Stinnett v. Northwestern Mut. Life Ins. Co.

• Decision Date: 18 April 2000
• Docket Number: No. EV 98-98-C-T/H.,EV 98-98-C-T/H.
• Citation: 101 F.Supp.2d 720
• Parties: David A. STINNETT, Plaintiff, v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Southern District of Indiana

101 F.Supp.2d 720

David A. STINNETT, Plaintiff, v. NORTHWESTERN MUTUAL LIFE INSURANCE COMPANY, Defendant.

No. EV 98-98-C-T/H.

United States District Court, S.D. Indiana. Evansville Division.

April 18, 2000.

Alan N. Shovers, Kahn Dees Donovan & Kahn, Evansville, IN, for plaintiff.

Maurice J. McSweeney, Foley & Lardner, Milwaukee, WI, Ross E. Rudolph, Mattingly Rudolph Fine & Porter, Evansville, IN, for defendant.

Entry on Cross-Motions for Summary Judgment

TINDER, District Judge.

The Plaintiff, David A. Stinnett, brings this breach of contract action against the Defendant, Northwestern Mutual Life Insurance Company, alleging that the Defendant owes him disability payments under certain policies of insurance. Both parties have moved for summary judgment. The court rules as follows.

I. Factual and Procedural Background

David A. Stinnett, an Indiana resident, contracted with the Northwestern Mutual Life Insurance Company ("Northwestern"), a corporation organized and existing under the laws of the State of Wisconsin, for six separate policies of disability insurance, each of which provides for payment of a monetary benefit in the event Mr. Stinnett suffers a qualifying disability. Though the policy language varies slightly from contract to contract, each policy also requires that the insured—Mr. Stinnett— be under the care of a licensed physician during the period of disability in order to recover benefits.

On December 23, 1993, Mr. Stinnett learned that a group of former insurance clients were contemplating legal action against him for alleged unfair selling practices. This threat of legal action had a negative impact on his psychological health and, he claims, triggered the onset of depression. Mr. Stinnett did not, however, seek treatment for depression until September 13, 1995.

On October 19, 1995, Mr. Stinnett filed a claim for disability benefits under his Northwestern disability insurance policies, alleging that he was disabled because of depression. After investigating his claim, on February 13, 1996, Northwestern partially approved his claim for disability benefits. It determined that his disability onset date was September 13, 1995 — the date he first saw a licensed physician for his condition and could provide medical evidence of his disability.

On January 26, 1998, Mr. Stinnett sought retroactive benefits under the disability polices for the period between December 23, 1993 and September 13, 1995. Northwestern denied payment of benefits for that time period.

On May 8, 1998, the Plaintiff commenced this action in the Vanderburgh Circuit Court seeking payment of disability benefits for the aforementioned time period. The Defendant Northwestern filed a Notice of Removal, removing this action to this court.

On January 31, 1999, the Plaintiff filed his Motion for Summary Judgment with supporting brief and evidentiary materials. On February 16, 1999, the Defendant filed its Cross-Motion for Summary Judgment with supporting brief and evidentiary materials.

II. Summary Judgment Standard

Summary judgment should be granted if the movant demonstrates through the pleadings, depositions, answers to interrogatories, admissions on file, and affidavits that no genuine issue of material fact exists and that the movant is entitled to judgment as a matter of law. See FED. R. CIV. P. 56(c); Celotex Corp. v. Catrett, 477 U.S. 317, 322-23, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the movant meets this burden, then the nonmovant must set forth specific facts showing a genuine issue for trial. See FED. R. CIV. P. 56(e); Grun v. Pneumo Abex Corp., 163 F.3d 411, 418 (7th Cir.1998). In deciding whether there is a genuine issue of material fact, the court views the evidence in the light most favorable to the nonmovant. See Adickes v. S.H. Kress & Co., 398 U.S. 144, 157, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970). A fact is material if it might affect the outcome of the case under the governing law. See Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

III. Analysis

Mr. Stinnett moves for summary judgment, contending that he can recover disability benefits for the time period of December 23, 1993 to September 13, 1995, because there is proof that he suffered from a disability during that period even though he was not under the care of a physician.

Northwestern contends that Mr. Stinnett's motion must be denied for two reasons: (1) because of a lack of proof of a disability for the relevant time period, and (2) because valid contractual provisions require him to be under the care of a licensed physician in order to be entitled to disability benefits and he was not under such care during the relevant time period. For these same reasons, Northwestern moves for summary judgment in its favor.

At the outset, it is noted that neither party directly addresses the matter of what substantive law should be applied in this case. Mr. Stinnett ignores the matter, and Northwestern apparently assumes that Indiana substantive law applies. (This inference is drawn from Northwestern's reliance on Indiana case law concerning policies of insurance.) However, the court determines that Indiana substantive law applies to this diversity action.

In deciding which substantive law applies, the court must apply the choice of law rules of the state in which it sits—Indiana. See Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Indiana applies a "most intimate contracts" approach to contract claims. See W.H. Barber Co. v. Hughes, 223 Ind. 570, 63 N.E.2d 417, 423 (1945); Dohm & Nelke v. Wilson Foods Corp., 531 N.E.2d 512, 513 (Ind.Ct.App. 1988). Under that approach, "[t]he court will consider all acts of the parties touching the transaction in relation to the several states involved and will apply as the law governing the transaction the law of that state with which the facts are in most intimate contact." W.H. Barber Co., 63 N.E.2d at 423; see also Schaffert v. Jackson Nat'l Life Ins. Co., 687 N.E.2d 230, 233 (Ind.Ct.App.1997), trans. denied. The following factors have been identified as representative of those which the court should consider: (1) the place of contracting, (2) the place of negotiation, (3) the place of performance, (4) the location of the subject matter of the contract, and (5) the domicile, residence, nationality, place of incorporation and place of business of the parties. See Schaffert, 687 N.E.2d at 233; Eby v. York-Div., Borg-Warner, 455 N.E.2d 623, 626 (Ind.Ct.App.1983).

Applying these factors, the court finds that Indiana has the most intimate contacts with this action. The first two factors do not assist the court's inquiry as there is no indication as to the places of contracting and negotiation. The third factor has little relevance because of the nature of a disability insurance policy; the policy did not require the performance of any act. See Schaffert, 687 N.E.2d at 233 (life insurance policy). The location of the subject matter of the contract is of no benefit either. See id. That leaves the fifth factor — the place of residence, incorporation and business of the parties. Mr. Stinnett, the insured, is an Indiana resident, whereas, Northwestern is incorporated in Wisconsin. Indiana, however, has the greater interest in the outcome of this controversy. The purpose of a disability insurance policy is to protect the insured's income lost due to a disability. Because Mr. Stinnett is a resident of Indiana, Indiana has a greater interest in protecting his income. In furtherance of that greater interest, Indiana's substantive law should be applied to this controversy. Therefore, the court concludes that Indiana has the most intimate contacts with this action.

Furthermore, Mr. Stinnett has not contested Northwestern's position that Indiana substantive law applies. And, in any event, as between the laws of Wisconsin and the laws of Indiana, the choice makes no difference in the outcome of this case. See Hampton Plains Realty Co. v. Cohen, 214 Wis. 128, 252 N.W. 572, 573 (1934); Coutts v. Wisconsin Retirement Bd., 201 Wis.2d 178, 547 N.W.2d 821, 826 (App.1996) ("Unambiguous contract terms are given their ordinary dictionary meaning."), aff'd, 209 Wis.2d 655, 562 N.W.2d 917 (1997).

Under Indiana law, "clear and unambiguous policy language must be given its ordinary meaning." Colonial Penn Ins. Co. v. Guzorek, 690 N.E.2d 664, 667 (Ind.1997). Unambiguous terms must be enforced even if the terms limit the insurer's liability. See Trisler v. Indiana Ins. Co., 575 N.E.2d 1021, 1023 (Ind.Ct.App. 1991); Guzorek, 690 N.E.2d at 669.

As a general rule, provisions in policies of disability insurance requiring that the insured be under the care of a licensed physician during the period of disability in order to receive benefits are enforceable. See 15 COUCH ON INSURANCE 3D § 146:25 (3d ed.1998). It is undisputed that each of the policies of insurance at issue contains such a provision. Mr. Stinnett, however, argues that the court should not enforce these provisions. He correctly points out that courts have not always enforced such provisions. (Br. in Support of Pl.'s Mot. for Summ. J. at 6-7 (citing Russell v. The Prudential Ins. Co. of America, 437 F.2d 602 (5th Cir.1971); Dixon v. Pacific Mut. Life Ins. Co., 151 F.Supp. 106 (S.D.N.Y.1957); Massachusetts Bonding & Ins. Co. v. Springston, 283 P.2d 819 (Okla.1955); Penrose v. Commercial Travelers Ins. Co., 75 Idaho 524, 275 P.2d 969 (1954); World Ins. Co. v. McKenzie, 212 Miss. 809, 55 So.2d 462 (Miss.1951); Schoeman v. Loyal Protective Life Ins. Co. of Mass., 239 Iowa 664, 32 N.W.2d 212 (1948); Davidson v. First Am. Ins. Co., 129 Neb. 184, 261 N.W. 144 (1935); Sullivan v. North Am. Acc. Ins. Co., 150 A.2d 467 (D.C.1959); Yager v. American Life Ins. Assoc., 44 N.J.Super. 575, 131 A.2d 312 (App.Div.1957))). He asserts that these cases establish that such provisions only serve an evidentiary purpose and...