Louis Leonor v. Provident Life & Accident Co.
790 F.3d 682
| 6th Cir. | 2015Background
- Louis Leonor, a Michigan-licensed dentist, held three disability-insurance policies that defined “Total Disability” as being "unable to perform the important duties of Your Occupation" and requiring physician care.
- Pre-injury Leonor spent ~2/3 of his time performing dental procedures and ~1/3 managing/overseeing dental practices and other businesses; after neck surgery he could no longer do dental procedures but continued business management and earned more overall.
- Insurers initially paid Total Disability benefits but later stopped payments after determining his managerial duties were part of his occupation and could still be performed.
- Leonor sued for breach of contract (and fraud); the district court granted summary judgment for Leonor on the contract claim, finding the phrase "the important duties" ambiguous and construing it for the insured.
- Insurers appealed arguing the definite plural "the important duties" unambiguously means "all the important duties." Leonor cross-appealed denial of penalty interest and the dismissal of his fraud claim.
- The Sixth Circuit affirmed contract judgment for Leonor, held the phrase is contextually ambiguous (may mean "most/majority"), and reversed to award 12% penalty interest under Mich. Comp. Laws § 500.2006(4).
Issues
| Issue | Plaintiff's Argument (Leonor) | Defendant's Argument (Insurers) | Held |
|---|---|---|---|
| Meaning of "the important duties of Your Occupation" | Means majority/most of the important duties; ambiguous and should be construed for insured | Grammatically unambiguous: definite plural "the" requires "all the important duties" so no Total Disability where some duties remain performable | The phrase is contextually ambiguous; may mean most/majority — construed for Leonor, so Total Disability applies |
| Effect of Residual Disability provision | Residual category doesn't compel "all" reading; a line between residual and total can be majority-based | Presence of a "one or more" residual standard shows "total" must mean inability to perform all important duties | Residual/total form a continuum; residual’s low bar does not make "total" necessarily mean "all"; "most" is a reasonable dividing line |
| Waiver of insurers' grammar argument on appeal | N/A (Leonor argued insurers forfeited the grammar point) | Insurers: argument preserved as an alternative basis; grammar may be considered on appeal | Grammar argument not forfeited; court still finds context controls meaning and ambiguity exists |
| Penalty interest under Mich. Comp. Laws § 500.2006(4) | Entitled to 12% penalty interest if contract claim prevails | District court denied because insurers’ interpretation was not plainly erroneous | Award of penalty interest reversed: Leonor entitled to 12% per statute |
Key Cases Cited
- Giddens v. Equitable Life Assur. Soc. of U.S., 445 F.3d 1286 (11th Cir. 2006) (supports reading "most/majority" of duties as reasonable for total disability)
- Dowdle v. Nat’l Life Ins. Co., 407 F.3d 967 (8th Cir. 2005) (same approach endorsing majority standard)
- Kaufman v. Allstate New Jersey Ins. Co., 561 F.3d 144 (3d Cir. 2009) (context where definite plural meant all defendants due to discrete, identifiable referents)
- In re Hannaford Bros. Co. Customer Data Sec. Breach Litig., 564 F.3d 75 (1st Cir. 2009) (illustrates contexts requiring universal reading)
- Henderson v. State Farm Fire & Cas. Co., 596 N.W.2d 190 (Mich. 1999) (Michigan rule: construe insurance ambiguities in favor of insured)
- Raska v. Farm Bureau Mut. Ins. Co. of Mich., 314 N.W.2d 440 (Mich. 1982) (defines contract ambiguity standard)
- Gallenstein v. United States, 975 F.2d 286 (6th Cir. 1992) (district court error/novel-argument principles on appeal)
- Griswold Props., L.L.C. v. Lexington Ins. Co., 276 Mich. App. 551 (Mich. Ct. App. 2007) (clarifies statutory penalty-interest application for first-party insureds)