Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-almd-1_04-cv-00819/USCOURTS-almd-1_04-cv-00819-0/pdf.json

Parties Involved:
Blanca Black-Gammons
Plaintiff
Zurich America Insurance Company
Defendant

Document Text:

IN THE DISTRICT COURT OF THE UNITED STATES FOR THE

MIDDLE DISTRICT OF ALABAMA, SOUTHERN DIVISION

BLANCA BLACK-GAMMONS, )

)

Plaintiff, )

) CIVIL ACTION NO.

v. ) 1:04cv819-MHT

) (WO)

ZURICH AMERICA INSURANCE )

COMPANY, )

)

Defendant. )

OPINION

Plaintiff Blanca Black-Gammons brings this lawsuit

against defendant Zurich America Insurance Company

asserting breach-of-contract and bad-faith claims under

Alabama law. She requests declaratory judgment and

damages because of Zurich America’s failure to continue

providing work benefits under an accident-insurance

policy. This lawsuit removed from state to federal court

on the basis of diversity-of-citizenship jurisdiction.

28 U.S.C.A §§ 1332, 1441. 

 After a complete review of the record and after oral

argument, the court concludes that Black-Gammons’s motion

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1. For purposes of § 1332, a corporation is a

citizen of any State by which it has been incorporated

and of the State where it has its principal place of

business. 28 U.S.C. § 1332(c)(1). Zurich America is

incorporated under the laws of the State of Illinois,

where it has its principal place of business. The

statute provides that “in any direct action against the

insurer of a policy or contract of liability insurance

... to which action the insured is not joined as a partydefendant, such insurer shall be deemed a citizen of the

State of which the insured is a citizen.” Id. However,

this “direct action” proviso applies only to cases in

which “a party suffering injuries or damages for which

another is legally responsible is entitled to bring suit

against the other's liability insurer without joining the

insured...,” and does not apply to those cases involving

an insurer’s duty to settle claims within policy limits

or in good faith. Fortson v. St. Paul Fire & Marine Ins.

Co., 751 F.2d 1157, 1159 (11th Cir. 1985). Therefore,

diversity jurisdiction has been properly alleged in this

case.

2

for summary judgment should be denied and Zurich

America’s granted.1

I. SUMMARY-JUDGMENT STANDARD

Summary judgment is appropriate “if the pleadings,

depositions, answers to interrogatories, and admissions

on file, together with the affidavits, if any, show that

there is no genuine issue as to any material fact and the

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moving party is entitled to a judgment as a matter of

law.” Fed. R. Civ. P. 56(c). Under Rule 56, the party

seeking summary judgment must first inform the court of

the basis for the motion, and the burden then shifts to

the non-moving party to demonstrate why summary judgment

would not be proper. Celotex Corp. v. Catrett, 477 U.S.

317, 323 (1986); see also Fitzpatrick v. City of Atlanta,

2 F.3d 1112, 1115-17 (11th Cir. 1993) (discussing

burden-shifting under Rule 56). The non-moving party

must affirmatively set forth specific facts showing a

genuine issue for trial and may not rest upon the mere

allegations or denials in the pleadings. Fed. R. Civ. P.

56(e).

The court’s role at the summary-judgment stage is not

to weigh the evidence or to determine the truth of the

matter, but rather to determine only whether a genuine

issue exists for trial. Anderson v. Liberty Lobby, Inc.,

477 U.S. 242, 249 (1986). In doing so, the court must

view the evidence in the light most favorable to the

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2. Defendant’s motion for summary judgment (Doc. No.

23), Exhibit 5 to, deposition of Blanca Black-Gammons, p.

156.

3. Id., Exhibit 1, affidavit of Melanie Lisicky

(“Lisicky affidavit”), p. 2.

4

non-moving party and draw all reasonable inferences in

favor of that party. Matsushita Elec. Indus. Co. v.

Zenith Radio Corp., 475 U.S. 574, 587 (1986).

II. BACKGROUND

On September 25, 2003, Black-Gammons, an independent

contractor and an owner-and-operator of a tractor leased

to U.S. Xpress, stopped to refuel her tractor in Oklahoma

City, Oklahoma.2

 While exiting the tractor, she slipped

and fell, experiencing brief paralysis and pain in her

head, neck, and foot. She was transported to a hospital

and diagnosed with “closed head trauma, vertigo trauma

induced, and left 5th metatarsal fracture.”3

 

After returning to Alabama, Black-Gammons sought

medical treatment and filed a claim for medical benefits

and total disability benefits under a Group Occupational

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4. Exhibit 1 to Lisicky affidavit, group

occupational accident insurance policy.

5. Id.

5

Accident Insurance Policy issued by Zurich America to

U.S. Xpress, Inc. Zurich America’s policy includes both

a Temporary Total Disability (TTD) benefit as well as a

Continuous Total Disability (CTD) benefit. It is

undisputed that both benefits apply only to injuries that

meet the following definition: “Injury means an

accidental bodily injury that is caused solely by

accidental means and is independent of all other causes.”4

The policy provides that either benefit may be paid

only when the disability “resulted solely and directly”

from an injury sustained while performing occupational

duties, as opposed to disability resulting from sickness,

disease, or repetitive or cumulative traumas.5

 Repetitive

or cumulative traumas are defined in the policy as

“conditions which impair the normal physiological

function of the body over an extended period of time, but

which do not arise as the result of a single physical

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6. Id.

7. Id.

8. Lisicky affidavit, p. 2.

9. Exhibit 7 to Lisicky affidavit, statement of Dr.

Steven R. Beranek dated February 5, 2004.

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trauma.”6

 The CTD benefit will be paid only when the

injured person “has been granted a Social Security

Disability Award for such Continuous Total Disability.”7

Zurich America paid Black-Gammons 32 weeks of TTD

benefits beginning on October 1, 2003, at a rate of

$ 392.30 per week, for a total payment of $ 12,553.60.

Zurich America also paid $ 9,952.00 in medical and

prescription expenses for Black-Gammons.8

 In subsequent

months, Black-Gammons’s attending physician filed

statements about Black-Gammons’s injuries required by

Zurich America. The second to last report, completed on

February 5, 2004, described the injuries as consisting of

a healed fracture of the fifth metatarsal, cervical-disc

syndrome, lumbar-disc syndrome, spinal stenosis, and “two

severe large herniated discs at C5-6 and C6-7.”9

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10. Statement of Dr. Steven R. Beranek dated February

26, 2004. This statement was omitted from the

evidentiary exhibits filed with Zurich America’s motion

for summary judgment, and was provided at the request of

the court.

11. Exhibit 9 to Lisicky affidavit, faxed response of

Dr. Steven R. Beranek dated March 18, 2004. 

7

The physician sent a final report on February 26,

2004, describing Black-Gammons’s disability as involving

carpal-tunnel syndrome, S1 radiculopathy, and a

(presumably healed) fracture of the fifth metatarsal.10

After receiving this report, Zurich America requested

clarification of the nature of Black-Gammons’s injuries

from her physician, who responded that the carpal-tunnel

syndrome was not caused by the accident of September 25,

2003, that the S1 radiculopathy was a result of

degenerative-disk disease, that prognosis for recovery of

the fractured metatarsal was good, and that their were no

other conditions affecting Black-Gammons.11 

Based on these representations, Zurich America

terminated Black-Gammons’s insurance payments on June 15,

2004. Zurich America wrote in its termination of

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12. Exhibit 10 to Lisicky affidavit, benefit

termination letter.

13. Defendant’s motion for summary judgment (Doc. No.

23), Exhibit 3, request for hearing by administrative law

judge, form HA-501-U5.

8

benefits letter that a review of the medical

documentation revealed that Black-Gammons had been

diagnosed with degenerative-disk disease, a medical

condition excluded from coverage under the policy.12

Black-Gammons applied for social security disability

benefits and was denied. In her appeal of the denial,

she wrote that, “the combination of my conditions

prevents me from working. I suffer from asthma, GERD,

pain, as well as residual effects from brain injury, back

injury, and depression.”13 On July 22, 2005, an

administrative law judge (ALJ) issed a decision awarding

benefits to Black-Gammons, finding that she suffers from

lumbar degenerative-disk disease, bilateral carpal-tunnel

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14. Id., Exhibit 4, Social Security Administration

Office of Hearing and Appeals, decision of Harry C.

Taylor, II., U.S. administrative law judge, pp. 1-2.

15. Id., p. 4.

16. Plaintiff’s response to defendant’s motion for

summary judgment (Doc. No. 27). note of Dr. Hassan

Kesserwani dated May 31, 2005.

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syndrome, cervical-disk disease, asthma, panic attacks,

and major depression.14

The ALJ also found that Black-Gammons had sustained

a concussion of the cervical spinal cord, paralyzing her

from the waist down for a short time, and resulting in

“autonomic storms.”15 The final finding apparently stems

from a doctor’s note dated May 31, 2005, stating that

Black-Gammons has “developed episodes of autonomic storms

reasonably controlled with xanax” after sustaining a

concussion of the cervical spinal cord.16 The concussion

apparently refers to Black-Gammons’s accident, although

this is not explicitly stated by the doctor or by the

ALJ. 

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Black-Gammons concedes that, except for the herniated

cervical discs diagnosed in the second to last

physician’s report, none of her diagnosed conditions is

eligible for benefit coverage under Zurich America’s

policy. 

III. DISCUSSION 

A. Breach-of-Contract Claim

A plaintiff can establish a breach-of-contract claim

in Alabama by showing “(1) the existence of a valid

contract binding the parties in the action, (2) his own

performance under the contract, (3) the defendant's

nonperformance, and (4) damages.” State Farm Fire & Cas.

Co. v. Slade, 747 So. 2d 293, 303 (Ala. 1999)(quoting

Southern Medical Health Systems, Inc. v. Vaughn, 669 So.

2d 98, 99 (Ala. 1995).

It is not disputed that the insurance policy at issue

in this case does not cover illness or disease, as

opposed to injuries resulting “solely and directly” from

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17. Defendant’s motion for summary judgment (Doc. No.

23), Exhibit 2, affidavit of John H. Allen.

11

an accident. It is also not disputed that doctors have

diagnosed Black-Gammons with non-injury-related

illnesses. Zurich America has presented evidence that it

terminated Black-Gammons’s policy because doctors

reported that her disability is the result of

degenerative disc disease, independent of her

work-related injury. Such disease would disqualify

Black-Gammons for benefits under the explicit terms of

the policy. 

Zurich America has also submitted the affidavit of an

expert witness who testifies that Zurich America

evaluated and terminated Black-Gammons’s benefits in

accordance with the accepted standard of care in the

insurance industry, and that Black-Gammons received all

benefits to which the policy entitled her.17 

Finally, Zurich America has introduced evidence that

Black-Gammons herself understands her disability to be

the result of more than accident-related injuries. In

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18. Plaintiff’s response to defendant’s motion for

summary judgment (Doc. No. 27), Affidavit of Blanca

Black-Gammons, p. 1.

12

appealing the original negative determination of

eligibility for social security benefits, Black-Gammons

asserted that her disability was caused by a combination

of factors, most of which are not compensable under the

Zurich America policy. The ALJ reviewing Black-Gammons’s

medical records agreed, and based his decision to grant

benefits on his finding of multiple causes for the

disability. 

Black-Gammons has presented no medical evidence

whatsoever that the herniated discs which form the only

basis of her claim are solely and directly related to her

accident, as opposed to stemming from the degenerativedisc disease with which she has been diagnosed. The only

relevant evidence before the court supporting

Black-Gammons’s claim is her own affidavit stating that

she was able to work before the accident, but not

afterwards.18

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The court has no reason to doubt that this is true,

but it does not automatically entitle Black-Gammons to

benefits under the Zurich America policy. Black-Gammons

has not argued that her degenerative disease was in some

way precipitated by the accident. She has not argued,

alternatively, that the injuries she sustained during the

accident are solely responsible for her herniated discs,

independent of the degenerative disc disease. Fatally

for her claim, she has not even argued that the herniated

discs are the sole cause of her inability to work.

In sum, Zurich America has produced evidence that

Black-Gammons is ineligible for benefits under the clear

terms of the insurance policy, and Black-Gammons has

failed entirely to come forward with any argument, much

less any specific facts, showing that summary judgment

should not be granted on her breach of contract claim.

See Fitzpatrick, 2 F .3d at 1115-16 (“For issues ... on

which the non-movant would bear the burden of proof at

trial, ... the moving party [for summary judgment]

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simply may show[]--that is, point[] out to the district

court--that there is an absence of evidence to support

the non-moving party's case.”) (citations and quotation

marks omitted). Black-Gammons has failed to meet her

burden, and summary judgment is granted in favor of

Zurich America on the breach-of-contract claim. 

B. Bad-Faith Claim

Black-Gammons also asserts a claim of bad faith.

Alabama law recognizes two types of bad faith claims--

normal” and “abnormal”--each of which must be analyzed

under a unique standard. Slade, 747 So. 2d 293. In a

“normal” bad-faith case arising from an insurance claim,

the plaintiff bears the burden of showing the absence of

any reasonably legitimate or arguable reason for denial

of a claim. Id. at 306. 

This has been termed the “directed verdict standard,”

under which an allegation of bad faith in the failure to

pay an insurance claim can be maintained only if the

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plaintiff is entitled to a directed verdict; that is, if

there is no factual dispute about the validity of the

claim. National Sav. Life Ins. Co. v. Dutton, 419 So. 2d

1357, 1362 (Ala. 1982).

However, to discourage insurance companies from

exploiting this exceptionally protective standard by

failing to investigate claims properly, the Alabama

Supreme Court has identified exceptions, or “abnormal”

cases, in which bad faith can consist of: (1) intentional

or reckless failure to “properly investigate the claim or

to subject the results of the investigation to a

cognitive evaluation and review,” Thomas v. Principal

Financial Group, 566 So. 2d 735, 744 (Ala. 1990); (2) the

manufacture of a debatable reason to deny a claim,

Slade, 747 So. 2d at 306; or (3) reliance on a

“subjective belief” that an ambiguous portion of a policy

provides a basis for denying a claim. Id.

Black-Gammons has never alleged that Zurich America

failed to investigate her disability properly; nor does

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she allege that Zurich America has manufactured a

debatable reason for denying her claim, or that Zurich

America has misinterpreted an ambiguous portion of the

policy in bad faith. Black-Gammons’s claim is that her

disability is covered under the explicit terms of the

policy, and Zurich America has failed to honor those

terms. Therefore, her bad-faith claim is a “normal” one.

Because summary judgment is granted in favor of

Zurich America on the breach-of-contract claim,

Black-Gammons’s bad-faith claim cannot survive summary

judgment as a matter of law: “if any one of the reasons

for denial of coverage is at least ‘arguable,’ [the]

court need not look any further.” State Farm Fire &

Casualty Co. v. Balmer, 891 F.2d 874, 877 (11th Cir.

1990) (affirming order granting judgment notwithstanding

the verdict in favor of appellee insurer on appellant

insureds' claim of bad faith because insurer had an

arguable basis for denying benefits at the time of

denial). Not only is Zurich America’s stated reason for

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terminating Black-Gammons’s benefits arguable, it

entitles Zurich America to summary judgment.

Consequently, Black-Gammons’s own motion for summary

judgment will be denied, and Zurich America’s motion for

summary judgment will be granted on Black-Gammons’s

breach-of-contract and bad-faith claims.

An appropriate judgment will be entered.

DONE, this the 9th day of January, 2006.

 /s/ Myron H. Thompson 

UNITED STATES DISTRICT JUDGE

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