12 F.4th 658
7th Cir.2021Background:
- Dr. Chad Mathis (Alabama-based orthopedic surgeon) replaced a Standard Insurance occupational disability policy with a MetLife policy on broker Moore's advice; Moore arranged procurement through Source Brokerage.
- MetLife policy did not provide "occupational" disability coverage; it paid only if not gainfully employed and had limited residual-disability provisions. The misalignment went unnoticed until Mathis became disabled in 2017.
- Mathis became disabled in March 2017, continued some gainful work, received residual benefits from MetLife for April–August 20, 2017, and received nothing after September 2017 because he did not submit proofs of loss for months after September.
- Mathis sued Moore and Source Brokerage for negligent procurement (alleging they procured the wrong policy) and sued MetLife for breach of contract (seeking additional disability benefits). He later amended alleging he had performed policy conditions.
- The district court, applying Indiana choice-of-law rules, held Alabama law applied, dismissed negligent-procurement claims with prejudice under Alabama contributory-negligence principles, granted summary judgment to MetLife for periods after Sept. 30, 2017 (because Mathis failed to submit proofs of loss), and left only Aug. 21–Sept. 30, 2017, which the parties settled. Mathis appealed.
Issues:
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Choice of law for negligent-procurement | Indiana law should apply (broker from Indiana); under Indiana law reasonable reliance on agent can excuse failure to read | Alabama law should apply (plaintiff lived, worked, and suffered loss in Alabama); Alabama recognizes contributory negligence as a complete bar | Court applied Indiana choice-of-law rules, found the loci delicti in Alabama, and held Alabama law governs; negligent-procurement claims fail under Alabama contributory-negligence doctrine |
| Ripeness / subject-matter jurisdiction of breach claim for post‑Sept. 30, 2017 periods | Mathis now argues claim is not ripe—no live case or controversy because he did not submit required proofs of loss | MetLife contends claim fails on the merits because Mathis did not comply with proof-of-loss condition; court may adjudicate ripeness and merits | Court held the breach claim was ripe and federal jurisdiction proper (Mathis alleged completed breach and past damages); but on the merits Mathis cannot prove breach for post‑Sept. 30 periods because he failed to submit required proofs of loss under Alabama law |
Key Cases Cited
- Auto-Owners Ins. Co. v. Websolv Computing, Inc., 580 F.3d 543 (7th Cir. 2009) (standard for reviewing choice-of-law resolution by a district court)
- Erie R. Co. v. Tompkins, 304 U.S. 64 (U.S. 1938) (federal courts in diversity apply state substantive law)
- Simon v. United States, 805 N.E.2d 798 (Ind. 2004) (Indiana choice-of-law framework; lex loci delicti presumption in torts)
- Filip v. Brock, 879 N.E.2d 1076 (Ind. 2008) (Indiana rule that reasonable reliance on agent can excuse insured's duty to read policy)
- Alfa Life Ins. Corp. v. Colza, 159 So.3d 1240 (Ala. 2014) (Alabama recognizes contributory negligence as a complete bar)
- Baldwin Mut. Ins. Co. v. Adair, 181 So.3d 1033 (Ala. 2014) (Alabama enforces contractual proof-of-loss requirements in insurance policies)
- Dupree v. PeoplesSouth Bank, 308 So.3d 484 (Ala. 2020) (elements of a breach-of-contract claim under Alabama law)
- Trump v. New York, 141 S. Ct. 530 (U.S. 2020) (ripeness defined as not depending on contingent future events)
- West Bend Mut. Ins. Co. v. Arbor Homes LLC, 703 F.3d 1092 (7th Cir. 2013) (federal courts must apply forum state's choice-of-law principles)