Pennsylvania Life Ins. Co. v. Bumbrey, Civ. A. No. 87-0023-A

CourtUnited States District Courts. 4th Circuit. United States District Court (Eastern District of Virginia)
Citation665 F. Supp. 1190
Docket Number87-0407-A.,Civ. A. No. 87-0023-A
PartiesPENNSYLVANIA LIFE INSURANCE COMPANY, Plaintiff and Counter-Defendant, v. Gladys E. BUMBREY, Emma L. Henderson, Harmon F. Johnson, Nathaniel J. Radford, Jr., Ossie L. Skipper, Defendants and Counter-Plaintiffs.
Decision Date03 August 1987


James L. Nolan, Washington, D.C., Rodney H. Glover, Alexandria, Va., for plaintiff and counter-defendant.

William Denton, Biloxi, Miss., James R. Becker, Middleburg, Va., for defendants and counter-plaintiffs.


CACHERIS, District Judge.

Plaintiff/counter-defendant Pennsylvania Life Insurance Company ("Penn Life") brings this Motion for Summary Judgment against defendants/counter-plaintiffs Gladys E. Bumbrey ("Bumbrey"), Emma L. Henderson ("Henderson"), Harmon F. Johnson ("Johnson"), Nathaniel J. Radford, Jr. ("Radford"), and Ossie L. Skipper ("Skipper"). For the reasons set forth below, the motion is granted in part and denied in part.


This case involves, as the caption suggests, insurance policies issued by Penn Life to five residents of Virginia, the defendants/counter-plaintiffs in this action. Each of these individuals was insured under a Penn Life Automobile Accident & Hospital Insurance Policy which provided for monthly benefits in the event of an accident causing total disability resulting in house confinement. Each counter-plaintiff suffered an accident and made a claim for benefits. As to each claim, a dispute arose regarding whether the claimant was house confined and therefore entitled to benefits. Each claimant subsequently signed a release settling his or her claim. On January 7, 1987, Penn Life began this case by filing a Declaratory Judgment action seeking an order declaring the releases valid and enforceable.

The defendants (also collectively referred to as the "counter-plaintiffs") deny the validity of the releases on grounds of fraud and in their Second Amended Counterclaims seek damages from Penn Life for breach of contract, fraud in the inducement (insurance policies), and fraud in the inducement (releases). In addition, defendant Radford claims he signed the release under duress. All counter-plaintiffs except Johnson also claim damages for intentional infliction of emotional distress.

Penn Life argues in its Motion for Summary Judgment that the releases executed by the counter-plaintiffs are valid and enforceable as Penn Life did not misrepresent facts, but merely stated opinions. Penn Life also asserts that each of the fraud counterclaims is barred by the statute of limitations. As to the breach of contract claims, Penn Life argues (in addition to the validity of the releases) that the house confinement clause found in each of the insurance policies is valid and enforceable, and therefore all benefits contractually due the counter-plaintiffs were paid. Finally, as to the claims for intentional infliction of emotional distress, Penn Life argues its conduct was not sufficiently extreme and outrageous to create liability for emotional distress.


In general, summary judgment "`should be granted only where it is perfectly clear that no issue of fact is involved and inquiry into the facts is not desirable to clarify the application of the law.'" Charbonnages de France v. Smith, 597 F.2d 406, 414 (4th Cir.1979) (quoting Stevens v. Howard D. Johnson Co., 181 F.2d 390, 394 (4th Cir. 1950)). The burden is on the moving party to "`show' that there `is no genuine issue as to any material fact' and that he `is entitled to judgment as a matter of law.'" Charbonnages, 597 F.2d at 414; Fed.R. Civ.P. 56(c). In determining whether this showing has been made, the nonmoving party:

is entitled ... to have the credibility of his evidence as forecast assumed, his version of all that is in dispute accepted, all internal conflicts in it resolved favorably to him, the most favorable of possible alternative inferences from it drawn in his behalf; and finally, to be given the benefit of all favorable legal theories invoked by the evidence so considered.

Charbonnages, 597 F.2d at 414.

The Supreme Court recently clarified the nonmoving party's burden in Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). In Celotex, the Court held a nonmoving party must make a showing sufficient to establish each element of her claim in order to defeat a motion for summary judgment. Celotex, 106 S.Ct. at 2553. The court stated:

In our view, the plain language of Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an essential element to that party's case, and on which that party will bear the burden of proof at trial. In such a situation, there can be "no genuine issue as to any material fact," since a complete failure of proof concerning an essential element of the nonmoving party's case necessarily renders all other facts immaterial.

Celotex, 106 S.Ct. at 2552-53.

The nonmoving party cannot rest on the bald assertions of her pleadings, but must point to specific facts establishing her essential elements:

Rule 56(e) therefore requires the nonmoving party to go beyond the pleadings and by her own affidavits, or by the "depositions, answers to interrogatories, and admissions on file," designate "specific facts showing that there is a genuine issue for trial."

Celotex, 106 S.Ct. at 2553. See also Ross v. Communications Satellite Corp., 759 F.2d 355, 364 (4th Cir.1985).

Here, the defendants have relied principally on the affidavit of Larry D. Price, a former Penn Life employee. To a large extent defendants have failed to support their opposition with specific facts by making reference to depositions, interrogatory answers or requests for admissions.1


As the facts vary in each of the five individual cases, Penn Life's Motion for Summary Judgment confronts this court with five separate motions for summary judgment. However, each case contains similar allegations and issues of law which must be decided by the court. The court will address these common issues together.

A. The Insurance Policy

This action centers around the "Total Confinement Benefits for Life" provision in each of the counter-plaintiffs' insurance policies. This provision reads in full:

If "Such Injury" as described in the Insuring Clause and not hereinafter excepted shall within thirty days after the date of the accident continously disable and prevent the Insured from performing any and every duty pertaining to any business or occupation, and as the result thereof is thereby necessarily confined within doors and requires regular and personal attendance by a currently licensed practitioner of the healing arts, other than himself, the Company will pay for any one accident an indemnity for one day or more at the rate shown in the application (1/30th of such Monthly Benefit for each day of any period less than a full month), payments to be made periodically in monthly intervals so long as such total disability and such personal attendance and confinement continues even for life. Confinement shall not be considered terminated by reason of transportation of the Insured at the direction of his physician to or from a hospital or doctor's office for necessary treatment.
This benefit is in addition to any other benefit payable under this policy.

(Defendants' Collective Response, Attachments B, C, D, E, and F).

All five of the counter-plaintiffs allege in their Second Amended Counterclaims that Penn Life, through its claims adjuster Anthony Carney, deliberately used an unreasonably restrictive interpretation of the house confinement provision found in the benefits clause to cheat them out of their benefits. Counter-plaintiffs allege that Penn Life, as a member of the International Claim Association, knew similar clauses had received liberal interpretations by judicial construction. Moreover, each counter-plaintiff alleges that Penn Life's own policy manual acknowledges a more liberal definition of house confinement. The five counter-plaintiffs allege that despite this acknowledgement, Penn Life represented to the insureds the following meaning of house confinement:

Confinement is the inability to leave the home except to obtain medical treatment or engage in medically prescribed activities which are primarily therapeutic and not social, recreational or business in nature.

The counter-plaintiffs claim they were fraudulently induced to purchase their insurance policies as Penn Life, at the time of contracting, did not intend to provide benefits as required by the policies, but rather intended to use house confinement to cut off those benefits. This is the fraud in the inducement (insurance policy) claim. Second, counter-plaintiffs claim that Penn Life misrepresented the meaning of house confinement and thereby fraudulently induced them to sign the releases. Third, all counter-plaintiffs allege they were house confined and therefore owed benefits. Finally, all counter-plaintiffs except Johnson allege that Penn Life's actions in handling their claims constituted intentional infliction of emotional distress. The court will now discuss these four claims and the issues of law common to each claimant's case which they bring before the court.

B. Breach of Contract

All five counter-plaintiffs make the same breach of contract claim against Penn Life. First, each alleges that the release is not valid and enforceable due to fraud. Second, each counter-plaintiff alleges that Penn Life breached its contract and implied covenant of good faith and fair dealing by:

(1) misrepresenting facts regarding the insurance coverage;
(2) failing to acknowledge and act promptly upon communications regarding

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