United States District Court, N.D. Alabama, Southern Division
ABDUL K. KALLON, District Judge.
Plaintiffs Julie Kaminsky and Nannette Schutta Lennitt commenced this action seeking to enforce an insurance policy that Defendant Pruco Life Insurance Company issued to David Schutta in April 2009 (to which Plaintiffs were beneficiaries). This dispute stems from certain representations that David Schutta-Ms. Kaminsky's ex-husband and Ms. Lennitt's then-fiance-made when he applied for the policy. In particular, although Mr. Schutta's physician diagnosed him with skin cancer in March 2008, Mr. Schutta omitted this diagnosis from his application with Pruco. Subsequently, after Mr. Schutta died in August 2010, Pruco learned about Mr. Schutta's history of skin cancer, denied Plaintiffs' claim for death benefits, and rescinded the policy. This led to Plaintiffs bringing this action against Pruco seeking a "declaration of ambiguity in policy language" and alleging breach of contract, bad faith and unfair practices in investigating the claim for death benefits, and intentional infliction of emotional distress in failing to promptly process the claim. See doc. 18. Ms. Kaminsky and Pruco have both moved for summary judgment on the breach of contract claim, and Pruco also moved for summary judgment on the bad faith, unfair practices, and intentional infliction of emotional distress claims. Docs. 27, 31, 33. For the reasons below, the court will grant Pruco's motion for summary judgment and deny Ms. Kaminsky's motion.
I. STANDARD OF REVIEW FOR SUMMARY JUDGMENT
Under Rule 56(a) of the Federal Rules of Civil Procedure, summary judgment is proper "if 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." To support a summary judgment motion, the parties must cite to "particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations, admissions, interrogatory answers, or other materials." FED. R. CIV. P. 56(c). Moreover, "Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986). The moving party bears the initial burden of proving the absence of a genuine issue of material fact. Id. at 323. The burden then shifts to the nonmoving party, who is required to "go beyond the pleadings" to establish that there is a "genuine issue for trial." Id. at 324 (citation and internal quotation marks omitted). A dispute about a material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The court must construe the evidence and all reasonable inferences arising from it in the light most favorable to the non-moving party. Adickes v. S. H. Kress & Co., 398 U.S. 144, 157 (1970); see also Anderson, 477 U.S. at 255 (all justifiable inferences must be drawn in the non-moving party's favor). However, "mere conclusions and unsupported factual allegations are legally insufficient to defeat a summary judgment motion." Ellis v. England, 432 F.3d 1321, 1326 (11th Cir. 2005) (per curiam) (citing Bald Mountain Park, Ltd. v. Oliver, 863 F.2d 1560, 1563 (11th Cir. 1989)). Furthermore, "[a] mere scintilla' of evidence supporting the opposing party's position will not suffice; there must be enough of a showing that the jury could reasonably find for that party." Walker v. Darby, 911 F.2d 1573, 1577 (11th Cir. 1990) (citing Anderson, 477 U.S. at 252).
II. FACTUAL BACKGROUND
The parties agree that Mr. Schutta never disclosed his March 2008 diagnosis of malignant melanoma in his application for life insurance with Pruco. In fact, Plaintiffs do not dispute that Mr. Schutta on three occasions answered "no" to questions asking if he had ever been diagnosed with "cancer, tumor leukemia, melanoma, or lymphoma." See docs. 33 at 10; 33-1 at 3; (Pruco Underwriting Telephone Interview at 9:00). Nonetheless, Plaintiffs challenge Pruco's denial of their claim and rescission of the policy based on their contention that Mr. Schutta's low "intelligence level" prevented him from fully comprehending Pruco's questions. See doc. 31 at 4. According to Plaintiffs, Mr. Schutta was "not a well-educated man, " and his "conversational vocabulary was quite limited unless the conversation concerned NASCAR, hunting, cooking, or heavy highway construction." Doc. 31-1 at 54. Because of his allegedly limited vocabulary, Mr. Schutta frequently "used a word that did not mean what he was trying to convey, " and often "did not understand what the other participant in [a] conversation was trying to convey to him." Id. As such, Plaintiffs' position is that Mr. Schutta-in answering "no" to three separate questions asking him about any prior diagnosis of cancer-answered "to the best of his knowledge and belief." See docs. 31 at 46; 33 at 10; 33-1 at 46.
Plaintiffs also point out that, during the application process, Mr. Schutta disclosed to Pruco the identity of the physician who diagnosed and treated his skin cancer. See doc. 33-1 at 3. A review of Mr. Schutta's application shows that he in fact listed a Dr. Marder as his treating physician, provided Dr. Marder's contact information, and stated that the reason for his last visit was a "check-up." Id. However, the record contains no evidence that Mr. Schutta mentioned that Dr. Mader treated him for skin cancer. Nonetheless, Plaintiffs presumably believe Mr. Schutta's mention of getting a check-up from Dr. Marder is sufficient to place Pruco on notice of Mr. Schutta's skin cancer. See id. at 8 n. 10. In light of this, Plaintiffs believe that Pruco "had the opportunity to request Dr. Marder's records before approving Mr. Schutta's application." Id. In any event, Pruco did not request Mr. Schutta's medical records (and therefore did not learn of Mr. Schutta's history of skin cancer) prior to issuing him a life insurance policy on April 13, 2009. See doc. 28-1 at 4. Instead, Pruco sought medical records after Mr. Schutta's death in August 2010 as part of Pruco's "contestable death claim investigation, " which is a "routine procedure whenever an insured dies within the first two years of coverage." Docs. 28-1 at 4; 28-2 at 3; 33-2 at 16. Ultimately, based on Pruco's findings during its investigation of the prior cancer diagnosis, Pruco denied Plaintiffs' claim for death benefits, rescinded the policy, and refunded past premium payments to Plaintiffs. Doc. 33-2.
At the heart of this dispute is whether Mr. Schutta's failure to disclose his history of cancer justified Pruco's rescission of the policy and denial of death benefits. Pruco seeks summary judgment on the breach of contract, "declaration of ambiguity in policy language, " bad faith, unfair practices, and intentional infliction of emotional distress claims, contending that Mr. Schutta's failure to disclose his history of cancer justified Pruco's actions. See doc. 26. Ms. Kaminsky seeks partial summary judgment with respect to the breach of contract claim contending that Mr. Schutta did not make any material misrepresentation on the application. See doc. 31. In responding to Pruco's motion, Ms. Kaminsky concedes that "[t]here is no dispute as to the material facts in this case" and that the court may resolve this case on summary judgment. Doc. 35 at 1. The court will address the breach of contract and ambiguity claims first and then turn to the bad faith, unfair practices, and intentional infliction of emotional distress claims.
A. Breach of contract and ambiguity claims
Plaintiffs claim that Pruco breached the insurance policy in denying death benefits, and that the application questions regarding Mr. Schutta's history of cancer were ambiguous (presumably justifying Mr. Schutta's failure to disclose his history of cancer). See doc. 18 at 15-16. As an initial matter, the parties agree that Florida law applies to the contract claims because the "policy was executed in Florida." See docs. 27 at 10; 31 at 46-48; 33 at 1; 33-1 at 17. Indeed, under Alabama law, "the law of the state wherein the contract was executed governs questions regarding validity and interpretation of the contract." Am. Nonwovens, Inc. v. Non Wovens Eng'g, S.R.L., 648 So.2d 565, 567 (Ala. 1994); see also Allison v. Vintage Sports Plaques, 136 F.3d 1443, 1446 n. 6 (11th Cir. 1998) ("A district court must apply the choice-of-law rules of the state in which it sits."). Relevant here, Florida law provides that misrepresentations in a policy application "may prevent recovery under [a] contract or policy" if (a) the misrepresentation is "material to the acceptance of the risk or to the hazard assumed by the insurer, " or (b) had the insurer known the true facts, "the insurer in good faith would not have issued the policy or... would not have issued it at the same premium rate." FLA. STAT. § 627.409(1)(a)-(b); see also Nat'l Union Fire Ins. Co. of Pittsburgh, Pa. v. Sahlen, 999 F.2d 1532, 1536 (11th Cir. 1993) ("Misrepresentations and incorrect statements in a policy application bar recovery under the policy where, inter alia, they are material to the risk assumed by the insurer or the insurer would not have offered the same terms had it known the truth.") (citing FLA. STAT. § 627.409(1)(a)-(b)). The points of contention here are whether Mr. Schutta's statements were "misrepresentations, " and if yes, whether they were "material" under Section 627.409(1)(a). For the reasons below, the court agrees with Pruco that Mr. Schutta's statements were material misrepresentations justifying denial of benefits and rescission of the insurance policy. Before reaching the Section 627.409 analysis, however, the court will first address Plaintiffs' contention about the purported ambiguity of the application questions.
1. Alleged ambiguity of application question
Under Florida law, "interpretation of an insurance contract is a matter of law to be decided by the court, " and an "insurance contract is deemed ambiguous if it is susceptible to two or more reasonable interpretations that can fairly be made." Gas Kwick, Inc. v. United P. Ins. Co., 58 F.3d 1536, 1539 (11th Cir. 1995). Furthermore, "[a] provision is not ambiguous simply because it is complex or requires analysis." Garcia v. Fed. Ins. Co., 969 So.2d 288, 291 (Fla. 2007). Here, Mr. Schutta filled out two written application forms that asked whether he had "been diagnosed with or treated by a member of the medical profession for... cancer, tumor, leukemia, melanoma, or lymphoma." Doc. 33 at 10; 33-1 at 3. The written application offered Mr. Schutta two answer choices: yes, or no. Doc. 33 at 10; 33-1 at 3. In addition to the written application, Pruco interviewed Mr. Schutta over the phone and asked the exact same question ...