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Karpenski v. American General Life Cos., LLC

United States District Court, W.D. Washington

April 2, 2014

CHRISTYANNA KARPENSKI, Plaintiff,
v.
AMERICAN GENERAL LIFE COMPANIES, LLC, d/b/a AMERICAN GENERAL, d/b/a AG BENEFIT SOLUTIONS CONNECTICUT CLAIM CENTER; THE UNITED STATES LIFE INSURANCE COMPANY IN THE CITY OF NEW YORK, d/b/a U.S. LIFE; and SEABURY & SMITH, INC., d/b/a MARSH U.S. CONSUMER, d/b/a MARSH AFFINITY GROUP SERVICES, Defendants

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[Copyrighted Material Omitted]

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For Christyanna Karpenski, Plaintiff: James A Hertz, Richard H Friedman, LEAD ATTORNEYS, Henry G. Jones, Kenneth R Friedman, FRIEDMAN RUBIN (BREMERTON), BREMERTON, WA; Sean J Gamble, LEAD ATTORNEY, FRIEDMAN RUBIN (SEATTLE), SEATTLE, WA.

For American General Life Companies LLC, doing business as American General, doing business as AG Benefit Solutions Connecticut Claim Center, The United States Life Insurance Company in the City of New York, doing business as U.S. Life, Seabury & Smith Inc, doing business as Marsh U.S. Consumer, doing business as Marsh Affinity Group Services, Defendants: Alycen Moss, Kenan G. Loomis, LEAD ATTORNEYS, PRO HAC VICE, COZEN O'CONNOR, ATLANTA, GA; Michael D Handler, LEAD ATTORNEY, COZEN O'CONNOR (SEA), SEATTLE, WA.

For American General Life Companies LLC, The United States Life Insurance Company in the City of New York, Seabury & Smith Inc, Counter Claimants, Counter Defendants: Michael D Handler, LEAD ATTORNEY, COZEN O'CONNOR (SEA), SEATTLE, WA.

For Christyanna Karpenski, Counter Defendant: James A Hertz, Richard H Friedman, LEAD ATTORNEYS, Kenneth R Friedman, FRIEDMAN RUBIN (BREMERTON), BREMERTON, WA; Sean J Gamble, LEAD ATTORNEY, FRIEDMAN RUBIN (SEATTLE), SEATTLE, WA.

OPINION

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ORDER ON MOTIONS

RICARDO S. MARTINEZ, UNITED STATES DISTRICT JUDGE.

THIS MATTER comes before the Court on Motion for Partial Summary Judgment by Plaintiff (Dkt. # 142), Motion for Summary Judgment by Defendants (Dkt. # 145), and Motion for Reconsideration by Plaintiff (Dkt. # 197). On February 14, 2014, the Court denied Plaintiff's claim to exclude her group disability insurance application fro evidence and deferred the parties' breach of contract and rescission claims pending supplemental briefing on the application of Virginia law. Having considered the parties' supplemental briefs, oral argument, the remainder of the record, and applicable case law, and for the reasons that follow, the Court hereby denies Plaintiff's Motion for Reconsideration and denies summary judgment on the remaining issues pending before it.

Background

This matter arises out of the decision of Defendants American General Life Company (" American General" ) and The United States Life Insurance Company (" U.S. Life" ) to rescind the long term disability coverage of Plaintiff Christyanna Karpenski due to alleged misrepresentations made by her on her Disability Insurance Application (" Application" ). A complete factual account of this matter is presented in the Court's Order of February 14, 2014, denying in part Plaintiff's Motion for Partial Summary Judgment. See Dkt. # 192, pp. 1-5. The Court therein determined that the choice-of-law provision in the American Physical Therapy Association (" APTA" ) Master Policy, under which Plaintiff procured coverage, selecting Virginia law as the governing law was valid and enforceable. The Court also denied Plaintiff's claim to preclude Defendants from introducing her Application into evidence because of Defendant U.S. Life's failure to attach it to her Certificate of Insurance in her Welcome Packet.

As the parties had only briefed the application of Virginia law to the attachment claim raised by Plaintiff's partial summary judgment motion, the Court directed the parties to file further supplemental briefs on the application of Virginia law to the remaining contractual claims for rescission, violation of the Application's good health provision, and breach of contract. Id. at pp. 25-26. In denying Plaintiff's subsequent motion to stay briefing pending a motion for reconsideration, the Court clarified its previous Order by permitting the parties to additionally address whether Virginia and Washington law conflict with regards to the remaining claims. See Dkt. # 194, p. 2. Remaining before the Court are Plaintiff's claims in its Motion for Partial

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Summary Judgment that Defendants are precluded from rescinding her insurance coverage because they had no evidence of intent to deceive and for breach of contract. See Dkt. # 142. Also remaining are Defendants' claims in its Motion for Summary Judgment for rescission under RCW 48.18.090 and due to Plaintiff's failure to satisfy the " good health" provision in her Application. See Dkt. # 145.

On February 28, 2014, Plaintiff filed a Motion for Reconsideration, moving the Court to reconsider its Order of February 14, 2014 based on its application of Virginia law to the contractual claims presented in this case. Specifically, Plaintiff contends that: (1) the Court already ruled that Washington rescission law is the law of the case, (2) it is manifest error to apply Virginia law to any or all claims, and (3) the Court manifestly erred in not ruling on the applicability of RCW 48.18.080. This Order considers Plaintiff's Motion for Reconsideration, the remaining issues raised in the parties' motions for summary judgment, and Plaintiff's Motion to Strike evidence introduced by Defendants in their supplemental brief (Dkt. # 201).

Analysis

a) Motion for Reconsideration

Motions for reconsideration are disfavored and will be denied " in the absence of a showing of manifest error in the prior ruling or a showing of new facts or legal authority which could not have been brought to [the Court's] attention earlier with reasonable diligence." Local Rule CR 7(h)(1). Where summary judgment has been entered, " 'after thoughts' or 'shifting of ground' are not an appropriate basis for reconsideration." Fay corp. v. Bat Holdings I., Inc., 651 F.Supp. 307, 309 (W.D. Wash. 1987). Motions for reconsideration are not a vehicle for a litigant to attempt a second bite at the apple by raising facts or arguments available to him or her prior to the entry of summary judgment. See Rosenfeld v. U.S. Department of Justice, 57 F.3d 803, 811 (9th Cir. 1995)(holding that the district court did not abuse its discretion in declining to consider an argument " raised for the first time on reconsideration without a good excuse" ); Hopkins v. Andaya, 958 F.2d 881, 887 n. 5 (9th Cir. 1992) (" A defeated litigant cannot set aside judgment because he failed to present on a motion for summary judgment all the facts known to him that might have been useful to the court." ).

Because the Court fails to identify any manifest error in its Order, the Court denies Plaintiff's Motion for Reconsideration. First, Plaintiff contradicts herself in arguing that the Court erred in addressing the applicability of Virginia law as it previously applied Washington law in its Order on bifurcation (Dkt. # 41). As Plaintiff herself points out, Washington follows the rule of depecage, whereby " different issues in a single case arising out of a common nucleus of facts may be decided according to the substantive law of different states." FutureSelect Portfolio Mgmt., Inc. v. Tremont Group Holdings, Inc., 175 Wash.App. 840, 856 n. 15, 309 P.3d 555 (2013). Moreover, the issue of choice of law was not before the Court when it considered Defendants' motion for bifurcation. To the extent that Plaintiff argues that Defendants waived their right to argue for the enforceability of the choice-of-law provision in Plaintiff's insurance contract, such an argument is unavailing. A party to a contract may impliedly waive a contract provision meant for its benefit through " unequivocal acts of conduct evidencing an intent to waive." Coastal Const. Group, Inc. v. Stellar J Corp., 164 Wash.App. 1032, *7 (2011)(citing Mike M. Johnson, Inc. v. Spokane County, 150 Wn.2d 375, 386, 78 P.3d 161 (2003)). It is undisputed that no conflict of law issue had

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previously arisen, and thus there had been no opportunity for Defendants to waive Virginia law. Accordingly, Defendants' prior failure to assert Virginia law was not an unequivocal act evidencing their intent to waive the contractual choice of Virginia law. See Id.

Plaintiff further argues that the Court erred by misclassifying Plaintiff's insurance as " true group insurance." Despite characterizing her insurance policy as " group insurance" throughout litigation, Plaintiff now for the first time attempts to characterize it as a " franchise policy." Relying on dicta in Erickson v. Sentry Life Ins. Co., 43 Wn.App. 651, 655 n.1, 719 P.2d 160 (1986), Plaintiff argues that her policy would then garner the choice-of-law treatment accorded to individual insurance policies. The Court declines to reconsider its treatment of Plaintiff's policy in light of her manifold admissions of group policy status, including in her answer to Defendants' counterclaim and at least 17 times throughout her pleadings, which are binding in judicio . See Dkt. # 13, ¶ 4; Dkt. 195, Ex. 1 (citing numerous instances in which Plaintiff characterized her policy as " group disability insurance" and argued for its legal treatment as such). See also, Gibbs Ex Rel. Estate of Gibbs v. CIGNA Corp, 440 F.3d 571, 578 (2d Cir. 2006)( " Facts admitted in an answer, as in any pleading, are judicial admissions that bind the [party] throughout this litigation." ). Plaintiff's brazen attempt to shift grounds in her characterization of her policy will not be entertained where the facts and arguments she now belatedly puts forward were clearly available to her prior to the Court's Order on summary judgment.

As to the additional contractual claims before the Court, the Court hereby clarifies that it proceeds under Washington choice-of-law analysis in making a separate determination of the applicable law governing each claim. The Court's solicitation of supplemental briefing by the parties on the results under Virginia law was necessary to make a proper choice-of-law determination. As the parties had neglected to brief the results of rescission, breach of contract, and good health provision claims under Virginia law, the Court was not previously in a position to make the required determination as to whether an actual conflict existed between the local law of Washington and the contractually chosen Virginia law. See Seizer, 132 Wash.2d at 648, 940 P.2d 261 (internal citation omitted)( " When parties dispute choice of law, there must be an actual conflict between the laws or interest of Washington and the laws or interests of another state before Washington courts will engage in a conflict of laws analysis." ). Indeed, the Court made its approach explicit in directing the parties to include in their supplemental briefs analysis of whether Virginia or Washington law controls on each pending claim. See Dkt. # 194.

Finally, Plaintiff's position that the Court erred in not ruling on whether RCW 48.18.080 governs her attachment claim is clearly incorrect. The Court directly addressed the applicability of RCW 48.18.080 in its Order and adopted a position that Plaintiff herself had put forward in determining that RCW 48.21.060 governs attachment for group disability applications. See Dkt. # 192 at pp. 18-19; Dkt. # 190 (" RCW 48.21.060 governs that [sic] admissibility of an insurance application for group disability insurance." ). Plaintiff has failed to identify any manifest error in the Court's decision that RCW 48.21.060, rather than RCW 48.18.080, governed her attachment claim under Washington law.

b) Motion to Strike

In reply (Dkt. # 201), Plaintiff moves the Court to strike new evidence attached to and discussed in Defendants'

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Supplemental Brief. Dkt. # 195, p. 16:15-17; Dkt. # 196. Federal Rule of Civil Procedure 26(a)(1)(A) requires parties to disclose a copy or description of all documents and tangible things that the party has in its possession, custody or control and may use to support its claims or defenses. Initial disclosures must be made within 14 days of the parties' Rule 26(f) conference or timely supplemented pursuant to Rule 26(e). " If a party fails to provide information or identify a witness as required by Rule 26(a) or (e), the party is not allowed to use that information or witness to supply evidence on a motion, at a hearing, or at trial, unless the failure was substantially justified or harmless." Fed.R.Civ.P. 37(c)(1). ...


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