## In the



# U n ited S ta tes Co urt o f Ap p ea ls

F o rth eS e v e n th C ir cu it
N o. 11

- 1170 H AB I BOL LA HT AB AT AB AI, P laint if f-A ppell ant, v. W ESTC O ASTL IF E I NS URANC E C OMPAN Y, D efend a nt-A pp ellee,

A pp eal from the United S t ates Di strictC our t fo r the E astern Di stricto f Wisc onsin
. No . 2:0 8-cv-00 22 7-JPS

—J. P. S tadtmuel ler, Judge .
A RG UE D S EP TE MBE R 12, 2011

— D ECI DE D D ECE MBE R 16, 2011

Befo re B AUER, R OV NERa nd W I L L I A MS, C ircu it Judges . B AUER, Cir cu i tJudg e . The pl ai nti ff

- appell ant, H abibol l ah Tabatab ai( “Tabatabai ”) sued defen d an t- appell ee W est Coast Life I nsurance Co. ( “W est Coast Life”) for br each of contrac t and f or a vi olation of W est C oast L ife’s i m pli ed duty ofgo od f ai th a n d fa i r deal i ng. W estCoast L ife m oved f or sum m ary j ud gm en t and the d istri ct cou rt gr anted the m oti on o n Decem ber21 , 20 10. Thi s a pp eal f o l l o we d

. We a ffi r m.2 N o. 11

- 1170 I . B AC KGR OUND O n J un e 17, 2006 , T aba taba i’ s w ife, Firouze h K esh m iri ( “M s. Keshm i ri ”) , com ple ted an appli cati on fo r a $ 500, 000 l i f e i ns ur an ce po l i cywi ththe as si st an ce o fDa r r el l Al vine (“A lvin e” ), a n eig hb or an d lice n se d ins u r a n c e in te rm ed iar y. The appli cation r eq uir ed M s. Keshm i rito choo se a specific r ate cl ass i fi cati on f orwh i ch she w i shed to apply

. T h e o p tio n s in c lu d ed “S u p er P re fer re d ,” “P re fer re d ,” “St andard, ” “ Rated, ” and “O ther

. ” M s. Keshm i rio pted f or th e “S upe r Pr efer r ed” c l as si fi ca ti o n a nd de l i ve r ed th e appl i ca ti o n, t o g ethe r wi tha n i ni ti alpa y m en t i n the a m o unt of$1 00, to A l vi ne. I n additi on t o th e $ 100 paym ent, M s. Kes hm i r i si g ne d a co ndi ti o na l r ec ei pt ag r ee m en t ( “CRA ”) with W estCoastLi fe. “[ A CRA ] i s a devi ce used by th e li f e insurance i nd ustr y thro ugh w hi ch an appl i ca nti s i m m edi at el y i ns ur ed up on pa y m en t o fthe i ni t i a l p r e mi um a tthe t i me o fa pp l i c a t i o n a nd upon sa tis fac tio n of va riou s c on d itio n s p re c ed en t t o c ov er ag e.” Tabat ab aiv. We s tCoas tLi f eIns . Co. , N o. 08

- cv-22 7, 20 10 U
. S. Dist. LE X I S 13550 7, at *13 ( E
. D
. W is. De c. 21, 2010). W estCoastLi f e’ s CRA st ate d i n part : C O ND I T I O NS UND E RWHI C H I N S UR ANC E MAY BECOM E EF F ECTI VE PRI OR TO POLI CY DELI VERY U nl ess ea ch and e ve ryco nd i ti on be l ow has bee n fulfi l l ed exactl y, no i nsurance w i l l beco m e effecti ve p rior to p olic y d eliv er y t o t h e O w n er : (A ) on th e E ffec tiv e D at e t h e P ro p os ed In su re d (s) is ( a r e ) i n s u r a b l e e x a c t l y a s a p p l i e d f o r u n d e r th e C o mpan y ’ s pr i nt ed unde r wri tingr ul es f o r the plan, am ou nt and prem ium rate class ap p li ed f or;N o. 11

- 1170 3

T he reco rd in d icates the re w ere oth er b loo d te sts w ith resu lts 1 exc eedin g the us ua l c l i ni c a l r a ng e f ora “ S up e r P r e f e r r e d” app licant. H ow ever, M s. K es hm ir i’ s chole st erol te stw as focu s ed o n i n the s um m ar y j udgm en tan d or al ar gum en t phases ofl it igat ion because of its s ignific ant i m pact on her pot en t i al i ns ur abi l i t y. . . . (C ) th e P ro p os ed Ins u re d (s) h as /h av e c om p let ed all exam i nati ons and/ortests r equeste d by the Com pany;

. . . T E R MI NAT I O N AND R E F UND O F P R E MI UM T h er e s h all b e n o in su ra n c e c ov er ag e u n d er th is A greem en t and this A greem en t sha llbe void if :

. . . ( B) i fthe ap p l i cati on t o w hi ch thi s Agree m ent was a t t a c h e d i s n o ta p p r o v e d a s ap p l i e d f o r b y th e C o mpany w i thi n ni nety busi ness days fro m i ts date. On June 2 8, 20 06, M s. Keshm i rim et w i th a param edi cal ex ami ne r a nd s ubmi tt ed b lo o d a nd ur i ne s pec i m en s for lab testing. On ce ava il able, th e lab resu lts w ere prom ptl y s ent t o M s. K eshm i ri
. A m ong the v ar i ous t est s conducted, o ne i nd ica ted thatherchol est er oll eve l o f22 9 w as ou ts id e t h e u su al c lin ica l r an ge of 14 0-1 99
. In a d d i- 1 ti on, M s. Keshm i ri ’ s ur i ne sa m ple r ai sed co n c er n due to a hi gh n um bero fr ed bl oo d cel l s a nd was consi dered, at best, i nc onc lusiv e . By J uly 6, 2006 , W est C oast L ife had o rder ed i ts i nsurance bro ker, The O’Bri en Financi al4 N o. 11

- 1170

T h e O’ Br i e n F i n a n c i a l Gr o u p , I n c . , a g e n e r a l b r o k e r age nt of 2 W es t C oa s tLi f e , wa s o ne o fthe o r i gi na l de f e nd a nt s n am ed in th e com p lain t by T ab ata b ai. H ow ev er, T ab ata b ai v olu nta rily di s mi s s e d h i s c l a i ms a g a i n s tT h e O’ Br i e n F i n a n c i a l Gr o up ren d erin g W est C oa st Life the sole d efend an t. A t s om e point betw een M s. Kes hm ir i’ s hospit ali zati on and her 3 den ia l ofan i nsurance polic y, a s econd urine s am ple was obtained and te st s ind ic a ted i t c ontai ned higher- than- norm al lev els of ba cteria , the cau se of w hich ( w he th e r d u e to illness ori m pr op e r o bt a i nme nt ) r e m a i ns un r e s ol ve d. Gr o up , I nc . , t o o b t a i n M s . Ke s hmi r i ’ s me di c a l r e c o r ds 2 f r o m he r phy si ci ana nd t o r eq ue st a se co nd ur i ne spe ci m enfr o m M s. K es hm i r i
. The r eque stf o r the s ec o nd uri ne speci m en o ccurr ed so m eti m e in J uly or A ugust o f 2006 , thou gh the ex act d ate rem ains u nc lear. On J uly 22, 20 06 , M s. Kes hm i r i was ho spi ta l i ze d a nd di agno se d wi tha b r ain tum o r a nd tw o da y s l at ers he und er w ent s urge ryf ori ts re m ov al. The next day, J uly23 , 200 6, Al vine a l er te d O’ Br i enF i na nc i altha t M s. Kes hm iri w as ex p ectin g O ’B r ien Fi na nc ialto callto arrange for a seco nd urine te st. Fi nal l y, On A ugust 9 , 20 06, W estC oa st L i fe decl ar ed M s. Kes h m i riuni nsurabl e ba sed o n herbr ai n surg er y. A little ov er a ye ar lat er , M s. K e s h m i r i d ied . I t is Taba tab ai ’ s po si ti o n tha t th e r eque stf o r the s ec o nd u rin e s p ec im en w as co m m u n ica te d to M s. K es h m iri in a unti m el y a nd ineffecti ve f ashi on; thatbut f orW est Coast Life’ s del ay, M s. Keshm i riwould have quali fi ed f orco ver age pri orto herbr ai n tum ordi agno si s. 3N o. 11

- 1170 5 O n Jan u ar y 2 9, 20 08 , Ta b a t a b a i filed a c om p lain t in the Mi l wa uk e e Co un t y Ci r c ui tCo ur tn a mi ngWes tCoast Life a nd The O’Bri en FinancialGroup as defendants. Pursuant t o 28 U
. S. C. § 1 332, W estCoast Li fe r em ove d th e a cti o n t o the Uni te d S ta te s Di st r i ctCo ur t f o r the Easter n Dis tr i ct o fW i sco nsi n. A fte r vol untari l y di smi s s i ngthe c l a i m a g a i ns tT he O’ Br i e n F i na nci al Gr o up , Tabataba i fil ed an am ended com pla i nt ag ainst W est Coast Life a sse rt i ng f our causes o fact i on: ( 1) br ea ch of cont r a c t ; ( 2 ) e s t o pp e l ; ( 3 ) b a d f a i th; a nd ( 4 ) n e g l i g ence. W estCoastLi f e fi l ed a m oti on f orsum m ar y j ud gm ent. I n r es po ndi ngt o the mot i o n, Taba taba i chos e to pur su e the b re ach o fco ntra ct c l ai m , and br each o fthe i m pli ed du ty ofgo od f ai th and f ai r deal i ng. O n D ec em ber21 , 2010 the dist ri ct c ourtgr anted W estCoastLi fe’ s m oti on f o r s ummar y j ud g men ta nd T a b a t a b a i t i mel y a pp e a l e d.

I I . DI S C US S I ON The g r an t o fs um m ar y j udg m en t i nc l ude d a fi ndi ng that no g enui ne i ssue ofm ate ri alf act on wh i ch Tabatabai co ul d pre va i l

. W e r ev i ew the g r an t o fs um m ar y j udg m en t de n o vo a n d c o n s t r u e a l l f a c t s i n f a v o r o fth e n o n - mo vi ng p ar ty
. Kim m e l v. We s t e r n Re s erve Lif eAs s ur . Co. , 62 7 F
. 3d 607, 60 8 ( 7th Ci r. 20 10). Tabat abaiar gues that the di str i ct cour t e rr ed ( 1) wh en i t dete rm i ned that T ab at abaiwas r eq ui r ed to pr o vi de ev i den ce o fi nt en ti o na l o r pur po se ful m i sc o nduc t i n o r dert o i nv o k e th e do ct r i ne o fpr ev en ti o n, an d (2) w h en it d et er m in ed th at W es t C oa s t L ife d id not owe an i m pli ed duty ofgo od f ai th and f ai r deal i ng.6 N o. 11

- 1170 A . Th e D octri n e of P reven ti on Claim T ab at ab ai a rg u es th at th e d ist ric t c ou rte r re d w h en it r ul ed th at he was r equi r ed to pr o vi de ev i den ce o fi nt en ti ona l o r pur po se fulmis co nduc t be f o r e i nv o k i ngthe d oc tr in e of p re ve n tio n . In c on tr ac t la w , th e g en er al p rin c iple kno w n as the do c tr ine o fpre venti on pro vi des that, “i fo ne par ty to a co ntra ct h in d er s, preve nts, o r m ake s im p ossible p erform an ce by th e oth er p arty, th e latte r’s f a i l ur e t o p e r f o r m wi l l b e e xc us e d. ” 1 3 R i c ha r d A. Lo r d, W i l l i sto n on Contr acts § 39: 3 (4 th ed. 20 00)
. Tabat abai ar gued that the doct ri ne o fprev en tion shoul d be a pp l i ed he re beca us e of W est C oast L ife’s f ail ure to notify M s. K es h m iri of th e n ee d for a s e c o n d u rin e s p ec im en in a t i m el y f ashi on. A ccor ding to Tab atabai, W estCoast L ife’s un reason able d elay an d f ail ure to ade qu ately notify M s. Keshm i rio fi ts re quest fora seco nd urine speci m en pr ev en te d M s. Kes hm i r i fr o m s at i sfy i ngtha t co ndi ti o n, and ther ef or e W estCoast Li fe s houl d be ba rr ed fro m re lyin g o n herf ai l ure to sat i sfy the co nd i ti on a s a defe nse t o enf or cem ent o fthe C R A
. Tabat abaidi re cts ou r at te n ti o n t o tw o c as es . Th e firs t o n e, N
. L. R. B. v. Local 554, G raphic C om m c’ns Int ’l , AFL -CIO , i s a cas e i nvol vin g a d i spute o vera col l ecti ve bar gai ni ng ag re em en t. N
. L. R. B v. Lo ca l 55 4, Gr aphic C o m m c’ ns Int ’ l, AFLC IO , 991 F.2 d 1 30 2 ( 7th Ci r . 1 99 3) I n tha t ca se , the N ati onalLaborRel ati ons Board s ou ght e nfo rce m ent o f an o rd ero n behal fo fW or l d C ol orPre ss. W or l d C ol or Pres s a nd the defe nd ant l abor u n ion had ent er ed i nto an ag re em en t, the v al i dity o fwh i ch depend ed on appr o va l b y the i nt ernatio na l uni o n. To s at i sfy thi s co n-N o. 11

- 1170 7 di ti o n, the de f en dan t ha d to s ee kthe a ppr o va l o fthe i nter nati onaluni on pre si dent, wh i ch i t r efused t o do. T h e e vid en c e s u p p or te d th e B o a r d ’s a rg u m en t t h at it w as the defendant’s di l ato rytac tic of re fusi ng to se ek appr o va l fr o m the un ion pre si den t th atpr ev en te d the ag re em en t fro m be c om in g e ffec tiv e. O n rev iew , th is Court enf or ced the Board’ s o rderbas ed on the ge nera l pr i nc i pl e b e hind the do c t r i ne o fp r e v e nt i o n. We s t a te d,

“ [ T] he n o no c c ur r e nc e o r n o np e r f o r man c e o fa c o ndi ti on i s e xcused w here that fail ure ofthe condi ti on i s ca used by the par ty aga i nst whom the condi ti on o p erate s t o i m pose a duty. ” Id

. at 1 3 0 2
. I n a n e ff o r tt o d r a w a par al l elb etwee n N. L. R. B. and hi s s uit, Tabat abaiar gues th atth i s Cou r t’ s us e o f“ di l at o r y ”, wi thr eg ar d t o the l a b o r u ni o n’ s b e ha v i o r, r e fe r s t o s o methingo the r tha n i ntenti onalo r pu rpos eful m i sco nd uct. W e di sag re e. W estCoastLi f e’ s a ctio ns can be e asi l y di sti ngui shed f ro m thato fthe defe nd ant lab or uni on. W estCoast Li f e ac te d i n goo d f ai thi n b o ththe ha ndl i nga nd the unde r wri tingo fM s. Kes hm i r i ’ s p oli cy. M o r eo ve r, the re cor d indicat es m ult i ple o ccasi ons i n w hi ch ag ents of W est C oast L ife took step s i n a n effort to not ify M s. Keshm iri o fthe necess ar y s eco nd urine speci m en pri orto herhos pit al i zati on. Fi n al l y, as ev en Tabat abai ad m itt ed , th er e w as atlea st on e s u c c es sfu l a t t em p t, in the for m o fa voi cem ai l, not i fyi ng hero fthei r re quest. W e ag r ee tha t th er e i s no e vi den ce o fa pur po se ful des i g n o n the pa r t o fW es t C oast L i fe to pr ev en t M s. Kesh m ir i fr o m c o m pl y i ngwi ththe c o ndi ti o ns r e q u i r e d b y th e C R A.8 N o. 11

- 1170 The seco nd case Tabataba i cit es i s R ohd e v. M assachus et ts M ut ual Li

f eIns . Co. I n that case , the appell ant w as a wi d o w w ho se husba nd di ed o fa he ar t at ta cko n the sa me da y h e h a d c o mpl e t e d a n a pp l i c a t i o n a nd me di cal ex ami na ti o n f o r l i f e i ns ur an ce . W he n th e pl aint i ff sou g ht to re cove r as bene fi ci ar y, the defe nd ant deni ed her claim after dete rm ining th at th e d ecea sed w as no t insu rab le u n d er th e p olic y for w h ich h e h a d ap p lied

. Rohde v. M as s ac hus e t t s M ut
. Li f eIns . Co. , 632 F .2d 66 7, 66 8 ( 6th Cir. 1 980 )
. The S i xth Ci r cui t det er m i ne d tha t th e i nsur a nc e c o mpa ny ha d a c t e d i n b a d f a i th a nd a s a r esu lt t h e d efe n d an t “ w a s w ith ou t re as on ab le gr ou n d s in det er m i ni ngtha t pl aint i ff’ s hus ba nd f ai l ed to m ee t th e re quir em ents f orthe pol i cy sought

. ” Rohde, 632 F. 2d at 670. The re cor d reg ar ding M s. Keshm i risugg est s no such bad f ai th; r ather, i t s ugges ts re aso nabl e g ro und s f or den y i nghe r a po l i cy . Ev ens et tinga si de th e ur i ne anal yse s, hercho les ter oll eve l was w el l bey ond the usual c lin ica l ran ge for a “S u p er P re fer re d ” a p p lica n t. It is und i sputed that these r esul ts al one w er e g ro und s f or denyi ng the pol i cy she a p p lied for. M or eov er, i t i s undis

put ed tha t W es t Coa stLi fe was wi th i n i ts r i g ht s to de ny M s. K esh m iria policy up on learnin g of he r brain tum or. I n any eve nt, ther e was no ev idence o fpurposeful m i sconduct, and the dist ri ct c ourtprop erl y di sm i sse d h i s c l a i m.

B. T h e G ood Faith an d Fair D ealing C laim The ar gum ent that W estCoastL i fe v i ol ate d an i m pli ed du ty ofgood f ai th and f ai r deal i ng, r equi re d an i ni ti alN o. 11

- 1170 9 d eterm ination as to w he t h e r or n ot the district cou rt er re d in fi nd i ng that no contr actual agr eem ent e x iste d b et w ee n th e p ar tie s. T h e d ist ric t c ou rtst at ed : [ T]he l anguage o fthe CR A i s un am b iguous and provi d es that i nsurabi l i ty and com ple ti on o fal l te sts o r exam i nati ons re quir ed by W estCoastLi fe s hal l be con di t i o ns p r e c e de nta nd , thu s , mus tb e s a t i s fi ed p rior to th e e ffec tiv en es s o f co ve ra ge . . . . T h er efo re , in th is c as e, a n i n te rim co n tr ac t o f ins u ra n c e w ou ld ar i se onlyup on W est C oast L if e ’s g ood f aith d eterm in at ion th at th e a p p lica n t w as ins u ra b le e x ac tly as appli ed f orand upon the appli cant’ s co m ple ti on ofal l r equeste d test s a nd exam i nati ons. Ta b a t a b a iv . We s tC o a s tL i f eIn s . C o. , N o. 08-CV-2 27, 20 10 U
. S. Dis t. LEX I S 1355 07, at* 5 ( E.D. W i s. D ec. 21, 20 10) (em p ha sis add ed ). By t e r ms o fthe CR A, t o f o r m a nyc o nt r a c tb e t we en M s. Ke s hmi r i a nd W e s t Co a s t Li fe , i t wa s r e qu i r e d t hat requests to M s. Keshm i ribyW estCoastbe sat i sfi ed an d tha t W es t Coa stLi fe appr o ved th e appl i ca ti o n a nd del i ver ed the pol i cy. I t i s undi spu te d tha t M s. Kes hm i r i di d no t su bmi t th e se c on d u rin e s p ec im en ord er ed by W es t C oa st L i f e . It is al so und i sputed that M s. K eshm i ri ’ s cho l est er olte st re veal ed re sul ts that exceeded t he usualcl i ni calr ange for a “Su p er Preferred ” ap p li can t. B ecau se M s. K e sh m iri di d no t sa ti sfy a l l o fthe ne ce ss ar y r equi r ement s, a nd because i t was i m possibl e for h erto qual i fy fora pol i cy
“ e xa c t l y a s a pp l i e d fo r, ” n o c o nt r a c t ua l a g r e e men te xi s t e d.10 N o. 11

- 1170 T ab at ab ai c on te n d s t h at t h e d ist ric t c ou rterr ed in dism i ssi ng t he cl ai m thatW estCoastLi fe o w ed an d br ea c h ed an im p lied d u ty of go od fait h an d fair d ealing. A ccord in g to Tab atab ai, w he n M s. K esh m iri p r o v i d e d h e r a p p l i c a t i o n, p a i d h e r i n i t i a l $ 1 0 0 p r e mi u m, and com pli ed w i th W estCoastLi fe’ s ini ti alr equest f orbl oo d and uri ne specim en s, she a nd W estCoast Li f e en te r ed i nt o a b i ndi ngc o nt r actualr el at i o ns hi p r en d er in g t h e C R A effe c tiv e. W h ile T ab at ab ai c or re c tly ar gues that und erW i sco nsi n l aw an i m plied du ty of goo d f a i th a nd f a i r de a l i nge xi s t s i n a l l c o nt r a c t ua l r e l ati o ns hi ps, thi s ar g um en t ul ti m at el y f ai l s. As b o ththe d istri c t cou rt and w e hav e note d , becau se M s. K esh m iri did notsa ti sfy the co nd i ti ons preced en t re quir ed by th e CRA, rega r dl es s o fthe unfo r tu na te na tu r e o fthe ci rcum sta nces, no contr act w as eve r f orm ed

. Establ i shed W i sc o n s i n l a w s t a t e s , “ I fth e r e i s n o c o n t r a c t, t he i m pli ed duty ofgo od f ai th and fair d ea l i ng does not com e into pla y . ” NII

-JIIEn tm ’t, L LC v. Tr oha , 2 0 0 7WI A p p . 183 (W is. Ct
. A p p . 2007).

I I I . C ONC L US I ON Fo r the r e a s o ns s t a t e d, s ummar y j ud g men t i n f a v o r of the de f e nd a nt
- a pp e l l e e i s a ffi r med

.

12- 16- 11