Bender v. Time Ins. Co., 9636

• Decision Date: 12 December 1979
• Docket Number: No. 9636,9636
• Citation: 286 N.W.2d 489
• Parties: Jack D. BENDER, Plaintiff and Appellant, v. TIME INSURANCE COMPANY, Defendant and Appellee. Civ.
• Court: North Dakota Supreme Court

Page 489

286 N.W.2d 489

Jack D. BENDER, Plaintiff and Appellant, v. TIME INSURANCE COMPANY, Defendant and Appellee.

Civ. No. 9636.

Supreme Court of North Dakota.

Dec. 12, 1979.

Rehearing Denied Jan. 10, 1980.

Gary R. Wolberg, of Fleck, Mather, Strutz & Mayer, Ltd., Bismarck, for plaintiff and appellant.

Leonard H. Bucklin, of Zuger & Bucklin, Bismarck, for defendant and appellee.

VANDE WALLE, Justice.

Jack D. Bender appeals from a summary judgment granted defendant Time Insurance Company ("Time"). We affirm in part and reverse in part and remand.

Time issued a medical insurance policy to Bender on December 13, 1972. In April of 1973, Bender had a general medical examination and it was found that he had moderately severe internal hemorrhoids. Bender filed a claim with Time for payment of the April 1973 examination and subsequent examinations and treatment within the 90-day period after loss as provided in the policy. Time refused to make payment on the ground that the hemorrhoids were a pre-existing condition not covered under the terms of the policy. Because Time refused to provide coverage, Bender delayed surgery needed to alleviate the problem until November of 1974 when he qualified for coverage under Blue Cross/Blue Shield.

Bender brought suit against Time in May of 1977 alleging two causes of action one in contract for the cost of the hemorrhoid surgery and the second in tort for income loss during the time he was unable to have surgery and for pain and suffering. The complaint was allowed by the district court to be amended in July of 1978 to ask for greater compensation.

In January of 1979, the district court heard a motion by Time for summary judgment. The court also permitted Time to amend its answer to include the plea that Bender had failed to bring action on the medical insurance policy within the three-year limitation prescribed by Section 26-03.1-03, subsection 1-k, N.D.C.C., ¹ which in Bender's case expired on July 27, 1976. It was the opinion of the district court that the three-year statute of limitation of Section 26-03.1-03, subsection 1-k, was controlling rather than the six-year limitation of Section 28-01-16, subsection 1. ² The trial court concluded that when Bender brought the action in May of 1977 he was outside the three-year limitation for actions on insurance contracts. The district court was also of the opinion that the action was totally based on contractual rights and that there was no independent tort involved which would come under the six-year limitation of Section 28-01-16(5), N.D.C.C.

After making its determination that the three-year statute of limitation applied, the district court refused to allow Bender to serve and file a proposed second amended complaint that included a specific bad-faith allegation. Summary judgment was ordered for Time, and Bender's action was dismissed with prejudice. Bender has appealed from this judgment.

The issues on appeal are:

1. Did the district court err by allowing Time to amend its answer after the original answer was served in order to assert as a defense the three-year statute-of-limitation provision of the insurance contract required under Section 26-03.1-03, subsection 1-k?

2. Between Section 26-03.1-03, subsection 1-k, and Section 28-01-16, subsection 1, which statute of limitation is applicable to an action on an insurance policy?

3. Does Bender's first amended complaint state a cause of action in tort not barred by the three-year limitation of Section 26-03.1-03, subsection 1-k?

4. Did the district court err in refusing to allow Bender to file a second amended complaint?

5. If the district court erred in refusing to allow Bender to file a second amended complaint, does the proposed second amended complaint raise a cause of action in tort outside the three-year limitation of Section 26-03.1-03, subsection 1-k?

We first consider whether or not the district court erred in allowing Time to amend its answer to assert as a defense the three-year limitation-of-action provision of the insurance contract required under Section 26-03.1-03, subsection 1-k. Bender served his original summons and complaint on Time in May of 1977. Time served an answer in June of 1977 but did not specifically assert as a defense the three-year limitation of Section 26-03.1-03, subsection 1-k. It was not until January of 1979, at a hearing upon Time's motion for summary judgment, that Time requested and was granted permission to amend its answer to specifically include as a defense the running of the statutes of limitation. ³

Rule 15(a) of the North Dakota Rules of Civil Procedure allows amendments to pleadings and provides that such amendments shall be freely allowed when justice so requires. This court has stated many times that a motion to amend submits the question of amendments to the informed, careful judgment of the trial court and that the propriety of permitting an amendment is a discretionary matter which will not be overruled by this court in absence of abuse. Vasichek v. Thorsen, 271 N.W.2d 555 (N.D.1978); Crosby v. Sande,180 N.W.2d 164 (N.D.1970). A review of the record here does not reveal that the district court abused its discretion in allowing Time to amend its pleadings. The action was, in part, brought by Bender on the insurance contract, which contained a clause in compliance with Section 26-03.1-03, subsection 1-k, providing for a three-year limitation of action. Time in its original answer had denied entitlement generally under this contract.

Time did not specifically move to amend its answer to assert the three-year limitation until more than 19 months after the original answer. The North Dakota Legislature's enactment of Section 26-03.1-04, subsection 2, N.D.C.C. (discussed more fully under the next issue), which incorporates a three-year limitation of action into every insurance policy as a matter of law, shows strong legislative intent that the three-year limitation should control.

Bender may have spent many hours preparing for trial during those months, but the fact that all this preparation was "washed out" by the district court's decision to grant Time's motion to amend and its motion for summary judgment does not indicate the court abused its discretion under these circumstances.

Bender cannot complain that, through surprise caused by the amendment, he was unable to prepare a defense to the raising of the three-year statute of limitation. The district court did not reach a decision on the summary-judgment motion on the day of the hearing, but instead took under advisement the issue of whether the three-year limitation or the six-year limitation was applicable, and did not issue a decision on Time's motion for summary judgment until March 5, 1979. For the reasons stated, we affirm the district court's action in allowing Time to amend its answer.

Bender has also raised as error the district court's holding that the three-year limitation-of-action provision of the insurance contract, required by Section 26-03.1-03, subsection 1-k, was applicable. The district court based its decision upon Wall v. Penn Life Ins. Co., 274 N.W.2d 208 (N.D.1979). In that case this court accepted the application of Section 26-03.1-03, subsection 1-k, as the proper statute of limitation for actions based upon accident or sickness insurance policies. It was not argued by the appellant in Wall, supra, as it is in this action, that Section 28-01-16, subsection 1, should apply instead of Section 26-03.1-03, subsection 1-k, but this does not change our decision. As provided under our rules of statutory interpretation at Section 1-02-07, N.D.C.C.:

"Whenever a general provision in a statute shall be in conflict with a special provision in the same or in another statute, the two shall be construed, if possible, so that effect may be given to both provisions, but if the conflict between the two provisions is irreconcilable the special provision shall prevail and shall be construed as an exception to the general provision, unless the general provision shall be enacted later and it shall be the manifest legislative intent that such general provision shall prevail."

Section 28-01-16, subsection 1, imposes a general six-year limitation on contract actions. Section 26-03.1-03, subsection 1-k, imposes a special three-year limitation on sickness or accident insurance contract actions. Because all insurance policies also include contractual relationships, Section 26-03.1-03, subsection 1-k, would be meaningless if Section 28-01-16, subsection 1, were to control under the circumstances. We therefore find the two provisions irreconcilable, in which case Section 26-03.1-03, subsection 1-k, as a special provision, will prevail and will be considered an exception to the general provision found at Section 28-01-16, subsection 1.

There is also a specific indication of legislative intent that Section 26-03.1-03, subsection 1-k, should prevail. Section 26-03.1-04, subsection 2, provides, in part:

"When any provision in a policy subject to this chapter is in conflict with any provision of this chapter, the rights, duties, and obligations of the insurer, the insured and the beneficiary shall be governed by the provisions of this chapter."

Thus, even if Time had incorporated the six-year limitation of Section 28-01-16, subsection 1, into its policy, Section 26-03.1-04, subsection 2, would have required the three-year limitation of Section 26-03.1-03, subsection 1-k, to govern instead. We agree with the district court's application of Section 26-03.1-03, subsection 1-k, to Bender's suit on the insurance policy, and therefore affirm its granting of summary judgment to Time on the contract action.

However, we must...