Court Opinion

ID: 2973527
Source: CourtListenerOpinion
Date Created: 2015-09-22 17:03:31.172322+00
Date Added: 2024-06-11T11:43:46.091746
License: Public Domain

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
                           File Name: 06a0185n.06
                            Filed: March 15, 2006

                                          No. 04-2168

                          UNITED STATES COURT OF APPEALS
                               FOR THE SIXTH CIRCUIT

DONALD A. TURNER,                                )
                                                 )
       Plaintiff-Appellant,                      )
                                                 )
v.                                               )   ON APPEAL FROM THE UNITED
                                                 )   STATES DISTRICT COURT FOR THE
UNUM PROVIDENT CORPORATION,                      )   EASTERN DISTRICT OF MICHIGAN
                                                 )
       Defendant-Appellee.                       )
                                                 )
                                                 )

       Before: CLAY and COOK, Circuit Judges; and RICE, District Judge.*

       COOK, Circuit Judge. Donald Turner appeals a district court’s order denying his motion for

summary judgment and dismissing his claim that UnumProvident Corporation (“Unum”) breached

a disability insurance policy (“Policy”) issued by Paul Revere Life Insurance Company (“Paul

Revere”), a wholly-owned subsidiary of Unum, by incorrectly computing the Cost of Living

Allowance (“COLA”) in its monthly disability payments to him. Finding no error in the district

court’s decision, we affirm.

                                             I

       *
         The Honorable Walter Herbert Rice, United States District Judge for the Southern District
of Ohio, sitting by designation.
No. 04-2168
Turner v. UnumProvident Corp.

       In a prior action, Turner, an attorney claiming to be disabled from the practice of law, sued

Paul Revere alleging that it improperly denied him disability-income insurance benefits under the

Policy. The district court agreed with Turner that he was entitled to benefits under the Policy and

directed him to submit a proposed judgment for entry. Turner’s proposed entry calculated damages

as past-due annual benefits plus an annually-compounded seven-percent COLA. Unum challenged

the proposed judgment’s interest calculation, but not the compounding of the COLA. The district

court entered judgment against Unum consistent with the entry Turner submitted. Paul Revere

satisfied that judgment and has since paid Turner’s monthly benefit, including annual COLA

increases, but not a seven percent compounding increase.

       The present action concerns the same policy, with Turner alleging that since the time of the

prior judgment, Unum has breached the Policy’s COLA rider by not compounding annually the

seven-percent COLA. Turner moved for summary judgment, maintaining that Unum, by agreeing

to a damages figure in the original judgment that calculated unpaid COLA on a compounded basis,

was barred by res judicata from re-litigating that issue. Unum, in turn, moved to dismiss or,

alternatively, for summary judgment, and Turner responded with a cross-motion for summary

judgment. The district court considered the arguments supporting the various motions and dismissed

Turner’s claim, ultimately concluding that, as a matter of law, the COLA rider entitled Turner to just

the seven percent annual adjustment, not compounding of that adjustment. On appeal, Turner

challenges the district court’s decision to deny his motion and cross-motion for summary judgment.

                                                -2-
No. 04-2168
Turner v. UnumProvident Corp.

                                                    II

         We review de novo the district court’s decision to dismiss Turner’s complaint. Turner

alleges that Unum breached the Policy by failing to compound his COLA payments, contending that

because the prior judgment for past years’ unpaid benefits included an annually-compounded

COLA, res judicata (claim preclusion) should prevent Unum from litigating whether the Policy

requires the COLA be compounded. The district court rejected the argument, first deciding that

Turner’s argument was “more properly dealt with as a matter of issue preclusion” and then

concluding that Turner “fails to show that at any point in the prior lawsuit the parties litigated and

this Court decided the issue of whether COLA should be compounded,” a prerequisite to issue

preclusion (collateral estoppel). Noting that the “original litigation focused exclusively on whether

[Turner] was disabled and therefore entitled to receive disability benefits,” the court concluded that

“collateral estoppel or issue preclusion does not apply” and thus “Plaintiff is not entitled to judgment

as a matter of law.”

       Turner argues that the district court erred by treating his argument as one advancing issue

preclusion and “by failing to perform a proper ‘claim preclusion’ analysis.” We disagree. We find

instead that the district court appropriately differentiated between the doctrines of claim and issue

preclusion and correctly found the latter inapt.

       The doctrine of claim preclusion establishes that a judgment in a prior suit between the same

parties is final not only as to all matters offered and received to sustain the claim, but also as to

                                                   -3-
No. 04-2168
Turner v. UnumProvident Corp.

matters that might have been offered for that purpose. Mitchell v. Chapman, 343 F.3d 811, 819 (6th

Cir. 2003). Its purpose generally is to prevent parties from “claim splitting.” Turner contends that

res judicata should bar Unum from asserting a claim here that it should have asserted in the prior

action. Yet Unum did not assert any claim in the prior action—it was a defendant—and thus claim

preclusion does not apply, as the district court observed. And it is only claim preclusion that aids

Turner’s cause. His argument concerns claims that could have been raised, and with issue

preclusion, only claims actually litigated warrant preclusive effect. Turner did not litigate the

compounding method of COLA computation in the prior litigation, so no preclusive effect attends

that issue here. Issue preclusion dictates that “once an issue is actually and necessarily determined

by a court of competent jurisdiction, that determination is conclusive in subsequent suits based on

a different cause of action involving a party to the prior litigation.” Montana v. United States, 440

U.S. 147, 153 (1979). Although the parties compounded the COLA for purposes of the prior

judgment, the issue was not judicially resolved and thus remains a proper subject of litigation in a

later suit. The district court correctly determined that issue preclusion did not foreclose Unum

raising defenses to Turner’s COLA-compounding claim, and that claim preclusion did not apply.

                                                 III

                                                -4-
No. 04-2168
Turner v. UnumProvident Corp.

        Turning to the merits of his claim, Turner contends that the terms of the Policy’s COLA

rider plainly require Unum to compound the COLA and that Unum, by failing to compound the

COLA, breached the Policy. The rider provides in relevant part that the COLA

       benefit will start on the 366th day of the Disability. This benefit will be paid
       monthly. The amount We will pay starts at 7 percent of the Base Amount. The Base
       Amount is the monthly amount of the Total or Residual Disability benefit payable
       under Your Policy. . . . We will later add 7 percent of the Base Amount to the
       monthly amount of this benefit. We will do this on each anniversary of Your
       Disability, after the first, while it continues.

Turner argues that the word “starts” implies that the COLA will increase on a compounded basis.

       The district court correctly concluded that the Policy does not require Unum to compound

the COLA, entitling Unum to judgment as a matter of law on Turner’s breach-of-contract claim.

By its plain language, the Policy instructs Unum to add seven percent of the Base Amount—“the

monthly amount of the total or residual disability benefits payable under the policy”—to the Base

Amount on each anniversary of the disability, excluding the first. The word “starts” indicates the

COLA begins at seven percent of the Base Amount in the first year in which the COLA becomes

payable. In each succeeding year, Unum must increase the COLA amount by another seven percent

of the Base Amount. “Base Amount” is a defined term, and no language suggests that it should

increase year-to-year. The district court reasonably read the word “starts” as corresponding to the

benefit thereafter increasing annually. The total benefits increase, but only by fixed increments.

                                               -5-
No. 04-2168
Turner v. UnumProvident Corp.

The word “starts” did not persuade the district court that the COLA must be compounded, and we

are not persuaded that the district court erred.

                                                   IV

       Because Unum did not breach the Policy by failing to compound the COLA, we affirm the

district court’s dismissal of this suit. And since Turner did not move for judgment as a matter of

law, we determine that the only logical conclusion to be drawn from the wording of the court’s

decision is that it sustained Unum’s FED. R. CIV. P. 12(b)(6) motion, finding Turner unentitled to

compounding as a matter of law.

AFFIRMED

                                                   -6-