Burger v. Allstate Ins. Co.

• Decision Date: 28 September 2009
• Docket Number: Case No. 07-11870.
• Citation: 667 F.Supp.2d 738
• Parties: Francis BURGER, Plaintiff, v. ALLSTATE INSURANCE CO., Defendant.
• Court: U.S. District Court — Eastern District of Michigan

667 F.Supp.2d 738

Francis BURGER, Plaintiff, v.ALLSTATE INSURANCE CO., Defendant.

Case No. 07-11870.

United States District Court, E.D. Michigan, Southern Division.

September 28, 2009.

COPYRIGHT MATERIAL OMITTED

Paul A. Zebrowski, Thomas A. Biscup, Paul Zebrowski Assoc., Shelby Township, MI, for Plaintiff.

Donald C. Brownell, Vandeveer Garzia, Troy, MI, for Defendant.

ORDER

JULIAN ABELE COOK, JR., District Judge.

On March 30, 2007, the Plaintiff, Francis Burger, filed a complaint in the Wayne County Circuit Court of Michigan which reflected his dispute with the Defendant, Allstate Insurance Co., ("All State") over issues relating to benefits under an automobile insurance policy that bound these two parties approximately twenty-five years ago.

Nearly four weeks later (April 27th), All State caused the state court action to be removed to this federal district court on the basis that this Court has subject matter jurisdiction pursuant to its diversity jurisdiction under 28 U.S.C § 1332.¹On March 2, 2009, All State filed a motion for the entry of a partial summary judgment and/or dismissal pursuant to Fed.R.Civ.P. 56(c)andFed.R.Civ.P. 12(b)(6),² to which Burger filed a timely response in opposition.

I.

Burger is a citizen of the State of Michigan and an insured customer of All State.All State is a corporation which is licensed by the State of Michigan and elsewhere throughout the United States to provide household and automobile insurance to the general public.On November 6, 1981, Burger entered into a contract with All State which was designed to provide him with automobile insurance coverage.

On April 2, 1982, Burger claims to have suffered severe and permanent injuries when he was struck by a motor vehicle while standing outside of his automobile, all of which caused him to sustain the disabling use of his right hand and to rely upon the virtually uninterrupted care by his wife.Burger also asserts that, despite being unable to work for ten months during the post-accident period immediately following the accident, he was able to return to work for the next twelve years until his retirement.

Following the accident, Burger's wife submitted receipts to All State for those services that her husband could no longer perform without the assistance of a health care provider.On August 19, 1983, she transmitted a letter to All State, along with the report from a physician who had urged Burger to continue his own physical therapy program at home.Although Burger maintains that all of the requisite "attendant care" had been performed by his wife since the accident of April 2, 1982, it was his belief that she would continue her close personal attention in the future.Notwithstanding this representation, he failed or neglected to submit any request for reimbursement which stemmed from her invaluable "health care" services.On April 3, 1985, Burger indicates that he received a call from a representative of All State who informed him that all of his "service related benefits" had expired on the three year anniversary of the accident.In retrospect, Burger claims to have understood this statement to mean that all of his claims for benefits terminated at the three year mark—a statement which Burger now believes was, in fact, a misrepresentation by All State.It is this alleged misrepresentation upon which Burger relies in order to justify his failure to file any additional claims with All State.However, All State disputes this allegation by contending that the statement by the All State representative was accurate and was not a misrepresentation of the benefits under the parties' contract.

On March 2, 2009, All State filed a motion pursuant to Fed.R.Civ.P. 56(c)andFed.R.Civ.P. 12(b)(6), in which it maintained that (1) Burger had failed to state a claim of silent fraud, and (2) his claims of actual fraud, misrepresentation, and breach of contract should be summarily dismissed.³

II.

Initially, it should be noted that All State filed its motion along with the following caption: "Defendant's Motion For Partial Summary Judgment and/or Dismissal."However, All State filed this motion after having filed an answer to the complaint, which effectively rendered its dispositive motion under Rule 12(b)(6) as an untimely dispositive pleading.See5B Wright & Miller, Federal Practice and Procedure§ 1357, at 408 (3d ed.2004).Furthermore, All State appears to improperly blur the difference between the standard for a summary judgment and the failure to state a claim when it cited to the deposition testimony in support of the latter.Therefore, the Court will interpret All State's motion under the procedurally available (and substantively appropriate) standard for summary judgment.

The purpose of a summary judgment "is to isolate and dispose of factually unsupported claims or defenses."Celotex Corp. v. Catrett,477 U.S. 317, 322-24, 106 S.Ct. 2548, 91 L.Ed.2d 265(1986).When deciding a motion for summary judgment, the Court must consider any pleadings and discovery material on file in a light that is most favorable to the non-moving party.SeeUnited States v. Diebold, Inc.,369 U.S. 654, 655, 82 S.Ct. 993, 8 L.Ed.2d 176(1962);Boyd v. Ford Motor Co.,948 F.2d 283, 285(6th Cir.1991).Therefore, the moving party bears the burden of showing the absence of any genuine issue of a material fact.Id. at 323.

A genuine dispute exists "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party."Anderson v. Liberty Lobby, Inc.,477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202(1986).Evidence that "is merely colorable, or is not significantly probative" is not a sufficient basis upon which to rebut the entry of a summary judgment.Id. at 249-50, 106 S.Ct. 2505.Thus, a summary judgment is appropriate if (1) the evidence that has been offered in support of a motion is so overwhelming that the proponent must prevail as a matter of law, or (2) the opponent fails to rebut the dispositive request for relief with evidence which creates a genuine issue of a material fact that is of consequence to the case.Id. at 252, 106 S.Ct. 2505;Celotex,477 U.S. at 322, 106 S.Ct. 2548.

III.

The Court will begin by addressing All State's contention that it is entitled to a judgment as a matter of law on Burger's claim of silent fraud.In addition to arguing that there is no legal duty of disclosure under the Unfair Trade Practices Act, All State also maintains that (1) any inquiries by Burger relating to those benefits available to him under the policy were specific in nature, (2) it did not voluntarily undertake a duty of disclosure, and (3) the insurer-insured relationship in this case does not—and did not—create a per se duty to explain the benefits of the policy to him.

Before reaching the issue of whether the prima facie elements of a silent fraud claim have been satisfied, Burger must first show that the alleged silence "occurred under circumstances where there was a legal duty of disclosure."Buntea v. State Farm Mut. Auto Ins. Co.,467 F.Supp.2d 740, 745(E.D.Mich.2006)(citingM & D Inc. v. W.B. McConkey,231 Mich.App. 22, 585 N.W.2d 33, 37(1998))(citingUnited States Fid. and Guar. Co. v. Black,412 Mich. 99, 313 N.W.2d 77(1981))."The gist of the [silent fraud] action is fraudulently producing a false impression on the mind of the other party."Basirico v. State Farm Mut. Auto. Ins. Co.,2008 WL 2446906(E.D.Mich.2008)(citingM & D Inc.,585 N.W.2d at 39).

As an example, the legal duty to disclose may arise if insured makes a specific and direct inquiry, and the insurer makes an incomplete reply as an affirmative misrepresentation.Hord v. Envtl. Research Inst. of Michigan,463 Mich. 399, 617 N.W.2d 543, 550(2000)(citingM & D, Inc.,585 N.W.2d at 38).A misrepresentation under this standard does not stem from mere non-disclosure.Rather, it comes from the suppression of the truth upon inquiry.M & D, Inc.,585 N.W.2d at 39.All State urges the Court to adopt the position in this case that it did not have any duty to disclose the benefits to Burger under his insurance policy.As an aside, All State also notes that Burger has never alleged that it was ever asked by him to describe all of the benefits to which he was entitled.

Burger takes issue with this argument, contending that All State, on the basis of its existing insurer-insured relationship with him, (1) had a statutory duty to disclose, (2) possessed a duty to disclose following his inquiries, and (3) voluntarily undertook the duty to disclose.In an attempt to support its duty of disclosure argument, Burger submits that the Unfair Trade Practices Act creates a statutory duty which, in essence, prohibits the misrepresentation of benefits by an insurer under an insurance policy.In support of this position, Burger proffers the plain language of Mich. Comp Laws.§ 500.2006(3) which states in pertinent part that "(a)n insurer shall specify in writing the materials that constitute a satisfactory proof of loss not later than 30 days after receipt of a claim unless the claim is settled within the 30 days."

While it is true that a statute can give rise to a legal duty, his reliance upon this legislative enactment in support of this argument is misplaced.SeeOverby v. Johnson,418 F.Supp. 471, 472(E.D.Mich.1976).In Buntea v. State Farm Mut. Auto Ins. Co., for example, the court reasoned that although the Unfair Trade Practices Act"creates, among others, a statutory duty on insurance carriers not to misrepresent benefits to policy holders, a review of the statute does not reveal any form of affirmative duty to disclose."467 F.Supp.2d at 745.Thus, it appears that a prohibition against misrepresentations under the Unfair Trade Practices Act would arise only if Burger had asked All State for a full disclosure his benefits, for which he received an incomplete answer.

Here, Burger asserts a claim of "silent fraud" without...