Kocurek v. Cuna Mut. Ins. Soc'y

• Decision Date: 24 January 2012
• Docket Number: No. 10-51042,10-51042
• Parties: BARBARA KOCUREK, Individually, and as Assignee of the Estate of Louis J. Kocurek, and on Behalf of All Others Similarly Situated, Plaintiff-Appellant v. CUNA MUTUAL INSURANCE SOCIETY, Defendant-Appellee
• Court: U.S. Court of Appeals — Fifth Circuit

BARBARA KOCUREK, Individually, and as Assignee of the Estate of Louis J. Kocurek,

and on Behalf of All Others Similarly Situated, Plaintiff-Appellant

v.CUNA MUTUAL INSURANCE SOCIETY, Defendant-Appellee

No. 10-51042

UNITED STATES COURT OF APPEALS FOR THE FIFTH CIRCUIT

Dated: January 24, 2012

Appeal from the United States District Court

for the Western District of Texas

5:08-cv-00581-FB

Before HIGGINBOTHAM, DAVIS, and STEWART, Circuit Judges.

W. EUGENE DAVIS, Circuit Judge:^*

Plaintiff Barbara Kocurek appeals the dismissal of her claims against CUNA Mutual Insurance Company alleging fraud and deceptive practices in the issuance of life insurance policies covering the life of her deceased husband on CUNA's motion to dismiss. Based on our conclusion that the plaintiff has standing to bring all but one of the classes of claims alleged and that the factsalleged by plaintiff state a legal claim, we reverse in part, affirm in part and remand this case to the district court.

I.

Louis J. Kocurek, as a member of the Firstmark Credit Union, purchased an accidental death and dismemberment (AD&D) policy naming plaintiff, his wife, as the primary beneficiary. The policy, CUNA Policy No. T5903024 (2004 Policy), was issued by the defendant CUNA around November 1, 2004 with a face amount of $200,000. Contingent beneficiaries to this policy were Mr. Kocurek's children from a previous marriage.

After paying the premiums on the 2004 Policy for four months, Mr. Kocurek received a mailing from CUNA offering him additional AD&D coverage. Mr. Kocurek purchased additional AD&D coverage by completing and returning the enrollment form included with the mailing. Around April 1, 2005, CUNA issued a second AD&D policy, No. T8314104 (the 2005 Policy), in the amount of $300,000. The 2005 Policy names Mr. Kocurek's children as primary beneficiaries and the plaintiff as contingent beneficiary. Mr. Kocurek paid the premiums on both policies for over a year and a half until his accidental death on July 27, 2006.

Plaintiff attempted to collect the benefits under the 2004 Policy and the Kocurek children filed a claim under the 2005 Policy. CUNA refused to pay the benefits on the 2004 Policy because of a "one policy only" provision in both policies, which CUNA contends voids the 2004 Policy. That provision reads -

11.03 Other Insurance With Us and Duplicate Coverage: You may not be the insured under more than one certificate per participating association. Upon discovery of a duplication, we will consider you to be covered under the certificate which provides the greatest amount of coverage, and will refund any duplicated premium payments which may have been made by or on your behalf.

Plaintiff contends that the above clause is misleading to customers, particularly because the one policy only provision is placed at the end of the policies under the heading "General Provisions," despite the presence of other, more appropriate policy sections. CUNA also solicits and continues to solicit its current customers with promotional mailings which "offer phantom additional coverage." Plaintiff complains that the mailings fail to mention the one policy only provision and there is no indication that CUNA has or has ever had a competent system in place to internally discovery and identify duplicate coverage.

Plaintiff alleges three causes of action for behalf of herself and six purported subclasses for false, misleading or deceptive acts or practices, fraud /misrepresentation, and negligence/gross negligence. CUNA filed a motion to dismiss arguing (1) that plaintiff does not have standing to bring this suit as either the beneficiary or purported assignee of the Kocurek estate, (2) that the plaintiff is not a consumer under the Texas Deceptive Trade Practices Act (DTPA) (if such claims were alleged), (3) that any DTPA claim did not survive the death of the consumer, (4) that plaintiff's misrepresentation claim fails because neither she nor Mr. Kocurek could have reasonably relied on any misrepresentation, (5) that plaintiff's negligence claims fail because plaintiff has not alleged a legal duty owed to her by CUNA, and (6) that the economic loss rule bars all of plaintiff's claims because the claims are contract-based seeking purely economic losses and are therefore governed by the express terms of the policies. The district court granted the motion. Plaintiff appeals.

II.

The district court dismissed Kocurek's claims either on the basis of lack of standing or for failure to state a claim. This court reviews a district court's dismissal under a Rule 12(b)(6) motion de novo. Gregson v. Zurich American Ins. Co., 322 F.3d 883, 885 (5th Cir. 2003). Such motions are viewed with disfavor and are rarely granted. Id. The complaint is construed liberally in favor of the plaintiff and all well pleaded facts are taken as true. Id. Gregson summarizes this strict standard of review as follows: "the question therefore is whether in the light most favorable to the plaintiff and with every doubt resolved on his behalf, the complaint states any valid claim for relief." Id. (quoting 5 CHARLES A. WRIGHT & ARTHUR R. MILLER, FEDERAL PRACTICE AND PROCEDURE § 1357, at 601 (1969)). With this guideline in mind and based on our review of the complaint, we conclude that this case should not have been resolved on a motion to dismiss, except for any claim under the Texas Deceptive Trade Practices Act. Our rationale for this decision follows.

Article III standing requires (1) an injury, (2) a fairly traceable causal link between the injury and the defendant's conduct and (3) that can be redressed by a decision in favor of the plaintiff. Lujan v. Defenders of Wildlife, 504 U.S. 555, 560-61 (1992); In re Cao, 619 F.3d 410, 421 (5th Cir. 2010)(en banc). Kocurek's allegations satisfy this test.

The plaintiff alleged fraudulent conduct on the part of the defendant by marketing the 2005 Policy as providing additional insurance, but which by its "one policy only" term terminated her established rights as primary beneficiary under the previously issued 2004 Policy. The district court concluded that because the plaintiff had not alleged injuries caused by the issuance of the 2004 Policy, of which she is the beneficiary, but instead claimed harm from the issuance of the 2005 Policy, she lacked standing...