d
540, 551 (Ala. 2002)).
Dr. Brawley’s argument is unavailing.
In Potter, a real estate agent
represented both the purchaser and seller in a real estate transaction. The agent
told the plaintiff that she represented him “as much as she represented the seller.”
7
Potter, 844 So. 2d at 543. At the real estate closing, the agent assured the plaintiff
that a document presented at the closing was the same as an almost illegible
document that she had previously presented. Id. at 551. Because the real estate
agent represented the plaintiff’s interests, the Alabama Supreme Court found a
special relationship between the plaintiff and the agent existed that made it
reasonable for the plaintiff to rely on the agent’s representations of what the
document contained. Id. As a result, the Alabama Supreme Court held that the
statute of limitations began running when the plaintiff discovered the fraud instead
of when he received the document. Id.
The Potter decision is distinguishable for two reasons. First, unlike in
Potter, in this case the agent who allegedly made misrepresentations regarding the
terms of the 2002 Policies was Northwestern’s agent, not Dr. Brawley’s agent.
And second, Dr. Brawley has not alleged or presented evidence that he could not
read or understand the language of the Policies. Given these distinctions, the
Potter decision does not apply in this case. Consequently, the statute began to run
in March 2002, more than two years before he filed this case in 2017, and his fraud
claims based on the 2002 Policies are time-barred.
8
C.
Alabama’s Two-Year Statute of Limitations Bars Dr. Brawley’s
Negligent and/or Wanton Training and Supervision Claims Against
Northwestern Under the 2002 Policies
Northwestern seeks summary judgment on Count III on the basis that
Alabama’s two-year statute of limitations for negligence and wantonness actions
bars the claim. (Doc. 28 at 22–24).
Dr. Brawley’s negligent and/or wanton training and supervision claims are
subject to a two-year statute of limitations. Ala. Code § 6–2–38; Booker v. United
Am. Ins. Co., 700 So. 2d 1333, 1339 (Ala. 1997) (applying a “two-year limitations
period for claims alleging liability for negligence, whether the liability is direct or
based upon the doctrine of respondeat superior”). Under Alabama law, it is well
settled that a “negligence [and/or wantonness] cause of action accrues when the
plaintiff can first maintain the action, regardless of whether the full amount of
damage is apparent at the time of the first injury.” Henson v. Celtic Life Insurance
Co., 621 So. 2d 1268, 1271 (Ala. 1993).
In this case, Dr. Brawley’s negligent and/or wantonness claims stem from
Northwestern’s sales training and supervision for insurance agents. (Doc. 1-1 at ¶
58). Specifically, Dr. Brawley alleges that the agents “did not know how to
truthfully represent the features of [the disability] policies to potential insureds.”
(Id.). The complaint alleges that a Northwestern agent described the scope of
coverage around the time Dr. Brawley purchased a policy. The last time Dr.
9
Brawley purchased a Northwestern policy was in 2002.
Thus, any alleged
negligence or wantonness on the part of Northwestern occurred, at the latest, on
March 1, 2002, when Dr. Brawley purchased the 2002 Policies. Because Dr.
Brawley filed his complaint fifteen years after his claim accrued, the statute of
limitations bars Dr. Brawley’s negligent and/or wanton supervision claims.
D.
Dr. Brawley’s Bad Faith Claims
Northwestern seeks summary judgment on Count V, in which Dr. Brawley
asserts bad faith claims, on the basis that the statute of limitations bars that claim.
(Doc. 28 at 24–26).
Under Alabama law, the statute of limitations for bad faith claims is two
years, Ala. Code § 6–2–38(1), and begins to run “upon the event of the bad faith
refusal, or upon the knowledge of facts which would reasonably lead the insured
to a discovery of the bad faith refusal.” Jones v. Alfa Mut. Ins. Co., 1 So. 3d 23,
30 (Ala. 2008) (quoting Safeco Ins. Co. of Am. v. Sims, 435 So. 2d 1219, 1222
(Ala. 1983)). Generally, a letter denying insurance coverage is sufficient to “put a
reasonable mind on notice.” Farmers & Merchants Bank v. Home Ins. Co., 514
So. 2d 825, 831–32 (Ala. 1987).
In Count V, Dr. Brawley asserts two bad faith claims: one arising from
Northwestern’s February 2015 denial of benefits and one arising from its June
2016 denial of benefits. The statute of limitations bars the claim arising from the
10
February 2015 denial of benefits because Dr. Brawley filed his complaint in
August 2017, more than two years after that denial. See Farmers & Merchants
Bank, 514 So. 2d at 832.
But, the statute of limitations does not bar the bad faith claim arising from
Northwestern’s June 2016 denial of benefits. In March 2016, Dr. Brawley made a
second claim under all five policies, attaching to his claim additional evidence in
support. (Doc. 32-2; see Doc. 32-3). Northwestern requested updated medical
records and evaluated the claim “to see if [it could] change that decision [on the
2013 Claim] and, if not, . . . whether [it was able to] establish a current period
of disability.” (Doc. 32-3) (emphasis added). After reviewing the information,
Northwestern wrote Dr. Brawley in June 2016, stating that it had reviewed the
information “both with regard to current limitations and possible limitations
continuing from [his] original claim” (doc. 32-4) (emphasis added), but that it was
“unable to either re-open [his] prior claim or approve a new claim” (id.)
(emphasis added).
Taken in the light most favorable to Dr. Brawley, the June 2016 letter is a
denial of benefits. By its terms, the letter clearly and unambiguously states that it
will “not approve” a new claim. (Id.). A denial of insurance benefits is, by
definition, a “rejection of an application for benefits.”
Denial, Black’s Law
Dictionary (10th ed. 2014). Thus, Northwestern’s decision to not approve a new
11
claim is the same as denying a new claim. Because Dr. Brawley filed his lawsuit
within two years of Northwestern’s June 2016 denial of his second claim, the
statute of limitations does not bar the bad faith claim based on that denial.
IV. CONCLUSION
The court GRANTS IN PART and DENIES IN PART Northwestern’s
motion for summary judgment. The court GRANTS Northwestern’s motion for
summary judgment on Counts II through IV of the complaint, GRANTS IN
PART Northwestern’s motion for summary judgment on Count V of the
complaint to the extent the count asserts a claim arising from Northwestern’s
February 2015 denial of benefits, and DENIES IN PART Northwestern’s motion
for summary judgment on Count V of the complaint to the extent the count asserts
a claim arising from Northwestern’s June 2016 denial of benefits.
DONE and ORDERED this December 21, 2018.
_________________________________
ANNEMARIE CARNEY AXON
UNITED STATES DISTRICT JUDGE
12
Disclaimer: Justia Dockets & Filings provides public litigation records from the federal appellate and district courts. These filings and docket sheets should not be considered findings of fact or liability, nor do they necessarily reflect the view of Justia.
Why Is My Information Online?