Barlow v. New York Life Ins. Co.
| Decision Date | 23 May 1995 |
| Docket Number | No. 94-1930,94-1930 |
| Citation | 56 F.3d 60 |
| Parties | NOTICE: Fourth Circuit I.O.P. 36.6 states that citation of unpublished dispositions is disfavored except for establishing res judicata, estoppel, or the law of the case and requires service of copies of cited unpublished dispositions of the Fourth Circuit. Michael A. BARLOW, Plaintiff-Appellant, v. NEW YORK LIFE INSURANCE COMPANY, Defendant-Appellee, and Roy E. BROWN, Defendant. |
| Court | U.S. Court of Appeals — Fourth Circuit |
ARGUED: Joel Steinberg, Fairfax, VA, for appellant. Thomas John Cawley, Hunton & Williams, Fairfax, VA, for appellee. ON BRIEF: Stuart A. Raphael, Hunton & Williams, Fairfax, VA, for appellee.
Before NIEMEYER and MOTZ, Circuit Judges, and BUTZNER, Senior Circuit Judge.
This diversity case arises out of the rescission by New York Life Insurance Company of a disability insurance policy issued to Michael A. Barlow. A jury returned a verdict in favor of New York Life on Barlow's breach of contract claim, and Barlow appeals. Finding no reversible error, we affirm.
On October 9, 1989, Barlow, a citizen of Virginia, applied for a disability insurance policy with New York Life, a New York corporation. With the assistance of one of New York Life's agents, Barlow completed and submitted an application for insurance, which included information about his past medical history. Relying on the information contained in Barlow's application, New York Life issued a policy which provided "total disability" coverage in the event Barlow could not do "the substantial and material duties of[his] regular job."
On December 18, 1990, after allegedly suffering a series of epileptic seizures, Barlow filed a claim under the policy. In the course of investigating the claim, however, New York Life discovered certain inaccuracies contained in Barlow's application. Accordingly, on June 6, 1991, New York Life rejected Barlow's claim and rescinded his policy. Barlow subsequently brought this breach of contract action, seeking damages and declaratory judgment.
At trial, Barlow acknowledged that he had injured his back and neck in a home accident prior to 1989, for which he received medical consultation and treatment. He and his wife testified that they reported this information to New York Life's agent, Roy Brown, when Brown took Barlow's application for insurance, but that Brown declined to record the information in the application because it was not "serious" enough to warrant disclosure. Brown, on the other hand, testified that Barlow never disclosed this information to him during their meeting and that he correctly recorded Barlow's answers on the application. Barlow signed the application without reading it, representing that all of the statements contained in the application were "correctly recorded and are complete and true to the best of the knowledge and belief of those who made them."
Furthermore, although Barlow's initial application failed to specify whether he had a personal physician, New York Life later noted in its records that its agent had called on October 23, 1989 to advise that Barlow in fact had none; an amendment to the policy was prepared to reflect this information. Two days later, Equifax Services, an insurance investigation firm, conducted a telephone interview on behalf of New York Life to confirm certain information contained in Barlow's application. The report prepared by Equifax indicated that during the interview Barlow disclosed that he had a personal physician whom he had last seen on an unspecified date in October of that year for an injured finger.
Nevertheless, New York Life proceeded to issue Barlow's disability insurance policy effective October 9, 1989. The policy issued to Barlow contained the following disclaimer:
Important notice concerning statements in the application for insurance. Please read the copy of the application attached to this policy. Omissions or misstatements in the application could cause an otherwise valid claim to be denied or the policy to be rescinded. Carefully check the application and write to the Company within 10 days after delivery if any information shown is not correct and complete or if any medical history has not been included. The application is part of this insurance policy and this insurance policy was issued on the basis that the answers to all questions and any other material information shown are correct and complete. However, upon receipt of the policy Barlow failed to report any omissions or misstatements in his application.
Barlow moved for judgment as a matter of law, which the district court denied. The jury returned a general verdict in favor of New York Life, and this appeal followed.
Barlow first contends that the district court erred in denying his motion for judgment as a matter of law. In reviewing the denial of such a motion, an appellate court must view "all of the evidence in the light most favorable to [the nonmoving party], drawing all reasonable inferences in [that party's favor]." Johnson v. Hugo's Skateway, 974 F.2d 1408, 1412 (4th Cir.1992) (en banc ). If there is "substantial evidence opposed to the motion, that is, evidence of such quality and weight that reasonable and fair-minded men in the exercise of impartial judgment could reasonably return a verdict for the nonmoving party, the motion should be denied." Wyatt v. Interstate & Ocean Transport Co., 623 F.2d 888, 891 (4th Cir.1980); see also Trandes Corp. v. Guy F. Atkinson Co., 996 F.2d 655, 660-61 (4th Cir.), cert. denied, --- U.S. ----, 114 S.Ct. 443 (1993). An appellate court is expressly prohibited from weighing the evidence or assessing the credibility of witnesses. Taylor v. Home Ins. Co., 777 F.2d 849, 854 (4th Cir.1985), cert. denied, 476 U.S. 1142 (1986). We review the decision of the district court de novo. Gairola v. Virginia Dep't of Gen. Servs., 753 F.2d 1281, 1285 (4th Cir.1985).
Barlow argues that New York Life was precluded from prevailing as a matter of law because it was on constructive notice of any misrepresentations contained in his application for insurance. He contends that because New York Life was aware of the discrepancy between his initial application, which failed to indicate whether or not he had a personal physician, and the Equifax report, which noted that he had a personal physician whom he had last seen sometime in October, 1989, New York Life had an affirmative "duty to inquire" as to the reason for the conflict. He asserts that had New York Life followed up on this discrepancy and contacted his physician, it would have discovered the medical history that it claims was omitted from the application.
In Pennsylvania Cas. Co. v. Simopoulos, 369 S.E.2d 166 (Va.1988), the Supreme Court of Virginia recognized that where an insurer has " 'knowledge of facts sufficient to put a reasonably prudent person upon inquiry of the possibility of fraud,' " the insurer is estopped from relying on such fraud to rescind a policy. Id. at 168-69 (quoting Employers Commercial Union Ins. Co. of America v. Great American Ins. Co., 200 S.E.2d 560, 563 (Va.1973)). The court noted that "[t]he burden 'rests upon the party relying on the doctrine of estoppel to prove each element by clear, precise and unequivocal evidence,' " id. at 169 (quoting John Hancock Mutual Life Ins. Co. v. Virginia Nat. Bank, 181 S.E.2d 618, 620 (Va.1971)), and that this burden requires the insured to demonstrate that the insurer "had knowledge, actual or imputed, of facts which would render its coverage void ab initio, yet issued the policies in question notwithstanding such knowledge." Id. (citing North River Ins. Co. v. Belcher, 155 S.E. 699, 703 (Va.1930)) (footnote omitted). There, the "facts" allegedly putting the insurer "upon inquiry of the possibility of fraud" consisted of certain unanswered questions on the insured's application for insurance; the court held that this was insufficient to estop the insurer from prevailing. Id.
Here, the "facts" that allegedly put New York Life "upon inquiry of the possibility of fraud" were Barlow's assertedly contradictory responses as to whether he had a personal physician. On Barlow's initial application no response was indicated; the question asking him to identify his personal physician was simply left blank. New York Life's agent subsequently advised its underwriting department that Barlow did not have a personal physician and that the correct response to the question was "none"; an amendment to the policy was prepared to reflect that response. However, during his telephone interview with Equifax, Barlow indicated that he did have a personal physician whom he had last seen in October, 1989 for a "hurt finger."
Although there was clearly a discrepancy between Barlow's initial application and the Equifax report in that respect, it was not such that would "put a reasonably prudent person upon inquiry of the possibility of fraud." The Equifax report indicated that Barlow's "personal physician" was "last seen" in October, 1989. The report did not specify when in October Barlow saw this physician, whether it was before or after the date he submitted his initial application for insurance, nor did it indicate whether Barlow had ever seen this physician any time prior to October, 1989, when he was simply treated for a "hurt finger." In addition, the Equifax report indicated that Barlow was not "presently under medication or treatment," and the report did not disclose "[a]ny other illness, injury, or operation." Under these circumstances, Barlow has failed to demonstrate that New York Life "had knowledge, actual or imputed, of facts which would render its coverage void ab initio." 369 S.E.2d at 169.
The case on which Barlow principally relies, Major Oil Corp. v. Equitable Life Assurance Society, 457 F.2d 596 (10th Cir.1972), is easily distinguishable. There, the insurance company sought to rescind a policy because of the...
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