Court Opinion

ID: 203360
Source: CourtListenerOpinion
Date Created: 2011-02-07 06:14:52+00
Date Added: 2024-06-11T17:27:36.263316
License: Public Domain

Not for Publication in West's Federal Reporter

          United States Court of Appeals
                        For the First Circuit

No. 07-2668

                             JOHN L. MCGILL,

                         Plaintiff, Appellant,

                                      v.

              MINNESOTA MUTUAL LIFE INSURANCE COMPANY,

                          Defendant, Appellee.

          APPEAL FROM THE UNITED STATES DISTRICT COURT
                FOR THE DISTRICT OF RHODE ISLAND

          [Hon. William E. Smith, U.S. District Judge]

                                   Before

                          Lynch, Chief Judge,

                O’Connor,* Associate Justice (Ret.),

                   and Torruella, Circuit Judge.

     Alan J. Pierce, with whom Hancock & Easterbrook, LLP, was on
brief for appellant.
     Melissa Lang, with whom Timothy Bliss was on brief for
appellee.

                               June 30, 2008

* The Hon. Sandra Day O’Connor, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
          O'CONNOR, Associate Justice (Retired).                   Appellant John

McGill appeals the district court’s grant of summary judgment

against him on his claims that his insurer breached its insurance

contract and its fiduciary duty, and engaged in misrepresentation

and fraud.     Because the insurer never contracted to pay McGill

disability benefits until age 65, we affirm.

                                          I.

          As this case arises on summary judgment, we state the

facts in the light most favorable to appellant.                       Anderson v.

Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986); Maldonado-Denis

v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994).

          John      McGill   was    employed     by     Eastern    Shore   Printing

Corporation    of    Virginia,      later      renamed    the     Interflex      Group

(“Interflex”).      In May of 1992, McGill spoke with a broker, who

sold insurance through appellee Minnesota Mutual Life Insurance

Company (“MML”), about obtaining disability insurance.

          McGill applied for insurance that would have provided

benefits, if disabled, until he reached the age of 65.                        On his

application,   he    included      both    his   home    address    and    his    work

address, and indicated that he wished MML to send correspondence

to his work address.

          After he submitted his application, MML went through

standard procedures to determine coverage:                  It sent a nurse to

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his office to perform a physical, and obtained McGill’s medical

records.   On the basis of that information, MML chose not to

issue a policy that would provide benefits until McGill reached

65.   Instead,   MML   countered   the   offer   McGill   made   in   his

application by writing on the application a limited period of

five years of benefits.     On July 2, 1992, MML issued a policy

containing the limited term of five years and sent it to McGill

at his work address, as McGill had requested.

           The human resources director at Interflex received and

filed a copy of the policy, and Interflex issued checks to pay

McGill’s premiums.     McGill has testified that he never saw the

policy that MML issued, and was unaware that the policy’s terms

differed from his initial application.

           In April of 1994, McGill was diagnosed with obstructive

sleep apnea.   More than a year later, the condition had become so

severe that he was unable to continue working.      He entered into a

severance agreement with Interflex, and thereafter filed a claim

for disability benefits with MML.        It was only in 1996, while

discussing this claim with MML, that McGill learned that the

policy had been issued with a five-year benefit cap.

           MML paid McGill benefits under the policy for five

years and then terminated the payments.

                               - 3 -
               McGill    filed     the   instant      lawsuit    in    2005,       alleging

breach    of    contract,      misrepresentation,           fraud,     and    breach      of

fiduciary duty.         The district court held that McGill’s policy did

not provide benefits until age 65, and granted summary judgment

to MML.

                                          II.

               McGill claims that he did not personally receive the

terms of the insurance contract, that his application should

govern the terms of the policy, and that he never consented to

MML’s provision of a five-year benefit cap.

               We must take as fact that McGill neither saw nor read

the   policy      terms.         Nevertheless,        the     July    2,    1992    policy

containing the five-year limitation was sent to McGill at his

office address at MML as he requested.                   There is no dispute that

MML mailed a copy of the July, 1992 policy and that McGill’s

employer,      Interflex,      retained     a    copy    in    its    files.        McGill

testified      that     he   did   not   ask    the     broker   who       sold    him   the

insurance policy to show him the policy.                       He never inquired of

his employer whether the policy had been delivered.

               Even so, McGill claims that MML’s alteration cannot

constitute the terms of the policy.                     Under Virginia law, “[n]o

alteration of any written application . . . shall be made by any

person other than the applicant without his written consent.”

                                         - 4 -
Va.   Code    §    38.2-3511.         McGill      claims   that       MML’s   handwritten

changes to his application were made without his consent, and

were thus ineffective and could not bind him.

              We agree that under Virginia law, it appears McGill

could not be bound by MML’s handwritten changes.                        The question we

must resolve in this case, however, is not whether McGill was

bound by the policy changes, but whether MML was bound to provide

disability benefits until McGill reached age 65.                         The conclusion

to be drawn from this statute is not that MML must be held to the

terms   for       which    McGill    initially      applied,      but    that    McGill’s

initial      offer    to       purchase    insurance       was    rejected      by   MML’s

counter-offer.            If    McGill    never    accepted      that    counter-offer,

under Virginia law, no meeting of the minds occurred and no

contract was formed.

              Virginia         law   establishes      that       an    application     for

insurance is not itself a contract.                 Instead, “an application for

insurance is merely an offer to enter into a contract.                                 The

insurance policy is the contract between the parties.”                          Smith v.

Colonial Ins. Co. of Cal., 515 S.E.2d 775, 777 (Va. 1999); see

also Hayes v. Durham Life Ins. Co., 96 S.E.2d 109, 111 (Va. 1957)

(“The application for insurance is a mere proposal for a contract

on the part of applicant.                It is one of two prerequisites in the

creation of the contract, the other consisting of the acceptance

                                           - 5 -
of the offer.        No contractual relationship exists between the

parties until acceptance by the insurer. . . .”).

            McGill’s application for insurance, then, did not by

itself establish coverage; he offered to purchase coverage at a

given     price.      In   order   to     form    a    contract,    McGill     must

demonstrate that the insurer accepted his offer.                    There is no

evidence     that    the     insurer    did    so.      Instead,     the     record

unequivocally       demonstrates       that    MML    responded    to      McGill’s

application with a more limited counter-offer.

            The undisputed facts establish that MML did not accept

McGill’s initial offer to buy coverage until age 65.                      At most,

MML proceeded on the assumption that it was required to provide

no more than five years of disability benefits.                   McGill has not

established that MML agreed to provide coverage for a longer

period.

                                        III.

            Because    the    district    court      properly   granted    summary

judgment to MML on the grounds that McGill’s insurance contract

did not provide benefits until age 65, we need not rule on MML’s

alternate grounds for summary judgment.

            AFFIRMED.

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