Crews v. Prudential Insurance Company of America
Filing
46
ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT re: 17 . "Plaintiff's Verified Complaint is DISMISSED WITH PREJUDICE in its entirety." Signed by JUDGE ALAN C KAY on 4/13/2015. (afc)[Written Order follows hearing held April 13, 2015 on Defendant's Motion for Summary Judgment.]CERTIFICATE OF SERVICEParticipants registered to receive electronic notifications received this document electronically at the e-mail address listed on the Notice of Electronic Filing (NEF). Participants not registered to receive electronic notifications were served by first class mail on the date of this docket entry
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF HAWAII
STEFFAN CREWS,
) Civ. No. 14-00009 ACK-RLP
)
Plaintiff,
)
)
v.
)
)
THE PRUDENTIAL INSURANCE COMPANY )
OF AMERICA; DOE DEFENDANTS 1-20, )
)
Defendants.
)
)
)
ORDER GRANTING DEFENDANT’S MOTION FOR SUMMARY JUDGMENT
For the reasons discussed herein, the Court GRANTS
Defendant’s Motion for Summary Judgment.
FACTUAL BACKGROUND1/
This case involves a life insurance dispute. Defendant
Prudential Insurance Company of America (“Prudential”) provides
life insurance to active duty members of the United States armed
forces. In 2002, Plaintiff Steffan Crews (“Plaintiff”) was an
active duty servicemember, married to Crystal Crews (“Crystal”),
who was also an active duty servicemember. (Pl.’s Decl. ¶¶ 4-5.)
On December 22, 2002, Crystal was killed in an automobile
accident. (Id. ¶ 10.)
1/
The facts as recited in this Order are for the purpose of
disposing of the current motion and are not to be construed as
findings of fact that the parties may rely on in future
proceedings.
Prudential has provided group life insurance coverage
to members of the United States armed services, their families,
and veterans for the Department of Veterans Affairs (the “VA”)
since 1965. (Compl. ¶ 10; 38 U.S.C. §1966.) This insurance is
provided as part of a program consisting of three types of
policies: Servicemembers’ Group Life Insurance (“SGLI”) for life
insurance on servicemembers themselves; Family SGLI (“FSGLI”) for
life insurance on family of servicemembers; and Veterans’ Group
Life Insurance (“VGLI”), which is not at issue here. (Compl. ¶¶
10-13; Def.’s CSF ¶ 2.) In 1999, the VA and Prudential agreed
that lump sum payments of insurance proceeds under these policies
would be made through retained asset accounts called Alliance
Accounts. Prudential’s Office of Servicemembers Group Life
Insurance administered the Alliance Account program, which
provided claimants with an interest-bearing Alliance Account to
hold their benefits payments and allowed access to those funds by
writing checks. (Def.’s CSF, McKoy Decl. ¶¶ 2-5.)
At the time of Crystal’s death, by virtue of their
status as active duty servicemembers, a $250,000 Servicemember
Group Life Insurance Policy (“SGLI Policy”) was held by Crystal
on her own life, and a $100,000 Family Servicemember Group Life
Insurance Policy (“FSGLI Policy”) was held by Plaintiff on
Crystal’s life. (Def.’s CSF ¶¶ 102; Opp’n at 4 n.1; Pl.’s CSF.)
At issue in the instant suit is the FSGLI Policy.
2
On December 23, 2003, Plaintiff submitted a claim for
death benefits under the SGLI Policy. (Def.’s CSF, Ex. B at “Ex.
6” (PRUD00024); Id., Ex. A (Pl.’s Depo.) at 27-28.) On January
13, 2003, Plaintiff states that he participated in a “review” at
the Casualty Assistance Office at Fort Hood, where it was
explained to him that he may be entitled to a FSGLI benefit.
(Pl.’s CSF, Pl.’s Decl. ¶ 20.) Plaintiff therefore submitted a
separate claim for death benefits under his FSGLI Policy on
January 13, 2003. (Id., Ex. B at “Ex. 5” (PRUD00013); Id., Ex. A
(Pl.’s Depo.) at 28.)
Prudential thereafter set up an Alliance Account for
Plaintiff and sent him an information packet about the account in
the mail, along with a box of checks. (Compl. ¶ 21; Def.’s CSF,
Ex. A (Pl.’s Depo.) at 29-30.) Plaintiff states that the letter
accompanying the box of checks stated “how much money was in that
account” and “how to take the money out.” (Def.’s CSF, Ex. A
(Pl.’s Depo.) at 30.) Plaintiff states that it was his
understanding that the amount in the Alliance Account represented
his wife’s SGLI Policy benefit of $250,000. (Id. at 31.) He also
stated in his deposition that, at the time, he did not know if he
was entitled to benefits under his FSGLI Policy and did not
believe that the Alliance Account contained any money from that
policy. (Id. at 31-32.)
The Alliance Account records available show that
3
Prudential made an initial deposit into the Alliance Account on
January 17, 2003, of $250,366.23, which included the $250,000.00
SGLI Policy death benefit plus accrued interest. (Def.’s CSF, Ex.
B at PRUD00045; Pl.’s CSF, Ex. 1.) The records also show that
Plaintiff wrote a check for $8,000 on January 22, 2003; Plaintiff
states that he did in fact write this check and it was made out
to a funeral home. (Def.’s CSF, Ex. B at PRUD00045; Ex. A (Pl.’s
Depo.) at 34.) Thus, at the latest, Plaintiff received the
information about the Alliance Account, as well as the box of
checks associated with that account, before January 22, 2003.
Given this timing, only the SGLI Policy death benefit (of
$250,366.32) had been deposited into the account at the time
Plaintiff first received notice of the account.
The Alliance Account records show that on January 22,
2003, Prudential made a second deposit into the Alliance Account
of $100,047.64, which Prudential states included the $100,000.00
FSGLI Policy death benefit plus accrued interest minus premiums
due on the policy. (Def.’s CSF, Ex. B at PRUD00045; Compl. ¶ 25,
Ex. A.) Plaintiff asserts he never knew about the FSGLI deposit.
Other than the initial informational package he received in the
mail in January 2003, Plaintiff denies having ever receiving any
other documentation from Prudential concerning his Alliance
Account until 2013. (Def.’s CSF, Ex. A (Pl.’s Depo.) at 38-39.)
It is undisputed, however, that Plaintiff’s mailing address at
4
the time was 1058 South Fort Hood Street, PMB 141, Killeen, Texas
76541. (Def.’s CSF, Ex. A (Pl.’s Depo.) at 25; Pl.’s CSF, Pl.’s
Decl. ¶¶ 20, 22.) Prudential sent a confirmation of the FSGLI
Policy payment postmarked January 23, 2003 to that address.
(Def.’s CSF, Ex. E; Compl., Ex. A.) It also sent confirmation of
the payment to the Casualty Operations Division. (Def.’s CSF,
McKoy Decl. ¶ 4; Ex. E.) Prudential has also introduced evidence
that it was its routine practice to send monthly account
statements to all Alliance Account holders. (Def.’s CSF, Ex. F at
1 (“Your opening balance is shown on the Certificate of Account
Confirmation in this package. Also, you will receive a
comprehensive statement each month showing your Alliance Account
balance, interest earned, withdrawals, applicable interest rate,
and any other account activity.”).)
On January 31, 2003, Check Number 108 was written from
the Alliance Account in the amount of $100,000. (Def.’s CSF, Ex.
B at PRUD00045; McKoy Decl. ¶ 3; Compl. ¶ 23, Ex. A.) In the
account statement the payee is identified only as “Alliance
check.” (Id.) Plaintiff asserts that he has no knowledge of this
check and has never received the FSGLI Policy death benefit.
(Compl. ¶ 26; Def.’s CSF, Ex. A (Pl.’s Depo.) at 34-35; Pl.’s
CSF, Pl.’s Decl. ¶¶ 30-32 & Ex. 1.)
Alliance Account records show that, after Check Number
108 was cashed, the account balance as of January 31, 2003 was
5
$242,570.54. (Def.’s CSF, Ex. B at PRUD00044-45.) Plaintiff
admits to having written a series of checks that were paid out
from the Alliance Account in February of 2003. Specifically,
Plaintiff admits to writing six checks totaling exactly
$250,570.54.2/ (Def.’s CSF, Ex. B at PRU00047; Ex. A (Pl.’s
Depo.) at 37-41; Pl.’s CSF, Pl.’s Decl. ¶¶ 25-27 & Ex. 1.).)
Thus, in February 2003, Plaintiff drew out of the Alliance
Account exactly the same amount that was shown on the January 31,
2003 statement. Nevertheless, Plaintiff claims he never received
the January 31, 2003 statement, or any subsequent update as to
his account balance. (Pl.’s CSF, Pl.’s Decl. ¶¶ 29, 33-34; Def.’s
CSF, Ex. A (Pl.’s Depo.) at 29-30, 37.) In his declaration in
support of his opposition to the instant Motion, Plaintiff states
that it was his intention to close the Alliance Account in
February of 2003 and that, to do so, he “followed [Prudential’s]
instructions on how to close the account by getting the current
account balance and writing a check for that amount.” (Pl.’s CSF,
Pl.’s Decl. ¶ 28.) In his earlier deposition testimony, however,
2/
The checks are as follows: (1) Check Number 102 payable
to Steffan Crews in the amount of $100,000; (2) Check Number 103
payable to Steffan Crews in the amount of $10,000; (3) Check
Number 104 payable to Teresita Crews (Plaintiff’s mother) in the
amount of $10,000; (4) Check Number 107 payable to Teresita Crews
in the amount of $2,419; (5) Check Number 109 payable to Billy
Madden (Plaintiff’s father-in-law) in the amount of $15,000; and
(6) Check Number 111 payable to Steffan Crews in the amount of
$105,161.64. (Def.’s CSF, Ex. B at PRUD00047.) Plaintiff states
he tore up checks numbered 105, 106, and 110. (Pl.’s CSF, Pl.’s
Decl. ¶¶ 25, 27.)
6
Plaintiff stated that he had no means of ascertaining the account
balance other than by manually subtracting the checks he wrote
against the opening account balance set forth in the January 2003
letter he received from Prudential. (Def.’s CSF, Ex. A (Pl.’s
Depo.) at 38-39.) Plaintiff states that he disposed of the
Alliance Account documentation and the remaining checks. (Id. at
46.)
Plaintiff deployed to Iraq in March 2003. (Pl.’s CSF,
Pl.’s Decl. ¶ 18.) Apparently there was no further communication
between Plaintiff and Prudential about Plaintiff’s FSGLI Policy
claim until around February of 2013. (Def.’s CSF, Ex. A (Pl.’s
Depo.) at 47-48.) In February 2013, Plaintiff attended Casualty
Assistance Officers training. (Id. ¶ 35.) Plaintiff states that,
during the training, he learned that he qualified for FSGLI
benefits that he asserts he never received. (Id. ¶ 36.) Plaintiff
states that he raised this issue with his instructor, who
“checked Army records” and stated that those records did not show
any payment made for FSGLI benefits. (Id. ¶ 37.) Thereafter,
Plaintiff contacted Prudential and inquired about the FSGLI
Policy benefit. (Id. ¶ 38; Def.’s CSF, Ex. A (Pl.’s Depo.) at 4143, 47-48.)
Plaintiff states that it was not until February 2013,
when Prudential provided him with copies of his Alliance Account
monthly account statements in response to his inquiry about the
7
FSGLI Policy, that he found out about the FSGLI deposit and Check
Number 108. (Pl.’s CSF, Pl.’s Decl. ¶ 39; Def.’s CSF, Ex. A
(Pl.’s Depo.) at 37.) Prudential states that it undertook
multiple searches for additional records related to Plaintiff’s
Alliance Account, including searches for copies or scanned images
of Check Number 108. (Def.’s CSF, Wetstein Decl. ¶¶ 2-3, 5.)
Prudential located some documents, including the account
statements for the account from January and February 2003, and
the January 22, 2003 payment notification showing payment of the
$100,047.64 FSGLI Policy benefit.3/ Prudential was unable,
however, to locate any documentation regarding Check Number 108.
(Id. ¶¶ 5-7.) Prudential notified Plaintiff via an April 24, 2013
letter that a copy of the check was unavailable because
Plaintiff’s request was made more than ten years after the date
of the check. (Def.’s CSF, Ex. B, “Ex. 9.”.) Pursuant to
Prudential’s document retention policies, Alliance Account
documents are retained for their current year, plus eight years.
Thus, a check written in 2003 would be retained until the end of
2003 plus eight years, or until the end of 2011. (Def.’s CSF,
Wetsein Decl. ¶ 7.)
Unsatisfied with Prudential’s production of records,
3/
Prudential states that these records had been retained by
virtue of the fact that they were covered by a Records Hold Order
in an unrelated class action suit in Massachusetts. (Mot. at 89.)
8
and asserting that he never received the FSGLI Policy benefit,
Plaintiff filed the instant suit.
PROCEDURAL BACKGROUND
On March 4, 2014, Plaintiff filed a Verified Complaint
against Prudential in the Circuit Court of the First Circuit,
State of Hawaii. (Doc. No. 1, Ex. A.) Prudential timely removed
the action to this Court on April 21, 2014 pursuant to 28 U.S.C.
§§ 1331, 1332(a), 1441(a), and 1446. (Doc. No. 1.) In his
Complaint, Plaintiff asserts claims for breach of contract,
breach of the implied covenant of good faith and fair dealing,
“breach of the standard of care in failing to provide material
necessary to file policy claim,” and unfair and deceptive acts in
violation of Hawaii’s Unfair and Deceptive Acts and Practices
Act. Plaintiff seeks “actual, trebel, and punitive damages.”
(Compl. at 22.)
Prudential filed the instant Motion for Summary
Judgment, along with a concise statement of facts and supporting
exhibits, on January 7, 2015. (Doc. Nos. 28 & 29.) Plaintiff
filed his memorandum in opposition, supported by a concise
statement of facts and a declaration by Plaintiff, on March 18,
2015. (Doc. No. 44.) Prudential filed its reply on March 30,
2015. (Doc. No. 45.) A hearing on the motion was held on April
13, 2015.
9
STANDARD
Summary judgment is appropriate when a “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 central issue is “whether the evidence presents a
sufficient disagreement to require submission to a jury or
whether it is so one-sided that one party must prevail as a
matter of law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242,
251–52 (1986).
The moving party bears the initial burden of
demonstrating the absence of a genuine issue of material fact.
Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If that
burden has been met, the nonmoving party must then come forward
and establish the specific material facts in dispute to survive
summary judgment. Matsushita Elec. Indus. Co. v. Zenith Radio
Corp., 475 U.S. 574, 588 (1986). The Court must draw all
reasonable inferences in favor of the nonmoving party. Id. at
587.
In supporting a factual position, a party must “cit[e]
to particular parts of materials in the record . . . or show[]
that the materials cited do not establish the absence or presence
of a genuine dispute, or that an adverse party cannot produce
admissible evidence to support the fact.” Fed. R. Civ. P.
56(c)(1). The nonmoving party “must do more than simply show that
10
there is some metaphysical doubt as to the material facts.”
Matsushita, 475 U.S. at 585. “[T]he requirement is that there be
no genuine issue of material fact . . . . Only disputes over
facts that might affect the outcome of the suit under the
governing law will properly preclude the entry of summary
judgment.” Anderson, 477 U.S. at 247–48 (emphasis in original).
Also, “[t]he mere existence of a scintilla of evidence in support
of the non-moving party’s position is not sufficient[]” to defeat
summary judgment. Triton Energy Corp. v. Square D Co., 68 F.3d
1216, 1221 (9th Cir. 1995). Likewise, the nonmoving party “cannot
defeat summary judgment with allegations in the complaint, or
with unsupported conjecture or conclusory statements.” Hernandez
v. Spacelabs Med. Inc., 343 F.3d 1107, 1112 (9th Cir. 2003).
DISCUSSION
In the instant motion, Prudential seeks dismissal of
Plaintiff’s Complaint in its entirety on the basis that
Plaintiff’s claims are barred by laches.4/
4/
Plaintiff concedes that laches is an available defense
to his claims and is not barred by the Servicemembers’ Civil
Relief Act (“SCRA”), 50 U.S.C. § 501, et seq. (Opp’n at 5, 17.)
Generally, the SCRA tolls all statutes of limitations applicable
to claims brought by full-time, active duty servicemembers. 50
App. U.S.C. § 526(a). As Prudential asserts, and Plaintiff
concedes, however, the SCRA does not prevent laches from barring
a servicemember’s claims, as laches is a limitation on stale
claims entirely independent of any applicable statutes of
limitations. See Ass’n of Apartment Owners of Newtown Meadows ex
rel. its Bd. of Directors v. Venture 15, Inc., 167 P.3d 225, 284
(Haw. 2007); Mot. at 23-24; Opp’n at 17.
11
“The doctrine of laches reflects the equitable maxim
that equity aids the vigilant, not those who slumber on their
rights.” Ass’n of Apartment Owners of Newton Meadows v. Venture
15, Inc., 167 P.3d 225, 284 (Haw. 2007) (quoting Adair v.
Hustace, 640 P.2d 294, 300 (Haw. 1982)). In order for the
doctrine to apply, two components must be present:
First, there must have been a delay by the
plaintiff in bringing his claim . . . and that
delay must have been unreasonable under the
circumstances. Delay is reasonable if the claim
was brought without undue delay after plaintiff
knew of the wrong or knew of facts and
circumstances sufficient to impute such knowledge
to him. Second, that delay must have resulted in
prejudice to defendant. Common but by no means
exclusive examples of such prejudice are loss of
evidence with which to contest plaintiff's
claims, including the fading memories or deaths
of material witnesses, changes in the value of
the subject matter, changes in defendant’s
position, and intervening rights of third
parties.
Id. (quoting Adair, 640 P.2d at 321). The Court addresses each
component in turn.
A.
Unreasonable Delay
First, to raise the defense of laches, Prudential must
demonstrate that there was an unreasonable delay in bringing the
subject claim. “Lapse of time alone does not constitute laches.
Since laches is an equitable defense, its application is
controlled by equitable considerations.” Pelosi v. Wailea Ranch
Estates, 985 P.2d 1045, 1058 (Haw. 1999) (quoting Yokochi v.
Yoshimoto, 353 P.2d 820, 823 (Haw. 1960)). “Delay is reasonable
12
if the claim was brought without undue delay after plaintiff knew
of the wrong or knew of facts and circumstances sufficient to
impute such knowledge to him.” Id. (quoting Adair, 640 P.2d at
300).
Here, Prudential argues that Plaintiff unreasonably
delayed in bringing this action because he did not contact
Prudential to inquire about his FSGLI Policy claim until February
2013, ten years after he filed the claim on January 13, 2003 and
first knew, or should have known, of his claim in the instant
suit.
It is undisputed that on January 13, 2003, Plaintiff
was informed by the Casualty Assistance Office at Fort Hood that
he may be entitled to a FSGLI benefit, and that he filed a claim
under his FSGLI Policy on that date. (Pl.’s CSF, Pl.’s Decl.
¶ 20; Def.’s CSF, Ex. A (Pl.’s Depo.) at 26-28; Ex. B at
PRUD00013.) Thus, as of January 13, 2003, Plaintiff had knowledge
of his outstanding FSGLI Policy claim. It is also undisputed that
Plaintiff never contacted Prudential at any time after January
13, 2003 (until 2013) to inquire about the status of his FSGLI
Policy claim. (Def.’s CSF, Ex. A (Pl.’s Depo.) at 42.)
Plaintiff offers no explanation for this delay, other
than by stating that, at the time, he was uncertain about whether
he was even entitled to benefits under the FSGLI Policy. (Def.’s
CSF, Ex. A (Pl.’s Depo.) at 26-28.) He does not, however, dispute
13
that he did, in fact, file a FSGLI claim for benefits. (Id. at
26-28.) Moreover, he also admitted that there is typically some
uncertainty at the time a claim is filed as to how an insurance
company will respond. (Id. at 48-49.) Even if Plaintiff assumed
his FSGLI claim had been denied, or was unsure as to whether he
was entitled to benefits under the FSGLI Policy, it is undisputed
that he was fully aware that he had filed a claim under that
policy in January 2003, and he offers no reason whatsoever for
the ten-year delay in inquiring about the processing of the
claim, or disputing its resolution.
In short, there is no dispute of material fact that
Plaintiff knew or should have known as of January 13, 2003 about
the existence of his FSGLI claim, but failed to inquire about it
for ten years. The Court is satisfied this ten-year period during
which Plaintiff did nothing to follow-up on his FSGLI claim
constitutes undue delay. See, e.g., Evergreen Safety Council v.
RSA Network Inc., 697 F.3d 1221, 1227 (9th Cir. 2012) (finding a
ten year delay from the date on which a party knew or should have
known of an alleged copyright infringement was sufficient to
support a laches defense).
Moreover, even assuming Plaintiff’s failure to inquire
about his outstanding FSGLI claim for over ten years doesn’t in
and of itself constitute an unreasonable delay, the Court also
finds that Plaintiff knew or should have known about the January
14
2003 FSGLI payment at the time it was made. Plaintiff does not
dispute that Prudential deposited the $100,047.64 FSGLI payment
into his Alliance Account on January 22, 2003. (Def.’s CSF, Ex. A
(Pl.’s Depo.) at 35.) Plaintiff nevertheless asserts that he had
no way of knowing that his FSGLI claim had been paid because he
never received any statements or additional information from
Prudential after the initial January 2003 mailing informing him
of the Alliance Account and sending him checks. (Def.’s CSF, Ex.
A (Pl.’s Depo.) at 29-30; Pl.’s CSF, Pl.’s Decl. ¶¶ 29-30.)
Plaintiff further asserts that he never wrote or knew about Check
Number 108, written for $100,000 and debited from the Alliance
Account on January 31, 2003. (Def.’s CSF, Ex. A (Pl.’s Depo.) at
35-36.)
The Court finds, however, that no reasonable juror
could conclude that, under the circumstances presented here,
Plaintiff was unaware of the fact that the $100,047.64 FSGLI
payment was deposited into his Alliance Account, and that Check
Number 108 for $100,000 was drawn on the account. First, the
Prudential records that are available show that an Alliance
Payment Notification regarding the FSGLI payment was mailed to
Plaintiff at the address that he has confirmed was his mailing
address at the time, and where he received the initial mailing
from Prudential regarding the establishment of the Alliance
Account. (See Def.’s CSF, McKoy Decl. & Ex. E; Ex. A (Pl.’s
15
Depo.) at 25, 29-30.) This was the same address listed on the
copies of the account statements for January 2003 and February
2003. (Def.’s CSF, Ex. B at PRUD00044-47.)
Further, notwithstanding his claims to the contrary,
Plaintiff’s documented withdrawals from the Alliance Account
suggest that he was aware of the actual account balance at the
time. Plaintiff admits to having withdrawn a total of $250,570.54
from the Alliance Account; however, the initial deposit into the
account (the only amount Plaintiff claims to have ever been aware
of by virtue of the first mailing) was only $250,366.23. (See
id.; Def.’s CSF, Ex. A (Pl.’s Depo.) at 31 (testifying that the
initial letter about the Alliance Account stated how much money
was in the account as of the initial deposit).) In his deposition
testimony, Plaintiff stated that he received no account
statements and had no way of ascertaining his Alliance Account
balance other than by manually calculating his current balance
based on the starting balance and the checks he had already
written. (Def.’s CSF, Ex. A (Pl.’s Depo.) at 30, 38-39.) The fact
that Plaintiff drew out more from the account than was initially
deposited (prior to the $100,047.64 FSGLI payment) indicates,
however, that he knew or should have known at the time he was
writing checks to draw down on the account that the account had
more money in it than could be accounted for solely by the
initial SGLI benefit deposit.
16
Indeed, in his declaration in opposition to the instant
motion, Plaintiff now asserts (in apparent contradiction to his
prior sworn testimony) that he found out the account balance for
the purpose of closing the account by “getting the current
balance and writing a check for that amount.” (Pl.’s CSF, Pl.’s
Decl. ¶ 28.) Plaintiff’s opposition states that he obtained the
account balance by using “a telephonic automatic balance
apparatus.” (Opp’n at 10-11.) Moreover, Plaintiff states in his
opposition that the initial mailing from Prudential about the
Alliance Account (which Plaintiff does not dispute he received)
included a toll-free number to be used to acquire “account
balance information.” (Opp’n at 9.) Thus, as of early January of
2003, Plaintiff had the ability to (and did) ascertain the
balance of the Alliance Account, and would have been aware that
there had been a deposit subsequent to the initial SGLI benefit
deposit.
In sum, there is no dispute that, as of January 2003,
Plaintiff knew that he had filed a claim under the FSGLI Policy,
knew that an Alliance Account had been set up for him by
Prudential, knew how to access the balance of this account (and
in fact did so), and yet took no action for over ten years to
determine the FSGLI claim’s status or inquire about the
additional deposit into his account.
Plaintiff has offered no reason, let alone factual
17
allegations sufficient to raise a question of fact, as to why he
failed to inquire about his FSGLI claim or the claimed Alliance
Account discrepancies for ten years. (See generally Pl.’s CSF.)
Thus, even if, as Plaintiff claims, he lacked actual knowledge of
his entitlement to FSGLI benefits or the circumstances of the
additional deposit into his Alliance Account, the Court concludes
that, at the very least, the undisputed facts and circumstances
were sufficient to impute knowledge of the alleged harm to him.
See Adair, 640 P.2d 302-303 (finding laches appropriate where the
record contained “facts and circumstances from which a jury could
properly impute knowledge of the claim [such that the parties’]
failure to act sooner was unreasonable”); Brown v. Bishop Trust
Co., 355 P.2d 179, 185 (Haw. 1960) (granting summary judgment
against plaintiffs even though they claimed they did not have
actual knowledge of the alleged harm because “there were enough
facts staring them in the face to put them on inquiry”)); see
also Order of R.R. Telegraphers v. Railway Express Agency, 321
U.S. 342, 348-39 (1944) (stating that the doctrine of laches is
“designed to promote justice by preventing surprises through the
revival of claims that have been allowed to slumber until
evidence has been lost, memories have faded, and witnesses have
disappeared”); Evergreen Safety Council, 697 F.3d at 1227
(finding a ten-year delay unreasonable “because it involved no
evaluation or investigation of the claim, or other legitimate
18
justification; [the plaintiff] merely slept on its rights.”).
B. Prejudice
Having found that Plaintiff unreasonably delayed in
bringing his claims in the instant suit, the Court turns next to
an assessment of whether the delay resulted in prejudice to
Prudential. “A lengthy delay, even if unexcused, that does not
result in prejudice does not support a laches defense.” Grand
Canyon Trust v. Tucson Elec. Power Co., 391 F.3d 979, 988 (9th
Cir. 2004).
Prudential asserts that there has been substantial
evidentiary prejudice to it as a result of Plaintiff’s
unreasonable delay. Specifically, Prudential states that it has
disposed of key documents in the ordinary course of business
during the ten years between the transactions at issue and the
time Plaintiff first contacted Prudential in 2013. Upon receiving
Plaintiff’s inquiry in 2013, Prudential undertook a search of its
records for any documentary proof of the FSGLI payment. (Def.’s
CSF, Wetstein Decl. ¶¶ 3-5, 8 & Ex. C.) Prudential found copies
of the January and February 2003 account statements, as well as
the payment notification and explanation of benefits associated
with the FSGLI benefit payment; however, it was unable to find
any additional documentation regarding Check Number 108 or the
Alliance Account because of its document retention policy and the
time elapsed since the FSGLI claim was made and processed. (Id.,
19
Wetstein Decl. ¶¶ 5-8.)
Specifically, Prudential states that, pursuant to its
document retention policies, Alliance Account documents are
retained for their current year, plus eight years. Thus, checks
written in 2003 were retained until the end of 2011. (Id.,
Wetstein Decl. ¶ 7.) Because of this, any documentation regarding
Check Number 108 was disposed of in the normal course of business
at the end of 2011. Thus, despite conducting several diligent
searches, Prudential has been unable to retrieve any additional
documentation regarding Plaintiff’s account and the checks drawn
therefrom.
Without the absent records, however, Prudential is
unable to adequately defend itself against Plaintiff’s assertions
that he did not write Check Number 108 and never received the
FSGLI Policy benefit. Because these facts lie at the crux of
Plaintiff’s claims, Prudential is clearly prejudiced by the
evidentiary gaps produced by the intervening delay of ten years.
Indeed, this is precisely the kind of prejudice that Hawaii
courts have recognized as a basis for laches, which bars relief
where “during inexcusable delay, the evidence has become obscured
and, under the circumstances of the case, it is too late to
ascertain the merits of the controversy.” Poka v. Holi, 357 P.2d
100, 107 (Haw. 1960); see also Adair, 640 P.2d at 321 (listing
“loss of evidence” as an example of prejudice arising out of
20
undue delay); Evergreen Safety Council, 697 F.3d at 1227
(“Evidentiary prejudice includes such things as lost, stale, or
degraded evidence . . ..”); Danjaq LLC v. Sony Corp., 263 F.3d
942, 956 (9th Cir. 2001) (stating that the prejudice inquiry asks
“not whether some [evidence] might be available - it is whether
the absence of other [evidence] ([that] will be absent because of
[the plaintiff’s] delay) will prejudice [the moving party]”)
(emphasis in original).
Plaintiff’s opposition, while hardly a model of
clarity, appears to attempt to argue that, because Plaintiff was
an active-duty servicemember, Prudential should have retained the
relevant documents longer. (Opp’n at 17-18.) Plaintiff does not
make any specific factual assertions, however, as to why his
status as an active-duty servicemember prevented him from making
any inquiry regarding the FSGLI benefits for ten years. Plaintiff
states that he was deployed to Iraq in 2003; however, he does not
(and can not credibly) assert that he was deployed for the entire
ten-year period. Moreover, Plaintiff himself admits that, during
the intervening ten years, he himself disposed of all of the
relevant documentation in his possession, including the letter
confirming the opening of the Alliance Account and payment of the
SGLI benefits, and the remaining checks associated with the
account. (Def.’s CSF, Ex. A (Pl.’s Depo.) at 46.) Thus, Plaintiff
- through his inexcusable delay and his own disposal of
21
documentation - clearly contributed to the evidentiary prejudice
Prudential now faces.
In sum, the Court concludes that there is no question
of material fact that there was an unreasonable delay in
Plaintiff bringing his claim regarding the FSGLI Policy benefit,
and that that unreasonable delay caused prejudice to Prudential
with respect to its ability to defend the instant suit. As such,
the Court concludes that the doctrine of laches bars the instant
suit. The Court therefore GRANTS Prudential’s Motion for Summary
Judgment and dismisses Plaintiff’s Complaint in its entirety.5/
Further, the Court concludes that, because the Court finds that
laches applies to bar Plaintiffs’ claims, any amendment of the
Complaint would be futile. See, e.g., Bonin v. Calderon, 59 F.3d
815, 845 (9th Cir. 1995) (“Futility of amendment can, by itself,
justify the denial of a motion for leave to amend.”).
5/
Because the Court concludes that laches bars all of the
claims in Plaintiff’s Complaint, the Court need not address
Prudential’s alternative argument that Plaintiff’s third claim,
for negligence, fails because Prudential had no duty to retain
documents indefinitely.
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CONCLUSION
For the foregoing reasons, the Court GRANTS Defendant’s
Motion for Summary Judgment. Plaintiff’s Verified Complaint is
DISMISSED WITH PREJUDICE in its entirety.
IT IS SO ORDERED.
DATED:
Honolulu, Hawaii, April 13, 2015
________________________________
Alan C. Kay
Senior United States District Judge
Crews v. Prudential, Civ. No. 14-00009 ACK RLP, Order Granting Defendant’s
Motion for Summary Judgment.
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