Arenberg v. Central United Life Ins. Co., CIV.A. 97-B-428.
| Decision Date | 27 August 1998 |
| Docket Number | No. CIV.A. 97-B-428.,CIV.A. 97-B-428. |
| Citation | 18 F.Supp.2d 1167 |
| Parties | I. Kaufman ARENBERG, M.D., F.A.C.S., a Colorado citizen, Plaintiff, v. CENTRAL UNITED LIFE INSURANCE COMPANY, a Texas corporation, Defendant. |
| Court | U.S. District Court — District of Colorado |
Thomas L. Roberts, John B. Grow, Karen V. Reutzel, Roberts & Zboyan, P.C., Denver, CO, for Plaintiff.
C. Scott Crabtree, Stephen Fitzsimmons, Alexander & Crabtree, P.C., Denver, CO, for Defendant.
Defendant, Central United Life Insurance Company ("Central United"), moves for reconsideration and clarification of my July 16, 1998 order ("the July 16 order") granting plaintiff's motion for partial summary judgment and denying Central United's motion for summary judgment. Central United also requests certification of the July 16 order as final and appealable pursuant to Rule 54 and 28 U.S.C. § 1292(b) (1997). Plaintiff, I. Kaufman Arenberg, M.D., F.A.C.S. ("Dr.Arenberg"), opposes reconsideration and certification of the July 16 order. The motions are adequately briefed and oral argument will not aid materially their resolution. Jurisdiction exists pursuant to 28 U.S.C. § 1332. After review of the parties' briefs and applicable law, I grant Central United's motion to reconsider and vacate the July 16 order. I also deny, as moot, Central United's request to certify the July 16 order as appealable. In this order, which supersedes the July 16 order, I deny Dr. Arenberg's motion for summary judgment and grant, in part, and deny, in part, Central United's motion for summary judgment.
The following material facts are undisputed. Dr. Arenberg was an employee and sole shareholder of The Ear Center, a professional corporation that specialized in otologic and neurotologic surgery, also referred to as "microsurgery." The record does not indicate whether Dr. Arenberg was also an officer of The Ear Center.
Dr. Arenberg purchased an "Injury and Sickness Income Replacement Policy" ("the policy") from Prairie States Life Insurance Company (Prairie States) on October 28, 1982. Life of America Insurance Company (Life of America) succeeded Prairie States as the policy insurer in 1988. Central United assumed all legal obligations of both Prairie States and Life of America in 1994, thereby becoming the policy insurer.
On January 24, 1995, while the policy was in force, Dr. Arenberg sent a letter to Central United that states:
Please cancel my Disability Insurance Policy # 3604501489 effective 2/1/95. Also, please cancel my automatic withdrawal on a monthly basis of $431.60.
(Ltr. from Dr. Arenberg to Life of America of 1/24/95, Plf.'s Ex. C.) Central United received this letter on January 30, 1995. Central United's policyholder service department processed this letter and entered it into its computer system on February 2, 1995. Also on February 2, 1995, Central United's bank account was credited $431.60 via automatic funds transfer. This payment represents Dr. Arenberg's February premium payment. Central United retained the February premium payment and did not respond to Dr. Arenberg's letter dated January 24, 1994. (Stip. ¶ 8, Pretrial Ord. of 3/10/98 at 10; Answer ¶ 54.)
On February 7, 1995, Dr. Arenberg was told he suffered a stoke in December 1994, an event that constitutes a "Covered Injury" or "Covered Sickness" as defined by the policy. (Ltr. from Dr. O'Brien to Dr. Higgins of 2/7/95, Plf.'s Ex. F.) A magnetic resonance imaging test confirmed this diagnosis and, on February 20, 1995, Dr. Arenberg's neurologist wrote:
As you know, there are some continuing problems with fine motor dexterity in the right hand. As [Dr. Arenberg] is left-hand-dominant, this has not been incapacitating, although is clearly affecting his function with microsurgery. I have recommended that he begin a course of occupational therapy, specifically with fine motor dexterity exercises for the right hand. In general, after motor-lacunar strokes, there is a period of improvement over 3-6 months, and then things tend to level off. We should be able to see if there are further gains possible, with approximately a 50% chance of being able to continue microsurgery.
(Ltr. from Dr. O'Brien to Dr. Higgins of 2/20/95, Plf.'s Ex. G.) Also on February 20, 1995, Dr. Arenberg signed a letter, which states:
In error I previously sent a letter dated 1/24/95. I do not wish to cancel the Disability Insurance Policy # 3604501849, just the previous method of payment by automatic withdrawal. I have enclosed check # 2306 in the amount of $431.60 for my February premium and will continue to send this premium amount on a monthly basis.
(Ltr. from Dr. Arenberg to Life of America of 2/20/95, Def.'s Ex. 2.) Dr. Arenberg, however, never sent this letter to Central United.
The very next day, on February 21, 1995, Dr. Arenberg canceled all of his upcoming, scheduled surgeries and discontinued his practice of microsurgery. He has not performed microsurgery since. He continued to see patients through November 1996 and the Ear Center closed in December 1996. On March 16, Central United received a letter from Dr. Arenberg dated March 10, 1995, which states:
Enclosed is check # 2306 in the amount of $431.60 for my March premium. I will continue to send this premium amount on a monthly basis rather that [sic] automated withdrawal from my checking account. Thank you for your help in this matter and please start sending me monthly statements for me to process my monthly payment by check.
(Ltr. from Dr. Arenberg to Life of America of 3/10/95, Plf.'s Ex. S.) By letter dated March 16, 1995, Central United returned check number 2306 to Dr. Arenberg:
Enclosed you will find your check number 2306, in the amount of $431.60, recently submitted for premium payment on the above referenced policy.
We are returning this payment to you as coverage provided by the policy has been canceled effective February 28, 1995, the date to which premiums were paid at the time we received your cancellation request, dated January 24, 1995. Enclosed for your reference is a copy of your letter requesting cancellation of coverage.
(Ltr. from Central United to Dr. Arenberg of 3/16/95, Plf.'s Ex. T.)
On May 22, 1995, Central United received Dr. Arenberg's proof of claim. (Stip. ¶ 12, Pretrial Ord. of 3/10/98 at 10.) By letter dated July 13, 1995, Central United requested additional information in support of his claim. Dr. Arenberg supplied additional information. After a period of correspondence, Central United issued a denial letter to Dr. Arenberg's counsel dated October 16, 1995, which letter provides:
We have reviewed Dr. Arenberg's disability claim for which he submitted a claim form dated May 15, 1995, and have concluded that the subject Injury and Sickness Income Replacement policy does not provide coverage to him inasmuch as his covered sickness did not manifest itself until one (1) week before the policy was canceled. Therefore, the insured's net income had not yet dropped.
Enclosed please find a copy of Dr. Arenberg's January 24, 1995 letter in which he requested that his disability policy be canceled effective February 1, 1995. Because premiums had already been paid to February 28, 1995, on the date we received the notice of cancellation, the policy was canceled effective February 28, 1995.
A "covered loss" exists when in any calendar month the Insured's net income is less than eighty percent of base earnings solely as a result of a Covered Injury or Covered Sickness.
According to Dr. Christopher's February 7, 1995 report, Dr. Arenberg "has had no problems carrying out his job ..." It was not until March 1, 1995 that Dr. Higgins communicated to Dr. Arenberg that he could no longer practice as a surgeon.
The financial records provided to us by your client show that his net income was never less than 80% of his base earnings, therefore, he is not entitled to benefits under the policy. The medical records provided by your client show that the covered sickness did not affect Dr. Arenberg's income until after our policy was canceled.
(Ltr. from Mary Lou Rainey to Thomas Roberts of 10/16/95 (strikeout in original), Def.'s Ex. 4.) Dr. Arenberg commenced this action on March 3, 1997. He filed an amended complaint on June 3, 1997, which states four claims: (1) breach of contract; (2) violation of public policy; (3) estoppel/waiver; and (4) breach of implied covenant of good faith and fair dealing.
Rule 56 provides that summary judgment shall be granted if the pleadings, depositions, answers to interrogatories, admissions, or affidavits show that there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed.R.Civ.P. 56(c). The non-moving party has the burden of showing that issues of undetermined material fact exist. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). A party seeking summary judgment bears the initial responsibility of informing the court of the basis for its motion, and identifying those portions of the pleadings, depositions, interrogatories, and admissions on file together with affidavits, if any, that it believes demonstrate the absence of genuine issues for trial. Celotex, 477 U.S. at 323, 106 S.Ct. 2548; Mares v. ConAgra Poultry Co., Inc., 971 F.2d 492, 494 (10th Cir.1992). Once a properly supported summary judgment motion is made, the opposing party may not rest on the allegations contained in the complaint, but must respond with specific facts showing the existence of a genuine factual issue to be tried. Otteson v. United States, 622 F.2d 516, 519 (10th Cir.1980); Fed.R.Civ.P. 56(e). These...
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