John Hancock Mut. Life Ins. Co. v. Amerford Intern. Corp.
| Citation | 22 F.3d 458 |
| Decision Date | 14 June 1994 |
| Docket Number | D,No. 1369,1369 |
| Parties | , 18 Employee Benefits Cas. 1315 JOHN HANCOCK MUTUAL LIFE INSURANCE CO., Appellee, v. AMERFORD INTERNATIONAL CORP., Appellant. ocket 93-9128. |
| Court | U.S. Court of Appeals — Second Circuit |
Barbara M. Roth, New York City (Elliot Paskoff, Francis J. Hearn, Jr., and Townley & Updike, on the brief), for appellee.
Robert S. Nayberg, Carle Place, NY (Martin H. Scher, on the brief), for appellant.
Before: TIMBERS, CARDAMONE, and WINTER, Circuit Judges.
This is an appeal from a summary judgment entered in the Southern District of New York, John F. Keenan, District Judge, in favor of John Hancock Mutual Life Insurance Company (Hancock).
Amerford International Corp. (Amerford) contends that the court erred in strictly construing contractual language to award summary judgment to Hancock. On appeal, Amerford requests a remand for entry of an order granting its own cross-motion for summary judgment. It also seeks reversal of the order denying Amerford's motion for leave to amend its answer.
We affirm.
We summarize only those facts and prior proceedings believed necessary to an understanding of the issues raised on appeal.
Effective July 1, 1985, Hancock and Amerford entered into a contract called the Planned Funding Agreement (PFA). Under the PFA, Hancock administered Amerford's employee benefits and paid any benefits' claims from a fund set aside for that purpose. In return, Amerford received an insurance policy that assured that its liability for employee medical benefits would be capped at a predetermined amount each year.
The PFA operated as follows. It specifically established a Claim Liability Limit (CLL), which was a figure representing the maximum amount of Amerford's liability in a given contract month or year. The CLL was calculated by Hancock underwriters who would examine Amerford's workforce and claim history. Hancock then would establish a Monthly Dollar Factor, which was the monthly premium Amerford paid per employee. That figure was established at the beginning of the contract year, in this case July 1, and did not vary throughout that year. Each month, the Monthly Dollar Factor was multiplied by the number of Amerford employees covered by the PFA. The product of that multiplication was the CLL for that month.
Under the terms of the PFA, when the amount paid out in any given month or contract year exceeded the CLL, Hancock reimbursed Amerford the excess amount as "Deficit". Conversely, if the amount of claims paid out in any future month or contract year was less than the CLL, then "Margin" existed and Amerford was obligated, for an additional premium, to pay Hancock out of any Deficit that Hancock already had paid to Amerford, plus expenses to the extent such amounts and expenses exceeded premiums paid. The PFA assured Amerford that Hancock would make all necessary payouts above the CLL and that Amerford would not have to repay Hancock until Margin became available.
Amerford renewed the PFA each year from 1985 through 1990, with each new contract year beginning on July 1. Section 4(i) of the PFA defines a contract year as the period beginning on a Policy Anniversary, here July 1, and ending either (1) on the day before the next scheduled Policy Anniversary (June 30), or (2) on the date that the agreement terminates. The contract year in question began on July 1, 1990; the agreement was terminated on September 30, 1990. According to the terms of the contract, the last contract year ran from July 1, 1990 to September 30, 1990.
On May 25, 1990, Hancock notified Amerford that the new Monthly Dollar Factor for the next contract year, beginning July 1, 1990, would be $363.78. According to the PFA, the contract automatically renewed each July 1st unless either party gave at least thirty-one days written notice of termination prior to that date. The latest date that either party could terminate the contract in 1990 was May 30.
Hancock contends that it tried to meet with an Amerford representative regarding the PFA several times during June 1990. Each time, however, Amerford rebuffed Hancock's efforts, stating that the representative had not had time to consider the new PFA. After receiving no feedback from Amerford, and after reconsidering the numbers, Hancock decided to revise its renewal recommendation and increase the Monthly Dollar Factor to $520.21. Hancock sent notice of this revision to Amerford on June 29, 1990 and July 3, 1990--two days before and three days after the beginning of the contract year.
Amerford did not object at that time. The parties subsequently met and agreed on the terms. On or about July 20, 1990, Hancock sent Amerford a letter detailing the renewal terms, which were agreed to and retroactively implemented effective July 1, 1990. Amerford, however, began researching alternatives and found a new insurance carrier. On September 30, 1990, Amerford terminated the PFA contract with Hancock. At that time, Amerford held Deficit under the terms of the PFA.
Section 9II(b) of the PFA states that at the end of each contract year, Amerford agrees to pay Hancock "an amount equal to the lesser of: (i) the Margin for such Contract Year; or (ii) the total amount of the Deficit, if any, which has not been recovered previously through the payment of additional premiums". After Amerford terminated the contract, Hancock sent Amerford a report in mid-December 1990 requesting the payment of the total amount of outstanding Deficit. Hancock also requested payment of expenses for the contract year less any amounts due Amerford. In arriving at a total, Hancock figured that the Deficit was $318,969 plus $12,353 for the Administrative Service Charges for the last contract year, less $230,294 that was credited to Amerford. The final figure that Hancock estimated it was owed by Amerford was $101,028.
Amerford refused to pay that amount. Hancock commenced the instant action. Amerford asserted that the terms of the PFA were ambiguous, that the court should look to extrinsic evidence to clear up the ambiguities, and, as a result, the court should find for Amerford. Amerford also claimed that the rate increase at the last moment was inequitable.
The court concluded otherwise, holding that the language of the PFA was clear and that it would not rewrite the PFA to suit Amerford's requests. The court granted Hancock's motion for summary judgment. It awarded Hancock $101,028 and denied Amerford's cross-motion.
During the pre-trial procedures, the court stated at a conference that all amendments to pleadings must be submitted by April 30, 1992. On August 28, 1992, Amerford moved for leave to amend its answer to assert a counterclaim for $217,941. Amerford explained its request as resulting from the delay and confusion caused by the death of its Human Resource Director who kept files on this matter. The court denied Amerford's motion as well as Amerford's subsequent motion for reconsideration.
Amerford contends that the court erred in strictly construing contractual language to grant Hancock's motion for summary judgment. On appeal, Amerford requests a remand for entry of an order granting its own cross-motion for summary judgment. Amerford also seeks reversal of the court's order denying Amerford's motion for leave to amend its answer.
The court grants a motion for summary judgment pursuant to Fed.R.Civ.P. 56 when "there is no genuine issue as to any material fact and ... the moving party is entitled to a judgment as a matter of law". We review the grant of summary judgment de novo. Sayers v. Rochester Telephone Corp., 7 F.3d 1091, 1094 (2 Cir.1993). We may not resolve disputed issues of fact; instead, we must determine whether there are genuine issues of fact to be resolved at trial. Id. If there are disputed issues of fact, then we must remand for a full trial.
In a contract dispute, a motion for summary judgment may be...
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