Karpenski v. Am. Gen. Life Cos.
| Decision Date | 14 February 2014 |
| Docket Number | Case No. C12–1569 RSM. |
| Court | U.S. District Court — Western District of Washington |
| Parties | Christyanna KARPENSKI, Plaintiff, v. AMERICAN GENERAL LIFE COMPANIES, LLC, d/b/a American General, d/b/a AG Benefit Solutions Connecticut Claim Center; The United States Life Insurance Company in the City of New York, d/b/a U.S. Life; and Seabury & Smith, Inc., d/b/a Marsh U.S. Consumer, d/b/a Marsh Affinity Group Services, Defendants. |
James A. Hertz, Richard H. Friedman, Friedman Rubin, Bremerton, WA, Sean J. Gamble, Henry G. Jones, Kenneth R. Friedman, Friedman Rubin, Seattle, WA, for Plaintiff.
Alycen Moss, Kenan G. Loomis, Cozen O'Connor, Atlanta, GA, Michael D. Handler, Cozen O'Connor, Seattle, WA, for Defendants.
ORDER ON MOTIONS
THIS MATTER comes before the Court on Motion for Partial Summary Judgment by Plaintiff (Dkt. # 142), Motion for Summary Judgment by Defendants (Dkt. # 145), and Motions to Strike (Dkt. 155, 170, 174–1, 178). Having considered the parties' pleadings and responses, including supplemental briefing solicited by the Court, as well as the remainder of the record, and having heard oral argument on this matter, the Court denies Plaintiff's Motion in part and defers its ruling on the parties' breach of contract and rescission claims pending further briefing as specified herein.
Plaintiff Christyanna Karpenski, a physical therapist, filed this action for breach of contract, breach of covenant of good faith and fair dealing (bad faith) and violation of the Washington Insurance Fair Conduct Act (“IFCA”) in King County Superior Court. Plaintiff Karpenski's claims arise out of a policy of disability insurance issue to Plaintiff, as a member of American Physical Therapy Association (“APTA”), by Defendant United States Life Insurance Company (“US Life”). Defendants properly removed this controversy to the Western District of Washington under this Court's diversity jurisdiction. See Dkt. # 1.
On February 15, 2009, Karpenski, a resident of Washington, applied for Long Term Disability coverage under a group policy issued by Defendant U.S. Life, a New York company, to APTA, an association headquartered in Virginia (Dkt. # 191, p. 4). The Master Policy contains a choice-of-law provision providing that the “policy is issued in and governed by the laws of [ ] Virginia.” Dkt. # 171, Ex. Q, p. 4. In order to procure individual coverage under the group Master Policy, Karpenski filled out and signed a Disability Insurance Application (“Application”). The Application contained a “good health provision,” which states, “Insurance will take effect only if a Certificate is issued based on this Application and the first premium is paid in full while there is no change in the insurability or health of such person from that stated in the Application.” Dkt. # 150–1, Ex. 2, p. 4. Plaintiff also filled out and signed a one-page “Polyp Questionnaire” as requested by U.S. Life. See Dkt. # 146, ¶ 23. US Life, via its third party administrator, Seabury & Smith, Inc., subsequently issued and delivered a Certificate of Insurance (“Certificate”) to Karpenski in a letter postmarked June 4, 2009 with an effective date of May 1, 2009. Dkt. # 122, Ex. 3; Dkt. # 143–1, Ex. A; Dkt. # 144, Ex. B, p. 12. The Certificate does not contain a choice-of-law provision but does specify that it is The Certificate also clarifies that the benefits described in it are “provided by group policy no. G–610.296, issued to [APTA].” Dkt. # 122–1, Ex. 3, p. 18.
It is undisputed that U.S. Life did not include a copy of Karpenski's signed application in the Welcome Packet containing her Certificate of Insurance. Dkt. # 143, ¶¶ 5–7. According to Plaintiff, she did not receive a copy of her Application until sometime after U.S. Life denied her claim for benefits. Dkt. # 143, ¶¶ 6–7. The date at which Plaintiff paid her first premium is, however, in dispute. See Dkt. # 145, p. 17 (); Dkt. # 168, ¶ 3 (); Dkt. # 150, p. 35, ln. 3–11; Dkt. # 171–19, Ex. T, p. 3.
Plaintiff submitted a notice of claim to her policy administrator in early June, 2009, due to disability arising from ulcerative pancolitis. Complaint, Dkt. # 1, Ex. 2, ¶¶ 26–28. Upon receiving a proof of claim form, Plaintiff filed a claim for benefits on September 10, 2009, disclosing that she was first treated by a physician for the present disability on May 6, 2009 and reporting that her total disability commenced on May 20. Dkt. # 144, Ex. F. As Karpenski filed the claim within two years of the commencement of coverage, American General elected to conduct a “contestable review” and sent Karpenski a Disability Claim Questionnaire about her medical and treatment history, which she returned on November 14, 2009. Dkt. # 144, Ex. G, p. 7; Ex. J. On March 25, 2010, American General formally informed Karpenski that her claim had been referred to medical underwriting for contestable review. See Dkt. # 144, Ex. K.
American General informed Plaintiff via a letter dated May 11, 2010 that it had determined to deny all benefits in connection with her disability claim and rescind her LTD coverage. Dkt. # 144, Ex. N.
The letter stated as grounds for rescission Karpenski's failure to disclose a history of joint and musculoskeletal disorders
. Id. at p. 3. The letter noted several undisclosed reports by Plaintiff to physical therapists and medical practitioner Dr. Jena Schliiter of conditions including localized shoulder pain, low back pain, ligamentous laxity, and lumbar spondylolisthesis. Id. In their Motion for Summary Judgment, Defendants raise additional grounds for rescission based on Plaintiffs' medical records and depositions of her healthcare providers, including Plaintiff's knowing misrepresentations of her alleged menstrual disorder, recurrent headaches, chronic fatigue, thyroid disorder, and mental and emotional problems. See Dkt. # 145. According to American General case manager Latoya Keatts, the claim would have been approved but for contestation by medical underwriting. See Dkt. # 144, Ex. I, p. 10. Plaintiff and her husband, Ryan Allmon, unsuccessfully appealed the rescission decision to U.S. Life and American General, including through letters dated October 15, 2010 and March 15, 2011. See Dkt. # 175–2, Ex. 3, 4.
Plaintiff filed her claim for breach of contract, bad faith, and violation of the IFCA in state court on August 15, 2012. Dkt. # 1, Ex. 2. Defendants removed the action to this Court and filed an answer with a counterclaim for declaratory relief, asking that the policy be deemed void ab initio and rescinded as a result of material misrepresentations on Plaintiff's Disability Application. See Dkt. # 6, ¶ 9. Upon motion by Defendants, the Court bifurcated the case and has stayed discovery on Plaintiff's bad faith and extra-contractual claims pending resolution of the breach of contract and rescission claims. See Dkt. # 41. Plaintiff now moves the Court to enter partial summary judgment against U.S. Life precluding it from introducing Karpenski's Application into evidence because of U.S. Life's failure to attach it to her Welcome Packet. Plaintiff also moves the Court to find that U.S. Life is precluded from rescinding her insurance coverage because she had no intent to deceive and to find U.S. Life in breach of contract. See Dkt. # 142. Upon their motion for summary judgment, Defendants move the Court to order that Plaintiff's coverage be rescinded based on alleged material, knowing misrepresentation on her insurance application made with intent to deceive and to find coverage void under the Application's “good health provision.” The parties also state eight separate motions to strike. Upon hearing oral argument on both parties' summary judgment motions, the Court solicited supplemental briefing as to whether Virginia or Washington law governs the contract and as to the requirements of the controlling application attachment statute under Washington law. See Dkt. # 188.
Through her Reply in Support of Motion for Partial Summary Judgment (Dkt. # 155, pp. 3–4), Plaintiff moves the Court to strike erratas/jurats for Lydia Labinsky, Wesley Jarvis, and Latoya Keatts submitted by Defendants with their responsive brief (Dkt. # 152, Ex. 1, 3, 8), on the grounds that they are sham affidavits and contradict prior testimony. Federal Rule of Civil Procedure 30(e) governs review of deposition transcripts and changes thereto. It provides that a deponent “must be allowed 30 days after being notified by the officer that the [deposition] transcript is available in which: (a) to review the transcript or recording, and; (b) if there are changes in form or substance, to sign a statement listing the changes and the reasons for making them.” See Fed.R.Civ.P. 30(e). The Ninth Circuit has clarified that the thirty-day correction clock begins to toll upon notification of availability, not possession of the transcript or recording. Hambleton Bros. Lumber Co. v. Balkin Enterprises, Inc., 397 F.3d 1217, 1224 (9th Cir.2005). While “missing the thirty day deadline by a mere day or two might not alone justify excluding the corrections in every case,” the basis for excluding late jurata is strengthened when compounded by other violations of Rule 30(e). Id.
In the Ninth Circuit, Rule 30(e) deposition errata are subject to the “sham rule,” which precludes a party from creating “an issue of fact by an affidavit contradicting his prior deposition testimony.” Hambleton, 397 F.3d at 1225 (internal citations omitted). See also, Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266 (9th Cir.1991). “While the language of FRCP 30(e) permits corrections in ...
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