Mullally v. Standard Insurance Company
Filing
24
ORDER Granting Defendant's 22 MOTION to Dismiss and for Default Judgment in favor of Standard Insurance Company against Brian A. Mullally, M.D. and Dismissing Plaintiff's First 15 Amended Complaint with Prejudice. Signed by District Judge Matthew F. Leitman. (SBur)
UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF MICHIGAN
SOUTHERN DIVISION
BRIAN A. MULLALLY, M.D.,
Plaintiff/Counter-Defendant,
Case No. 14-cv-14433
Hon. Matthew F. Leitman
v.
STANDARD INSURANCE COMPANY,
Defendant/Counter-Plaintiff.
_________________________________/
ORDER GRANTING DEFENDANT’S MOTION TO DISMISS AND FOR
DEFAULT JUDGMENT (ECF #22) AND DISMISSING PLAINTIFF’S
FIRST AMENDED COMPLAINT (ECF #15) WITH PREJUDICE
INTRODUCTION
This action is a dispute between an insurance company and one of its
insureds. Plaintiff/Counter-Defendant Brian A. Mullally, M.D., (“Dr. Mullally”)
alleges
that
Defendant/Counter-Plaintiff
Standard
Insurance
Company
(“Standard”) failed to make certain payments owing to him under a “Business
Overhead Expense” insurance policy he purchased from Standard (the “Policy”).
(See First Am. Compl., ECF #15 at 2, Pg. ID 96.) Standard disputes that it owes
Dr. Mullally any payment under the Policy, and it has filed counterclaims seeking
recovery of certain payments it did make to Dr. Mullally (totaling $133,103.29).
(See Def.’s Ans., ECF #11 at 7, Pg. ID 74.)
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Standard has now filed a motion to dismiss Dr. Mullally’s claims and for a
default judgment on its counterclaims (the “Motion”). (ECF #22.) For the reasons
explained below, the Court GRANTS the Motion.
RELEVANT FACTUAL BACKGROUND
Dr. Mullally purchased the Policy from Standard in 2004. (See Policy, ECF
#16-1 at 6, Pg. ID 121.) The Policy permits Dr. Mullally to seek reimbursement
for his business’s “Covered Expenses” during periods of personal disability. (See
id. at 7, Pg. ID 122.) The Policy defines “Covered Expenses” as the insured’s
“share of business expenses incurred or allocable in [the insured’s] regular
occupation…that are ordinary and necessary in the operation of [the] business or
profession.” (Id. at 8, Pg. ID 123.)
In mid-2013, Dr. Mullally was diagnosed with liver cancer.1 (See First Am.
Compl., ECF #15 at 2, Pg. ID 96.) On May 20, 2013, Dr. Mullally submitted a
claim for Covered Expenses under the Policy while he sought treatment for his
cancer. (See Def.’s Ans., ECF #16 at 12, Pg. ID 109.) According to Standard, it
paid Dr. Mullally a total of $133,103.29 in monthly installments from August 2013
through May 2014. (See Def.’s Ans., ECF #16 at 13, Pg. ID 110.) Dr. Mullally
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Dr. Mullally alleges that the cancer is terminal. (See First Am. Compl., ECF #15
at 2, Pg. ID 96.) Standard admits that Dr. Mullally was diagnosed with liver
cancer, but not that his diagnosis is terminal. (See Def.’s Ans., ECF #16 at 4-5, Pg.
ID 100-01.)
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alleges that Standard wrongfully stopped making payments to him in May 2014
despite his ongoing disability. (See First Am. Compl., ECF #15 at 3, Pg. ID 97.)
In response, Standard denies that it failed to reimburse Dr. Mullally for any
Covered Expenses owing under the Policy. (See Def.’s Ans., ECF #16 at 9, Pg. ID
106.) Indeed, Standard alleges that it actually overpaid Dr. Mullally. (Id.) More
specifically, Standard asserts that Dr. Mullally closed his medical practice “in or
around June 2013,” and thus was no longer entitled to reimbursement for Covered
Expenses following that closure. (See id. at 7-9, Pg. ID 104-06.) Standard says
that despite the closure, Dr. Mullally nonetheless continued to accept payments
from Standard. (See id.)
Standard also claims that “[e]xpenses for which [Dr.
Mullally] claims reimbursement were not ‘ordinary and necessary’ in the operation
of his business and otherwise fail to satisfy” the Policy’s definition of Covered
Expenses. (See id. at 7-8, Pg. ID 104-05.) Standard alleges that Dr. Mullally
wrongfully accepted $133,103.29 in benefits to which he was not entitled. (See id.
at 13, Pg. ID 110.)
PROCEDURAL HISTORY
Dr. Mullally filed his First Amended Complaint on April 8, 2015. (See ECF
#15.) On April 22, 2015, Standard filed its Answer. (See ECF #16.) Standard also
filed counterclaims for breach of contract, unjust enrichment, and restitution. (See
id. at 15-17, Pg. ID 112-14.).
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In early July 2015, Standard contacted the Court by letter to complain that
Dr. Mullally had not responded to interrogatories and document requests it had
served upon him. On July 2, 2015, the Court held a phone conference with the
parties. (See Dkt.) During that conference, counsel for Dr. Mullally informed the
Court that Dr. Mullally had not responded to the outstanding discovery requests
because he was receiving treatment for liver cancer. Dr. Mullally’s counsel then
asked the Court stay this action while Dr. Mullally received treatment. The Court
instructed Dr. Mullally’s counsel to file a formal motion requesting a stay, and
counsel did so on July 16, 2015 (the “Stay Motion”). (See ECF #19.)
In the Stay Motion, Dr. Mullally requested additional “time to focus on his
health and his treatment” because litigation can be particularly taxing on a party
who is “battling terminal cancer at the same time.” (Id. at 1-3, Pg. ID 155-57.) On
August 12, 2015, the Court denied the Stay Motion to the extent that it requested
an indefinite stay. (See ECF #21 at 3. Pg. ID 188.) But the Court was sympathetic
to Dr. Mullally’s condition, and issued the following Order in an effort to fairly
accommodate the interests of both parties:
The Court fully understands and is sympathetic to the challenges Dr.
Mullally faces as he battles liver cancer. The Court must carefully
balance Dr. Mullally’s circumstances against Standard’s right to a fair
and efficient adjudication of Dr. Mullally’s claims and its
counterclaim. If Standard is not permitted to take discovery from Dr.
Mullally now, it may forever lose a critical opportunity to develop
support for its serious counterclaim against him. The Court also notes
that while Dr. Mullally’s diagnosis appears to be undisputed, the
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motion requesting a stay is not supported by a letter from Dr.
Mullally’s physician attesting that Dr. Mullally cannot participate in
any discovery. Under these circumstances, the Court does not believe
that an indefinite stay of proceedings is appropriate.
However, given Dr. Mullally’s medical condition, an extension of
time to respond to Standard’s outstanding discovery is not
unreasonable. The discovery was first served on Dr. Mullally on May
12, 2015. The Court will grant Dr. Mullally an additional 30 days
from the date of this Order to respond to the discovery. This will have
provided Dr. Mullally, in total, roughly four months to respond to the
discovery. As this action moves forward, the Court will consider
granting Dr. Mullally additional and/or other accommodations to
enable him to participate in discovery and in the litigation.
Accordingly, for the reasons stated above, it is hereby ordered that Dr.
Mullally’s Motion for Stay of Proceedings (ECF #19) is denied. It is
further ordered that Dr. Mullally is directed to respond to Standard’s
outstanding discovery within 30 days of this Order.
(Id.at 2-3, Pg. ID 186-87.)
Despite the Court’s order that Dr. Mullally provide discovery responses by
September 11, 2015, (and the despite the Court’s willingness to provide Dr.
Mullally with additional accommodations to allow him to continue participating in
this action), he did not do so – and still has not done so more than two months
later. Nor has Dr. Mullally sought an additional extension or suggested that he is
preparing (or contemplating preparing) the discovery responses.
On September 24, 2015, Standard filed the Motion. (See ECF #22.) In the
Motion, Standard asserts that Dr. Mullally has failed to produce any documents
despite the Court’s extension and Standard’s own good faith efforts to confer with
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Dr. Mullally and his counsel by telephone and in writing. (See id. at 3-4, Pg. ID
191-92.) Dr. Mullally failed to file a response to the Motion. It does not appear
that Dr. Mullally has not taken any action in this case since July – roughly four
months ago – and neither Dr. Mullally nor his counsel has indicated that he is
considering any future participation in the action.
On October 16, 2015, Standard filed a reply brief – despite not receiving a
response from Dr. Mullally – in which it once again requested that this Court
dismiss Dr. Mullally’s First Amended Complaint and that it grant Standard a
default judgment on its counterclaims. (See ECF #23.)
ANALYSIS
Dr. Mullally’s First Amended Complaint is subject to dismissal for two
reasons. First, he has failed to comply with this Court’s Order (ECF #21) requiring
him to provide discovery responses to Standard. Under Federal Rule of Civil
Procedure 41(b), “[i]f the plaintiff fails to prosecute or to comply with . . . a court
order, a defendant may move to dismiss the action or any claim against it.” The
Court applies the following four factors to determine whether dismissal under
Federal Rule of Civil Procedure 41(b) is appropriate:
(1) whether the party's failure is due to willfulness, bad faith, or fault;
(2) whether the adversary was prejudiced by the dismissed party's
conduct; (3) whether the dismissed party was warned that failure to
cooperate could lead to dismissal; and (4) whether less drastic
sanctions were imposed or considered before dismissal was ordered.
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United States v. Reyes, 307 F.3d 451, 458 (6th Cir. 2002). And “[a]lthough no one
factor is dispositive, dismissal is proper if the record demonstrates delay or
contumacious conduct.” Id.
The record in this case demonstrates clear delay and complete
unresponsiveness on the part of Dr. Mullally. He has failed to comply with the
Court’s Order requiring him respond to Standard’s discovery requests no later than
September 11, 2015. Dr. Mullally also never contacted the Court to communicate
that he was having problems complying with the Order or that his treatment
prevented him from meeting the deadline. Nor has Dr. Mullally taken any steps to
indicate that the discovery responses are being prepared and/or will be served upon
Standard. Dr. Mullally’s failure to respond to Standard’s discovery requests has
materially prejudiced Standard.
Simply put, without the discovery responses,
Standard cannot effectively defend against Dr. Mullally’s claims or prosecute its
own counterclaims. And if, as Dr. Mullally has suggested, his health status will
continue to deteriorate, Standard may forever lose the ability to obtain the needed
discovery responses. Finally, the Court has considered less drastic sanctions but
does not believe that any are appropriate given Dr. Mullally’s complete abdication
from this case and the resulting serious prejudice to Standard.
Second, Dr. Mullally failed to respond to the Motion which sought dismissal
of his claims. Local Rule 7.1(e)(1)(B) requires a party to respond to an opponent’s
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dispositive motion within 21 days. “Numerous cases have held that where a
plaintiff fails to respond to a motion to dismiss, his or her claims are deemed
abandoned.” Williams v. Chase Bank, No. 15-10565, 2015 WL 4600067, at *3
(E.D. Mich. July 29, 2015); see also Schafer v. City of Defiance Police Dep’t, 529
F.3d 731, 739 (6th Cir. 2008) (“[A] party that does not act in bad faith, but
nevertheless shows willfulness and fault in that he was at best extremely dilatory in
not pursuing his claim, indicates an intention to allow his case to lapse”) (internal
quotations and citation omitted). The Court thus deems Dr. Mullally’s claims
abandoned and dismisses them for this second, independent reason.
Next, Standard is entitled to a default judgment on its counterclaims. Rule
37(b)(2)(vi) of the Federal Rules of Civil Procedure authorizes a district court to
enter a default judgment against a party who fails to comply with a discovery
order. Here, as described in detail above, Dr. Mullally failed to comply with the
Court’s Order directing him “to respond to Standard’s outstanding discovery
within 30 days” of August 12, 2015. (Order Denying Stay Motion, ECF #21 at 3,
Pg. ID 188.)
The Court issued that Order to preserve Standard’s “critical
opportunity to develop support for its serious counterclaim against” Dr. Mullally.
(Id. at 2, Pg. ID 187.) Dr. Mullally’s noncompliance, even after the Court granted
him an extension, has further compromised that opportunity. Thus, Dr. Mullally’s
noncompliance with the Court’s Order is sufficiently serious as to warrant the
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extreme sanction of entry of a default judgment. See Bank One of Cleveland v.
Abbe, 916 F.2d 1067, 1073 (6th Cir. 1990) (“Simply put, if a party has the ability
to comply with a discovery order and does not, dismissal and we add entry of
default, is not an abuse of discretion”) (emphasis added; internal quotations and
citation omitted).
The Court remains sympathetic to Dr. Mullally and has done its best to
accommodate him.
But the Court must continue to balance Dr. Mullally’s
circumstances against Standard’s right to a fair and efficient adjudication of Dr.
Mullally’s claims and its counterclaims. Under the unfortunate circumstances
presented here – where Dr. Mullally has failed to comply with a court order, failed
to respond to a dispositive motion, failed to request any additional
accommodations from the Court, and has given no indication that he intends to
continue participating in this action – granting the relief requested by Standard is
appropriate.
Accordingly, IT IS HEREBY ORDERED that the Motion (ECF #22) is
GRANTED; that Dr. Mullally’s First Amended Complaint is DISMISSED
WITH PREJUDICE; and that a default judgment (on liability only) shall enter in
favor of Standard on its counterclaims.
Dated: November 16, 2015
s/Matthew F. Leitman
MATTHEW F. LEITMAN
UNITED STATES DISTRICT JUDGE
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I hereby certify that a copy of the foregoing document was served upon the
parties and/or counsel of record on November 16, 2015, by electronic means
and/or ordinary mail.
s/Shawna C. Burns
Case Manager
(313) 234-5113
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