Graham v. Stonebridge Life Insurance Company
4:10-cv-02022
E.D. Ark.Dec 6, 2011Background
- Graham sues Stonebridge Life Insurance in White County Circuit Court for breach of an insurance contract; action removed to ED Ark. based on citizenship and amount in controversy.
- Graham held a Blanket Accident Disability Insurance policy covering total and permanent loss of sight; he claimed total loss after a July 6, 2005 eye injury.
- Stonebridge denied the claim on October 31, 2006; Graham filed suit October 29, 2010.
- Policy requires Proof of Loss within 90 days after loss or as soon as possible, but no later than one year, except in absence of legal capacity.
- Policy bars any action until at least 60 days after proof of loss and more than 3 years after the date proof of loss was required.
Issues
| Issue | Plaintiff's Argument | Defendant's Argument | Held |
|---|---|---|---|
| Whether the contract’s three-year limit governs the action | Graham argues policy deadlines are void or improper under Arkansas law | Stonebridge asserts the three-year period in the policy is enforceable | Yes; the three-year limit governs the claim. |
| Which state's law applies to the limitations issue | Graham urges Arkansas law; argues same result under either state law | Stonebridge urges Delaware law; cites § 3541(7) | Court avoids choice-of-law dispute; Arkansas law applied for purposes of limitation analysis. |
| Whether the policy is a life insurance policy under Arkansas law | Graham contends policy is life insurance because it covers dismemberment by accident | Stonebridge contends policy is not life insurance | Policy is not life insurance under Ark. Code Ann. § 23-62-102; thus § 23-79-202 does not apply. |
| Whether the policy’s limitation provision contravenes public policy or statutory minimums | Graham argues five-year minimum for written contracts; seeks longer period | Three-year limit is reasonable and contractually agreed | Three-year limitation is not unreasonable or contrary to policy/public policy; valid. |
Key Cases Cited
- Dodson v. J.C. Penney Co., 336 F.3d 696 (8th Cir. 2003) (any policy that covers human life is life insurance if it also covers death or dismemberment by accident)
- Graham v. Hartford Life and Accident Ins. Co., No. 4:10CV00763, 2011 WL 1464534 (E.D. Ark. 2011) (discusses statute of limitations and reasonableness of three-year period)
- Ferguson v. Order of United Commercial Travelers of Am., 307 Ark. 452, 821 S.W.2d 20 (Ark. 1991) (stated that parties may contract limitation periods shorter than statutory minimums if reasonable)
- Hawkins v. Heritage Life Ins. Co., 63 Ark. App. 67, 973 S.W.2d 823 (Ark. App. 1998) (supports reasonableness of three-year insurance contract limitation)
- Prudential Ins. Co. v. Kamrath, 475 F.3d 920 (8th Cir. 2007) (recognizes applying governing law does not require resolution of choice of law when outcome same)