Brown v. The Travelers Indem. Co., Case No. 8:08-cv-168-T-TBM

MELVIN DEAN BROWN, Plaintiff,

v.THE TRAVELERS INDEMNITY COMPANY, Defendant.

Case No. 8:08-cv-168-T-TBM

UNITED STATES DISTRICT COURT

MIDDLE DISTRICT OF FLORIDA

TAMPA DIVISION

Dated: January 6, 2011

ORDER

THIS MATTER is before the court on Defendant, The Travelers Indemnity Company's, Motion for Summary Judgment of Plaintiff's Count I (Silent Fraud) and Count III (Negligence) and for Partial Summary Judgment of Count IV (Breach of Contract) and Incorporated Memorandum of Law (Doc. 123) and Plaintiff's memorandum in opposition (Doc. 124). Oral arguments on the motion were conducted November 19, 2010.

I.

Plaintiff, Melvin Dean Brown (Brown or Plaintiff), sues his no-fault automobile insurer, The Travelers Indemnity Company (Travelers or Defendant), following a 1974 motor vehicle accident in Michigan which rendered him quadriplegic. The claims remaining under the Amended Complaint are for silent fraud (Count I), negligence (Count III), and breach ofcontract (Count IV).¹ It is undisputed that Brown was covered by the insurance policy issued by Travelers for the injuries he sustained in the accident, and that benefits under the policy have been paid and continue to be paid to date. (Doc. 123-2 at 61). At this point, the dispute centers on whether Plaintiff is entitled to additional monies for past attendant care benefits. By Plaintiff's claim, he is entitled to additional attendant care benefits dating back to 1974 for the attendant care provided by his mother and other family members.² On the claims for silent fraud and negligence, Plaintiff urges that Travelers owed him a duty to explain his benefits which it breached. Even in the absence of such duty, to the extent that it responded to inquiries by Plaintiff or his family, Defendant deliberately created a false impression about both the nature and extent of attendant care benefits, and similarly, when it voluntarily undertook to explain the benefits, it failed to speak fully and accurately about such benefits. Plaintiff urges that the claims are not time-barred by reason of the Defendant's fraudulent concealment and on principles of equitable estoppel. On his breach of contract claim, heseeks similar past benefits despite Michigan's one-year-back rule as set forth at MCL § 500.3145(1).³

Travelers generally denies liability on the bases of the facts and law. On this motion, Travelers urges that both the silent fraud claim and the negligence claim fail because it had no affirmative duty to explain benefits to Plaintiff and the undisputed facts establish that Travelers did not voluntarily undertake to act as an advisor or to explain benefits to Plaintiff, nor did its agents make any voluntary, partial, incomplete and/or misleading disclosures related to benefits under the policy thereby invoking such duty. On the silent fraud claim, Travelers further argues that, as a matter of law, Plaintiff cannot prove the reasonable reliance necessary in order to state the claim. Specifically, Travelers submits that Plaintiff could not reasonably rely on any alleged false impression or alleged statement by Travelers about the extent of attendant care benefits available under the policy because he had the means to determine the accuracy of the same by consulting an attorney. Additionally, because Travelers paid for additional receipts submitted for attendant care expenses over and above the eight-hundred dollar figure which Plaintiff allegedly believed to be the extent of his coverage, Plaintiff knew or should have realized that the amount paid for such care was not the maximum amount payable under his policy for family-provided attendant care. At the hearing, Defendant also argued that there can be no reasonable reliance where the issue is entitlement under a statute. Stated another way, when the issue is knowledge of the law, itcannot be the basis of reasonable reliance because every person is charged with knowing the law. Defendant also contends that both the silent fraud claim and the negligence claim are time-barred because neither the state fraudulent concealment statute nor the doctrine of equitable estoppel apply. As for the contract claim, Defendant maintains that it is governed by Michigan's one-year-back rule.

In his response, Brown generally asserts that Traveler's own documents and its communications with him and his mother reveal that Travelers engaged in a purposeful scheme to keep them in the dark and created false impressions as to his benefits under the policy in order to avoid paying higher costs for Plaintiff's attendant care. He urges that there is ample evidence by which a jury could conclude from his inquiries that Travelers had a duty to disclose fully and accurately his attendant care benefits and instead of doing so it created the false impression that he was receiving all such benefits to which he was entitled. Separately from its inaccurate and incomplete responses to the inquiries, he asserts that Travelers undertook the duty to explain his benefits very early on, but failed to do so fully and completely. As for Travelers' reliance argument, Plaintiff argues that the disputed facts dictate that the matter cannot be decided on this motion and must be decided by a jury and, in any event, he and his family actually relied on the representations of Defendant. The same course of fraudulent conduct by Defendant supporting the silent fraud claim supports his position on the application of the Michigan fraudulent concealment statute to extend the statute of limitations and principles of equitable estoppel to preclude Defendant from assertingthe statute of limitations as a bar. He urges that the same inequitable conduct precludes the application of the one-year-back rule to his breach of contract claim.

II.

The court shall grant summary judgment for the moving party only when "the pleadings, the discovery and disclosure materials on file, and any affidavits show that there is no genuine issue as to any material fact and that the movant is entitled to a judgment as a matter of law." Fed. R. Civ. P. 56(c). The movant bears the exacting burden of demonstrating that there is no dispute as to any material fact in the case. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986); Hairston v. Gainesville Sun Publ'g Co., 9 F.3d 913, 918 (11th Cir. 1993).

Once the moving party satisfies its burden, the burden shifts to the non-moving party to establish the existence of a genuine issue of material fact. Celotex, 477 U.S. at 324; Howard v. BP Oil Co., 32 F.3d 520, 524 (11th Cir. 1994). The non-movant must designate specific facts showing a genuine issue for trial beyond mere allegations or the party's perception. Perkins v. Sch. Bd. of Pinellas County, 902 F. Supp. 1503, 1505 (M.D. Fla. 1995). It must set forth, by affidavit or other appropriate means, specific facts showing that there is a genuine issue for trial. See Fed. R. Civ. P. 56(e)(2).

When deciding a motion for summary judgment, "[i]t is not part of the court's function... to decide issues of material fact, but rather determine whether such issues exist to be tried..." and "[t]he court must avoid weighing conflicting evidence or making credibility determinations." Hairston, 9 F.3d at 919 (citing Anderson v. Liberty Lobby, Inc., 477 U.S. 242 (1986)). The only determination for the court in a summary judgment proceeding is whether there exists genuine and material issues of fact to be tried. Hairston, 9 F.3d at 921; see also Little v. United Techs., Carrier Transicold Div., 103 F.3d 956, 959 (11th Cir. 1997). All the evidence and inferences from the underlying facts must be viewed in the light most favorable to the nonmoving party. Combs v. Plantation Patterns, 106 F.3d 1519, 1526 (11th Cir. 1997).

III.

A.

As this court has previously stated, "silent fraud, " also known as "fraud by nondisclosure or fraudulent concealment, " arises from the suppression of the truth with the intent to defraud. The suppression of a material fact is equivalent to a false representation where a party is duty-bound to disclose such fact, and thus will support an action in fraud. M&D, Inc. v. W.B. McConkey, 585 N.W.2d 33, 37 (Mich. Ct. App. 1998). While Michigan law recognizes that fraud may be committed by suppression of the truth as well as by open false assertions, "in order for the suppression of information to constitute silent fraud there must be a legal or equitable duty of disclosure." U.S. Fid. & Guar. Co. v. Black, 313 N.W.2d 77, 88 (Mich. 1981).

As a general principle, Michigan law imposes no affirmative duty on an insurer to act as an advisor with respect to informing an insured of benefits that are covered by the policy or provided by statute. As a consequence, there is no cause of action for silent fraud against an insurer merely by reason of an insurer's nondisclosure of benefits. See Buntea v. State Farm Mut. Auto Ins. Co., 467 F. Supp. 2d 740, 745 (E.D. Mich. 2006); Van Emon v. State Farm Mut. Auto Ins. Co., No. 05-72638, 2007 WL 275882, at *3 (E.D. Mich. Jan. 26, 2007). However, numerous Michigan courts have recognized a legal duty in circumstances where a party voluntarily undertakes or assumes to act. In such circumstances, a duty voluntarily assumed must be handled with care and skill. See, e.g., Zychowski v. A.J. Marshall Co., 590 N.W.2d 301, 302 (Mich. Ct. App. 1998); Baker v. Arbor Drugs, Inc., 544 N.W.2d 727, 731 (Mich. Ct. App. 1996).⁴ Similarly, where a party undertakes to respond to an inquiry in a commercial relationship, it may not give partial answers leading to false impressions or intended to mislead. See, e.g., Sullivan v. Ulrich, 40 N.W.2d 126, 131-32 (Mich. 1949) ("the concealment of the true facts and the deliberate creating of false impressions and inferences is the equivalent of an express and intentional misrepresentation") (citing Groening v. Opsata, 34 N.W.2d 560 (Mich. 1948)). Buntea supports that in such circumstances a claim for silent fraud may pertain; "[t]he misrepresentation occurs when a party...