Parsons v. Standard Ins. Co.

185 F.Supp.3d 909

Michael J. Parsons, M.D., Plaintiff,

v.Standard Insurance Company and Minnesota Life Insurance Company. Defendants.

CIVIL ACTION NO. 1:16CV20

United States District Court, N.D. West Virginia.

Signed May 5, 2016

Debra Tedeschi Varner, James N. Riley, Samuel H. Harrold, III, McNeer, Highland, McMunn & Varner, LC, Clarksburg, WV, for Plaintiff.

Brian D. Morrison, Bailey & Wyant PLLC, Charleston, WV, Jacqueline J. Herring, Warren Von Schleicher, Smith/Von Schleicher + Associates, Chicago, IL, for Defendants.

MEMORANDUM OPINION AND ORDER GRANTING DEFENDANTS' MOTION TO DISMISS COUNTS II AND III [DKT. NO. 14]

IRENE M. KEELEY, UNITED STATES DISTRICT JUDGE

Pending before the Court is the motion to dismiss (dkt. no. 14), filed by the defendants, Standard Insurance Company ("SIC") and Minnesota Life Insurance Company ("MLIC") (collectively "defendants" or "insurers"). The motion seeks to dismiss Counts II and III of the complaint, claiming they are barred by West Virginia's one-year statute of limitations. Alternatively, the defendants assert that Counts II and III are inadequately pled, and should be dismissed pursuant to Fed. R. Civ. P. 8. For the reasons that follow, the Court GRANTS the motion.

I. BACKGROUND

From October, 2011, through May, 2013, the plaintiff, Michael J. Parsons ("Parsons"), was an emergency room physician at Louis A. Johnson VA Hospital in Clarksburg, West Virginia. On April 14, 2001, Parsons procured a disability income insurance policy from MLIC, which was to provide him with an income of $6,000 per month in the event he became disabled or was unable to continue in his regular occupation. On April 14, 2013, Parsons procured a second disability income insurance policy from SIC, which was to provide him with income of $450 per month in the event he became disabled and could not perform the substantial and material duties of his regular occupation.

On or about May 23, 2013, Parsons was diagnosed with a cardiac condition known as prinzmetal's angina.¹ The complaint alleges that Parsons properly filed claims with SIC, which administered both policies.² Under a reservation of rights, SIC paid Parsons benefits from both policies from August 21, 2013, until February 13, 2014, a period of just under six months. On or about February 13, 2014, the defendants denied coverage and ceased any further benefit payments.

Parsons appealed the denial of benefits, arguing that he was still under the care and treatment of his physician and unable to engage in his regular occupation. The parties engaged in several rounds of correspondence and requests for additional documentation. According to Parsons, he fully complied with all of the insurers' requests. Nonetheless, by letter dated January 15, 2015, the defendants affirmed their denial of benefits and refused to pay Parsons further benefits under the policies.

On January 12, 2016, Parsons filed suit in the Circuit Court of Harrison County, asserting claims for breach of contract, statutory bad faith under the West Virginia Unfair Trade Practices Act³ ("UTPA"), and common law bad faith. In his complaint, Parsons sought 1) enforcement of the insurance contracts, 2) damages for aggravation, mental anguish, humiliation, embarrassment, emotional distress, and inconvenience, 3) damages for amounts paid by him since his date of loss, including interest, 4) punitive damages for intentional or reckless conduct, 5) attorney's fees and costs, 6) pre- and post-judgment interest, and 7) all applicable Hayseeds- type damages.

The defendants timely removed the case to this Court on February 12, 2016, based on diversity jurisdiction.

II. THE DEFENDANTS' MOTION TO DISMISS COUNTS II AND III

On March 4, 2016, the defendants moved to dismiss Counts II and III of Parsons's complaint (dkt. no. 14), citing two bases. They first claim that the alleged UTPA violation contained in Count II, and the common law bad faith claim contained in Count III (collectively "the bad faith claims"), are barred by West Virginia's one-year statute of limitations. Alternatively, they claim that Parsons inadequately pled Counts II and III, and the Court should dismiss those claims pursuant to Fed. R. Civ. P. 8.

A. The Statute of Limitations Bars Counts II & III

In Dunn v. Rockwell, 225 W.Va. 43, 689 S.E.2d 255, 265 (2009), the West Virginia Supreme Court of Appeals laid out a five-step analysis for courts to utilize when determining whether a claim is barred by the relevant statute of limitations:

First , the court should identify the applicable statute of limitation for each cause of action. Second , the court (or, if material questions of fact exist, the jury) should identify when the requisite elements of the cause of action occurred. Third , the discovery rule should be applied to determine when the statute of limitation began to run by determining when the plaintiff knew, or by the exercise of reasonable diligence should have known, of the elements of a possible cause of action, ... Fourth , if the plaintiff is not entitled to the benefit of the discovery rule, then determine whether the defendant fraudulently concealed facts that prevented the plaintiff from discovering or pursuing the cause of action. Whenever a plaintiff is able to show that the defendant fraudulently concealed facts which prevented the plaintiff from discovering or pursuing the potential cause of action, the statute of limitation is tolled. And fifth , the court or the jury should determine if the statute of limitation period was arrested by some other tolling doctrine.

(Emphasis added). "In the great majority of cases, the issue of whether a claim is barred by the statute of limitations is a question of fact for the jury." Gaither v. City Hosp., Inc., 199 W.Va. 706, 487 S.E.2d 901, 909–10 (1997). The Court, however, may make a determination "where the relevant facts are undisputed and only one conclusion may be drawn from those facts." Legg v. Rashid, 222 W.Va. 169, 663 S.E.2d 623, 630 (2008) (citation omitted).

1. The Applicable Statute of Limitations Period is One Year

Under W.Va. Code § 55–2–12(c), both UTPA and common law bad faith claims are subject to a one-year statute of limitations. SeeNoland v. Virginia Ins. Reciprocal, 224 W.Va. 372, 686 S.E.2d 23, 33, 35 (2009) (holding that the one year statute of limitations contained in § 55–2–12(c) applies to both statutory and common law bad faith claims).

2. The Causes of Action Accrued on February 13, 2014

According to Parsons' complaint, his bad faith claims are a result of the defendants' denial of coverage and cessation of any further benefit payments, both of which occurred on February 13, 2014. See Dkt. No. 1-2 at 4. He further acknowledges that he was "put on notice of the Defendants' [denial] ... when he received the February 13, 2014 letter." (Dkt. No. 17 at 8-9). Accordingly, the Court concludes that the cause of action accrued on February 13, 2014.

3. The Statute of Limitations Began to Run on February 13, 2014

Under the "discovery rule," the statute of limitations begins to run "when the plaintiff knew, or by the exercise of reasonable diligence should have known, of the elements of a possible cause of action." Dunn v. Rockwell, 689 S.E.2d at 265 (citing Syl. Pt. 4, Gaither v. City Hosp., Inc., 199 W.Va. 706, 487 S.E.2d 901 (1997) ). It is clear from the face of Parsons' complaint that he was aware of the denial of coverage and cessation of benefit payments when he received the defendants' denial letter on February 13, 2014. The Court, therefore, concludes that the statute of limitations began to run on that date.

4. The Defendants did not Fraudulently Conceal any Facts

The Court need not spend any time on this step of the analysis, as there has been no claim or inference that the defendants concealed any facts, fraudulently or otherwise.

5. The Defendants are not Equitably Estopped from Asserting a Statute of Limitations Defense

Parsons relies heavily on this fifth step of the Dunn analysis to advance his argument. The crux of his response to the defendants' statute of limitations argument is that he "reasonably relied upon the Defendants' representations, delaying filing suit because he was trusting the representations made by the Defendants and the possibility of a more favorable outcome in the administrative review process." (Dkt. No. 17 at 9). Accordingly, the defendants should be equitably estopped from asserting a statute of limitations defense. In other words, so long as there was a chance that the defendants, at some point, would change their minds and provide coverage and pay benefits to Parsons, the statute of limitations should be tolled. Under that logic, the statute of limitation should not have begun to run until January 15, 2015, the date on which Parsons received the letter denying his appeal.

The law favors statutes of limitation and construes them liberally. SeeJohnson v. Nedeff, 192 W.Va. 260, 452 S.E.2d 63, 66 (1994) (quotations omitted); Humble Oil & Ref. Co. v. Lane, 152 W.Va. 578, 165 S.E.2d 379, 383 (1969). In order to avoid a statute of limitations, a plaintiff must "bring himself strictly within some exception." Nedeff, 452 S.E.2d at 66.

One such exception is the doctrine of equitable estoppel, which applies when "a party is induced to act or to refrain from acting to her detriment because of her reasonable reliance on another party's misrepresentation or concealment of a material fact." Bradley v. Williams, 195 W.Va. 180, 465 S.E.2d 180, 184–85 (1995) (quotation omitted). In Humble Oil & Ref. Co. v. Lane, the West Virginia Supreme Court of Appeals held that

[i]n order to create an estoppel to plead the statute of limitations the party seeking to maintain the action must show that he was induced to refrain from bringing his action within the statutory period by some affirmative act or conduct of the defendant or his agent and that he relied upon such act or conduct to his detriment.

Syl. Pt. 1, 152 W.Va. 578, 165 S.E.2d 379 (1969) ; see ...