Case Title: BROWN v. LIFE INS. CO. OF NORTH AMERICA

Citation: 

Docket Number: 

State: wyoming

Court: Wyoming Supreme Court

Date: 2000-07-05T00:00:00Z

Document:
BROWN v. LIFE INS. CO. OF NORTH AMERICA2000 WY 1438 P.3d 333Case Number: 99-262Decided: 07/05/2000Supreme Court of Wyoming
 
KENT R. BROWN, Appellant 
(Plaintiff), v.LIFE INSURANCE COMPANY OF NORTH AMERICA; CIGNA GROUP 
INSURANCE, Appellees (Defendants).

Appeal from the District 
Court of Lincoln County, The Honorable Nancy Guthrie, 
Judge.

Representing 
Appellant: Kent R. Brown, pro 
se.Representing Appellee: Mark C. Overturf of Overturf & McGath, 
P.C., Denver, Colorado.

Before 
LEHMAN, C.J., and THOMAS, MACY*, GOLDEN, and 
HILL, JJ.

HILL, 
Justice.

[¶1] Appellant 
Kent R. Brown (Brown) seeks review of an order of the district court granting 
summary judgment in favor of Appellee Life Insurance Company of North America 
(LINA)1. The district court granted summary 
judgment for LINA on the basis that Brown's claim for disability benefits was 
barred because he failed to make a timely application for benefits as required 
by the policy of insurance. We reverse and remand.

ISSUES

[¶2] Brown 
provides this statement of the issues:

I. Do material facts 
exist, precluding the granting of summary judgment, regarding whether 
Appellant's alleged breach of the insurance policy provisions requiring timely 
notice and proof of loss were either excused under the circumstances or 
immaterial to the purpose of the contract, since the insurer suffered no 
prejudice to its ability to investigate the claim.

II. If prejudice to the 
insurer is a factor to be considered before coverage will be forfeited due to 
breach of contract terms, is there any arbitrary period of time, other than the 
applicable statute of limitations, after which an analysis of such prejudice 
need not be performed.

III. Did Appellees' 
payment of Loss of Member benefits due under an insurance policy, without 
effective reservation of rights, waive by conduct the right to assert the 
defense of untimely compliance with the Notice and Proof of Loss provisions in 
denying Monthly Income benefits contained in the same policy, where the Notice 
and Proof of Loss provisions applied equally to both 
benefits.

 

[¶3] LINA 
recapitulates the issues in significantly different terms:

I. Has Appellant 
presented any facts or law which would exempt him from W.S. §§ 26-18-109 and 
26-18-111 and the terms of the Policy?

II. Does an insurance 
company waive previously identified defenses when it states: "Nothing contained 
in this letter should be construed as a waiver of any rights or defenses under 
the policy"?

III. Does the 3 year 
statute of limitations applicable to disability insurance policies bar actions 
that are filed 10 years after the date of loss?

FACTS

[¶4] Brown filed 
his complaint on July 7, 1997, alleging breach of a contract for disability 
insurance, as well as a breach of the insurer's duty of good faith and fair 
dealing. LINA answered the complaint, denied (or asserted lack of information to 
admit or deny) all of the allegations in Brown's complaint, and asserted some 14 
affirmative defenses, essentially a laundry list of all available defenses to a 
complaint such as that in issue here. On April 20, 1999, LINA filed its motion 
for summary judgment. On May 24, 1999, Brown answered that motion and filed his 
motion for summary judgment. LINA filed a reply to Brown's cross motion for 
summary judgment on June 23, 1999. The record also contains a two-page document 
filed by Brown, which is entitled, "Statement of Proceedings." That statement 
purports to be filed under W.R.A.P. 3.03; however, the requirements of that rule 
were not followed, and the document plays no part in the resolution of this 
appeal.

[¶5] The facts 
underlying the complaint are available only in the sense that they are either 
pleaded by Brown, gleaned from documents attached to the parties' pleadings, or 
set out in the parties' papers. For purposes of our review of the Order Granting 
Summary Judgment, there is no dispute concerning the underlying facts. The 
dispute focuses on what legal effect those facts have. In summary, the facts are 
that Brown, a dentist, purchased an occupational disability policy on November 
1, 1979, through the American Dental Association. He paid all premiums due under 
the policy. Under the policy, Brown was to receive $1,000.00 per month, for a 
period of 60 months (i.e., a total of $60,000.00) if he was disabled from 
performing his occupation as a dentist.

[¶6] Brown 
suffered an injury to his eye on July 4, 1987, in a fireworks accident.2 The accident left Brown with 
virtually no vision in his left eye, except for light perception. His physician 
told him that he would achieve maximum medical recovery six months after the 
date of the accident. Virtually no recovery was experienced at the end of six 
months, and Brown contacted a company to arrange for the sale of his practice. 
Based upon the materials contained in the record, there is no apparent dispute 
but that Brown was totally disabled from practicing as a dentist after the 
injury to his eye. A letter dated June 1, 1994, from Brown's physician to LINA 
contains this statement:

In regards to the letter 
of April 19, 1994, I do not know the exact date that Dr. Brown was totally 
disabled except dating back to the time of his injury. I do know that he 
attempted to continue his practice of dentistry. I suspect that once he 
continued practice that at some point he realized that he could not deliver the 
quality of dentistry that he wished to deliver or that perhaps his patients 
perceived that he was not able to deliver that quality. Certainly Dr. Brown was 
totally disabled at the time of his accident.

[¶7] 
Nonetheless, Brown continued to practice dentistry after the accident, in spite 
of his disability, and he managed to keep his practice going in the interim. The 
production from his practice fell from over $188,000 in 1986 to $69,000 in 1991. 
Even with the assistance of his wife, he was unable to keep the practice going 
at a level that covered the overhead for a dental office. The process of selling 
the practice ended up taking several years so that the sale was not consummated 
until May 1, 1993. In late July or early August of 1993, Brown submitted a claim 
for loss of member (loss of eye3), as well as for disability 
benefits. His initial claim was returned to him because of a change in the 
carrier of the disability policy, and the claim was then forwarded to LINA in 
August of 1993.

[¶8] This appeal 
presents only a very narrow question. The district court limited its ruling to 
one basis for its summary judgment order:

8. Defendants seek 
summary judgment on a number of theories. This Court's ruling that Plaintiff's 
claim is barred because he failed to make a timely application is dispositive of 
this matter. For this reason the other reasons will not be 
discussed.

[¶9] The LINA 
policy is quite clear with regard to an insured's obligation to notify the 
company of a loss. This obligation is detailed in two separate 
paragraphs.

[¶10] Notice of 
Claim: Written notice of claim must be given to the Company or the Administrator 
within 30 days after the occurrence of any loss covered by the Master Policy or 
as soon thereafter as is reasonably possible. Notice given by or on behalf of 
the agent o[f] the claimant to the Company at its Home Office in Philadelphia, 
Pennsylvania, or to any authorized agent of the Company, with information 
sufficient to identify the insured, shall be deemed notice to the 
Company.

[¶11] Proof of 
Loss: Written proof of loss must be furnished to the Company in case of claim 
for any loss within 90 days after the date of such loss. Failure to furnish such 
proof with in [sic] the time required shall not invalidate nor reduce any claim 
if it was not reasonably possible to give proof within such time, provided such 
proof is furnished as soon as reasonably possible and in no event, except in the 
absence of legal capacity of the Claimant, later than one year from the time 
proof is otherwise required.

[¶12] Under 
Plaintiff's version of the facts, he did not make a determination that he was 
disabled at the time of his injury. He was advised by his doctors not to make 
any life-changing decisions until after the passage of a six-month healing 
period. At the end of that time period, he determined that he could no longer 
practice as a dentist and initiated the process of selling his practice. Under 
those facts, [he] should have notified LINA of his loss within the first three 
months of 1988. He did not do so for more than five years.

[¶13] With 
respect to providing proofs of loss to an insurer issuing a disability insurance 
policy, Wyo. Stat. Ann § 26-18-111 (LEXIS 1999) provides:

26-18-111. Proofs of 
loss.

[¶14] Proofs of 
Loss: Written proof of loss shall be furnished to the insurer at its office in 
case of claim for loss for which this policy provides any periodic payment, 
contingent upon continuing loss within ninety (90) days after the termination of 
the period for which the insurer is liable, and in case of claim for any other 
loss within ninety (90) days after the date of the loss. Failure to furnish 
proof within the time required does not invalidate nor reduce any claim if it is 
not reasonably possible to give proof within that time, provided the proof is 
furnished as soon as reasonably possible and, except in the absence of legal 
capacity, not later than one (1) year from the time proof is otherwise 
required.

[¶15] The 
conclusion of the district court was that Brown's claim was untimely as a matter 
of law, and that there were no material facts that required the intervention of 
a fact-finder. Based on the record before us, it seems clear that Brown was 
entitled to disability benefits under the policy but for the conclusion that his 
claim was not timely submitted. 

STANDARD OF 
REVIEW

[¶16] Summary 
judgment is appropriate only when no genuine issues of material fact exist, and 
the prevailing party is entitled to judgment as a matter of law. W.R.C.P. 56; 
Hulse v. First Interstate Bank of Commerce - Gillette, 994 P.2d 957, 958 (Wyo. 
2000); Century Ready-Mix v. Campbell County School District, 816 P.2d 795, 798 
(Wyo. 1991). A material fact is any fact that, if proved, would establish or 
refute an essential element of a claim or defense asserted by a party. Hulse, 
994 P.2d at 958-59; Century Ready-Mix, 816 P.2d  at 799. When reviewing a grant 
of summary judgment, we will consider the record in the light most favorable to 
the party opposing the motion and give that party the benefit of all favorable 
inferences we may fairly draw from the record. Id.

DISCUSSION

[¶17] The 
essence of Brown's first assertion of error is that a reasonable person might 
well be uncertain as to when application should have been made for benefits 
under the terms of the policy. Both LINA and the district court view either the 
accident itself, or Brown's medical condition at six months after the accident, 
as the event that "triggered" Brown's duty to timely file a claim with LINA. 
What Brown filed a claim for is disability, and the policy is very explicit 
about what disability means: the insured's inability because of accident "to 
practice your own occupation (your special area of dental practice)." Brown 
continued to practice dentistry, albeit in a much-reduced fashion, until the 
time he sold his practice in May 1993. Thereafter, he promptly made a claim for 
disability, as well as for loss of member. Under the terms of the policy, so 
long as he was practicing his profession as a dentist, he was not disabled and 
would not have been eligible for disability benefits. 13 Couch on Insurance 3d, 
§§ 190:1 - 190:3 (1999). Moreover, the question as to what constitutes a 
reasonable time for filing of the claim in the context of disability insurance 
is ordinarily for the jury. Id., §§ 190:13 and 190:112; Burton v. Metropolitan 
Life Insurance Co., 48 Ga. App. 828, 173 S.E. 922 (1934). Perhaps of greater 
importance, the disability from which Brown suffered was a continuous 
disability, and under the terms of the policy, there was nothing to prevent 
submission of the claim within the duration of the disability covered by the 
policy. See Goodwin v. Nationwide Insurance Co., 104 Idaho 74, 656 P.2d 135, 
143-44 (1982). We also note that, based on the record before us, LINA does not 
have a viable defense based on prejudice because of an inability to investigate 
the claim. The record extant demonstrates that an accident occurred, that Brown 
was eventually totally disabled by it, and that the policy provided for benefits 
once Brown was deemed disabled from practicing as a 
dentist.

[¶18] To the 
extent there are any remaining issues that relate to the timeliness of the 
submission of Brown's claim, those issues must be resolved as issues of fact by 
a fact-finder. Because of this disposition, we need not address the other issues 
raised in the appeal.

[¶19] The order 
granting summary judgment is reversed, and the case is remanded to the district 
court for further proceedings consistent with this 
opinion.

Footnotes

1 The 
Defendants below were LINA and Cigna Group Insurance. The Defendants' pleadings 
below were filed on behalf of both. Counsel for Appellees purports to represent 
both named Defendants in this appeal. However, in the Brief of Appellees, only 
LINA is referred to, and, for purposes of convenience, we will refer to the 
Appellees collectively as LINA.

2 Both the 
Order Granting Summary Judgment and LINA's papers refer to the injury as being 
caused while Brown was playing with fireworks, though there is nothing in the 
pleadings or otherwise in the record which supports that 
characterization.

3 The loss of 
member benefit was paid, and no issue with respect to that claim is included in 
this appeal. Brown does contend that the payment of that claim was inconsistent 
with LINA's denial of his disability claim.