Court: District Court, W.D. New York; December 15, 2011; Federal District Court
The case involves a recommendation from Magistrate Judge Leslie G. Foschio regarding motions related to a disability income insurance policy held by plaintiff Rosemary A. Ligotti against defendants Provident Life and Casualty Insurance Company and The Unum Group. The magistrate recommended converting defendants' motion for judgment on the pleadings into a motion for partial summary judgment, which was granted, resulting in the dismissal of the complaint against Unum. Additionally, the magistrate recommended denying Ligotti's motion to amend her complaint and granting defendants' motion to compel her to undergo a physical examination, with a requirement for defendants to provide her with their expert opinion report within 30 days post-examination.
The case history reveals that Ligotti, who has held the insurance policy since January 1985, claimed disability benefits following an eye injury on July 26, 2007, which exacerbated her chronic dry eye syndrome. After multiple medical treatments and surgeries, it was determined by her physicians that her eye condition was permanent and limited her professional capabilities as a financial consultant. Ligotti's initial benefits claim was denied on January 11, 2010, on grounds that her condition did not prevent her from performing her job duties, and this denial was upheld upon appeal on May 26, 2010. The case is now referred back to Magistrate Judge Foschio for further proceedings.
On June 18, 2010, Plaintiff initiated a lawsuit in New York Supreme Court, Erie County, claiming that Defendants improperly denied her disability benefits under the insurance policy. She presented four claims for relief: (1) declaratory relief; (2) breach of contract; (3) bad faith and attorney’s fees; and (4) attorney’s fees related to the breach of contract. Defendants removed the case to federal court on July 7, 2010, citing diversity jurisdiction, and filed their answer on July 27, 2010. A motion for judgment on the pleadings was filed by Defendants on March 14, 2011, which was opposed by Plaintiff on May 17, 2011. Subsequent filings included a motion by Plaintiff to amend her complaint and a motion by Defendants to compel a physical examination of Plaintiff.
On November 4, 2011, Defendants’ counsel informed the court that Plaintiff had withdrawn several claims, leaving only the breach of contract claim pending against both Defendants. This withdrawal was confirmed by a court order on November 9, 2011. The court determined that Defendants' motion for partial judgment on the pleadings would be treated as a motion for partial summary judgment, which was granted, while Plaintiff's motion to amend her complaint was denied, and Defendants’ motion to compel was also granted.
Defendants seek partial judgment on the pleadings to dismiss the First, Third, and Fourth Claims against both Defendants and the entire Complaint against Unum. Following Plaintiff's withdrawal of claims related to anticipatory repudiation, bad faith, punitive damages, and attorneys’ fees, only the Second Claim for breach of contract against Unum remains. Defendants argue that Unum, as the parent company of Provident, is not a proper party since Plaintiffs cannot recover against Unum even if they establish entitlement to benefits under the insurance policy. In contrast, Plaintiff contends that Unum's involvement in her claims file indicates its relevance and argues that dismissing the claim without completing discovery would be premature. Defendants counter that Plaintiff has not demonstrated any involvement of Unum personnel in the denial of her disability insurance claim, thus claiming no legal basis exists for the breach of contract claim against Unum, making discovery unnecessary. The court’s evaluation of the motion follows the standards of a Rule 12(b)(6) motion to dismiss, requiring acceptance of all allegations as true and drawing inferences in favor of the non-moving party. A complaint must present sufficient factual matter to state a plausible claim for relief. Additionally, motions for judgment on the pleadings should be based solely on the pleadings without introducing external evidence, or they may be converted to motions for summary judgment.
A complaint encompasses any attached exhibits, materials referenced, and documents integral to the complaint. According to Sira and Fed. R. Civ. P. 10(c), written instruments attached as exhibits are part of the pleading. If a party relies on documents outside the pleadings that are not incorporated, the motion must be converted to one for summary judgment, as established in Hernandez v. Coffey. Formal notice of this conversion is unnecessary if the party had reasonable awareness of the potential for conversion without being surprised or deprived of a chance to address outside facts.
In this case, the Defendant's Rule 12(c) motion for judgment on the pleadings is impacted by the Plaintiff's submission of exhibits that are not part of the complaint. As per Rule 12(d), this requires conversion to a motion for summary judgment. The court notes that both parties are represented by counsel, indicating that the Plaintiff's submission implies awareness of the possibility of conversion, thus no additional notice is needed. The motion is converted to a motion for partial summary judgment.
The standard for granting summary judgment requires the moving party to show no genuine issues of material fact exist, and they are entitled to judgment as a matter of law, as set forth in Fed. R. Civ. P. 56. The moving party bears the burden of proving the absence of genuine issues, while the nonmoving party must present sufficient evidence to support a jury verdict in their favor to avoid summary judgment.
Plaintiff is attempting to hold Unum liable for Provident's alleged breach of an insurance policy by piercing Provident's corporate veil. The case is governed by New York's choice of law rules, which dictate that the law of the state of incorporation applies; therefore, Tennessee law governs since Provident is a Tennessee corporation. To pierce the corporate veil, three elements must be established: (1) Unum must have exercised complete dominion over Provident regarding the transaction, (2) this control must have been used to commit fraud or wrong, and (3) the control and breach must have caused the injury claimed. Tennessee courts require proof of fraud to pierce the corporate veil, which must go beyond mere contract breach. Since Plaintiff's claim against Unum is solely for breach of contract, this does not meet the threshold for piercing the veil. Consequently, summary judgment should be granted in favor of Defendants, dismissing the complaint against Unum.
Regarding Plaintiff’s request to amend the complaint to include additional claims under Massachusetts laws (Mass. Gen. Law Ch. 93A and Ch. 176D), Defendants oppose this motion on several grounds: (1) Plaintiff did not provide a copy of the proposed amendment, (2) failed to demonstrate "good cause" for the delay in seeking amendment, (3) the amendment is futile as Ch. 176D does not permit private actions, (4) Plaintiff did not serve the required written demand under Ch. 93A, and (5) Massachusetts law is not applicable to this case.
Plaintiff asserts that she served a demand under chapter 93A on September 9, 2011, and is seeking permission to file an amended Complaint after the required 30-day waiting period. She contends that Massachusetts law applies since her claim was processed by the Defendants’ Massachusetts employees. Under Federal Rule of Civil Procedure (Fed. R. Civ. P.) 15, leave to amend should be freely granted unless it causes undue prejudice, results from bad faith or undue delay, or is deemed futile. Although failure to submit a proposed amended complaint can justify denial, the court recognizes that adequate explanation of the proposed amendment can mitigate this issue.
Despite this, Plaintiff's motion is denied because she did not show good cause to amend the scheduling order, as the original deadline for amendments was January 13, 2011, and was not extended. The court emphasizes that modifying a scheduling order requires good cause, which hinges on the diligence of the moving party. Additionally, the proposed claims are considered futile, which also justifies the denial of the motion, as the standard for determining futility mirrors that of a motion to dismiss under Rule 12(b)(6).
An amendment to a complaint is deemed futile if it would be subject to immediate dismissal for failing to state a claim. In this case, the plaintiff's failure to send a 30-day demand letter to the defendants, as required under Massachusetts General Laws Chapter 93A, is critical and fatal to her claim. Previous case law establishes that such a letter detailing specific deceptive practices is a prerequisite for filing a suit under Chapter 93A. The plaintiff's assertion that she intended to comply with this requirement after obtaining leave to amend is deemed meritless. The court denies the motion to assert a Chapter 93A claim.
Regarding the plaintiff's attempt to amend the complaint to include a claim under Chapter 176D, it is noted that this statute does not provide a private cause of action and can only be enforced by the commissioner of insurance. Thus, the motion to amend concerning Chapter 176D is also denied.
Despite the defendants' argument that New York law applies, Chapter 93A explicitly allows for claims to be brought only in Massachusetts courts, leaving this court without jurisdiction over such claims.
Additionally, the defendants have filed a motion to compel the plaintiff to undergo an ophthalmologic examination by their expert witness, arguing that the plaintiff’s refusal has delayed compliance with a scheduling order for expert witness reports. The plaintiff opposes this motion, claiming that the defendants have not shown good cause for the examination and asserting that it is unnecessary since the decision to deny her disability insurance claim was made before the lawsuit commenced.
Defendants argue that Plaintiff has not provided any legal authority to support her opposition to the requested ophthalmologic examination and that her attempt to restrict trial evidence to her disability insurance claim documents lacks legal merit. Under Rule 35(a), a court may order a party whose physical condition is in controversy to undergo a physical examination if good cause is shown. The decision to grant such an order is at the court's discretion. Plaintiff has not contested that her eyesight is in controversy nor denied that Defendants have met the requirements outlined in Rule 35(a)(2)(B) for the examination, which includes specifics about the examiner, Dr. Twist, and the nature of the examination. Plaintiff's only argument against the motion is that Defendants waived their right to seek this examination by not doing so for a previous disability claim; however, she provides no supporting case law. Defendants have demonstrated good cause for the examination, as Plaintiff's claim of total disability involves her eyesight, and without an independent examination, they would be prejudiced. As such, the court grants Defendants' Motion to Compel and allows an extension for providing Plaintiff with an expert opinion report to 30 days post-examination.
Defendants’ motion for judgment on the pleadings has been granted, leading to the dismissal of the Complaint against Unum. The Plaintiffs’ motion for leave to amend is denied, while Defendants are ordered to compel the Plaintiff to undergo a physical examination. Following this examination, Defendants must provide the Plaintiff with their expert opinion report within 30 days. The Report and Recommendation must be filed with the Clerk of the Court, and any objections must be submitted within fourteen days, or the right to appeal will be waived.
Additionally, the Plaintiff has withdrawn claims for anticipatory repudiation, bad faith denial, punitive damages, and attorney’s fees without prejudice. The court acknowledges Unum's status as a subsidiary of Provident, as per its recent Form 10-K, and notes that the demand letter requirement is not jurisdictional but a prerequisite to suit. The court emphasizes that failure to comply with this requirement does not prevent a party from waiving it and that the judge cannot raise this issue independently after the statutory period has expired.
