Opinion ID: 602828
Heading Depth: 2
Heading Rank: 2

Heading: Breach of IME Clause

Text: 12 VanHaaren nevertheless contends that State Farm failed to establish beyond reasonable disputation the other essential element of its defense--that he breached the IME clause by refusing to comply with State Farm's reasonable IME requests. 13 As a general rule, whether there was substantial compliance with a condition precedent in an insurance contract is a question of fact ill-suited to disposition on summary judgment. See, e.g., Piro, 514 N.E.2d at 1234 (noting that whether the insured provided necessary information too late normally is a question for the factfinder). Under Maine law, even if the insurer suffers appreciable prejudice from the breach, the insured may still quell the insurer's affirmative defense by proffering a valid excuse or justification for the failure or refusal to comply. See Ouellette, 495 A.2d at 1234 (noting that if insured's delay was unreasonable or unexplained, insurer may avoid coverage by demonstrating prejudice); cf. Hines v. State Farm Fire & Cas. Co., 815 F.2d 648, 652 (11th Cir.1987) (holding that, under Georgia law, asserted justification for failure to provide tax returns foreclosed summary judgment on issue of breach); St. Paul, 418 F.2d at 305 (requiring that jury determine, under New Hampshire law, whether insured's failure to comply with condition was unexplained, unexcused, unreasonable, or arbitrary); cf. also Matthias v. Government Employees Ins. Co., 132 A.D.2d 534, 517 N.Y.S.2d 540, 541 (1987) (finding that insured failed to defeat insurer's defense by showing a justification for repeated non-compliance); Pennsylvania Gen. Ins. Co. v. Becton, 475 A.2d 1032, 1035 (R.I.1984) (using multi-factor test, requiring factfinder to weigh length of delay, reasons for delay, and probability of prejudice to insurer). 14 Even if we were to accord VanHaaren the benefit of every conceivable doubt, allowing that he may have misperceived the intent or urgency of State Farm's inquiries on April 8, May 2, and June 10, 3 the ongoing pattern of noncooperation unmistakably exceeded the bounds of reasonableness by December 16, 1991, when he flatly rejected State Farm's definitive and objectively reasonable IME request, and invited State Farm instead to pursue a judicial remedy which would compel compliance. Even if Maine law permitted an insured to test the reasonableness of an IME request prior to compliance without thereby committing an incurable breach, see Kay v. Aetna Cas. & Sur. Co., 152 So.2d 198, 199-200 (Fla.App.1963) (fact that plaintiff seeks legal ruling as to whether he was required to submit to the [IME] should not constitute breach of policy condition); cf. Insurance Co. of North America v. Goelz, 4 Ill.App.3d 862, 863, 282 N.E.2d 15, 16 (1972) (good faith refusal based on honest mistake will not work forfeiture without first giving the insured a right to comply), the insured must act in good faith in asserting a challenge to the IME request. 15 VanHaaren's objections to the terms of the December 1991 IME request belie a good faith challenge. See Falagian v. Leader Nat'l Ins. Co., 167 Ga.App. 800, 801, 307 S.E.2d 698, 700 (1983) (reasonableness of IME terms is a jury question, but there are instances in which it can be decided as a matter of law by the court). An IME clause is a condition precedent which imposes a duty of performance on the insured. A contracting party's insistence, wilfully or by mistake, on preconditions to performance not stated in the contract, constitutes a breach by anticipatory repudiation. See 4 Arthur L. Corbin, Corbin on Contracts § 973, at 910 (1951) (Such a repudiation is conditional in character, it is true; but the condition is a performance to which the repudiator has no right.); cf. Martell Bros., Inc. v. Donbury, Inc., 577 A.2d 334, 337 n. 1 (Me.1990) (a distinct and unequivocal repudiation entitles the injured party to treat the contract as entirely rescinded, and its obligations under the contract as discharged); cf. also REA Express v. Interway Corp., 538 F.2d 953, 955 (2d Cir.1976) (New York law). 16 VanHaaren's objection to the final State Farm IME request on the ground that the selected physician's diagnoses were too conservative was just such an untenable precondition. The IME clause required VanHaaren to submit to an examin[ation] by physicians chosen by State Farm as often as State Farm reasonably may require. The IME clause would afford the insurer little protection if the insured were entitled to dictate the identity of the examining physician. Thus, the IME clause reasonably cannot be interpreted as affording an insured a veto power based on physician preference, as distinguished from reasonable and timely objection to the scheduled location, date, or time, or to particular risks which the examination might pose to the health of the insured. See, e.g., Kay, 152 So.2d at 199-200 (insured did not breach IME clause by objecting, on advice of physicians, to lower GI examination which would aggravate his physical condition, even though he was later ordered to comply). The insured's preference for an examining physician more likely to provide a favorable (i.e., gloomier) diagnosis certainly cannot qualify as a reasonable basis for failing to accommodate the IME request, unless the clause is to be rendered meaningless. See, e.g., Allstate Ins. Co. v. Graham, 541 So.2d 160, 162 (Fla.App.1989) (holding unreasonable, under Florida law, insured's refusal to submit to IME on counsel's advice that physician was not sufficiently independent); Lockwood v. Porter, 98 N.C.App. 410, 411, 390 S.E.2d 742, 743 (1990) (holding that insurer's affirmative defense was established as a matter of law where insured refused to submit to IME because he did not want to waste his time with a doctor who was not going to do anything for him and would report to [the insurer] that nothing was wrong with him when that was not so). 17 VanHaaren's complaint with the place for conducting the IME was objectively unreasonable as well, for at least three reasons. First, VanHaaren chose Portland, Maine as a convenient forum for instituting suit against State Farm, which entailed the reasonable prospect that he would be required to make himself available in the forum district for court appearances, depositions, and other reasonably foreseeable examinations relating to the matter in litigation. Thus, it would be unreasonable to indulge a presumption that VanHaaren would be inconvenienced by an IME in Maine, especially since State Farm scheduled VanHaaren's IME and deposition for the same day, in the same city. Second, in the letter rejecting State Farm's December 16 IME request, counsel indicated that VanHaaren might be willing to come to Maine for an IME if State Farm were to designate an orthopedist acceptable to him. 4 Finally, viewed in the context of State Farm's earlier expressions of willingness to schedule an IME wherever VanHaaren was residing, coupled with VanHaaren's repeated failure to identify his current place of residence, VanHaaren's objection to an IME in Maine rings hollow. 18 Nor is VanHaaren saved by his eventual submission to the court order compelling his attendance at the January 14 IME. Were it otherwise, IME clauses would be reduced to little more than invitations to litigate IME requests. As the unreasonableness of VanHaaren's earlier repudiation was beyond dispute, Falagian, 167 Ga.App. at 801, 307 S.E.2d at 701, 5 State Farm's obligation to cover VanHaaren's claim for the alleged occurrence was excused upon VanHaaren's unequivocal repudiation. 6 III