36 F.Supp.3d 761 (N.D.Ohio 2014), 1:12 CV 1738, Ramsey v. Penn Mut. Life Ins. Co.
|Docket Nº:||1:12 CV 1738|
|Citation:||36 F.Supp.3d 761|
|Opinion Judge:||William H. Baughman, Jr., United States Magistrate Judge.|
|Party Name:||BARBARA RAMSEY, Plaintiff, v. PENN MUTUAL LIFE INSURANCE COMPANY, Defendant|
|Attorney:||No. 1:12 CV 1738 For Barbara Ramsey, Plaintiff: Daniel A. Powell, Joseph W. Diemert , Jr., LEAD ATTORNEYS, Law Office of Joseph W. Diemert, Cleveland, OH. For Penn Mutual Life Insurance Company, Defendant: Karen A. Davey, LEAD ATTORNEY, Jeffrey D. Fincun, Weston Hurd - Cleveland, Cleveland, OH.|
|Case Date:||August 07, 2014|
|Court:||United States District Courts, 6th Circuit, Northern District of Ohio|
MEMORANDUM OPINION & ORDER
This is a diversity case1 arising out of defendant Penn Mutual Life Insurance Company's refusal to pay death benefits to plaintiff Barbara Ramsey on the death of her husband John Ramsey, the insured. Before me2 are cross-motions for summary judgment.3 In addition to briefing their respective motions,4 responding in opposition,5 and replying to such responses,6 the parties have participated in an oral argument on these motions7 and submitted joint stipulations of fact before8 and after9 the oral argument.
For the reasons that follow, Ramsey's motion will be denied and Penn Mutual's motion will be granted.
A. Background facts
Although the parties have raised and argued many facts, the relevant facts underlying the present action are contained in the supplemental joint stipulation of fact.10
In February 2010, John Ramsey completed and signed an application for a life insurance policy with Penn Mutual.11 Part of that application was a " medical examiner's report" that was prepared by an LPN working for Penn Mutual based on answers given by Ramsey, with the completed application signed by Ramsey.12 In that section Ramsey stated that he had been hospitalized for colitis in 1984 but that he had made a " full recovery" and had
last been seen for this condition in 2006, which examination yielded " normal findings." 13
Also included in the application was a so-called " good health" representation whereby Ramsey agreed that insurance would not be issued unless the first premium was paid in full, the policy was delivered, and his " health, habits, occupation and other facts" are " the same as described" in the application, the medical examiner's report attached, and in any subsequent amendments or supplements.14
Based on the disclosure of colitis, Penn Mutual determined that additional information was needed before a policy could issue.15 In that regard, Penn Mutual, with Ramsey's approval, obtained various medical records and, after reviewing those records, offered to insure Ramsey at a higher than usual premium.16
Virtually contemporaneous with this event, Ramsey was examined by Ian Lavery, M.D., the physician who had treated him for colitis in 1984,17 because Ramsey was experiencing " diarrhea/blood in stool" and " having frequent bloody bms and feels bad." 18 A follow-up examination by Dr. Lavery a month later, in May 2010, revealed that medication had produced " some improvement" in Ramsey's symptoms but that he was " still having 15+ loose stools a day." 19
Subsequent to these visits to Dr. Lavery, which were then unknown to Penn Mutual, Penn Mutual drafted amendments to Ramsey's application for coverage.20 The amendments asked if Ramsey had " ever been treated for, or had any indication of: ... intestinal bleeding, ulcer, hernia, colitis, ... or other disorder of the stomach, intestines, liver or gall bladder?" 21 In both cases, Ramsey, on June 1, 2010, answered, " Yes, I had a colon resection in 1984 due to colitis. My last colonoscopy was in 2004. I have not had a colonoscopy since 2004 and have had no gastrointestinal problems since that time." 22 Ramsey, however, did not disclose in this amendment that he had seen Dr. Lavery in April and May of 2010, despite, as noted above, having represented in the original application that he had not seen Dr. Lavery since 2006.
Contemporaneously with or shortly after Ramsey's execution of the application amendments, Penn Mutual thereupon completed delivery of separate policies for term life insurance and whole life insurance to Ramsey.23
Shortly thereafter, on June 24, 2010, during surgery to address five months of " rectal bleeding and diarrhea," 24 John Ramsey was discovered to have colon cancer,25 and died fifteen months later due to complications from that cancer.26 There is no dispute that Ramsey had continued to make all premium payments on the two life insurance policies from Penn Mutual from their issuance to the date of his death.27
Ramsey's wife, Barbara, filed an application for death benefits with Penn Mutual, which was denied.28 In denying coverage, Penn Mutual in particular noted that Ramsey " knew of his treatments between the time of the application and the delivery of the policies, and knew that they rendered untrue the statement in the application that he 'had no gastrointestinal problems since (2004).'" 29 Barbara Ramsey, in turn, filed the present action.30
B. Parties' arguments
In its motion for summary judgment Penn Mutual argues first that a condition precedent to formation of a valid contract of insurance was that Ramsey's health be the same at the time the insurance policy was delivered as it was at the time of the application.31 Because the evidence from Dr. Lavery's visits prior to delivery of the policy show that Ramsey was having serious gastrointestinal problems, including frequent, bloody stools, prior to delivery of the policy, Penn Mutual maintains that Ramsey's health at the time the policy was delivered was not the same as when he made application for the policy, and so, as a matter of law, a necessary condition precedent to formation of an enforceable contract was not met.32
Alternatively, Penn Mutual asserts that any right to recover under these policies was precluded by statute when Ramsey willfully gave a false answer to the question in the application and the application amendment concerning whether he had indications of intestinal bleeding.33 Penn Mutual further argues that Ramsey's signature on the relevant documents ratified and adopted that representation, regardless of who initially drafted the language.34 Thus, Penn Mutual contends, because Ramsey's answers in both the application and the application amendment were willfully false, made without any knowledge by the insurer of their falsity, and induced the insurer to deliver insurance policies that but for the false answers would not have been delivered, Ramsey violated Ohio Revised Code § 3911.06, which renders the policies void ab initio.35
Ramsey, for her part, argues that John Ramsey's answers on both the application and the application amendment were not false nor willfully intended to defraud, and further that Penn Mutual had knowledge of the actual situation and so cannot claim ignorance.36 As concerns the question of
willful falsity, Ramsey maintains that John Ramsey was simply experiencing " characteristic symptoms of colitis" in his abdominal pain and bloody stools -- symptoms that were known to Penn Mutual and were not unusual or remarkable to Ramsey, except in their severity.37 In addition, Ramsey urges that any inherent ambiguity in the questions, such as whether the term " gastrointestinal problems" is synonymous with symptoms of chronic colitis, must be resolved by construing the language against Penn Mutual, who, through its agent, drafted the answer.38
In essence, Ramsey asserts that John Ramsey had, and was known by Penn Mutual to have, chronic active colitis at the time he applied for the policies, at the time the policies were approved, and at the time the policies were delivered.39 Thus, she contends, there was no change in John Ramsey's health to his knowledge when he submitted these answers, and there was no willful falsity in his answers.40
A. Standard of review -- summary judgment
The court should grant summary judgment if satisfied " that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." 41 The moving party bears the burden of showing the absence of any such " genuine issue" :
[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion, and identifying those portions of 'the pleadings, depositions answers to interrogatories, and admissions on file, together with affidavits, if any,' which it believes demonstrates the absence of a genuine issue of material fact.42
A fact is " material" only if its resolution will affect the outcome of the lawsuit.43 Determination of whether a factual issue is " genuine" requires consideration of the applicable evidentiary standards.44 The court will view the summary judgment motion " in the light most favorable to the party opposing the motion." 45
The court should grant summary judgment if a party who bears the burden of proof at trial establishes each essential element of his case.46 Accordingly, " [t]he mere existence of a scintilla of evidence in support of the plaintiff's position will be insufficient; there must be evidence on which the jury could reasonably find for the plaintiff." 47
Once the moving party has satisfied its burden of proof, the burden then shifts to
the nonmover.48 The nonmoving party may not simply rely on its pleadings but must " produce evidence that results in a conflict of material fact to be solved by a jury." 49 Moreover, if the nonmovant presents evidence " merely colorable" or not " significantly probative," the court may decide the legal issue and grant summary judgment.50 " In other words, the...
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