Court Opinion

ID: 9491471
Source: CourtListenerOpinion
Date Created: 2023-08-05 14:15:02.184916+00
Date Added: 2024-06-11T17:54:45.697797
License: Public Domain

GRABER, Circuit Judge,
dissenting:
I respectfully dissent from the majority’s conclusion that a cover letter enclosing an application for Arnold to convert his extant group life insurance coverage to an individual policy “supplanted” the terms of the application for conversion from the group policy to an individual policy, the terms of the group policy, and the terms of the certificate of insurance. (Majority op. at 1005.)
Under Washington law, insurance policies are written contracts. Ohio Cas. Ins. Co. v. Nelson, 49 Wash.2d 748, 751, 306 P.2d 201, 204 (1957). When the terms of such a contract are clear, the court must enforce them as written. Cook v. Evanson, 83 Wash.App. 149, 152, 920 P.2d 1223, 1225, review direct, 131 Wash.2d 1016, 936 P.2d 416 (1997). Whether the terms of such a written contract are clear is a question of law to be determined by the court and reviewed de novo. See Grange Ins. Co. v. Brosseau, 113 Wash.2d 91, 95, 776 P.2d 123, 125 (1989) (holding that the interpretation of an insurance policy is a question of law).1 In interpreting a policy, the court must construe the whole contract together so as to give effect to each clause. Ross v. State Farm Mut. Auto. Ins. Co., 132 Wash.2d 507, 515, 940 P.2d 252, 256 (1997) (citing Transcontinental Ins. Co. v. Washington Pub. Utils. Dists.’ Util. Sys.,) 111 Wash.2d 452, 456-57, 760 P.2d 337, 340 (1988). By definition, the right to convert a group policy to an individual policy generally is a right granted by, and subject to the written terms of, the group policy. John A. Appleman, I Insurance Law and Practice § 126, at 417-18 (1981).
In the present case, Monumental’s group policy contains a clause entitled “CONVERSION PRIVILEGE” that provides, as pertinent:
If the Insured’s coverage under this Policy ends for reasons other than:
he may convert his coverage to an individual policy without Evidence of Insurability. He must apply for the policy and pay the first premium within 31 days after his *1007insurance ends. The policy will be issued subject to the following:
(b) The amount of the policy may not exceed the amount of insurance which ends.
(Emphasis added.) Although Arnold and Fleming did not receive a copy of the group policy, they did receive a Certificate of Insurance that summarized the terms of the group policy. That certificate contained essentially the same “CONVERSION PRIVILEGE” clause:
If your coverage ends for reasons other than:
you may convert your coverage to an individual policy without Evidence of Insura-bility.
You must apply for the policy and pay the first premium within 31 days. The policy will be issued subject to the following:
(b) The amount of the policy may not exceed the amount of insurance which ends.
(Emphasis added.)
Additionally, when Arnold applied for such conversion to an individual policy, he filled out a document that acknowledged the limitations of the group policy. The document is entitled “Application for Conversion of Group Life Insurance” (emphasis added), and its substantive provisions begin with this caution:
It is understood and agreed that:
1. The Individual Life Insurance policy hereby applied for shall not be effective unless:
(a) said policy is available under the Conversion Privilege of the Group Policy [.]
(Emphasis added.) The application further states that “this application shall form the basis of said policy and shall be made a part thereof.” By signing the application, Arnold agreed to its terms — -not to the terms of a cover letter — including the term specifying that an individual policy would not be effective unless it was available as specified in the group policy’s Conversion Privilege. Under Washington law, the insured has a duty to read an insurance policy and to be on notice of its terms and conditions. Dombrosky v. Farmers Ins. Co., 84 Wash.App. 245, 257, 928 P.2d 1127, 1134-35, review denied, 131 Wash.2d 1018, 936 P.2d 417 (1997).
The quoted portions of the insurance contract are clear and must be enforced as written. Any individual policy that Monumental issued pursuant to the Conversion Privilege was limited by the group policy creating that Conversion Privilege. The group policy, in turn, limited the Conversion Privilege to the amount of insurance provided by the group policy itself.
In my view, the only ambiguity in the written insurance contract pertains to the amount of insurance provided by the group policy in the first place. Monumental argues that the group policy provided only $18,000 in coverage. However, the Schedule of Ben-éfits reasonably can be read to insure for any of three different amounts: $18,000; $36,000; or $48,546.96.2 Under Washington law, an ambiguity in an insurance contract is resolved in favor of the insured. Mutual of Enumclaw Ins. Co. v. Jerome, 122 Wash.2d 157, 161, 856 P.2d 1095, 1096 (1993). Therefore, Arnold was entitled to obtain $48,546.96 in insurance upon converting the group coverage to an individual policy.
The next question is whether Monumental is equitably estopped from enforcing the coverage restriction contained in the written contract.3 Under Washington law, eqúitable estoppel is not favored; a party asserting it must prove each element by “clear, cogent, and convincing evidence.” Henderson *1008Homes, Inc. v. City of Bothell, 124 Wash.2d 240, 249, 877 P.2d 176, 180 (1994). To establish estoppel here, Fleming had to prove that Monumental made an admission, statement, or act inconsistent with a claim that it asserted later; that Arnold acted in reasonable reliance on that admission, statement, or act; and that Arnold would be injured if Monumental were allowed to change its position. See Ellis v. William Penn Life Assur. Co., 124 Wash.2d 1, 15, 873 P.2d 1185, 1192 (1994) (describing elements of equitable estoppel). I would conclude as a matter of law that Fleming failed to establish the element of reasonable reliance with the requisite level of proof. See Granite State Ins. Co. v. Smart Modular Techs., Inc., 76 F.3d 1023, 1028 (9th Cir.1996) (holding that, when the district court is the trier of fact on a defense of equitable estoppel, its findings of fact are reviewed for clear error and its legal conclusions are reviewed de novo). Fleming’s reliance could not have been reasonable in the circumstances.
As noted, the contract itself is clear.4 Arnold and Fleming had only to read the conversion application, the certificate of group insurance, and the schedule of benefits in their possession to know that the Conversion Privilege was a privilege only to switch the existing amount of coverage from a group to an individual format without providing further evidence of insurability. Fleming admitted that he did not read the certificate carefully.
Moreover, neither Arnold nor Fleming inquired about the correct amount of coverage, even though Fleming testified that he “really just was at a loss as to what we were entitled to” and even though he contacted Monumental about other questions. A person asserting estoppel must, under Washington law, prove not only the absence of knowledge, but also “the absence Of any convenient and available means of acquiring ... knowledge” of the material facts. Patterson v. Horton, 84 Wash.App. 531, 544, 929 P.2d 1125, 1131 (1997). See also Chemical Bank v. Washington Pub. Power Supply Sys., 102 Wash.2d 874, 905-06, 691 P.2d 524, 542 (1984) (“In order to create an estoppel it is necessary that: The party claiming to have been influenced by the conduct or declarations of another to his injury, was himself not only destitute of knowledge of the state of facts, but was also destitute of any convenient and available means of acquiring such knowledge ....” (internal quotation marks and citation omitted) (emphasis in original)). Fleming had the pivotal documents that would have answered his question as to the amount of coverage under the Conversion Privilege, and he also had conversations with Monumental in which his question could have been answered. He took advantage of neither means of acquiring knowledge. Therefore, Fleming failed to prove the absence of a convenient and available means of acquiring knowledge of the amount of coverage.
Finally, I must reach the insured’s third major argument: that Monumental is precluded from invoking any limitation on coverage under an individual policy, because the group policy was illegal.5 It is undisputed that the group policy was illegal in that Monumental failed to register it with the Washington Insurance Commissioner who, as a result, did not approve the group policy for marketing or use in the State of Washington.
Under Washington law, however, an insurance policy is not necessarily void for failure to follow a regulatory requirement. See Hennessy v. Vanderhoef, 1 Wash.App. 257, 262, 461 P.2d 581, 584 (1969) (“a contract which violates a statutory regulation of business is not void unless made so by the terms of the act”) (internal quotation marks and citation omitted); Wash. Rev.Code § 48.18.510 (1998) (an insurance policy that is otherwise valid, containing a condition not in compliance with the insurance code, shall not *1009be rendered invalid thereby, but shall be enforced as if in compliance with the insurance code). Fleming does not argue that the group policy, if registered, would have violated any substantive provision of Washington law. That being so, the group policy is not void, and the court can enforce it as written.6 Monumental is not barred from invoking the coverage limitation contained in the Conversion Privilege clause.
For the reasons stated, I believe that the district court erred. Judgment should have been entered for Fleming only in the amount of $48,546.96. I dissent from the majority’s contrary holding.

. Accordingly, the district court’s "findings of fact” numbers 11, 16, and 23 are clearly erroneous insofar as they contain legal conclusions (a) that the contract of insurance is ambiguous and (b) that Fleming's and Arnold's belief that Monumental would issue an individual policy for $231,463 without requiring evidence of insurability was reasonable.

. The $48,546.96 of coverage is based on the certificate’s promise to pay an amount equal to 24 months times the "Initial Monthly Indemnity," $2,022.79, which was indicated on the first page of the certificate. No reading of the contract documents would provide for $231,463 of coverage.

. In conclusions of law numbers 3 and 4, the district court held that Fleming had proved all the elements of estoppel.

. The majority suggests that Washington law is uncertain as to the adoption of a "reasonable expectation doctrine.” (Majority op. at 10004). However, "Washington has never adopted the reasonable expectation policy. Rather, we consider how a reasonable person would interpret the policy’s language, but do not allow an insured's expectations to override the plain language of the contract." Cook v. Evanson, 83 Wash.App. at 155, 920 P.2d at 1227 (citations omitted) (emphasis added).

. The district court so held in conclusion of law number 6.

. Moreover, the application for an individual policy used the group policy as a point of reference. Even if the application alone controlled, it used the Conversion Privilege of the group policy— whether valid or not — as a numerical benchmark.