Hunter v. American General Life and Acc. Ins. Co., No. C/A 3:01-5000-22.
Decision Date | 24 June 2005 |
Docket Number | No. MDL 1429.,No. C/A 3:01-5000-22. |
Citation | 375 F.Supp.2d 442 |
Court | U.S. District Court — District of South Carolina |
Parties | Louise HUNTER; Gloria Hunter Carr; Jessie Hunter, Jr.; Arthur Hunter; Annie Griffin; Patricia Griffin Taylor; Joyce Griffin Barton; Tommy Griffin; Irene Davis; Terry Davis; Moses Davis; Melvin Davis; Edith Mack; Lorene Mack; and Alexander Mack, individually and as representatives of those similarly situated, Plaintiffs, v. AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY; and Independent Life and Accident Insurance Company, Defendants. |
Don Barrett, Barrett Law Offices, Lexington, MS, Joseph Preston Strom, Jr., Strom Law Firm, Thomas E. McCutchen, McCutchen, Blanton, Rhodes and Johnson, Columbia, SC, for Plaintiffs.
Lee E. Bains, Jr., Jeffrey M. Grantham, Stephen C. Jackson, Michael D. Mulvaney, Maynard, Cooper & Gale, P.C., Birmingham, AL, William Coleman Hubbard, C. Mitchell Brown, Don Lawrence Kristnik III, Nelson, Mullins, Riley & Scarborough, Columbia, SC, for defendants.
ORDER AND OPINION GRANTING IN PART AND DENYING IN PART MOTION TO DISMISS
This order relates to the Third Consolidated Amended Class Action Complaint filed on January 5, 2005 (Pacer Doc. No. 123) (hereinafter "Complaint").1 The Complaint was filed in accordance with the Order entered on December 2, 2004 (hereinafter "December 2nd Order") (Pacer Doc. No. 122).
The motion presently before the court is Defendants' motion to dismiss certain aspects of the Complaint (Pacer Doc. No. 125). For the reasons set forth below, the court has determined that Defendants' motion to dismiss should be granted in part and denied in part.
The Complaint alleges that Defendant American General Life and Accident Insurance Company ("American General") or companies that it has acquired (collectively "Defendants") engaged in racial discrimination in the issuance or maintenance of certain forms of insurance. The allegations central to the present motion relate to alleged discriminatory practices in the sale of what are commonly referred to as industrial life insurance policies.2 Specifically, Plaintiffs allege that various companies acquired by Defendant American General discriminated against African-Americans by offering African-Americans less coverage per dollar of premium than offered similarly situated Caucasians.
The Complaint asserts three causes of action: (1) violation of 42 U.S.C. § 1981 ( ); (2) violation of 42 U.S.C. § 1982 ( ); and (3) a claim for injunctive relief, disgorgement, unjust enrichment and constructive trust.
In its motion to dismiss and supporting briefs, Defendant argues that Plaintiffs, who claim an interest as an insured in a life insurance policy, have failed to satisfy their burden of establishing standing to pursue the causes of action in the Complaint. Applying the Fourth Circuit's standard for determining the threshold issue of standing as explained in Friends for Ferrell Parkway, LLC v. Stasko, 282 F.3d 315, 319-320 (4th Cir.2002), the court finds that the following five Plaintiffs have failed to satisfy their burden of establishing standing: Lorene Mack, Alexander Mack, Gloria Hunter, Arthur Hunter, and Jessie Hunter. Those five Plaintiffs were minors when the policies were issued. They were the insureds under the policies. They did not pay policy premiums during the short duration of the policies at issue. The policies lapsed while these Plaintiffs were still minors. The policy language does not confer standing on these five Plaintiffs under these circumstances. They have not satisfied their burden of establishing the Article III standing requirements of injury, traceability, and redressability outlined by the Fourth Circuit in the Friends of Ferrell Parkway decision. Accordingly, these five Plaintiffs do not have standing to assert a claim for alleged premium overcharges for policies that terminated for non-payment of premiums. As a result, Defendant's motion to dismiss for lack of standing is granted as to Lorene Mack, Alexander Mack, Gloria Hunter, Arthur Hunter, and Jessie Hunter.
The Second Cause of Action alleges a claim under 42 U.S.C. § 1982. Plaintiffs allege that, "[i]nsurance contracts are personal property within the meaning of 42 U.S.C. § 1982". Complaint ¶ 59. In its motion to dismiss and supporting briefs, Defendant argues that Plaintiffs do not state a claim under Section 1982 because an insurance policy is not "personal property" within the scope of Section 1982.
Although the Fourth Circuit has not addressed the issue, the prevailing view is that Section 1982 does not apply to contract rights.3 The court finds persuasive the analysis in Yates v. Hagerstown Lodge No. 212, 878 F.Supp. 788 (D.Md.1995). In the Yates case, plaintiff argued that a contract for club membership, "constitutes personal property within the meaning of Section 1982". Id. at 799. The district court disagreed with plaintiff's analysis of the case authority, granted defendant's motion to dismiss, and explained as follows:
Section 1982 generally is aimed at remedying discrimination relating to property, while Section 1981 provides against the refusal to contract on the basis of race. [Plaintiff] has failed to explain why, absent specific allegations that an interest in property has been denied, Section 1982 should be expanded to apply to matters clearly contractual.
The decision in the Yates case is consistent with general rules of statutory construction. Sections 1981 and 1982 originate from the same legislative enactment: Section 1 of the Civil Rights Act of 1866. General Bldg. Contractors Ass'n v. Pennsylvania, 458 U.S. 375, 102 S.Ct. 3141, 3146, 73 L.Ed.2d 835 (1982). Section 1981(a) specifically protects the right "to make and enforce contracts". 42 U.S.C. § 1981(a). Section 1982 does not mention contracts, but does protect the right to "inherit, purchase, lease, sell, hold and convey real and personal property." 42 U.S.C. § 1982. Section 1981 clearly applies to contracts. Accepting Plaintiffs' position that Section 1982 also applies to contracts would render Section 1981 superfluous. Courts have "a deep reluctance to interpret a statutory provision so as to render superfluous other provisions in the same enactment." Freytag v. Commissioner, 501 U.S. 868, 877, 111 S.Ct. 2631, 2638, 115 L.Ed.2d 764 (1991) (citation omitted); Maryland Psychiatric Soc., Inc. v. Wasserman, 102 F.3d 717, 720 (4th Cir.1996) (, )cert. denied, 522 U.S. 810, 118 S.Ct. 51, 139 L.Ed.2d 16 (1997). As a matter of statutory construction, Congress is presumed to have intended a difference between Section 1981 and 1982 when it enacted them in 1866.
Based on this analysis, Defendant's motion to dismiss is granted as to Plaintiffs' Section 1982 claim in the Second Cause of Action.
The Fourth Cause of Action is denominated a claim for injunctive relief/disgorgement and unjust enrichment and imposition of a constructive trust.4 Defendant's motion to dismiss and supporting briefs argue that this cause of action should be dismissed because the express contracts between the parties govern the relationship and preclude the quasi-contract unjust enrichment claim. Defendant also argues that the state law unjust enrichment claims are barred by the statute of limitations for all Plaintiffs and by the rule of repose for the Alabama Plaintiffs. Although the Fourth Cause of Action appears to be a separate cause of action, Plaintiffs' Brief states that, Pacer Doc. No. 129, 00. 22 and 23 n. 7. Based on Plaintiffs' clarification of its position, the Fourth Cause of Action is not to be considered as a separate cause of action but simply as a claim for relief under Plaintiffs' Section 1981 claim.
Defendant argues that the Complaint fails to allege the essential elements of a Section 1981 claim. The court finds that the Complaint sufficiently alleges the essential elements of a Section 1981 claim. Defendant's motion to dismiss is denied as to the sufficiency of the allegations of the Section 1981 claim.
Plaintiffs' Complaint seeks recovery for certain actions occurring after the formation of the insurance policies at issue. Plaintiffs' post-formation conduct claims include the collection of alleged discriminatory premium payments, the payment of alleged inadequate death benefits, actions to conceal the alleged discriminatory pricing scheme, and the failure to take corrective action with regard to in-force policies that Defendant allegedly knew were discriminatorily rated. Complaint ¶¶ 25-32. In its motion to dismiss and supporting briefs, Defendant argues that Plaintiffs are precluded from pursing a Section 1981 claim as to any such alleged post-formation conduct that occurred: (1) before the November 11, 1991 effective date of the Civil Rights Act of 1991 and (2) more than four years before the original Louise Hunter complaint was filed on February 8, 2002.
Prior to the Civil Rights Act of 1991 that became effective on November 21, 1991, Section 1981 provided in relevant part that "[a]ll persons ... shall have the same right in every State and Territory to make and enforce contracts ... as is enjoyed by white citizens..." 42 U.S.C. § 1981(a). In Patterson v. McLean Credit Union, 491 U.S. 164, 171, 109 S.Ct. 2363, 105 L.Ed.2d 132 (1989) ("Patterson"), the United States Supreme Court ruled that ...
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