Court Opinion

ID: 2777659
Source: CourtListenerOpinion
Date Created: 2015-02-06 20:01:03.247681+00
Date Added: 2024-06-11T11:28:05.765698
License: Public Domain

UNPUBLISHED

                  UNITED STATES COURT OF APPEALS
                      FOR THE FOURTH CIRCUIT

                             No. 13-1995

MARTIN JENNINGS CURRY, D.C.,

                Plaintiff – Appellant,

           v.

TRUSTMARK INSURANCE COMPANY; CONTINENTAL ASSURANCE COMPANY,

                Defendants – Appellees.

Appeal from the United States District Court for the District of
Maryland, at Baltimore.      James K. Bredar, District Judge.
(1:11−cv−02069−JKB)

Argued:   October 29, 2014                 Decided:   February 6, 2015

Before GREGORY, AGEE, and DIAZ, Circuit Judges.

Affirmed by unpublished opinion. Judge Diaz wrote the opinion,
in which Judge Gregory and Judge Agee joined.

ARGUED: Elijah Dale Adkins, III, SALSBURY, CLEMENTS, BEKMAN,
MARDER & ADKINS LLC, Baltimore, Maryland, for Appellant. Jason
Allen Walters, BRADLEY ARANT BOULT CUMMINGS, LLP, Birmingham,
Alabama, for Appellees. ON BRIEF: Emily C. Malarkey, SALSBURY,
CLEMENTS, BEKMAN, MARDER & ADKINS LLC, Baltimore, Maryland, for
Appellant.

Unpublished opinions are not binding precedent in this circuit.
DIAZ, Circuit Judge:

     Martin    Curry     filed   a   lawsuit       contending      that     Trustmark

Insurance Company breached the parties’ contract by refusing to

pay benefits to Curry under a disability insurance policy.                          The

district court disposed of Curry’s action at summary judgment on

the basis that it was largely barred by Maryland’s statute of

limitations.       On the portion of Curry’s action that fell within

the limitations period, the district court ruled against Curry

on the merits.      We affirm the district court’s judgment based on

our conclusion that Curry’s suit is time-barred in its entirety.

                                       I.

     Curry, a chiropractor operating his own practice, owned a

disability      insurance        policy       originally        purchased          from

Continental Assurance Company and later assigned to Trustmark

Insurance Company.       In pertinent part, the policy provided that

the insurance company would pay monthly benefits to Curry if a

physical      disability     prevented           him     from     working     as     a

chiropractor.       In order to determine Curry’s eligibility for

benefits, the policy also required him to submit written and

continuing proof of loss and, if necessary, to submit to an

independent medical examination (“IME”).

     In    2003,    Curry   injured        his    back    while    performing       an

adjustment    on    a   patient.      He      underwent     spinal    surgery      and

                                          2
applied for disability benefits in early 2004.                         Trustmark began

paying        benefits    to     Curry,       subject      to     Curry’s       providing

information regarding the extent of his injury, condition, and

expected recovery.             For the next three years, Trustmark paid

Curry monthly benefits under his insurance policy, all while

attempting       to   establish     his   continued         disability.          Although

Curry provided some information related to his condition during

those years, the information he provided was inconsistent and

incomplete.           Consequently,      in       July   2007,    Trustmark      notified

Curry that it had discontinued his benefits, effective June 26,

2007, until it received the information it requested under the

policy.

        For     the    next      year,    Trustmark         and       Curry     exchanged

correspondence regarding the discontinuation of benefits and the

scope of the information requested by Trustmark.                              During that

period, Trustmark extended three additional months of benefits

to Curry.        Finally, in the spring of 2008, Trustmark requested

that Curry undergo an IME to determine his continued eligibility

for   benefits.          Curry    refused         to   submit    to   the     IME   unless

Trustmark paid him additional benefits that he alleged Trustmark

owed.     When Curry failed to attend the IME, Trustmark denied any

additional benefits, effective June 30, 2008, and closed Curry’s

claim on September 29, 2008.

                                              3
     On July 27, 2011, Curry filed suit against Trustmark and

Continental,       alleging       breach     of    contract.         In      ruling    on

Trustmark’s       motion    for    summary       judgment,     the   district       court

determined that Curry’s cause of action for breach of contract

accrued anew each month benefits were not paid.                         Consequently,

although    the    court     concluded      that    Curry’s     action       for   breach

between    September       25,    2007,    and    July   27,   2008,    was    untimely

under Maryland’s three-year statute of limitations, it addressed

on the merits all alleged monthly breaches occurring after July

27, 2008.     Because it found no breach of contract in Trustmark’s

requirement that Curry submit to an IME and provide continuing

proof of loss as a prerequisite for payment of his benefits, the

district     court       granted    summary        judgment     to     the    insurance

companies.

     We review de novo the district court’s grant of summary

judgment.         Twin     City    Fire    Ins.    Co.   v.    Ben     Arnold-Sunbelt

Beverage Co. of S.C., 433 F.3d 365, 369 (4th Cir. 2005).                           We may

uphold that decision on “any grounds apparent from the record.”

United States v. Smith, 395 F.3d 516, 519 (4th Cir. 2005).

                                            4
                                    II.

                                       A.

     In   Maryland,   a   breach   of       contract    action     must   be   filed

within three years of the date it accrues.                   Md. Code Ann., Cts.

& Jud. Proc. § 5-101. 1        Typically, the period of limitations

begins to run from the date of the alleged breach.                    See Jones v.

Hyatt Ins. Agency, Inc., 741 A.2d 1099, 1104 (Md. 1999).

     However,    actions     arising        from   “alleged        breaches    of   a

continuing contractual obligation” are not wholly barred by the

statute   of   limitations    merely        because    one    or   more   of   those

alleged breaches occurred earlier in time.                   Singer Co. v. Balt.

Gas & Elec. Co., 558 A.2d 419, 425 (Md. Ct. Spec. App. 1989).

Rather,

     where a contract provides for continuing performance
     over a period of time, each successive breach of that
     obligation begins the running of the statute of
     limitations anew, with the result being that accrual
     occurs continuously and a plaintiff may assert claims
     for damages occurring within the statutory period of
     limitations.

Id. at 426

     In this case, the district court determined that Trustmark

“breached the contract each time [it] failed to pay benefits for

a period during which [Curry] was disabled.”                  Curry v. Trustmark

     1
       Because this case arises under our diversity jurisdiction
pursuant to 28 U.S.C. § 1332, we apply Maryland law.

                                        5
Ins. Co., No. 11–cv–2069–JKB, 2013 WL 3716413, at *4 (D. Md.

July 15, 2013).          Because it concluded that “[e]ach failure to

pay   monthly    benefits    .     .    .     is   a     separate    and   independent

breach,” the district court found timely “claims for payments

that were not due until after July 27, 2008.”                      Id.

      We   disagree.       Although          we    have    found    no   authoritative

Maryland precedent applying the “continuing breach” theory to an

insurance disability policy, the Court of Appeals of Maryland

has opined, in the context of a tort action, that a similar

theory does not apply to the “continuing effects of a single

earlier act.”       MacBride v. Pishvaian, 937 A.2d 233, 240 (Md.

2007), overruled on other grounds by Litz v. Maryland Dep’t of

Env’t, 76 A.3d 1076, 1090 n.9 (Md. 2013); see also Poole v.

Coakley & Williams Const., Inc., 31 A.3d 212, 238 n.24 (Md.

2011)   (where    the    plaintiff          “did   not    allege    ongoing    tortious

conduct, but only that resulting in a single injury incurred on

one day”); Bacon v. Arey, 40 A.3d 435, 469 (Md. Ct. Spec. App.

2012) (where the plaintiff’s allegations involved simply “the

continuing ill effects of prior tortious acts”).

      Other     courts    have     rejected         a     broad    application    of   a

continuing    breach      theory       of    accrual.        For    example,     federal

district courts in Maryland have concluded that while harm in a

given case may be continuous, often there exists only a single

violation or breach “from which all of Plaintiff’s harm flowed.”

                                              6
Montrose Educ. Servs., Inc. v. Sylvan Learning Sys., Inc., No.

RDB   06-308,     2007 WL 979923,   at     *5    (D.   Md.   Mar.        30,   2007)

(quoting Ruddy v. Equitable Life Assurance Soc., No. DKC 00-70,

2000 WL 964770, at *5 (D. Md. June 20, 2000)).

      In    the    insurance     context,      both    the   Tenth       and    Eleventh

Circuits have rejected the idea that disability policies are

installment       contracts     giving    rise   to    continuing        breaches      for

each unpaid monthly benefit.              See Lang v. Aetna Life Ins. Co.,

196 F.3d 1102, 1105 (10th Cir. 1999) (borrowing Utah law to

determine the statute of limitations under ERISA and holding

that characterizing disability policies as installment contracts

would      “undermine     the    overriding       purpose     of     a    statute       of

limitation”); Dinerstein v. Paul Revere Life Ins. Co., 173 F.3d
826, 828 (11th Cir. 1999) (applying Florida law and holding that

the cause of action at hand was not for a debt “payable by

installments”       but    rather   sought       “to    define     the    rights       and

obligations       of     the    parties     under      the    original         insurance

contract”).

      Some courts have reached the opposite conclusion, treating

a disability insurer’s failure to pay benefits as a breach of an

installment contract, and therefore concluding that the statute

of limitations runs separately as to each missed payment.                             See,

e.g., Pierce v. Met. Life Ins. Co., 307 F. Supp. 2d 325, 330

(D.N.H. 2004) (collecting cases).                 However, the Ninth Circuit

                                          7
has distinguished between the “denial of a basic entitlement to

benefits on the one hand, and the denial of an entitlement to

recover a particular periodic installment on the other.”                           Wetzel

v. Lou Ehlers Cadillac Grp. Long Term Disability Ins. Program,

222 F.3d 643, 650 (9th Cir. 2000) (applying California law).                             In

the context of a pension plan’s refusal to pay benefits, Wetzel

instructs that the right to receive periodic pension benefits is

a   “continuing     one”       that   would     give     rise    to    an    installment

contract; however, such a duty does not exist where the right to

receive the pension itself has not first been established.                              See

id.

       Similarly,    the       issue    here      is     whether       the    disability

benefits are “owed in the first place.”                      Dinerstein, 173 F.3d at

829.    Curry alleges that because his back injury rendered him

disabled    under    his       disability       insurance       policy,      he   is   owed

benefits    under        the    policy.           According       to      Curry,       then,

Trustmark’s refusal to pay benefits after September 25, 2007,

constitutes a breach of contract.                 However, the policy does not

provide    Curry    an    unconditional         right    to     receive      benefits    in

perpetuity; rather, his receipt of benefits is subject to his

providing    adequate      continuing       proof       of    loss.     Trustmark       has

maintained that it did not owe Curry additional benefits because

he failed to provide this continuing proof of loss.                           Therefore,

because the alleged breach arose from Trustmark’s denial that it

                                            8
owed Curry benefits at all, no installment contract exists, and

the continuing breach theory is not applicable. 2

                                          B.

      We turn next to Curry’s contention that the alleged breach

occurred, and the statute of limitations began running, when

Trustmark closed his claim for benefits on September 29, 2008.

Curry presses two arguments on this point.                      First, he says that

applicable law demonstrates that, in the context of a disability

policy,    a    cause   of   action     for       breach     accrues    only   after      an

insurer formally denies the claim.                       Second, he contends that

even if his breach of contract action accrued earlier, he could

not   possibly     have    known    about         it   until   September     2008,   thus

tolling the statute of limitations until that point.                           We reject

both arguments, addressing each in turn.

                                          1.

      As   we    have     discussed,     the       statute     of   limitations      on   a

contract       action   begins     to   run       from   the   date    of   the   alleged

breach.        Jones, 741 A.2d at 1104.                  In order for a cause of

      2
       We find misplaced the district court’s reliance on two
district court cases to establish the applicability of a
continuing breach theory.    See Curry, 2013 WL 3716413, at *4
(citing Mut. Life Ins. Co. of N.Y. v. Moyle, 116 F.2d 434 (4th
Cir. 1940) and Medina v. Provident Life & Accident Ins. Co., No.
L-10-3146, 2011 WL 249502 (D. Md. Jan. 24, 2011)). These cases
say nothing about accrual of the statute of limitations.
Rather, they involve only the determination of the amount in
controversy for jurisdictional purposes.

                                              9
action   for   breach   of   contract       to   exist,    a   party    must    show

contractual obligation, breach of that obligation, and damages.

See, e.g., Kumar v. Dhanda, 17 A.3d 744, 749 (Md. Ct. Spec. App.

2011).   Given that Curry’s cause of action for breach is based

on Trustmark’s non-payment of benefits owed under the contract,

it seems an unremarkable proposition that his action for alleged

breach of contract arose when Trustmark stopped paying benefits

on June 30, 2008. 3

     Curry     disagrees,    arguing   that      because   Trustmark      did    not

formally close his claim for benefits until September 29, 2008,

he had no right to bring an action before then.                        Although he

admits that no case law exists evaluating specifically “when

claims for breach of a disability insurance contract accrue for

the purpose of the statute of limitations,” Appellant’s Br. at

14, he points to case law from Maryland and the U.S. Supreme

Court to support his argument that the statute of limitations

accrues only after an insurer formally denies a claim.                     We find

these cases readily distinguishable.

     3
       Although Trustmark initially stopped paying benefits on
June 26, 2007, Trustmark’s equivocation in three times paying
Curry an additional month of benefits (on August 1, 2007,
February 27, 2008, and April 22, 2008) calls into question its
original decision to stop benefit payments.     Thus, as we are
required to do, we take the facts in the light most favorable to
Curry, and assume that, at the very latest, Trustmark terminated
additional benefit payments on June 30, 2008.

                                       10
     For example, Vigilant Insurance Co. v. Luppino--on which

Curry heavily relies--involved an insurer’s denial of its duty

to defend the insured under a homeowner’s insurance policy.         723
A.2d 14, 15 (Md. 1999).      Although the insurer denied a defense

to Luppino at the onset of an underlying tort lawsuit filed

against Luppino by third parties, Luppino did not file a breach

of contract action against the insurer until four years later,

near the end of the tort lawsuit.

     On   the   issue   of   whether   the   three-year   statute    of

limitations barred Luppino’s action, the Court of Appeals of

Maryland held that because the duty to defend is a “continuing

one,” involving personal services, the statute only began to run

from the time that duty could be completed--in that case, at the

termination of the underlying lawsuit.       See id. at 18.   Notably,

Luppino involved the “continuation of events” exception to the

strict “date of the wrong” rule of accrual. 4        See id.     Here,

Curry does not contend that an insurer’s duty to pay disability

     4
       The “continuation of events” exception typically arises in
cases involving services or treatment (as by a lawyer or
physician), along with a “relationship” between the parties that
would give one party no reason to question the quality of the
services or treatment. See, e.g., Frederick Rd. Ltd. P’ship v.
Brown & Sturm, 756 A.2d 963, 974–75 (Md. 2000). However, as in
Luppino, this tolling doctrine has also been applied “where
there is an undertaking which requires a continuation of
services, or the party’s right depends upon the happening of an
event in the future.” Luppino, 723 A.2d at 18 (quoting W., B. &
A. Elect. R.R. Co. v. Moss, 100 A. 86, 89 (1917)).

                                  11
benefits is a duty involving services that should be subject to

this     common        law     exception.                Consequently,        Luppino        is

inapplicable to this case.

       Curry’s    reliance       on    Lane    v.    Nationwide        Mutual      Insurance

Co., 582 A.2d 501 (Md. 1990), is similarly misplaced.                                   Lane

involved a claim for recovery of uninsured motorist benefits,

where the Lanes notified their insurer of their suit against an

uninsured       motorist       but    the     insurer        made     no    determination

regarding the status of their claim at that time. 582 A.2d at

502.      When, four years later, the Lanes sued the insurer to

recover      uninsured       motorist    benefits,         the   insurer      argued      that

their action was time-barred.               Id.

       The     Court    of     Appeals      of      Maryland        held    that    because

Nationwide did not deny benefits at the time the Lanes notified

them of the lawsuit against the uninsured motorist, no breach

occurred that would have caused the statute of limitations to

begin running.          See id. at 505.             Here, in contrast, Trustmark

denied       benefits    to    Curry     both       on    June   26,       2007,   when      it

preliminarily ceased paying benefits, and on June 30, 2008, when

it   unequivocally       terminated         Curry’s       benefit     payments.         As    a

result, Lane is distinguishable.

       Curry also misreads the Supreme Court’s decision in Mobley

v. New York Life Insurance Co., 295 U.S. 632 (1935), as standing

for the proposition that a disability policy is breached--and

                                              12
therefore that the statute of limitations begins running--only

when the policy is absolutely repudiated.                    There, a disability

insurer   initially     refused      to    pay   benefits      after   determining

Mobley was not disabled, but then it reinstated benefits after

further   investigation.        Nevertheless,           in   his   lawsuit    Mobley

argued that the insurer’s actions “fully repudiated” the policy,

such that he was entitled to expectation damages in the amount

of   benefits    he   would   have    received      over     the   course    of    his

lifetime.   Mobley, 295 U.S. at 636.                Because it found that the

insurance company’s actions evidenced intent to adhere to the

insurance   policy,     the   Court       held   that    the   contract      was   not

“absolutely and finally” broken such that Mobley could recover

the damages he sought.        Id. at 638.

      However,    the   Court   did       not--as    Curry     seems   to    think--

conclude that breach requires total repudiation of the contract.

Notably, the Court’s holding supports the opposite argument that

an insurer’s denial of benefits alone may constitute a breach:

“Mere refusal, upon mistake or misunderstanding as to matters of

fact or upon an erroneous construction of the disability clause,

to pay a monthly benefit when due is sufficient to constitute a

breach of that provision . . . .”              Id. (emphasis added).

      To hold that an insured cannot bring an action until an

insurer formally denies the claim for benefits would, as the

district court noted, allow insurers to “prevent policy holders

                                          13
from suing by continuing in perpetuity to consider the claims

open and the denial of benefits preliminary.”           Curry, 2013 WL
3716413, at *3 n.5.     This cannot be so.       Therefore, we conclude

that Curry’s cause of action for breach of contract arose--and

the   statute   of   limitations    began   to    run--when   Trustmark

terminated Curry’s monthly benefit payments on June 30, 2008. 5

As a result, his suit, filed on July 27, 2011, falls outside the

limitations period. 6

                                   2.

      Curry nevertheless contends the limitations period should

have been tolled under Maryland’s discovery rule, which delays

accrual of the statute of limitations when a party neither knows

nor reasonably should have known of a breach.          See Poffenberger

      5
       Trustmark’s August 4, 2008, payment of two years’ worth of
“Social Insurance Substitute Benefits” does not affect our
conclusion.   Under Curry’s policy, payment of these additional
benefits was contingent on Curry’s eligibility for his monthly
disability benefits. Trustmark’s payment of these benefits only
through September 25, 2007--the same date through which
Trustmark paid disability benefits--simply reflects Trustmark’s
earlier discontinuation of benefits past that date.
      6
       We reject Curry’s contention that, even though a plaintiff
“is not precluded from filing a lawsuit when an insurer denies a
monthly benefit,” the statute of limitations does not begin to
run “until there is a final termination of the contract by the
insurer.” Appellant’s Br. at 15 n.8. To the contrary, Maryland
courts have expressly recognized that a cause of action accrues
where a plaintiff “could have maintained his action to a
successful result.”   Goldstein v. Potomac Elec. Power Co., 404
A.2d 1064, 1069 (Md. 1979); see also Luppino, 723 A.2d at 19
(quoting Moss, 100 A. at 89).

                                   14
v. Risser, 431 A.2d 677, 680 (Md. 1981).                             Specifically, Curry

argues that even if his cause of action arose when Trustmark

discontinued paying his monthly benefits, he was not aware of

the alleged breach until Trustmark closed his claim on September

29, 2008.      However, both the subjective and objective evidence

suggests that Curry knew he had an action for breach before July

27, 2008.

     First,       by   Curry’s      own    admission,          he    believed         Trustmark

breached    the    terms     of    the     insurance       policy         when    it    stopped

paying   him    benefits.           Specifically,         Curry       testified         in    his

deposition     that     he       considered       Trustmark          in    breach      of     its

obligations       as   of    a     January        9,    2008,       letter       he    sent    to

Trustmark.         Further,        Curry     never       disputed         his     receipt     of

Trustmark’s June 30, 2008, letter, in which it unequivocally

denied   Curry     additional        benefits          until    he    produced         adequate

proof of continuing loss.             These facts establish that Curry both

knew and should have known of any alleged wrong prior to July

27, 2008.      We therefore conclude that the discovery rule did not

toll the limitations period.

                                           III.

     For    the    reasons        given,     we    affirm       the       district      court’s

judgment.

                                                                                       AFFIRMED

                                             15