Whitley v. Hartford Acc. and Indem. Co.

• Decision Date: 16 April 1981
• Docket Number: Civ. A. No. 3-80-0310-H.
• Citation: 532 F. Supp. 190
• Parties: Wyndham R. WHITLEY and Elisabeth M. Whitley, Plaintiffs, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Texas

532 F. Supp. 190

Wyndham R. WHITLEY and Elisabeth M. Whitley, Plaintiffs, v. HARTFORD ACCIDENT AND INDEMNITY COMPANY, Defendant.

Civ. A. No. 3-80-0310-H.

United States District Court, N. D. Texas, Dallas Division.

April 16, 1981.

J. Ralph Howell, Jr., Dallas, Tex., for plaintiffs.

D. Paul Dalton, Jackson, Walker, Winstead, Cantwell & Miller, Dallas, Tex., for defendant.

MEMORANDUM OPINION

SANDERS, District Judge.

In this diversity case, Plaintiff Elisabeth Whitley seeks to recover under an insurance policy issued by the Defendant for the costs of medical treatment and services required by her husband, Wyndham Whitley, after a 1976 automobile accident. Wyndham Whitley died during the pendency of this action and, although no formal substitution of parties has yet been made, the Court has treated Elisabeth Whitley as the proper representative for the claims urged herein. The Defendant has moved for Rule 56(a) summary judgment asserting that the action is barred by the statute of limitations in the Pennsylvania No-Fault Motor Vehicle Insurance Act, 40 Pa.Cons.Stat.Ann. § 1009.101 et seq. While disputing that either Pennsylvania statutory or substantive law should govern this action, Plaintiff alternatively contends that the Defendant is estopped from invoking the limitations bar because its representations reasonably led her and her husband to delay any legal action until after the period had run.

After a review of the briefs and affidavits submitted by both parties, the relevant case law and the pleadings on file, the Court concludes that the Defendant's summary judgment motion should be granted.

Principles for Summary Judgment

Under Rule 56, summary judgment can only be granted "if everything in the record — pleadings, depositions, interrogatories, affidavits, etc. — demonstrates that no genuine issue of material fact exists." Keiser v. Coliseum Properties, Inc., 614 F.2d 406, 410 (5th Cir. 1980). The burden of proof falls upon the party seeking the summary judgment, and all reasonable doubts as to the existence of a genuine issue of a material fact "must be resolved against the moving party." Keiser v. Coliseum Properties, Inc., 614 F.2d 406, 410 (5th Cir. 1980). See Alabama Farm Bureau Mutual Casualty Co. v. American Fidelity Life Insurance Co., 606 F.2d 602, 609 (5th Cir. 1979).

In order to avoid the grant of summary judgment, a party must demonstrate both the existence of a material fact and a genuine issue as to that material fact. Kennett-Murray Corp. v. Bone, 622 F.2d 887, 893 (5th Cir. 1980). The court must draw all reasonable inferences from undisputed facts in favor of the party resisting the motion in determining whether any genuine issue exists. American Telephone & Telegraph Co. v. Delta Communications Corp., 590 F.2d 100, 101-102 (5th Cir.), cert. denied, 444 U.S. 926, 100 S.Ct. 265, 62 L.Ed.2d 182 (1979). The issue of material fact required by Rule 56(c) to be present to entitle a party to proceed to trial is not required to be resolved conclusively in favor of the party asserting its existence; rather, all that is required is that sufficient evidence supporting the claimed factual dispute be shown to require a jury or judge to resolve the parties' differing versions of the truth at trial. See First National Bank of Arizona v. Cities Services Co., 391 U.S. 253, 290, 88 S.Ct. 1575, 20 L.Ed.2d 569 (1968); Munoz v. International Alliance, 563 F.2d 205, 214 (5th Cir. 1977).

With these stringent criteria for summary judgment in mind, the Court has searched the record before it for genuine issues of material fact.

Contacts Between the Whitleys and Hartford

The undisputed facts in this case show that in 1975 the Defendant Hartford Accident and Indemnity Company (Hartford) issued an automobile insurance policy to the Whitleys through its representative, Loesel Insurance Agency. At the time of the issuance of the policy, the Whitleys were living in Erie, Pennsylvania, and it is uncontested that the delivery of the policy and payment of the premiums were made in that state.

On January 27, 1976, the Whitleys were involved in an automobile accident in Dallas, Texas, in which Wyndham Whitley received serious injuries. As a result of these injuries, Whitley required hospitalization and extensive medical services. The initial contact with Hartford in regard to any recovery under the Whitley insurance policy for these expenses was made by their son-in-law, J. Reynolds Van Cleve, in the spring of 1976 through the Loesel agency. Hartford's records show that notice of the Whitley claim was received from the Loesel agency on May 28, 1976.

During 1976, payment of benefits by Hartford under the insurance policy were made to or on behalf of Wyndham Whitley for partial costs of his medical treatment. The last payment of any significant amount — $865.00 — was made on July 19, 1976. Three subsequent disbursements were made by Hartford, the last on February 20, 1978, for photocopying charges of Whitley's medical records and, in one instance, a physician's fee for completion of an insurance form.

Elisabeth Whitley, who with her husband had returned to Pennsylvania in 1976, entered into a trust agreement with Union Bank & Trust Company, Erie, Pennsylvania. Union Bank officials subsequently agreed to assist the Whitleys in the handling of remaining claims for medical and hospital services under the Hartford insurance policy. From late 1976 until the institution of this litigation, Union Bank personnel were in contact with Hartford's local agent, Loesel, and other company personnel regarding Mr. Whitley's case. In August 1977, a Hartford claims representative reviewed Mr. Whitley's file at the bank and subsequently requested a detailed listing of his medical expenses in May 1978.

Shortly after the Whitleys returned to Dallas in November 1977, a Hartford representative visited Mr. Whitley at a Dallas convalescent home and "talked to him". Van Cleve affidavit Six months later, the Hartford representative again sought information on his condition and informed Mr. Whitley that the Dallas claims office was assuming control over his insurance claim. In July 1979, Van Cleve met with Millie Sanders of the Hartford Dallas office where "she explained that Hartford wanted to make a settlement; that the Whitleys were to choose an attorney to represent them in effecting a settlement, to be approved in some sort of proceeding in court in Dallas." Van Cleve affidavit.

On July 31, 1979, Sanders met with Van Cleve and counsel for the Whitleys but no resolution was reached of the disputed Whitley claim. Thereafter, negotiations continued with Hartford representatives of the Dallas office until the instant action was filed on February 19, 1980, in state court and removed to federal court pursuant to 28 U.S.C. § 1441 on March 17, 1980. The undisputed testimony of Van Cleve is that during the course of the negotiations Hartford did not deny liability for Mr. Whitley's claims but rather seemed to indicate that "it was always a matter of arriving at a settlement of the amount of Hartford's liability." Van Cleve affidavit.

The essence of the Defendant's motion for summary judgment is that the Plaintiff's action is time-barred under the two-year statute of limitations in the Pennsylvania No-Fault Act. The Plaintiff argues, however, that the Texas four-year limitations period governs in this case and that the equitable doctrine of waiver and estoppel precludes the Defendant from invoking any limitations bar. The resolution of this dispute requires the application of traditional choice-of-law doctrines and recognition of the comity principles they represent.

Choice of Law

The Defendant contends that since the Plaintiff Elisabeth Whitley pitches her right to recovery on the automobile insurance policy, the Pennsylvania No-Fault Motor Vehicle Insurance Act and Pennsylvania substantive law shape the Plaintiff's remedy and must govern the statute of limitations question. The two main prongs of the Plaintiff's response are that the insurance policy is essentially a contract with a Texas resident which should be interpreted under Texas law, and that a foreign limitations statute is merely a procedural matter which under Texas law cannot bind this diversity court.

The clear command of Erie R. Co. v. Tompkins, 304 U.S. 64, 58 S.Ct. 817, 82 L.Ed. 1188 (1938) is that federal courts must apply the substantive law of the forum state in diversity of citizenship actions. The Erie doctrine requires, therefore, that a federal court apply the choice-of-law rules of the jurisdiction in which it sits. Klaxon v. Stentor, Elec. Mfg. Co., 313 U.S. 487, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941); New York Life Insurance Co. v. Baum, 617 F.2d 1201, 1204 (5th Cir. 1980). Under Texas conflicts law, in the absence of a contrary manifestation, an initial presumption is that the parties intend for the law of the jurisdiction where the contract is made to govern. Dailey v. Transitron Electronic Corp., 475 F.2d 12 (5th Cir. 1973); Austin Building Co. v. National Union Fire Ins. Co., 432 S.W.2d 697 (Tex.1968).

This general rule, however, is subject to two qualifications. Texas courts have long recognized that parties to a contract, under certain circumstances, may specify in the instrument that it is to be governed by the law of a particular state and that law will apply if it has a reasonable relationship to the contract. Dugan v. Lewis, 79 Tex. 246, 14 S.W. 1024, 1026 (1891); Securities Investment Company of St. Louis v. Finance Acceptance Corporation, 474 S.W.2d 261 (Tex.Civ.App. — Houston 1st Dist. 1971, writ ref'd n.r.e.); Hi Fashion Wigs Profit Sharing Trust v. Hamilton Investment Trust, 579 S.W.2d 300 (Tex.Civ.App. — Eastland 1979, no writ). See also Tex.Bus. & Comm.Code § 1.105(a).

In addition, in Gutierrez v. Collins, 583 S.W.2d 312 (Tex.1979), the Texas Supreme Court adopted the position of the Restatement (Second) that the law of the place with the...