Wright v. Paul Revere Life Ins. Co.

• Decision Date: 12 September 2003
• Docket Number: No. CV 02-4956 (GAF).,CV 02-4956 (GAF).
• Citation: 291 F.Supp.2d 1104
• Parties: Franklin Y. WRIGHT, Plaintiff, v. PAUL REVERE LIFE INSURANCE COMPANY, Defendants.
• Court: U.S. District Court — Central District of California

291 F.Supp.2d 1104

Franklin Y. WRIGHT, Plaintiff, v. PAUL REVERE LIFE INSURANCE COMPANY, Defendants.

No. CV 02-4956 (GAF).

United States District Court, C.D. California.

September 12, 2003.

COPYRIGHT MATERIAL OMITTED

Patricia Depew, Patricia S. Depew Law Offices, Los Angeles, CA, for plaintiff.

Stephen H. Galton, David J. Weinman, Cameron Hall Totten, Galton & Helm, Los Angeles, CA, for defendants.

ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

FEESS, District Judge.

I. INTRODUCTION

Plaintiff Franklin Y. Wright sues defendant Paul Revere Life Insurance Company¹ to obtain benefits under a disability policy Paul Revere issued to him in 1994. Paul Revere now moves for summary judgment against Wright on all claims.

This case presents the Court with an extraordinary coincidence: Wright, a once-successful personal injury attorney, claims to have become physically disabled from the practice of law on December 19, 1997, the very same date that he was convicted of federal income tax evasion. (Compare DePew Decl. Exh. A (Timeline) with Weinman Decl. Exh. G (Verdict)). Even more peculiar, he made no claim under his disability policy at the time, and, indeed, allowed his policy to lapse by failing to pay premiums due on the policy in August 1998 and by ignoring notices that he must cure his default to prevent his policy from lapsing. In November 1999, while suspended from the practice of law by the Texas state bar for his federal criminal conviction, Texas officials brought an additional criminal case against him for stealing client funds, a charge to which he eventually pled no contest. In the meantime, in early 2000, Wright suddenly "remembered" that he once had a disability policy with Paul Revere, and belatedly claimed to have become disabled in December 1997 as a result of back and hip pain, alcoholism, and depression.

To be sure, Wright had a serious substance abuse problem, but, according to his attorney, it pre-dated his criminal conviction by several decades, and the record before this Court indicates that it never precluded him from practicing law. The medical records presented by Wright reveal that, from early 1998 to the time of the filing of his disability claim in early 2000, he had long periods during which he was completely clean and sober, and in fact, he submitted to treatment at two different de-toxification facilities in 1998 and 1999. Indeed, Wright was well enough in 1999 to spend extended periods at the race track, a pastime he had time for because, in his words, "his license had been suspended until the [criminal] appeal goes through, so he [was] currently not working ...." (DePew Decl. Exh. A). In plain English, Wright had a legal, not a physical disability, and this bars his present claims, even assuming that his policy had not lapsed when it did.

The Court therefore GRANTS Paul Revere's motion for summary judgment. First, the Court concludes that Wright does not have a valid claim for disability under the policy. Second, even if the claim were valid, the policy had lapsed. Third, because Wright failed to respond to requests for admission, the requests are deemed admitted, and they concede that Wright's claims in this case are neither valid nor timely.

II. FACTUAL BACKGROUND

The Court finds the following facts to be undisputed or without substantial controversy.

A. WRIGHT'S LEGAL PRACTICE

For many years, Wright successfully practiced as a personal injury attorney in the state of Texas. (Ryan Decl. ¶ 14). For the three years preceding 1997, Wright's federal income tax returns reveal earnings of $1,112,367, $799,962, and $380,524. (Id. ¶ 14). It was during this period that Wright purchased a disability policy from Paul Revere.²

B. THE POLICY

On December 19, 1994, Paul Revere issued a disability policy to Wright. (Statement of Undisputed Facts ("SUF") ¶¶ 1, 6; Ryan Decl. Exh. A). Under the policy, Wright was eligible to recover benefits if "as a result of Injury or Sickness," he was "unable to perform the important duties of [his][o]ccupation," and was "receiving Physician's Care" therefor. (SUF ¶ 5 (emphasis added); see also DePew Decl. Exh. F at 3). Upon a showing of eligibility, the policy initially entitled Wright to a monthly payment of $5,000, which was increased to $5,500 as of December 1997. (Ryan Decl. ¶ 5).

Wright paid his premiums through a preauthorized check. (Id. ¶ 8). Premiums were current through 1997. (Id. at ¶ 8; Exh. 2). Through 1997, Wright made no claim under the policy.

C. WRIGHT'S FEDERAL CONVICTION AND SUSPENSION FROM PRACTICE

On April 30, 1997, a federal grand jury in the Western District of Texas indicted Wright for felony tax evasion. (Weinman Decl. Exh. G). In December 1997, a Texas jury found Wright guilty of conspiracy and federal income tax evasion. (Id.). On May 12, 1998, after considerable post-trial litigation, Wright was sentenced to 12 months in custody and three years of supervised release. (Ryan Decl. Exh. 9, at 21). Judgment was entered on May 27, 1998, and on June 4, 1998, Wright timely filed his notice of appeal. (Id. at 22).

Thereafter, in November 1998, following negotiation with the state bar, Wright entered into an "Agreed Interlocutory Order of Suspension" under which his license to practice law in Texas was suspended pending final appellate review of his conviction. (Ryan Decl. Exh. 10). Under the terms of the agreement, if and when the conviction became final, Wright would be disbarred. (Id.). Wright's appeal was unsuccessful, and his conviction became final in January 2001. (Compl. ¶ 7; Ryan Decl. ¶ 17).

D. THE POLICY LAPSE

In the meantime, Wright's policy premium came due in August 1998. (See id. Exh. 2). This required no action on Wright's part, as he had an arrangement that allowed Paul Revere to draw directly against Wright's bank account to pay the annual premium on the policy. (Id. ¶ 8; Exh. 2). However, without giving notice to Paul Revere, and perhaps in connection with bankruptcy proceedings filed on July 9, 1998, Wright closed his bank account before Paul Revere attempted to draw on it, late in August 1998. (See id. ¶ 8; Exh. 3).

When the bank refused Paul Revere's draft, Paul Revere wrote to Wright at 3107 Broadway, San Antonio, Texas 78209, one of the addresses Wright had provided on his insurance application. (Compare id. at Exh. 1 with Exh. 2). In that letter, dated September 4, 1998, Paul Revere advised Wright that: (1) the bank had refused payment on the premium draft; (2) Wright had 31 days from August 19, 1998 to pay his premium, or he would lose the policy; and (3) if the policy lapsed, he would still have an additional 26 days to pay the premium and reinstate coverage. (Id. Exh. 2). The letter concluded:

We urge you to contact your agent or our office as soon as possible at 1-800-799-0990, to discuss the status of your policy(s) and your premium payment option should you wish to continue your valuable Paul Revere insurance.

(Id.). Wright did not respond to the letter.³ Paul Revere received no premium payments from Wright in either 1998 or 1999. (Id. ¶¶ 8-9).

E. WRIGHT'S THEFT INDICTMENT AND CONVICTION

Wright's legal problems did not end with his federal conviction. On November 17, 1999, Wright was indicted in Texas state court for misappropriating as much as $100,000 in client money. (Id. Exh. 11). The indictment alleged that, from March 1996 through August 1998, Wright misappropriated between $20,000 and $100,000, which he held for the benefit of certain of his clients. (Id.). In or about 2001, Wright pleaded no contest to these charges. (Id. ¶ 19). By that point, his federal criminal conviction had been affirmed on appeal, and he was disbarred in Texas.

As Wright had effectively destroyed his Texas legal career, he move to Malibu, California in September 1999. (SUF ¶ 35). As of that date, and indeed as of his indictment in November 1999, he had not made a claim on his long-lapsed Paul Revere disability policy. However, that was about to change. In a document dated December 28, 1999, and received by Paul Revere on January 3, 2000, Wright made a claim for disabilities, which he asserted arose two years earlier, in December 1997. (Ryan Decl. Exh. 4; Exh. 7). In that claim, Wright stated, "left hip/back & mental depression keep me from working & alcoholism." (Id.). Nothing in this original claim revealed anything about Wright's legal problems, nor the bearing those problems had on his ability to earn a living.⁴

After the claim was filed, Wright was interviewed in a telephone call placed by Hope Troilo, an employee of Paul Revere. (See DePew Decl. Exh. A (Claimant Telephone Interview)). In that interview, Wright again claimed that his disability was caused by "alcoholism, depression, hip & back problems." (Id.). Wright, however, was not totally candid with Troilo in describing all of the circumstances confronting him. For example, while he mentioned that he had ongoing "proceedings" with the IRS and "lawsuits" from former clients, he failed to disclose that his tax problems involved a conviction for tax evasion or that the problems with his clients manifested themselves in a criminal indictment in San Antonio, Texas. (Id. Exh. A (Claimant Interview Form, at 4)). And while he conceded that his license to practice had been suspended, he lied to Troilo, stating that it was "due to missed court appearances, `that kind of thing.'" (Id. at 6). Wright embellished that statement with his supposed belief that "he does not feel he will have difficulty having it [his license] reinstated." (Id.). Nothing in the interview reveals that, if and when his federal conviction was affirmed, Wright would be entirely precluded from the practice of law.

The interview also provides Wright's "explanation" for the late notice of his claim. Wright stated that he "didn't think he was `disabled'" and that he "forgot about the policy." (Id. at 5).

Following an investigation, Paul Revere denied Wright's claim in a letter...