Yang et al v. Western-Southern Life Assurance Company
Filing
46
MEMORANDUM OPINION AND ORDER denying 40 Plaintiffs' Motion to Strike Pleading; granting 23 Defendant's Motion for Summary Judgment (Written Opinion). Signed by Judge Ann D. Montgomery on 03/30/2012. (TLU)
UNITED STATES DISTRICT COURT
DISTRICT OF MINNESOTA
Ser Yang and Xeng Yang,
Plaintiffs,
MEMORANDUM OPINION
AND ORDER
Civil No. 11-2492 ADM/JJK
v.
Western-Southern Life Assurance
Company,
Defendant.
_____________________________________________________________________________
Timothy T. Sempf, Esq., Novitzke, Gust, Sempf, Whitley & Bergmanis, Amery, WI, on behalf
of Plaintiffs Ser Yang and Xeng Yang.
Joseph M. Windler, Esq., and Justice Ericson Lindell, Esq., Winthrop & Weinstine, PA,
Minneapolis, MN, on behalf of Defendant Western-Southern Life Assurance Company.
_____________________________________________________________________________
I. INTRODUCTION
On February 28, 2012, the undersigned United States District Judge heard oral
argument on Defendant Western-Southern Life Assurance Company’s (“WSLAC”) Motion for
Summary Judgment [Docket No. 23], as well as Plaintiffs Ser Yang and Xeng Yang’s Motion
to Strike Exhibit [Docket No. 40]. For the reasons set forth below, WSLAC’s Motion for
Summary Judgment is granted and Plaintiffs’ Motion to Strike Exhibit is denied.
II. BACKGROUND1
On October 23, 2009, Soua Yang completed a WSLAC life insurance application
(“Application”) in the presence of her parents, Adam Yang and Ka Her, at her parents’ home.
Vang Decl. [Docket No. 29] ¶ 2; Vang Decl. Ex. 1 (“Application”); Adam Yang Decl. [Docket
No. 37] ¶ 6. WSLAC sales representative Kaojia Vang posed to Soua Yang the questions from
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On a motion for summary judgment, the Court views the evidence in the light most
favorable to the nonmoving party. Ludwig v. Anderson, 54 F.3d 465, 470 (8th Cir. 1995).
the Application, and Kaojia Vang marked the answers electronically on her laptop. Vang Decl.
¶ 3. Both Kaojia Vang and Soua Yang were native Hmong speakers. Id. Soua Yang
immigrated to the United States in 2004, spoke little English and did not read English. Adam
Yang Decl. ¶ 3. Kaojia Vang asked each Application question in English and clarified the
questions in Hmong as Soua Yang needed. Vang Decl. ¶ 3. Soua Yang orally responded in
both English and Hmong, and appeared to Kaojia Vang to understand most of the questions as
asked in English. Id.
The Application included Question 4, which asks, “In the past ten years has the person
named above received or been advised to receive any medical or surgical treatment or test?”
Vang Decl. Ex. 1 at 3. Question 5 asks “In the past ten years has the person named above had
or been treated for any abnormality or disease of [heart, brain, lungs, kidneys, or any other part
of the body]?” Id. Adam Yang and Ka Her state that Soua Yang spontaneously told Kaojia
Vang in Hmong that she had Hepatitis B. Adam Yang Decl. ¶ 7; Ka Her Decl. [Docket No.
39] ¶ 7. Soua Yang’s parents also state that Kaojia Vang did not ask Soua Yang about surgery
or medical testing. See, e.g., Adam Yang Decl. ¶ 9. Kaojia Vang electronically recorded
answers to questions 4 and 5 on the Application as “no.” Id.
Upon completion of the Application, Kaojia Vang reviewed Soua Yang’s answers with
her, and Soua Yang signed the Application. Vang Decl. ¶ 3. On November 10, 2009, a
WSLAC representative called Soua Yang and, through the aid of a Hmong interpreter,
reviewed the questions from the Application. Wolf Decl. [Docket No. 26] Ex. 1. On
December 28, 2009, Kaojia Vang delivered the WSLAC Life Insurance Policy No.
W80348184 (the “Policy”) to Soua Yang. Id. ¶ 5; Vang Decl. Ex. 2 (“Policy”). The Policy
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included a copy of Soua Yang’s Application completed on October 23, 2009. See Policy.
Soua Yang had been diagnosed with Hepatitis B in the fall of 2004 and had received
treatment and medication for that condition. Bobby Yang Decl. [Docket No. 27] ¶¶ 2–3; see
also Wolf Decl. Exs. 5 and 6. Soua Yang also had an underlying condition of Lupus. See
Wolf Decl. Ex. 2 (“Death Certificate”). Had the application reflected Soua Yang’s Hepatitis B
condition, she would have been denied life insurance. Wolf Decl. ¶ 6; Lumpkin Decl. [Docket
No. 32] Ex. 1. On April 23, 2010, Soua Yang died of hypoxic encephalopathy and her
underlying Lupus condition. See Death Certificate.
On December 3, 2010, Soua Yang’s claim for benefits was denied because she had
failed to disclose her Hepatitis B condition. Am. Compl. [Docket No. 21] ¶ 8. On August 31,
2011, this case was removed to federal court.
III. DISCUSSION
A. Plaintiffs’ Motion to Strike Exhibit
Plaintiffs move to strike Exhibit 1 from Aaron Wolf’s Declaration, a transcript of the
November 10, 2009 phone call between a WSLAC representative and Soua Yang. Plaintiffs
argue that this transcript is inadmissible because it violates the Policy and is hearsay.
Defendant contends that the exhibit does not contradict the Policy and is not hearsay or is
admissible hearsay.
Hearsay is a “statement, other than one made by the declarant while testifying at the
trial or hearing, offered in evidence to prove the truth of the matter asserted.” Fed. R. Evid.
801(c). A statement not offered for the truth of the matter asserted is not hearsay. United
States v. Amahia, 825 F.2d 177, 181 (8th Cir. 1987). Hearsay is generally inadmissible. Fed.
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R. Evid. 802. Hearsay is admissible, however, if it constitutes a business record “kept in the
course of a regularly conducted business activity, and if it was the regular practice of that
business activity to make [it].” Fed. R. Evid. 803(6).
Exhibit 1 is not hearsay because it is not being offered for the truth of the matter
asserted. The phone transcript details that Soua Yang answered that she had not had any
medication or treatment in the last five years, or had surgeries, treatments or medical tests in
the last ten years. See Wolf Decl. Ex. 1. Defendant is not offering Exhibit 1 to prove that
Soua Yang did not in fact receive medication, treatment, or medical tests in these time periods.
Rather, Defendant offers it to prove that Soua Yang made these representations to the
insurance company. As such, it is not hearsay and is admissible.
Even if it were hearsay, it is a business record and therefore admissible. WSLAC
maintains and creates transcripts of its phone interviews as part of its ordinary course of
business. Lynch Decl. [Docket No. 44] ¶ 3. Therefore, the transcript of Soua Yang’s
November 10, 2009 phone interview with a WSLAC representative constitutes a business
record and is admissible under Federal Rule of Evidence 803(6).
Finally, Plaintiffs’ argument that Exhibit 1 contravenes the Policy is unavailing. The
Policy states, “No statement will be used in contesting this policy or any rider unless it is in an
application or supplemental application and a copy of such application is attached to this
policy.” Policy at 16. Exhibit 1 is not being offered to contest the Policy, nor is it being
offered to augment or supplement the Policy. Rather, Exhibit 1 is being offered to show that
Soua Yang was asked the questions included in the Application. Because this purpose does
not contest the Policy, Exhibit 1 is not expressly inadmissible under the Policy. Accordingly,
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Plaintiffs’ Motion to Strike Exhibit is denied.
B. Defendant’s Motion for Summary Judgment
Defendant moves for summary judgment, arguing that Soua Yang failed to make a
required disclosure on her WSLAC insurance application regarding Hepatitis B or, in the
alternative, that she signed the insurance application misstating that she had not been medically
treated and did not have a disease. Federal Rule of Civil Procedure 56(a) provides that
summary judgment shall be granted if “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); see Matsushita
Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986) (citing Fed. R. Civ. P.
56(c)).2 On a motion for summary judgment, the court views the evidence in the light most
favorable to the nonmoving party. Ludwig, 54 F.3d at 470. The nonmoving party, however,
may not “rest on mere allegations or denials, but must demonstrate on the record the existence
of specific facts which create a genuine issue for trial.” Krenik v. Cnty. of Le Sueur, 47 F.3d
953, 957 (8th Cir. 1995).
Minnesota law requires that, “In any claim upon a policy issued in this state without
previous medical examination . . . the statements made in the application as to the age, physical
condition, and family history of the insured shall be valid and binding upon the company,
unless willfully false or intentionally misleading.” Minn. Stat. § 61A.11. This allows an
insurer to cancel an insurance policy issued without a medical examination if the insured
willfully misstates or intentionally misleads the insurance company regarding necessary
information. Berthiaume v. Minn. Mut. Life Ins. Co., 388 N.W.2d 15, 18 (Minn. Ct. App.
2
The summary judgment standard was previously located in Rule 56(c).
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1986). No intent to deceive is required where “there was an undoubted misrepresentation of a
matter which materially affected the risk.” St. Cloud Nat’l Bank & Trust Co. v. Woodmen of
the World Life Ins. Soc’y, 451 N.W.2d 75, 79 (Minn. Ct. App. 1990); see also Ellis v. GreatWest Life Assur. Co., 43 F.3d 382, 386 (8th Cir. 1994) (“Minnesota courts have not required a
premeditated design to falsify facts.”) (quotation omitted). Instead, the misrepresentation need
only be “willfully false” or “intentionally misleading.” St. Cloud Nat’l Bank & Trust Co., 451
N.W.2d at 79; Minn. Stat. § 61A.11. “All that is required is that the insured have full
knowledge of the facts that are concealed and that the concealed facts would have precluded
issuance of the policy if known to the insurance company.” Ellis, 43 F.3d at 387. The cause of
the insured’s death need not be related to the undisclosed condition. See, e.g., Berthiaume, 388
N.W.2d at 16–19 (holding that an insurance company was proper in denying benefits for
decedent’s failure to disclose his high blood pressure even where decedent died by striking his
head on a coffee table).
The only disputed issue under Minn. Stat. § 61A.11 in this case is whether Soua Yang
made willfully false or intentionally misleading statements on her Application concerning her
physical condition. It is undisputed that WSLAC never conducted a medical examination of
Soua Yang, instead basing its insurance policy decision upon her answers in the Application.
Wolf Decl. ¶ 4. It is also uncontested that WSLAC would not have issued the same Policy to
Soua Yang had it known of her Hepatitis B condition. Wolf Decl. ¶ 6; Lumpkin Decl. Ex. 1.
Plaintiffs instead argue that Soua Yang did not make willfully false or misleading statements
on the Application. Although not asserted in Plaintiffs’ Amended Complaint, Plaintiffs now
contend that Soua Yang affirmatively disclosed this information to Kaojia Vang. Adam Yang
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Decl. ¶ 7; Ka Her Decl. ¶ 7. Construing the evidence in the light most favorable to the
nonmovant at the summary judgment stage, it is argued Soua Yang disclosed this information
to Kaojia Vang and therefore did not orally make willfully false or misleading statements.
It is undisputed that Soua Yang affirmed her Application, which lacked this material
information, at least on one occasion. “Where an agent records incorrect information on an
application and the insured knows that the information is false, the insurer will not be bound by
the acts of its agent and may avoid the policy.” Patch v. Am. Summit Ins. Co., 1997 WL
20336, at *2 (Minn. Ct. App. Jan. 21, 1997). In Minnesota, a party who signs an agreement is
presumed to know and agree to its terms. See TNT Props., Ltd. v. Tri-Star Developers LLC,
677 N.W.2d 94, 102 (Minn. Ct. App. 2004) (“Minnesota follows the objective theory of
contract formation, under which an outward manifestation of assent is determinative, rather
than a party’s subjective intent.”). In fact, a party has a duty to “learn and know the contents
of a contract before he signs and delivers it.” Hoshaw v. Cosgriff, 247 F. 22, 26 (8th Cir.
1917). Illiteracy, in the absence of fraud, mistake, or unconscionability, is not a defense.
Greer v. Kooiker, 253 N.W.2d 133, 140 (Minn. 1977); see also Shaughnessy v. New York Life
Ins. Co., 203 N.W. 600, 601–02 (Minn. 1925). “It will not do for a man to enter into a
contract, and . . . [then] to say that he did not read it when he signed it, or did not know what it
contained. If this were permitted, contracts would not be worth the paper on which they are
written.” Upton v. Tribilcock, 91 U.S. 45, 50 (1875).
In Greer, the Minnesota Supreme Court determined that an individual’s failure to read a
contract, or to ask someone to explain or read its contents to her, did not void that person’s
signature and assent to the contract. 253 N.W.2d at 508. In Shaughnessy, the plaintiff argued
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that the decedent signed a life insurance application but did not make the answers or read the
application before she signed it. 203 N.W. at 601. The Shaughnessy court, however,
determined that since the decedent had the “opportunity and ability to read it, [] in these
circumstances, the law does not permit a party to avoid his contract by showing that he did not
know what it contained.” Id.
The Application which Kaojia Vang showed Soua Yang for her review reflected that
Soua Yang had answered “no” to Questions 4 and 5. Adam Yang Decl. ¶ 11. Soua Yang
signed the application, representing that all the answers were “true and complete to the best of
my [] knowledge and belief.” Application at 4; Adam Yang Decl. ¶ 11; Ka Her Decl. ¶ 11. It
is disputed how much English Soua Yang could speak, read, or write, but for purposes of
summary judgment she is adjudged to have spoken very little English and to be unable to read
English. Adam Yang Decl. ¶ 3. Still, she had the opportunity to review the application and
she had the ability, through access to Kaojia Vang, an insurance agent fluent in both Hmong
and English, to review the life insurance agreement. No fraud, mistake, or unconscionable
terms are alleged in this case.3 By signing this Application, which included material
misstatements that indisputably influenced WSLAC’s approval of her Policy, Soua Yang
adopted and verified willfully false and intentionally misleading statements regarding her
physical condition. As a matter of law, Soua Yang’s signing of the Application is a
misrepresentation which allowed WSLAC to cancel its insurance policy under Minn. Stat. §
61A.11, and Defendant is entitled to summary judgment.
3
Although Plaintiffs suggest that Kaojia Vang purposely failed to ask Soua Yang the
material questions in the Application and that she did not give Soua Yang sufficient opportunity
to review the application, no claim of fraud is mentioned in Plaintiff’s Amended Complaint.
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Moreover, the November 10, 2009 phone call between a WSLAC representative and
Soua Yang, through the use of a Hmong interpreter, also demonstrates that Soua Yang made
intentionally misleading or willfully false statements. In that phone call, Soua Yang answered
that she had not had any medication or treatment in the last five years and that she had not had
any treatments or medical tests in the last ten years. See Wolf Decl. Ex. 1 at 7–8.
Additionally, she answered “no” to a question whether she had any problems with any part of
her body. Id. at 9. These statements were willfully false or intentionally misleading and were
provided prior to WSLAC issuing the Policy. Based on these misstatements, WSLAC issued
the Policy. Under Minn. Stat. § 61A.11, Defendant is entitled to summary judgment based on
these misrepresentations as well.
A contracting party’s unfamiliarity with a contract written in a language foreign to them
may seek to void that contract in certain circumstances. Defendant cites several cases to
support this argument, but these cases stop short of flatly disallowing non-English-speaking
individuals from ever voiding contracts written in English. The Court of Appeals for the Third
Circuit held, “In the absence of fraud, the fact that an offeree cannot read, write, speak, or
understand the English language is immaterial to whether an English-language agreement the
offeree executes is enforceable.” Morales v. Sun Constructors, Inc., 541 F.3d 218, 222 (3d.
Cir. 2008). In Soto v. State Indus. Prods., Inc., 642 F.3d 67 (1st Cir. 2011), the Court of
Appeals for the First Circuit cited Morales and held that unless intimidation or
unconscionability is present, “The fact that [plaintiff] did not ‘fully’ understand that
agreements that she signed because of her lack of fluency in English, of which she was aware,
does not render void her consent to [the agreement].” 642 F.3d at 78. In Minnesota, illiteracy
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may be grounds for avoiding a contract if fraud, mistake, or unconscionable terms are alleged.
Greer, 253 N.W.2d at 140. None of these claims are alleged in this case, and this Court will
not alter Minnesota law which protects a potentially exploitable population. Here, however,
Soua Yang’s lack of English language literacy does not release her from a duty of truthful
disclosure on her WSLAC Application. In this case, Soua Yang had opportunities with two
different Hmong speakers to correct the false statements in her application. Defendant’s
motion for summary judgment is accordingly granted.
IV. ORDER
Based upon the foregoing, and all of the files, records, and proceedings herein, IT IS
HEREBY ORDERED that:
1.
Plaintiffs’ Motion to Strike Exhibit [Docket No. 40] is DENIED; and
2.
Defendant’s Motion for Summary Judgment [Docket No. 23] is
GRANTED;
3.
Plaintiffs’ Amended Complaint [Docket No. 21] is DISMISSED with
prejudice.
LET JUDGMENT BE ENTERED ACCORDINGLY.
BY THE COURT:
s/Ann D. Montgomery
ANN D. MONTGOMERY
U.S. DISTRICT JUDGE
Dated: March 30, 2012.
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