Nelson v. Transguard Ins. Co. of Am., Inc.

GUY W. NELSON, Plaintiff, v. TRANSGUARD INSURANCE COMPANY OF AMERICA, INC., Defendant.

14-cv-862-bbc

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF WISCONSIN

October 13, 2015

OPINION and ORDER

This is the second case plaintiff Guy Nelson has filed in this court, contending that defendant Transguard Insurance Company of America, Inc. owes him disability insurance benefits for injuries and medical expenses caused by an accident that occurred in 2010. I dismissed the first case without prejudice because plaintiff failed to wait to file the lawsuit until 60 days had elapsed after filing his proof of loss with defendant or until he received a response from defendant, as required by Wis. Stat. § 631.83(4). Nelson v. Transguard Insurance Company of America, Inc., No. 13-cv-854-bbc (W.D. Wis. Dec. 4, 2014).

A few days after the dismissal of the first case, plaintiff filed this lawsuit. Now defendant has filed a motion for judgment on the pleadings on the ground that the three-year statute of limitations for plaintiff's claim expired before he filed his second suit. Dkt. #13. (More than a week after the parties completed briefing on defendant's motion, defendant filed a "corrected" version of its reply brief. Dkt. #19. Because defendant neithersought leave to file the brief nor identified the "corrections" it made, I have disregarded that brief.)

In response to defendant's motion for judgment on the pleadings, plaintiff does not refute defendant's contention that his statute of limitations expired in May 2013. Instead, he says that defendant's motion should be denied on various equitable grounds such as estoppel, laches and tolling. For the reasons explained below, I do not find any of plaintiff's arguments persuasive, so I am granting defendant's motion.

OPINION

A. Subject Matter Jurisdiction

The first question in every case filed in federal court is whether subject matter jurisdiction is present, even if the parties do not contest jurisdiction. Booker-El v. Superintendent, Indiana State Prison, 668 F.3d 896, 899 (7th Cir. 2012); Avila v. Pappas, 591 F.3d 552, 553 (7th Cir. 2010). In this case, plaintiff relies on 28 U.S.C. § 1332 as a basis for jurisdiction. Section 1332 requires diversity of citizenship and an amount in controversy over $75,000.

With respect to the amount in controversy, plaintiff does not request a specific amount in his complaint. However, he alleges that he is entitled to benefits for a number of serious injuries, such as "trauma induced stroke . . . and subsequent seizures, and cognitive and neurologic disabilities, including, but not limited to, expressive aphasia and physical impairment," Cpt. ¶ 12, dkt. #1, so it is reasonable to infer that plaintiff's claim isworth more than $75,000. Miller v. Herman, 600 F.3d 726, 730 (7th Cir. 2010) (when plaintiff does not identify specific amount in controversy, court may infer from plaintiff's alleged injuries whether jurisdictional minimum is met).

With respect to diversity of citizenship, plaintiff alleges that he is a "resident" of Wisconsin and that defendant's principal place of business and state of incorporation is Illinois. Id. at ¶¶ 2, 4. Plaintiff's allegation is sufficient at this stage to show that defendant is a citizen of Illinois, Hoagland ex rel. Midwest Transit, Inc. v. Sandberg, Phoenix & von Gontard, P.C., 385 F.3d 737, 740-43 (7th Cir.2004), but plaintiff's allegation regarding his "residence" raises a potential problem because the Court of Appeals for the Seventh Circuit has stated in numerous cases that "residence" and "citizenship" are not the same under § 1332 and that an allegation of residence is not sufficient to show citizenship. E.g., Heinen v. Northrop Grumman Corp., 671 F.3d 669, 670 (7th Cir. 2012); Hukic v. Aurora Loan Services, 588 F.3d 420 (7th Cir. 2009); Craig v. Ontario Corp., 543 F.3d 872, 876 (7th Cir. 2008); McMahon v. Bunn-O-Matic Corp., 150 F.3d 651, 653 (7th Cir.1998); Meyerson v. Harrah's East Chicago Casino, 299 F.3d 616, 617 (7th Cir. 2002). This is because citizenship encompasses not just where the party lives currently, but where he intends to live in the foreseeable future. Myrick v. WellPoint, Inc., 764 F.3d 662, 664 (7th Cir. 2014). However, in the previous case plaintiff filed, the parties stipulated in their summary judgment materials that plaintiff was a citizen of Wisconsin. Nelson v. Transguard Insurance Company, Inc., No. 13-cv-854-bbc, dkt. #26, ¶ 1. Because plaintiff alleges he has the same residence now that he had in the previous case, it is reasonable to infer at thepleading stage that he intends to remain in Wisconsin.

The only other potential jurisdictional issue is that plaintiff has named Cooperative Benefit Administrators, Inc. as an "involuntary plaintiff" because that company has paid some of plaintiff's medical expenses. Cpt. ¶ 3, dkt. #1. Plaintiff alleges that the company "is a Nebraska corporation licensed to engage in business in the State of Wisconsin," Cpt. ¶ 3, dkt. #1, but he does not identify the company's principal place of business, as he is required to do. Hoagland, 385 F.3d at 741.

As an initial matter, plaintiff should not have named Cooperative Benefit Administrators as an "involuntary plaintiff." That is a proper designation for subrogees in states court, but, as I have explained in many other cases, in federal court, a party who wishes to name an involuntary plaintiff must show that the absent party has refused to be joined as a plaintiff and is outside the court's jurisdiction. E.g., Pullen v. House, 88 F. Supp. 3d 927, 948 (W.D. Wis. 2015); Elborough v. Evansville Community School District, 636 F. Supp. 2d 812, 826 (W.D. Wis. 2009); Murray v. Mississippi Farm Bureau Casualty Insurance Co., 251 F.R.D. 361, 364 (W.D. Wis. 2008). See also 7 Charles Alan Wright, Arthur R. Miller and Mary Kay Kane, Federal Practice and Procedure § 1606, at 73 (3d ed. 2001). Because plaintiff has not made either of these showings, he should not have named Cooperative Benefit Administrators as an involuntary plaintiff.

Regardless whether plaintiff should have included Cooperative Benefit Administrators in his caption, I need not consider the citizenship of Cooperative Benefit Administrators because that company did not join plaintiff's complaint and plaintiff has not served it withthe complaint. This means that the company is not a proper party to the case and its citizenship is not relevant to the question of jurisdiction. Cripps v. Life Insurance Co. of North American, 980 F.2d 1261, 1266 (9th Cir. 1992) ("Most . . . courts . . . have concluded . . . that the citizenship of defendants who are not served cannot be considered [for the purpose of determining diversity jurisdiction.]"). Even if the company had been served and I assumed that its citizenship created a diversity problem, I would dismiss the company to preserve jurisdiction. Dexia Credit Local v. Rogan, 602 F.3d 879, 883 (7th Cir. 2010) ("Under Rule 21, a district court can dismiss dispensable, nondiverse parties either before or after a final judgment."). Accordingly, I conclude that jurisdiction is present under § 1332.

B. Merits

Defendant identifies May 23, 2013 as plaintiff's statute of limitations deadline. In support of that date, defendant cites Wis. Stats. § 631.83(1)(b), which states that an "[a]n action on disability insurance coverage must be commenced within 3 years from the time written proof of loss is required to be furnished." In addition, defendant says that, under plaintiff's policy, he was required to submit his proof of loss within 120 days of his alleged injury. According to defendant, because plaintiff alleges that his injury occurred on January 5, 2010, his proof of loss was due on May 23, 2010 and his limitations period expired on May 23, 2013. Because plaintiff does not argue for a later deadline, I will accept defendant's calculation as correct.

Plaintiff did not file this lawsuit until December 2014, well after the expiration of his statute of limitations. However, plaintiff relies on three theories to support his argument that the court should not enforce the May 2013 statute of limitations: equitable estoppel, laches and tolling. I will consider each theory in turn. Both parties argue that Wisconsin law applies, Plt.'s Br., dkt. #16, at 7 n.2; Dft.'s Br., dkt. #14, at 5, so I need not conduct a choice of law analysis. Indiana Insurance Co. v. Pana Community Unit School District No. 8, 314 F.3d 895, 900 (7th Cir. 2002). See also Hollander v. Brown, 457 F.3d 688, 694 (7th Cir. 2006) (in diversity case, statute of limitations and "rules that are an integral part of the statute of limitations," such as tolling and equitable estoppel, are governed by state law).

1. Equitable estoppel

Equitable estoppel may defeat a statute of limitations defense when the plaintiff failed to meet the limitations deadline because of his reasonable reliance on fraudulent or otherwise inequitable conduct by the defendant. Hester v. Williams, 117 Wis. 2d 634, 644-45, 345 N.W.2d 426, 431 (1984); Hocking v. City of Dodgeville, 2009 WI App 108, ¶ 17, 320 Wis. 2d 519, 531, 770 N.W.2d 761, 767; Wieting Funeral Home of Chilton, Inc. v. Meridian Mutual Insurance Co., 2004 WI App 218, ¶ 23, 277 Wis. 2d 274, 288, 690 N.W.2d 442, 449; Bell v. Employers Mutual Casualty Co. of Des Moines, Iowa, 198 Wis. 2d 347, 373-74, 541 N.W.2d 824, 834 (Ct. App. 1995); Johnson v. Johnson, 179 Wis. 2d 574, 582, 508 N.W.2d 19, 21-22 (Ct. App. 1993). Plaintiff cites a somewhat differentstandard in a "law note" in the Wisconsin Jury Instructions. WIS JI-CIVIL 3074 ("An estoppel arises where a party is prevented from asserting a position because of prior conduct by which a contrary position has been implied. . . . To apply, it is necessary that the action or nonaction of one induce another to rely thereon, to his or her detriment."). Plaintiff does not cite any cases in which Wisconsin courts have applied that standard in the statute of...