Reid v. Life Ins. Co. of North America, Inc., 82-1757

• Decision Date: 12 October 1983
• Docket Number: No. 82-1757,82-1757
• Citation: 718 F.2d 677
• Parties: James J. REID, Appellee, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, INC., a corporation, Appellant.
• Court: U.S. Court of Appeals — Fourth Circuit

Page 677

718 F.2d 677

James J. REID, Appellee, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, INC., a corporation, Appellant.

No. 82-1757.

United States Court of Appeals Fourth Circuit.

Argued March 8, 1983.

Decided Oct. 12, 1983.

Thomas C. Salane, Columbia, S.C. (Turner, Padget, Graham & Laney, Columbia, S.C., on brief), for appellant.

Michael Parham, Greenville, S.C. (Andrew L. Abrams, Abrams, Bowen & Parham, Greenville, S.C., on brief), for appellee.

Before RUSSELL, WIDENER and CHAPMAN, Circuit Judges.

WIDENER, Circuit Judge:

James Reid brought this diversity action against the Life Insurance Company of North America to recover benefits under a policy of accident insurance. The policy provides benefits for accidental "loss of one member," which is defined as a "hand, foot or eye." The policy defines "loss" as "actual severance through or above the wrist or ankle joints...." The district court held the policy term "actual severance" to be ambiguous, and liberally construed the language to cover what it found to be Reid's functional loss of a leg after he underwent surgery for the implantation of a Bateman hip prosthesis. Because we believe that Reid did not suffer an "actual severance" within the meaning of the policy, we reverse.

On October 5, 1980, James Reid was helping a friend shore up a deck, which had partially fallen away from the house to which it was attached. Reid raised the deck with an automobile jack and cut some lumber to serve as supports. While lying on his right side and wedging the lumber between a cement pad and the deck, Reid suddenly experienced a popping sensation in his right hip, as he twisted around. He immediately felt pain and a burning sensation. A piece of the right femur had flaked off and passed into the hip joint, restricting the operation of the joint.

Reid had experienced problems with both hips before the incident of October 5. As early as June 1975, Reid visited an orthopedic surgeon, Dr. James Green. Dr. Green diagnosed Reid's condition as a wasting away of the cartilage of the hip joint, which he treated with anti-inflammatory drugs. Reid also consulted with Dr. Lesley Myer, who told him that X-ray pictures showed a narrowing of the right hip joint.

In April 1976, Reid saw another orthopedic surgeon, Dr. B. Freeman, who diagnosed Reid as suffering from arthritic degeneration of the hips. The degeneration was progressive and irreversible. His right hip was worse, and Dr. Freeman told him that he had lost fifty percent of the joint space in the hip, but that with some care the hip might last ten to fifteen years.

Dr. Freeman treated Reid with cortisone injections into both hip joints. Reid's condition improved for awhile, but then became increasingly worse. In October 1977, Dr. Freeman told Reid that he would definitely need reconstructive surgery on both hips. Dr. Freeman recommended that Reid make each hip last as long as possible before undergoing surgical replacement of the heads of the femurs. On April 12, 1978, Reid saw Dr. Freeman again and complained of increasing pain and decreasing range of motion in both hips, with more restriction in the right than in the left hip. Dr. Freeman told Reid that he "will undoubtedly ultimately require total hip joint replacement, probably of both hips." By December 1979, Reid had lost almost all rotary motion in his right hip and was in pain whenever he moved. If he labored for a living and were it not for his sedentary employment as a member of the South Carolina Industrial Commission, Reid stated he would have been totally incapacitated by pain and stiffness in his hip at that time.

After the incident on October 5, 1980, Reid had to use crutches for a couple of weeks. He saw Dr. Freeman on October 20, at which time he was scheduled for reconstructive surgery, which took place on February 4, 1981.

The surgical procedure involved an incision through the buttock. The surgeons exposed and dislocated the hip joint, and then cut off the head and part of the neck of the femur, which they replaced with a prosthesis. The femur and prosthesis were then replaced in the hip, and the incision was closed.

While immediately after the incident of October 5 the impairment of Reid's right leg was total, after the surgery his condition substantially improved. Most of the time, Reid can walk unassisted. He does, however, use a cane about one third of the time, and sometimes he needs crutches. Reid's leg "gives out" unpredictably when he feels pain and weakness in his hip and thigh. He can walk only on level ground for short distances, and he cannot stand for more than fifteen minutes without difficulty. Although he has occasional numbness in his toes, he has no sensory loss in his leg, and he has a full range of motion in his right ankle. He has no problem driving his car, which his job requires.

The district court found that Reid's injury resulted from an accident, directly and independently of all other causes, including arthritis. The district court further found that Reid suffered a severance of the leg, resulting in a complete functional loss of the right leg and foot, and gave judgment for Reid in the amount specified in the policy for "loss of one member."

In this diversity case, we apply the substantive law of the forum, South Carolina. Erie RR Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1487 (1938).

Under the law of South Carolina, insurance policies are subject to the general rules of contract construction. Sloan Constr. Co. v. Central Nat'l Ins. Co. of Omaha, 269 S.C. 183, 236 S.E.2d 818, 819 (1977). We must enforce, not write, contracts of insurance; and we must give policy language its "plain, ordinary, and popular meaning." Id. We should not torture the meaning of policy language in order to extend coverage that was never intended by the parties. Torrington Co. v. Aetna Casualty & Sur. Co., 264 S.C. 636, 216 S.E.2d 547, 500 (1975).

If policy language is ambiguous, it should be construed liberally in favor of the insured. Torrington, 216 S.E.2d at 550. If the policy language is not ambiguous, again, we must construe it "according to the plain, ordinary meaning" of its words. Deese v. American Bankers Life Assur. Co. of Florida, 263 S.C. 160, 208 S.E.2d 736, 737 (1974).

Neither party has pointed to any South Carolina authority construing the term "actual severance," and none has come to our attention. In the absence of South Carolina authority, we must decide the case as we think the highest court of South Carolina would if confronted with the same situation. See Commissioner v. Estate of Bosch, 387 U.S. 456, 465, 87 S.Ct. 1776, 1782, 18 L.Ed.2d 886 (1967); Hatfield v. Palles, 537 F.2d 1245 (4th Cir.1976). In deciding a question of first impression, the decisions of courts of other jurisdictions are persuasive authority in South Carolina. Shepherd v. United States Fidelity & Guar. Co., 233 S.C. 536, 106 S.E.2d 381, 383 (1958).

In turning to the decisions from other jurisdictions, we find three basic categories of cases. The first category of cases involves policy language that provides for benefits upon "loss" of a member, without any requirement that the loss take place in a certain manner. Courts of other jurisdictions have generally construed such "loss" so as to include "loss of use of the member." They have thus refused to read "loss" strictly to require an actual physical separation of the member from the body. E.g., Business Men's Mut. v. Lockhart, 291 S.W. 658, 660 (Tex.Civ.App.1927) ("loss" as used in a policy includes "any injury which renders the member useless"); Lord v. American Mut. Accident Ass'n, 89 Wis. 19, 61 N.W. 293, 294 (1894) (question of fact for jury whether "loss" of a hand included actual loss of three fingers, part of another, and destruction of the thumb joint).

A second category of cases in this area of law involves accident policies that insure against "loss" of a member and define the "loss" in terms such as "loss ... by severance at or above ..." or simply as "severance" or "amputation." Most courts that have faced such policy language have concluded it clearly and unambiguously required dismemberment. In Eminent Household of Columbian Woodmen v. Hancock, 174 S.W. 657 (Tex.Civ.App.1915), for example, the insured suffered a complete paralysis of his arm after a large muscle and a motor nerve were cut. The Court held that no ambiguity existed and that the insured did not suffer a "loss of one arm by severance at or above the wrist...." Id. at 658. The policy language clearly required severance from the body. Id. Similarly, in Brittain v. Prudential Ins. Co., 29 Ala.App. 57, 191 So. 794, cert. denied, 238 Ala. 445, 191 So. 800 (1939), the court held that the removal of cartilage and ligament from the insured's knee by surgery, without which the knee would not function, rendering the leg permanently useless, was not a "loss ... by severance at or above ... the ankle." 191 So. at 796-797. Concluding that the policy language was unambiguous, the court enforced the policy limitation. 191 So. at 800. See also to like effect: Muse v. Metropolitan Life Ins. Co., 193 La. 605, 192 So. 72, 73-74 (1939); Metropolitan Casualty Ins. Co. v. Shelby, 116 Miss. 278, 76 So. 839, 839-40 (1917); Wiest v. United States Health & Accident Ins. Co., 186 Mo.App. 22, 171 S.W. 570, 571-72. Also within this second category are cases in which courts have had to construe policy language that provides benefits for the "amputation or severance ... at or above the wrist joint." The general response to such language has been to hold that it clearly and unambiguously requires an actual cutting off of the member at the place indicated. E.g. Brotherhood of RR Trainmen v. Wilkins 57 Ky. 331, 78 S.W.2d 6, 9 (1935); Brotherhood of RR Trainmen v. Walsh, 89 Ohio St. 15, 103 N.E. 759, 760 (1913).

Within this second category of cases, however, a minority rule has evolved that allows for recovery of benefits when...