MEDICAL LIABILITY MUTUAL INSURANCE COMPANY v. ALAN CURTIS LLC; Alan Curtis; Evergreene Properties of North Carolina, LLC; Alan Curtis Enterprises, Inc.
No. 07-2061
United States Court of Appeals, Eighth Circuit
March 10, 2008
Rehearing and Rehearing En Banc Denied April 18, 2008
519 F.3d 466
Arkansas Advocates for Nursing Home Residents, Amicus Curiae. Submitted: Jan. 14, 2008.
Because we are bound by Olberding‘s holding, see United States v. Vertac Chem. Corp., 453 F.3d 1031, 1048 (8th Cir.2006) (“A panel of this Court is bound by a prior Eighth Circuit decision unless that case is overruled by the Court sitting en banc.” (internal marks omitted)), cert. denied, --- U.S. ---, 127 S.Ct. 2098, 2099, 167 L.Ed.2d 812 (2007), I concur in the court‘s judgment.
GRUENDER, Circuit Judge, concurring in the judgment and in the opinion except as to parts II.C and II.D.
Jess Askew, III, argued, Bonnie J. Johnson, on the brief, Little Rock, AR, for Appellee.
Before LOKEN, Chief Judge, MURPHY, Circuit Judge, and JARVEY,1 District Judge.
Medical Liability Mutual Insurance Company (Insurer) brought this action against Alan Curtis and Evergreene Properties of North Carolina, LLC (Evergreene) seeking a declaratory judgment regarding its duties to defend and indemnify them against claims in an Arkansas state court action brought by the estate of Annie Redden. All parties filed motions for summary judgment. The district court2 concluded that Insurer had no duty to defend or indemnify Curtis, that it had a duty to defend Evergreene on all claims in the underlying lawsuit, and that its duty to indemnify Evergreene extended only to any judgment against it for breach of contract. Curtis and Evergreene appeal. We affirm.
I.
Annie Redden entered into a contract with Evergreene and moved into its Crestpark Inn of Marianna (Crestpark) nursing home facility in 1997. Evergreene holds the medical needs license for Crestpark and contracted with Alan Curtis Enterprises, Inc. (Curtis Enterprises) to provide onsite management and operational services at Crestpark and seven other Evergreene nursing home facilities in Arkansas. Redden moved out of Crestpark on January 9, 2003 and died in November 2003.
On March 3, 2005 Redden‘s estate initiated a state court action in Arkansas against Evergreene, Curtis Enterprises, and Alan Curtis, an employee of Curtis Enterprises, seeking compensatory and punitive damages for negligence, wrongful death, medical malpractice, and violations of the Arkansas Long Term Care Resident‘s Rights Act (RRA) (
Evergreene is the named insured under a primary policy and a supercover umbrella policy originally issued by Fireman‘s Fund Insurance Company, but later acquired by Insurer which succeeded to all of the obligations under the policies. The primary policy covers claims on an “occurrence” basis, that is claims are covered only if they arise “from incidents that occur while the policy is in force.” The policy was in force from January 15, 2000 to January 15, 2001 and therefore does not cover any claim arising from incidents which occurred outside that period. The underlying lawsuit was initiated on March 3, 2005, after which Evergreene notified Insurer and demanded that it provide coverage under the primary policy both for its defense and indemnity.
Insurer brought this action for a declaratory judgment regarding its rights and obligations under the policies. Both sides moved for summary judgment. Insurer argued that each of the estate claims has a two or three year limitations period. Claims with a two year statute of limitations would be timely only if they had arisen from incidents occurring on or after March 3, 2003, since the state court action was initiated on March 3, 2005. Timely claims with three year statutes of limitation must have arisen from incidents occurring on or after March 3, 2002. Since the policy does not cover claims which arise from incidents occurring after the policy period ended on January 15, 2001,
The district court concluded that the estate‘s breach of contract claim against “Defendant” had a five year limitations period under
Since the original complaint was filed on March 3, 2005, and the covered period for occurrences ended on January 15, 2001, the court concluded the case was filed too late to obligate Insurer to cover the wrongful death and medical malpractice claims which have a two year limitations period. That was also true for negligence, statutory and regulatory violations, and claims under the RRA which the court concluded have a three year limitations period. In addition, the continuous treatment doctrine was held not to toll any of the statutes of limitation. Evergreene and Curtis appeal.
On appeal Evergreene and Curtis argue that once the district court determined that Insurer had a duty to defend Evergreene on the contract claim, triggering a duty to defend on all of the estate claims, it should not have reached any questions regarding the duty to indemnify on the negligence, wrongful death, and RRA claims or the duties to defend or indemnify Curtis. They contend that resolution of those coverage questions turns on factual issues to be presented in the underlying lawsuit; to answer the questions in this action raises the risk of inconsistent judgments. Insurer counters that the district court acted within its discretion by resolving all questions about the scope of its duties to defend and indemnify appellants and points out that it is not a party to the underlying lawsuit where different interests and issues are involved.
The RRA does not include a limitations provision, and Evergreene, Curtis, and Amicus Arkansas Advocates for Nursing Home Residents (Advocates) argue that the district court erred by concluding that claims under it are subject to a three year limitations period under
Evergreene and Curtis argue that the district court also erred by concluding that the continuous treatment doctrine did not toll the statute of limitations on the negligence and RRA claims and by deciding the issue because it involves a factual dispute which should be resolved in the underlying lawsuit. Insurer counters that the district court was correct in concluding that the complaint did not allege facts which could have implicated the continuous treatment doctrine and that regardless, the doctrine would not apply as a matter of law to a relationship between a nursing home and its client.
Curtis argues that the district court erred by concluding that Insurer does not have a duty to defend him coextensive with its duty to defend Evergreene. Curtis says that because Curtis Enterprises acted as Evergreene‘s agent in the management and operation of Crestpark, the policy obligates Insurer to defend him to the same extent it must defend Evergreene. Insurer counters that Curtis was not a party to the contract between Redden and Evergreene on which the breach of contract claim and the duty to defend are based.
II.
We review for an abuse of discretion a district court‘s decision to exercise jurisdiction over a declaratory judgment action in which there are parallel state court proceedings, giving great deference to its analysis and conclusions. See Wilton v. Seven Falls Co., 515 U.S. 277, 283, 286, 288 (1995); Scottsdale Ins. Co. v. Detco Indus., Inc., 426 F.3d 994, 997 (8th Cir.2005). An insurer who is not a party to the parallel proceeding “is entitled to have the extent of the coverage of its policy declared,” Scottsdale Insurance Co. v. Flowers, 513 F.3d 546, 559 (6th Cir.2008), quoting American States Insurance Co. v. D‘Atri, 375 F.2d 761, 763 (6th Cir.1967), and a district court is not prohibited from answering all questions presented to it on declaratory judgment, see Royal Indemnity Co. v. Apex Oil Co., 511 F.3d 788, 793 (8th Cir.2008). Insurer is not a party to the underlying lawsuit, which involves different interests and issues than those presented here, and the district court did not abuse its discretion by resolving all of Insurer‘s questions regarding the scope of its duties to defend and indemnify Evergreene and Curtis in the underlying lawsuit.
We review a district court‘s grant of summary judgment de novo, “viewing the record in the light most favorable to the nonmoving party; summary judgment is proper if there are no genuine issues of material fact and the moving party is entitled to judgment as a matter of law.” R.D. Offutt Co. v. Lexington Ins. Co., 494 F.3d 668, 672 (8th Cir.2007). We review the district court‘s determinations of law de novo. Highland Indus. Park, Inc. v. BEI Def. Sys. Co., 357 F.3d 794, 796 (8th Cir.2004).
A.
In the fourth amended complaint in the underlying lawsuit the estate seeks compensatory and punitive damages based on its claim that Evergreene and Curtis negligently, willfully, and recklessly violated
Arkansas courts have not explicitly addressed which limitations period should apply to claims brought under the RRA. Amicus Advocates urge us to certify this question to the Arkansas Supreme Court. Insurer attacks both Advocates’ standing to raise the issue as an amicus and the propriety of requesting certification after an adverse judgment. Certification of the RRA limitations question at this stage, after the district court has issued its judgment and after we have had full briefing and oral argument, would cause undue delay. The task of a “federal court[] sitting in diversity [is to] attempt to predict how the [forum] state‘s highest court would resolve [a] question” which it has not squarely decided. Highland, 357 F.3d at 798. By ruling on the limitations issue, the district court helped move this litigation forward. We review its determination of state law de novo. Salve Regina Coll. v. Russell, 499 U.S. 225, 231 (1991); Whirlpool Corp. v. Ritter, 929 F.2d 1318, 1321 n. 4 (8th Cir.1991).
Chapter 56 of Arkansas Code Title 16 contains the limitation periods for actions brought in Arkansas.
Based on our review of Arkansas law we conclude that the Arkansas Supreme Court, if presented with the issue of which limitations period applies to an RRA claim, would decide that such a claim is subject to a three year limitations period under
As early as 1890 the Arkansas Supreme Court ruled that a statutorily created liability had a three year limitations period unless that liability was part of a written agreement which would then have a five year limitations period under what is today
Nebraska National Bank involved a statute which made corporate presidents and secretaries liable for corporate debts incurred during any period in which the officers failed to file certain financial information with the county clerk. The supreme court decided that a three year limitations period applies, for “[h]aving reached the conclusion that this is a statutory liability ... the statute of limitations would be [the three year limitation] applicable to ‘all actions founded upon any contract or liability, expressed or implied, not in writing.‘” Id., citing Sand. & H. Dig. § 4822; Rev. St. 1837, c. 91, § 6 (now
Although the Arkansas Supreme Court has not squarely decided which limitations period applies to an RRA claim, it has explicitly referred to an “[RRA] claim [as] a statutory claim,” Koch v. Northport Health Servs. of Ark., LLC, 361 Ark. 192, 205 S.W.3d 754, 762 (2005). We have found no Arkansas case questioning the general proposition that where a statute creates a liability but does not include a limitations provision and no other statute of limitations applies,3 a claim to enforce the statutory liability is an action “founded on ... liability, expressed or implied” under
We also agree with the district court that it is possible that Arkansas courts might determine that an RRA claim sounds in tort and is therefore subject to a three year limitations period under
Advocates argue that the RRA is more in the nature of a “privately enforceable” civil rights law “than a codification of ordinary duties of care,” however, because it gives residents a remedy for deprivation of a wide range of enumerated rights including freedom of choice in selecting a physician and the right to participate in social and religious activities. If the Arkansas Supreme Court were to characterize RRA claims as civil rights actions, it would no doubt look at the limitation periods applied to such cases in Arkansas. A review of those cases suggests that a civil rights action would likely be treated as a tort for limitations purposes.
The Arkansas Civil Rights Act,
Evergreene, Curtis, and Advocates argue that the RRA claim should be subject either to a five year or to an indefinite limitations period, which could make at least some of the incidents occurring during the policy period actionable, triggering Insurer‘s duty to defend and indemnify Evergreene and possibly Curtis. Appellants argue that the five year statute of limitations in
Another argument Evergreene, Curtis, and Advocates advance for a five year statute of limitations on the RRA claim is that such a claim is not described explicitly by any limitations provision in Chapter 56 and so falls under the five year catchall in
Advocates argue in the alternative that an RRA claim should not have a limitations period at all. In support of this argument they cite Acxiom Corp. v. Leathers, 331 Ark. 205, 961 S.W.2d 735 (1998), where the court held that the Arkansas legislature did not include a limitations period in a tax refund statute because it did not want to limit taxpayers’ ability to claim a refund. Arkansas courts have recognized, however, that where a statute contains no specific statute of limitations, claims arising under it may still be time barred, e.g., Winston, 606 S.W.2d at 759-60, and that statutes of limitation “encourage the prompt filing of claims by allowing no more than a reasonable time within which to make a claim so a defendant is protected from having to defend an action in which the truth-finding process would be impaired by the passage of time.” McEntire v. Malloy, 288 Ark. 582, 707 S.W.2d 773, 776 (1986). In Acxiom there were no adverse parties and therefore no risk that one party would be prejudiced by having to defend itself against a stale claim as there is in this case. We find no support for the argument that the legislature would have intended to have no limitation period and to allow a party to file an RRA claim even decades after the alleged injuries.
We conclude that the district court did not err in its conclusions that a three year limitations period applied to the estate‘s RRA claim and that Insurer had no duty to indemnify Evergreene and Curtis in respect to it.
B.
Arkansas courts recognize the continuous treatment doctrine, “which tolls the two-year statute of limitations for medical-malpractice actions until the medical treatment is discontinued.” Posey v. St. Bernard‘s Healthcare, Inc., 365 Ark. 154, 226 S.W.3d 757, 761 (2006); Lane v. Lane, 295 Ark. 671, 752 S.W.2d 25, 27 (1988) (“continuous treatment doctrine becomes relevant when the medical negligence consists of a series of negligent acts, or a continuing course of improper treatment” (emphasis added)). A thorough search of case law from Arkansas and other jurisdictions across the country has not produced a single case in which this doctrine has tolled the limitations period on a claim other than malpractice, and its application in Arkansas appears to be limited to medical malpractice claims. See Howard v. Ozark Guidance Ctr., 326 Ark. 224, 930 S.W.2d 341, 342 (1996); FDIC v. Deloitte & Touche, 834 F.Supp. 1129, 1148 (E.D.Ark.1992) (recognizing that only two states extend the doctrine to accounting malpractice and Arkansas is not one of them).
Arkansas imposes a two year limitations period on medical malpractice actions, which runs from the date of the alleged wrongful act,
C.
The pleadings against an insured determine an insurer‘s duty to defend, which is broader than the duty to indemnify because it arises where there is a possibility that the injury or damages may fall within the policy coverage. Ison v. S. Farm Bureau Cas. Co., 93 Ark.App. 502, 221 S.W.3d 373, 378 (2006). The fourth amended complaint in the underlying lawsuit alleges breach of contract against “Defendant,” stating that “[u]pon becoming a resident at Crestpark, Ms. Redden entered into an express or implied contract with Defendant, whereby for consideration duly paid by her ... Defendant was to provide her a place of residence and to provide her nutrition, personal care, and nursing care.” Redden‘s contract was with Evergreene, and Curtis makes no claim that Redden and Curtis Enterprises ever entered into a contract. The fourth amended complaint therefore makes a breach of contract claim only against defendant Evergreene. A provision in Section D of the Insurer policy states that “[e]ach [insured] is covered separately,” so even if an Arkansas court found that Curtis were an “insured” under the policy Insurer‘s duty to defend Evergreene on the breach of contract claim would not create a derivative duty to defend Curtis on any of the claims against him.
Curtis appears to argue that Insurer‘s duty to defend him is coextensive with its duty to defend Evergreene because Curtis and Evergreene have an agency relationship and the policy states that Insurer will defend and indemnify against alleged injuries resulting from the actions of Evergreene‘s agents. The breach of contract claim which triggered Insurer‘s duty to defend Evergreene was only brought against Evergreene, however, not Curtis or Curtis Enterprises. Accordingly, the district court did not err in concluding that Insurer has no duty to defend Curtis in the underlying lawsuit.
III.
For these reasons we conclude that the district court did not err by deciding that the only claim in the underlying lawsuit covered under Insurer‘s policy is the Redden estate‘s breach of contract claim against Evergreene, that Insurer has a duty to defend and indemnify Evergreene on that claim and therefore also a duty to defend it on all of the estate‘s claims against it, and that Insurer has no duty to defend or indemnify Curtis. Accordingly, we affirm the judgment of the district court.
JARVEY, District Judge, dissenting.
Under Arkansas law, the pleadings determine an insurer‘s duty to defend and that duty arises when there is a possibility that the injury or damage may fall within the policy coverage. Madden v. Continental Cas. Co., 53 Ark.App. 250, 922 S.W.2d 731, 734 (1996) (emphasis added). “It is the allegations made against the insured, however groundless, false, or fraudulent such allegations may be, that determine the duty of the insurer to defend the litigation against its insured.” Id. The uncertainty regarding the statute of limitations applicable to the claims in the underlying lawsuit causes me to conclude that coverage is still possible. For that reason, I respectfully dissent.
We will pay damages and defend you and others covered under this section only when:
- the providing or failure to provide professional services occures [sic] during the policy period shown on the Declarations;
- the providing or failure to provide professional services took place in the coverage territory.
We will defend any claim brought against you and others covered under this policy seeking damages that are covered under any section of this policy. We will do this even if the allegations of the claim are groundless, false or fraudulent.
The district court and this court make good arguments in favor of a three-year statute of limitations. I do not believe that this is enough to relieve the insurer of its duty to defend both Evergreene and Curtis in this matter. The arguments in favor of a five year statute of limitations pursuant to
I believe the district court erred in deciding that the Insurer had no duty to defend Curtis against the tort claims and, therefore, all claims in this matter. Whether or not there is a duty to indemnify Curtis and/or Evergreene depends on the facts established in the underlying trial, making summary judgment inappropriate. Madden, 922 S.W.2d at 734. Accordingly, I would reverse the judgment of the district court.