ORDER ON MOTIONS
THIS MATTER comes before the Court on Motion for Partial Summary Judgment by Plaintiff (Dkt. # 142), Motion for Summary Judgment by Defendants (Dkt. # 145), and Motions to Strike (Dkt. ## 155, 170, 174-1, 178). Having considered the parties’ pleadings and responses, including supplemental briefing solicited by the Court, as well as the remainder of the record, and having heard oral argument on this matter, the Court denies Plaintiffs Motion in part and defers its ruling on the parties’ breach of contract and rescission claims pending further briefing as specified herein.
Background
Plaintiff Christyanna Karpenski, a physical therapist, filed this action for breach of contract, breach of covenant of good faith and fair dealing (bad faith) and violation of the Washington Insurance Fair Conduct Act (“IFCA”) in King County Superior
On February 15, 2009, Karpenski, a resident of Washington, applied for Long Term Disability coverage under a group policy issued by Defendant U.S. Life, a New York company, to APTA, an association headquartered in Virginia (Dkt. # 191, p. 4). The Master Policy contains a choice-of-law provision providing that the “policy is issued in and governed by the laws of [ ] Virginia.” Dkt. # 171, Ex. Q, p. 4. In order to procure individual coverage under the group Master Policy, Karpenski filled out and signed a Disability Insurance Application (“Application”). The Application contained a “good health provision,” which states, “Insurance will take effect only if a Certificate is issued based on this Application and the first premium is paid in full while there is no change in the insurability or health of such person from that stated in the Application.” Dkt. # 150-1, Ex. 2, p. 4. Plaintiff also filled out and signed a one-page “Polyp Questionnaire” as requested by U.S. Life. See Dkt. # 146, ¶ 23. US Life, via its third party administrator, Seabury & Smith, Inc., subsequently issued and delivered a Certificate of Insurance (“Certificate”) to Karpenski in a letter postmarked June 4, 2009 with an effective date of May 1, 2009. Dkt. # 122, Ex. 3; Dkt. # 143-1, Ex. A; Dkt. # 144, Ex. B, p. 12. The Certificate does not contain a choice-of-law provision but does specify that it is “a summary of the group policy provisions which affect your insurance. It is merely evidence of the Insurance provided by such policy.” The Certificate also clarifies that the benefits described in it are “provided by group policy no. G-610.296, issued to [APTA].” Dkt. # 122-1, Ex. 3, p. 18.
It is undisputed that U.S. Life did not include a copy of Karpenski’s signed application in the Welcome Packet containing her Certificate of Insurance. Dkt. # 143, ¶¶ 5-7. According to Plaintiff, she did not receive a copy of her Application until sometime after U.S. Life denied her claim for benefits. Dkt. # 143, ¶¶ 6-7. The date at which Plaintiff paid her first premium is, however, in dispute. See Dkt. # 145, p. 17 (claiming Karpenski paid first premium after June 2009); Dkt. # 168, ¶ 3 (Karpenski cannot recall when first premium was paid); Dkt. # 150, p. 35, In. 3-11; Dkt. # 171-19, Ex. T, p. 3.
Plaintiff submitted a notice of claim to her policy administrator in early June, 2009, due to disability arising from ulcerative pancolitis. Complaint, Dkt. # 1, Ex. 2, ¶¶ 26-28. Upon receiving a proof of claim form, Plaintiff filed a claim for benefits on September 10, 2009, disclosing that she was first treated by a physician for the present disability on May 6, 2009 and reporting that her total disability commenced on May 20. Dkt. # 144, Ex. F. As Karpenski filed the claim within two years of the commencement of coverage, American General elected to conduct a “contestable review” and sent Karpenski a Disability Claim Questionnaire about her medical and treatment history, which she returned on November 14, 2009. Dkt. # 144, Ex. G, p. 7; Ex. J. On March 25, 2010, American General formally informed Karpenski that her claim had been referred to medical underwriting for contestable review. See Dkt. # 144, Ex. K.
American General informed Plaintiff via a letter dated May 11, 2010 that it had determined to deny all benefits in connection with her disability claim and rescind her LTD coverage. Dkt. # 144, Ex. N.
Plaintiff filed her claim for breach of contract, bad faith, and violation of the IFCA in state court on August 15, 2012. Dkt. # 1, Ex. 2. Defendants removed the action to this Court and filed an answer with a counterclaim for declaratory relief, asking that the policy be deemed void ab initio and rescinded as a result of material misrepresentations on Plaintiffs Disability Application. See Dkt. #6, ¶ 9. Upon motion by Defendants, the Court bifurcated the case and has stayed discovery on Plaintiffs bad faith and extra-contractual claims pending resolution of the breach of contract and rescission claims. See Dkt. #41. Plaintiff now moves the Court to enter partial summary judgment against U.S. Life precluding it from introducing Karpenski’s Application into evidence because of U.S. Life’s failure to attach it to her Welcome Packet. Plaintiff also moves the Court to find that U.S. Life is precluded from rescinding her insurance coverage because she had no intent to deceive and to find U.S. Life in breach of contract. See Dkt. # 142. Upon their motion for summary judgment, Defendants move the Court to order that Plaintiffs coverage be rescinded based on alleged material, knowing misrepresentation on her insurance application made with intent to deceive and to find coverage void under the Application’s “good health provision.” The parties also state eight separate motions to strike. Upon hearing oral argument on both parties’ summary judgment motions, the Court solicited supplemental briefing as to whether Virginia or Washington law governs the contract and as to the requirements of the controlling application attachment statute under Washington law. See Dkt. # 188.
Analysis
A. Motions to Strike
1) Erratas/Jurats for Lydia Labinsky, Wesley Jarvis, and Latoya Keatts
Through her Reply in Support of Motion for Partial Summary Judgment (Dkt. # 155, pp. 3-4), Plaintiff moves the Court to strike erratas/jurats for Lydia Labinsky, Wesley Jarvis, and Latoya Keatts submitted by Defendants with their responsive brief (Dkt. # 152, Ex. 1, 3, 8), on the grounds that they are sham affidavits and contradict prior testimony. Federal Rule of Civil Procedure 30(e) governs review of deposition transcripts and changes thereto. It provides that a deponent “must be allowed 30 days after being notified by the officer that the [deposition] transcript is available in which: (a) to review the transcript or recording, and; (b) if there are changes in form or substance, to sign a statement listing the changes and the reasons for making them.” See Fed. R.Civ.P. 30(e). The Ninth Circuit has
In the Ninth Circuit, Rule 30(e) deposition errata are subject to the “sham rule,” which precludes a party from creating “an issue of fact by an affidavit contradicting his prior deposition testimony.” Hambleton,
The Court may strike jurats as “sham” testimony upon making a finding of fact that they “flatly contradict earlier testimony in an attempt to ‘create’ an issue of fact and avoid summary judgment.” Kennedy v. Allied Mut. Ins. Co.,
Plaintiff contends that the errata should be stricken in their entirety as shams. Plaintiff argues that “none of the statements provided in defendants erratas/jurats were uttered during the depositions,” and consequently cannot be understood as “simply errors in transcription,” which could permit a contradictory change. See Dkt. # 155, p. 3 (citing Hambleton,
The question of whether the errata are shams may be determined as a factual matter upon oral argument. Plaintiff has not alleged that the errata are untimely, although they were submitted between March 15 and March 20, 2013, almost two months after the depositions were taken (between January 29 and January 31, 2013). Timing aside, several factors cut in favor of a finding that the depositions constitute shams, including the extensiveness of corrections, the fundamental changes they introduce to prior testimony, and the impact of the corrections. Errata for Ly
The witnesses’ qualifications to testify also weigh in favor of striking. Lydia Labinsky is Associate Director at American General and Manager of the Underwriting Department and substantially qualified to speak on the topics she addressed in her deposition. Dkt. # 144, Ex. H, pp. 3-5. Wesley Jarvis is Vice-President for AIG Benefits and U.S. Life’s Rule 30(b)(6) designee for the case. As a sophisticated Rule 30(b)(6) designee, his extensive corrections are particularly suspect. See Lewis,
Taking all these factors into account, the Court finds that errata/jurats for Lydia Labinsky, Latoya Keatts, Wesley Jarvis (See Dkt. # 152, Ex. 1, 3, 8) constitute sham affidavits that constitute contradictory rather than corrective testimony and exceed the scope of changes permitted to deposition testimony under Rule 30(e). Deposition errata/jurats shall consequently be STRICKEN.
2) Declaration of Lydia Labinsky
Upon response to Defendant’s motion for summary judgment (Dkt. # 170), Plaintiff moves the Court to strike declaration of Lydia Labinsky (Dkt. # 147) under the “sham” affidavit rule. Plaintiff contends that Labinsky’s declaration, discussing multiple bases for rescission, contradicts her deposition testimony, which discussed exclusively neck and back pain as the basis for U.S. Life’s decision to rescind. Compare Dkt. # 147 with Dkt. # 171, Ex. H, Labinsky Dep., 64:20-65:5. Plaintiff also contends that Labinsky’s declaration should be stricken on the grounds that it offers inadmissible speculative testimony.
Upon review of the record, the Court declines to strike the declaration.
3) Declarations by Plaintiffs Health Care Providers and Co-Workers
Upon reply, Defendants move to strike affidavits by Plaintiffs health care providers and co-workers (Dkt. ## 161-166) filed in opposition to Defendants’ motion for summary judgment. Dkt. # 174-1, pp. 13-16. Defendants contend that the declarations should be stricken in their entirety as they offer only conclusory statements about Plaintiffs lack of contested health disorders. Defendants also move to strike the declaration by Plaintiffs husband, Mr. Alimón (Dkt. # 167), on the grounds that it offers unqualified, conclusory opinion testimony about Plaintiffs medical status. Defendants further move to strike two statements by Plaintiffs treating physicians, Dr. Schliiter and Dr. Paroo (Dkt. # 164, Schliiter Dep., ¶ 9; Dkt. # 162, Paroo Dep., ¶ 11), on the grounds that they conflict with their prior testimony.
The Court denies Defendants’ motion to strike the affidavits in their entirety. Conclusory testimony is insufficient to defeat a summary judgment motion. See Timeline, Inc. v. Proclarity Corp.,
4) New Evidence and Case Law References upon Reply
Pursuant to Local Rule 7(g) (permitting motions to strike in a surreply), Plaintiff moves the Court to strike new evidence and case law references. Dkt. # 178, p. 3. The offending material consists of 10 exhibits containing “92 pages of new evidence” submitted by Defendants upon reply to their motion for summary judgment. Dkt. # 175, Ex. 1-10. As a general rule, a “movant may not raise new facts or arguments in his reply brief.” Quinstreet, Inc. v. Ferguson,
Through her surreply to Defendant’s motion for summary judgment (Dkt. # 178), Plaintiff moves the Court to strike Defendants’ argument that Virginia, rather than Washington, law governs her insurance contract based on a provision of the policy. See Dkt. # 174-1; Dkt. # 146-2, Ex. 29, p. 2. As a general matter, a movant may not raise new issues in a reply brief, as doing so “essentially prevents [the non-moving party] from providing any response.” Wood v. Household Finance Corp.,
6) Case Law Citations
Plaintiff further moves the Court to strike several new case law references introduced by Defendant upon reply. Dkt. # 178, p. 4. The Court denies this motion as Plaintiff has failed to demonstrate that these citations raise new issues rather than expound on those already presented through Defendants’ opening motion.
7) Factual Averments
Finally, Plaintiff moves the Court to strike several alleged factual misrepresentations by Defendants in their reply brief. Dkt. # 178, p. 4. Plaintiff moves the Court to strike Defendant’s averment that Plaintiff “has conceded that [the first premium] was paid after she received her Welcome Package.” See Dkt. # 174-1, p. 12. Plaintiff also moves to strike Defendants’ statement that Dr. Paroo testified that Plaintiff had “an emotional problem that required treatment by a psychotherapist.” See Id.- The Court denies Plaintiff’s motion to strike, as the allegedly infringing factual averments constitute interpretations of the factual record already before the Court and subject to the Court’s independent scrutiny.
B. Standard of Review
Federal Rule of Civil Procedure 56(a) permits parties to move for summary judgment on all or part of their claims. Summary Judgment is proper where “the movant shows that 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); Anderson v. Liberty Lobby, Inc.,
The moving party bears the initial burden of production and the ultimate burden of persuasion. Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc.,
C. Attachment Statute Claim and Choice of Law
Plaintiffs claim that her insurance Application should be stricken from evidence due to Defendants’ failure to attach it to her Certificate when issued (Dkt. ## 142, 170) raises a threshold choice-of-law question. The parties do not dispute that the Master Policy under which Plaintiffs Certificate of Insurance was issued contains a choice-of-law provision providing that it is issued and governed under the laws of Virginia. See Dkt. # 189, p. 2; Dkt. # 190, p. 2; Dkt. # 171, Ex. Q, p. 4. Defendants contend that the Policy’s choice-of-law provision should be upheld and Virginia law should govern whether Plaintiffs insurance application should have been attached to her Certificate. In her supplemental brief, Plaintiff contends that Washington law should apply where application of Virginia law would violate a fundamental public policy of the forum state.
Because this Court exercises diversity jurisdiction in this case, Washington’s conflict of law rules apply. Patton v. Cox,
In the instant matter, though the choice-of-law provision is found in the Master Policy rather than the Certificate of Insurance, it governs both. The Supreme Court, in Boseman v. Connecticut Gen. Life Ins. Co.,
“The certificate is not a part of the contract of, or necessary to, the insurance. It is not included among the documents declared to constitute the entire contract of insurance. It did not affect any of the terms of the policy. It was issued to the end that the insured employee should have the insurer’s statement of specified facts in respect of protection to which he had become entitled under the policy. It served merely as evidence of the insurance of the employee. [Plaintiffs] rights and [the insurance company’s] liability would have been the same if the policy had not provided for issue of the certificate.”
Boseman,
As in Boseman, the instant Master Policy does not declare the Certificate of Insurance to constitute part of the contract, and the Certificate does not alter any of the Master Policy’s terms. See Dkt. # 156-2, Ex. S, p. 28. Where a provision of the Certificate of Insurance conflicts with the Master Policy, the Certificate will ordinarily be held to control. See Fittro v. Lincoln Nat. Life Ins. Co.,
The Court’s determination that Virginia law governs Karpenski’s individual coverage is undergirded by the unique choice-of-law rules that apply in the group insurance policy context. “Rights against the insurer under a group policy are generally governed by. the law of the state where the master policy was delivered.” Erickson v. Sentry Life Ins. Co.,
Giving effect to the choice-of-law provision in the Master Policy is also consistent with the results reached by courts in other states. See, e.g., Hofeld v. Nationwide Life Ins. Co.,
Plaintiff argues that even if the Court finds the Master Policy’s choice-of-law provision to be applicable, it should refuse to enforce it where doing so would contravene Washington public policy. Plaintiff thereby moves the Court to engage in a conflict of law analysis to determine whether the selection of Virginia law will be upheld with regards to Plaintiffs attachment statute claim.
(2) The law of the state chosen by the parties to govern their contractual rights and duties will be applied, even if the particular issue is one which the parties could not have resolved by an explicit provision in their agreement directed to that issue, unless either
(a) the chosen state has no substantial relationship to the parties or the transaction and there is no other reasonable basis for the parties’ choice, or
(b) application of the law of the chosen state would be contrary to a fundamental policy of a state which has a materially greater interest than the chosen state in the determination of the particular issue and which, under the rule of § 188 would be the state of the applicable law in the absence of an effective choice of law by the parties.
Accordingly, in order to “effectively void a choice of law provision, a court must find that the chosen state has no substantial relationship to the parties or that the application of the chosen law would be contrary to a fundamental policy of’ the state with a materially greater interest than the chosen state and which would otherwise be the state of the applicable law. Schnall,
As to the threshold question, the Court is not persuaded that a conflict exists between the applicable Virginia and Washington attachment statutes. As an initial matter, the Court finds that RCW 48.21.060, rather than RCW 48.18.080(1) as argued by Defendants, governs the attachment of Karpenski’s Application under Washington law. RCW 48.18.080(1) provides that “No application for the issuance of any insurance policy or contract shall be admissible in evidence in any action relative to such policy or contract, unless a true copy of the application was attached to or otherwise made a part of the policy when issued and delivered.” RCW 48.18 deals with insurance contracts generally while RCW 48.21 governs aspects of group and blanket disability insurance in particular. RCW 48.21.060 mandates specific requirements for the furnishment of an individual insured’s application under a group disability policy. As the more specific statute, RCW 48.21 is not displaced by the later amended, more general RCW 48.18. See Radzanower v. Touche Ross & Co.,
Both parties agree that under Virginia law, Va.Code Ann. § 38.2-3529 governs the admissibility of Karpenski’s Application. Section 38.2-3529 provides, in relevant part, that each group accident and sickness insurance policy shall contain a provision stating that:
A copy of any application of the policy owner shall be attached to the policy when issued; ... [and] [n]o written statement made by any person insured shall be used in any contest unless a copy of the statement is furnished to the person or to his beneficiary or personal representative.
Washington’s attachment statute for group disability insurance policies is nearly identical. RCW 48.21.060 provides, in relevant part, that:
There shall be a provision that a copy of the application, if any, of the policyholder shall be attached to the policy when issued ... and that no statement made by any individual insured shall be used in any contest unless a copy of the instrument containing the statement is or has been furnished to such individual....
Plaintiff concedes that the two statutes are substantially similar. See Dkt. # 190, p. 2. The only difference between the two statutes is the addition of the words “or has been” to RCW 48.21.060. Defendants contend that the use of the disjunctive conjunction “or” between “is” and “has been” sets forth two ways by which an application may be furnished “in any contest:” 1) presently or 2) at some time prior to or during the contest. See Dkt. # 189, pp. 10-15, citing Black v. National Merit Ins. Co.,
Plaintiff relies on Whitaker v. Spiegel, Inc.,
Furthermore, critical to the Whitaker Court’s analysis was a Washington statutory provision, RCW 19.52.034, which specifically required that Washington’s usury statutes be applied to all loans, whether made within or without the State.
Having found that Virginia law applies, the Court determines that Virginia law does not bar the introduction of Karpenski’s application into evidence. Va. Code Ann. § 38.2-3529 nowhere states that failure to furnish an application with the insurance certificate precludes a group carrier from relying upon the application to disclaim coverage. Rather the statute provides that the Policy must state that no written statement made by the insurer may be used in any contest unless a copy of the same is furnished to the person. In the instant case, it is undisputed that Karpenski received her Application in connection with the rescission contest. See, e.g., Dkt. # 175-2, Ex. 2 (letter dated June 3, 2010 referencing enclosure of Karpenski’s entire claim file). Karpenski’s statements made on her Application were in her possession during her appeals of U.S. Life’s decision. See Id. at Ex. 3, 4 (referencing ongoing appeals process).
Southland Life Ins. Co. v. Donati,
This Court’s decision to admit Karpenski’s Application accords with the interpretation that several courts have given to statutory language similar to that of Va. Code Ann. § 38.2-3529 and RCW 48.21.060. In Aliaga v. Continental Insurance Co.,
“[A] group policy is not a one-on-one contract with the insured — a group policy is issued to an organization, and members of that organization are eligible for coverage under that policy as a benefit of membership in that organization. As a consequence, group applications are short and ask general, yes-or-no questions.... While the insurance company has less information about each insured in a group policy, the risk is spread wide among a group of people. Because the group policy application is less critical, it is logical that the provisions governing admissibility ... are less rigorous than those [for individual insured policies].”
Id. at *5. Other jurisdictions have followed the rule that statutes similar to Va.Code Ann. § 38.2-3529 and RCW 48.21.060 require that a copy of the alleged misstatement be provided prior to admitting it into evidence during a contest. See McGeehan v. Am. Gen. Assurance Co.,
This result is particularly appropriate where, as here, the individual insured completed the application herself and has had multiple opportunities to defend her alleged misstatements both to the insurance company and now to the Court. In Johnson v. Prudential Ins. Co. of Am.,
For all these reasons, the Court finds that in this case, the requirement of the applicable attachment statute has been met where Plaintiff received the group
D. Rescission, Bréach of Contract, and Violation of Good Health Provision
Defendants claim that they are entitled to rescind Plaintiffs Application based on alleged misrepresentations as well as her alleged violation of the good health provision in her Application. Plaintiff contends that U.S. Life’s decision to rescind her disability insurance coverage constitutes breach of contract. Both parties have briefed these issues with respect to Washington statutory and case law under the assumption that Washington law governs the parties’ rights under Karpenski’s insurance contract. As the Court has found the Master Policy’s choice-of-law provision valid and enforceable, it will proceed to analyze the parties’ remaining claims under Virginia law. Consequently, the Court defers summary judgment pending further briefing by the parties on the application of Virginia law to the remaining claims asserted in their respective motions for summary judgment.
Conclusion
For the reasons stated herein, it is hereby ORDERED that:
(1) Plaintiffs Motion to Strike Erratas/Jurats for Lydia Labinsky, Wesley Jarvis, and Latoya Keatts (Dkt. # 155, p. 3) is GRANTED.
(2) Plaintiffs Motion to Strike Declaration of Lydia Labinsky (Dkt. # 170, p. 19) is DENIED.
(3) Defendants’ Motion to Strike Declarations by Plaintiffs Health Care Providers and Co-Workers (Dkt. # 174-1, p. 13) is DENIED.
(4) Plaintiffs Motion to Strike New Evidence (Dkt. # 178, p. 3) is GRANTED in part and DENIED in part. The Court strikes Exhibits 7, 8, and 10 (Dkt. # 175-3) submitted by Defendants upon reply. The Court declines to strike Exhibits 1-6 and 9 (Dkt. ## 175-2,175-3).
(5) Plaintiffs Motion to Strike Defendants’ Choice-of-Law Argument (Dkt. # 178, p. 3) is DENIED.
(6) Plaintiffs Motion to Strike Case Law References (Dkt. # 178, p. 4) is DENIED.
(7) Plaintiffs Motion to Strike Factual Averments (Dkt. # 178, p. 4) is DENIED.
(8) Plaintiffs Motion for Partial Summary Judgment (Dkt. # 142) is DENIED in part to the extent that the Court finds that Plaintiffs Disability Application is admissible in this case as a matter of law. Plaintiffs Motion to Strike Karpenski’s Disability Application from evidence (Dkt. # 170, p. 4) is similarly DENIED.
(9) All remaining claims are deferred pending further briefing on the application of Virginia law. Both parties are directed to file supplemental briefs of no more than twelve (12) pages on the application of Virginia law to the remaining claims for rescission, violation of the Application’s good health provision, and breach of contract. Supplemental briefs shall be submitted within fourteen (lip) days of the entry of this Order.