RICARDO S. MARTINEZ, 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 Motions to Strike (Dkt. ## 155, 170, 174-1, 178). Having considered the parties' pleadings and responses, including supplemental briefing solicited by the Court, as well as the remainder of the record, and having heard oral argument on this matter, the Court denies Plaintiff's Motion in part and defers its ruling on the parties' breach of contract and rescission claims pending further briefing as specified herein.
Plaintiff Christyanna Karpenski, a physical therapist, filed this action for breach of contract, breach of covenant of good faith and fair dealing (bad faith) and violation of the Washington Insurance Fair Conduct Act ("IFCA") in King County Superior
On February 15, 2009, Karpenski, a resident of Washington, applied for Long Term Disability coverage under a group policy issued by Defendant U.S. Life, a New York company, to APTA, an association headquartered in Virginia (Dkt. #191, p. 4). The Master Policy contains a choice-of-law provision providing that the "policy is issued in and governed by the laws of [] Virginia." Dkt. # 171, Ex. Q, p. 4. In order to procure individual coverage under the group Master Policy, Karpenski filled out and signed a Disability Insurance Application ("Application"). The Application contained a "good health provision," which states, "Insurance will take effect only if a Certificate is issued based on this Application and the first premium is paid in full while there is no change in the insurability or health of such person from that stated in the Application." Dkt. # 150-1, Ex. 2, p. 4. Plaintiff also filled out and signed a one-page "Polyp Questionnaire" as requested by U.S. Life. See Dkt. # 146, ¶ 23. US Life, via its third party administrator, Seabury & Smith, Inc., subsequently issued and delivered a Certificate of Insurance ("Certificate") to Karpenski in a letter postmarked June 4, 2009 with an effective date of May 1, 2009. Dkt. # 122, Ex. 3; Dkt. # 143-1, Ex. A; Dkt. # 144, Ex. B, p. 12. The Certificate does not contain a choice-of-law provision but does specify that it is "a summary of the group policy provisions which affect your insurance. It is merely evidence of the Insurance provided by such policy." The Certificate also clarifies that the benefits described in it are "provided by group policy no. G-610.296, issued to [APTA]." Dkt. # 122-1, Ex. 3, p. 18.
It is undisputed that U.S. Life did not include a copy of Karpenski's signed application in the Welcome Packet containing her Certificate of Insurance. Dkt. # 143, ¶¶ 5-7. According to Plaintiff, she did not receive a copy of her Application until sometime after U.S. Life denied her claim for benefits. Dkt. #143, ¶¶ 6-7. The date at which Plaintiff paid her first premium is, however, in dispute. See Dkt. # 145, p. 17 (claiming Karpenski paid first premium after June 2009); Dkt. # 168, ¶ 3 (Karpenski cannot recall when first premium was paid); Dkt. # 150, p. 35, In. 3-11; Dkt. # 171-19, Ex. T, p. 3.
Plaintiff submitted a notice of claim to her policy administrator in early June, 2009, due to disability arising from ulcerative pancolitis. Complaint, Dkt. # 1, Ex. 2, ¶¶ 26-28. Upon receiving a proof of claim form, Plaintiff filed a claim for benefits on September 10, 2009, disclosing that she was first treated by a physician for the present disability on May 6, 2009 and reporting that her total disability commenced on May 20. Dkt. # 144, Ex. F. As Karpenski filed the claim within two years of the commencement of coverage, American General elected to conduct a "contestable review" and sent Karpenski a Disability Claim Questionnaire about her medical and treatment history, which she returned on November 14, 2009. Dkt. # 144, Ex. G, p. 7; Ex. J. On March 25, 2010, American General formally informed Karpenski that her claim had been referred to medical underwriting for contestable review. See Dkt. # 144, Ex. K.
American General informed Plaintiff via a letter dated May 11, 2010 that it had determined to deny all benefits in connection with her disability claim and rescind her LTD coverage. Dkt. #144, Ex. N.
Plaintiff filed her claim for breach of contract, bad faith, and violation of the IFCA in state court on August 15, 2012. Dkt. # 1, Ex. 2. Defendants removed the action to this Court and filed an answer with a counterclaim for declaratory relief, asking that the policy be deemed void ab initio and rescinded as a result of material misrepresentations on Plaintiff's Disability Application. See Dkt. #6, ¶ 9. Upon motion by Defendants, the Court bifurcated the case and has stayed discovery on Plaintiff's bad faith and extra-contractual claims pending resolution of the breach of contract and rescission claims. See Dkt. # 41. Plaintiff now moves the Court to enter partial summary judgment against U.S. Life precluding it from introducing Karpenski's Application into evidence because of U.S. Life's failure to attach it to her Welcome Packet. Plaintiff also moves the Court to find that U.S. Life is precluded from rescinding her insurance coverage because she had no intent to deceive and to find U.S. Life in breach of contract. See Dkt. # 142. Upon their motion for summary judgment, Defendants move the Court to order that Plaintiff's coverage be rescinded based on alleged material, knowing misrepresentation on her insurance application made with intent to deceive and to find coverage void under the Application's "good health provision." The parties also state eight separate motions to strike. Upon hearing oral argument on both parties' summary judgment motions, the Court solicited supplemental briefing as to whether Virginia or Washington law governs the contract and as to the requirements of the controlling application attachment statute under Washington law. See Dkt. # 188.
Through her Reply in Support of Motion for Partial Summary Judgment (Dkt. # 155, pp. 3-4), Plaintiff moves the Court to strike erratas/jurats for Lydia Labinsky, Wesley Jarvis, and Latoya Keatts submitted by Defendants with their responsive brief (Dkt. # 152, Ex. 1, 3, 8), on the grounds that they are sham affidavits and contradict prior testimony. Federal Rule of Civil Procedure 30(e) governs review of deposition transcripts and changes thereto. It provides that a deponent "must be allowed 30 days after being notified by the officer that the [deposition] transcript is available in which: (a) to review the transcript or recording, and; (b) if there are changes in form or substance, to sign a statement listing the changes and the reasons for making them." See Fed. R.Civ.P. 30(e). The Ninth Circuit has
In the Ninth Circuit, Rule 30(e) deposition errata are subject to the "sham rule," which precludes a party from creating "an issue of fact by an affidavit contradicting his prior deposition testimony." Hambleton, 397 F.3d at 1225 (internal citations omitted). See also, Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262, 266 (9th Cir.1991). "While the language of FRCP 30(e) permits corrections in `form or substance,' this permission does not properly include changes offered solely to create a material factual dispute in a tactical attempt to evade an unfavorable summary judgment." Hambleton, 397 F.3d at 1225. The Ninth Circuit treats "sham" corrections through errata as akin to "sham" affidavits as they are similar in purpose and effect. Id.
The Court may strike jurats as "sham" testimony upon making a finding of fact that they "flatly contradict earlier testimony in an attempt to `create' an issue of fact and avoid summary judgment." Kennedy v. Allied Mut. Ins. Co., 952 F.2d 262 (9th Cir.1991). In determining whether a deposition errata constitutes a sham, courts consider circumstances including the number of corrections, whether the corrections fundamentally change the prior testimony, the impact of the corrections on the cases (including whether they pertain to dispositive issues), the timing of the submission of corrections, and the witness's qualifications to testify. Lewis v. The CCPOA Benefit Trust Fund et al., 2010 WL 3398521, *2 (N.D.Cal.2010). See also, Johnson v. CVS Pharmacy, Inc., 2011 WL 4802952, *3 (N.D.Cal.2011); Hambleton, 397 F.3d at 1225 (considering the "tactical timing" of corrections submitted after motion for summary judgment was filed). Even where a court finds that errata are not shams, the court may still strike portions that constitute contradictory rather than corrective changes. See Hambleton, 397 F.3d at 1226 (holding that "Rule 30(e) is to be used for corrective, and not contradictory, changes"); Johnson, 2011 WL 4802952, at *4.
Plaintiff contends that the errata should be stricken in their entirety as shams. Plaintiff argues that "none of the statements provided in defendants erratas/jurats were uttered during the depositions," and consequently cannot be understood as "simply errors in transcription," which could permit a contradictory change. See Dkt. # 155, p. 3 (citing Hambleton, 397 F.3d at 1225). Defendants do not deny that the changes might be contradictory but rather contend that Rule 30(e) permits substantive changes through errata and furthermore that the timing of the errata was not suspect, as they were provided to Plaintiffs several months before the instant motion. Dkt. # 158, p. 4.
The question of whether the errata are shams may be determined as a factual matter upon oral argument. Plaintiff has not alleged that the errata are untimely, although they were submitted between March 15 and March 20, 2013, almost two months after the depositions were taken (between January 29 and January 31, 2013). Timing aside, several factors cut in favor of a finding that the depositions constitute shams, including the extensiveness of corrections, the fundamental changes they introduce to prior testimony, and the impact of the corrections. Errata for Lydia
The witnesses' qualifications to testify also weigh in favor of striking. Lydia Labinsky is Associate Director at American General and Manager of the Underwriting Department and substantially qualified to speak on the topics she addressed in her deposition. Dkt. # 144, Ex. H, pp. 3-5. Wesley Jarvis is Vice-President for AIG Benefits and U.S. Life's Rule 30(b)(6) designee for the case. As a sophisticated Rule 30(b)(6) designee, his extensive corrections are particularly suspect. See Lewis, 2010 WL 3398521, at *4 ("That a deposition should not be treated as a take home exam is particularly true. . . where the deponent is not an unsophisticated witness but rather a 30(b)(6) designee who has submitted extensive declarations in the course of this litigation."). All three deposition transcripts reflect clear and consistent answers and fail to manifest any confusion that could have merited post-deposition correction. See Johnson, 2011 WL 4802952, at *4 (refusing to strike errata where deponent was unsophisticated and the record replete with internal contradictions and indications of her confusion). The only factor that significantly militates against a finding that the errata are shams is the fact that they were provided to Plaintiff prior to the motion for summary judgment.
Taking all these factors into account, the Court finds that errata/jurats for Lydia Labinsky, Latoya Keatts, Wesley Jarvis (See Dkt. # 152, Ex. 1, 3, 8) constitute sham affidavits that constitute contradictory rather than corrective testimony and exceed the scope of changes permitted to deposition testimony under Rule 30(e). Deposition errata/jurats shall consequently be STRICKEN.
Upon response to Defendant's motion for summary judgment (Dkt. # 170), Plaintiff moves the Court to strike declaration of Lydia Labinsky (Dkt. # 147) under the "sham" affidavit rule. Plaintiff contends that Labinsky's declaration, discussing multiple bases for rescission, contradicts her deposition testimony, which discussed exclusively neck and back pain as the basis for U.S. Life's decision to rescind. Compare Dkt. # 147 with Dkt. # 171, Ex. H, Labinsky Dep., 64:20-65:5. Plaintiff also contends that Labinsky's declaration should be stricken on the grounds that it offers inadmissible speculative testimony.
Upon review of the record, the Court declines to strike the declaration.
Upon reply, Defendants move to strike affidavits by Plaintiff's health care providers and co-workers (Dkt. ## 161-166) filed in opposition to Defendants' motion for summary judgment. Dkt. # 174-1, pp. 13-16. Defendants contend that the declarations should be stricken in their entirety as they offer only conclusory statements about Plaintiff's lack of contested health disorders. Defendants also move to strike the declaration by Plaintiff's husband, Mr. Allmon (Dkt. # 167), on the grounds that it offers unqualified, conclusory opinion testimony about Plaintiff's medical status. Defendants further move to strike two statements by Plaintiff's treating physicians, Dr. Schliiter and Dr. Paroo (Dkt. # 164, Schliiter Dep., ¶ 9; Dkt. #162, Paroo Dep., ¶ 11), on the grounds that they conflict with their prior testimony.
The Court denies Defendants' motion to strike the affidavits in their entirety. Conclusory testimony is insufficient to defeat a summary judgment motion. See Timeline, Inc. v. Proclarity Corp., 2007 WL 1574069, at *8 (W.D.Wash.2007). The Court may discount such conclusory statements in considering a summary judgment motion and need not strike the declarations in their entirety. The Court also declines to strike the specific statements by Dr. Schliiter and Dr. Paroo as they do not contradict former testimony. In her deposition, Dr. Schliiter states that she "assessed" Plaintiff for autoimmune thyroid disorder but does not claim to have diagnosed her with the condition. See, Dkt. # 150, Ex. 28, p. 42. Similarly, Dr. Paroo discussed in deposition her recommendations to Plaintiff for help with emotional problems but does not state that she diagnosed a disorder. See Dkt. # 150, Ex. 13, pp. 81-82.
Pursuant to Local Rule 7(g) (permitting motions to strike in a surreply), Plaintiff moves the Court to strike new evidence and case law references. Dkt. # 178, p. 3. The offending material consists of 10 exhibits containing "92 pages of new evidence" submitted by Defendants upon reply to their motion for summary judgment. Dkt. #175, Ex. 1-10. As a general rule, a "movant may not raise new facts or arguments in his reply brief." Quinstreet, Inc. v. Ferguson, 2008 WL 5102378, at *4 (W.D.Wash.2008), citing United States v. Puerta, 982 F.2d 1297, 1300 n. 1 (9th Cir.1992). The Court agrees that Exhibits 7, 8, and 10, introduced upon reply by Defendants in support of their rescission claims, should have been introduced by Defendants in their opening brief. Consequently, Exhibits 7, 8, and 10 will be stricken. In contrast, Defendants introduced Exhibits 1-6 upon reply in order to respond to motions to strike asserted by Plaintiff's in their brief in opposition. Defendants also introduced Exhibit 9 for the sole purpose of supporting their motion to strike declarations by Plaintiff's co-worker physical therapists. The Court accordingly declines to strike exhibits 1-6 and 9.
Through her surreply to Defendant's motion for summary judgment (Dkt. # 178), Plaintiff moves the Court to strike Defendants' argument that Virginia, rather than Washington, law governs her insurance contract based on a provision of the policy. See Dkt. # 174-1; Dkt. # 146-2, Ex. 29, p. 2. As a general matter, a movant may not raise new issues in a reply brief, as doing so "essentially prevents [the nonmoving party] from providing any response." Wood v. Household Finance Corp., 341 B.R. 770, 773 (W.D.Wash.2006). Nonetheless, the Court declines to strike Defendant's argument regarding choice of law, where it is raised upon reply in opposition to Plaintiff's motion to strike her Disability Application, and where the Court has provided both parties with extensive opportunities to engage choice of law through oral argument and supplemental briefing.
Plaintiff further moves the Court to strike several new case law references introduced by Defendant upon reply. Dkt. # 178, p. 4. The Court denies this motion as Plaintiff has failed to demonstrate that these citations raise new issues rather than expound on those already presented through Defendants' opening motion.
Finally, Plaintiff moves the Court to strike several alleged factual misrepresentations by Defendants in their reply brief. Dkt. # 178, p. 4. Plaintiff moves the Court to strike Defendant's averment that Plaintiff "has conceded that [the first premium] was paid after she received her Welcome Package." See Dkt. # 174-1, p. 12. Plaintiff also moves to strike Defendants' statement that Dr. Paroo testified that Plaintiff had "an emotional problem that required treatment by a psychotherapist." See Id. The Court denies Plaintiff's motion to strike, as the allegedly infringing factual averments constitute interpretations of the factual record already before the Court and subject to the Court's independent scrutiny.
Federal Rule of Civil Procedure 56(a) permits parties to move for summary judgment on all or part of their claims. Summary Judgment is proper where "the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(a); Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). Material facts are those that may affect the outcome of the suit under governing law. Anderson, 477 U.S. at 248, 106 S.Ct. 2505. An issue of material fact is genuine "if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Id. In ruling on a motion for summary judgment, the court does "not weigh the evidence or determine the truth of the matter but only determine[s] whether there is a genuine issue for trial." Crane v. Conoco, 41 F.3d 547, 549 (9th Cir.1994) (internal citations omitted).
The moving party bears the initial burden of production and the ultimate burden of persuasion. Nissan Fire & Marine Ins. Co., Ltd. v. Fritz Companies, Inc., 210 F.3d 1099, 1102 (9th Cir.2000). The moving party must initially establish the absence of a genuine issue of material fact. Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The nonmoving party defeats a motion for summary judgment if she "produces enough evidence to create a genuine issue of material fact." Nissan Fire, 210 F.3d at 1103. By contrast, the moving party is entitled to summary judgment where "the nonmoving party has failed to make a sufficient
Plaintiffs claim that her insurance Application should be stricken from evidence due to Defendants' failure to attach it to her Certificate when issued (Dkt. ## 142, 170) raises a threshold choice-of-law question. The parties do not dispute that the Master Policy under which Plaintiffs Certificate of Insurance was issued contains a choice-of-law provision providing that it is issued and governed under the laws of Virginia. See Dkt. #189, p. 2; Dkt. # 190, p. 2; Dkt. # 171, Ex. Q, p. 4. Defendants contend that the Policy's choice-of-law provision should be upheld and Virginia law should govern whether Plaintiff's insurance application should have been attached to her Certificate. In her supplemental brief, Plaintiff contends that Washington law should apply where application of Virginia law would violate a fundamental public policy of the forum state.
Because this Court exercises diversity jurisdiction in this case, Washington's conflict of law rules apply. Patton v. Cox, 276 F.3d 493, 495 (9th Cir.2002); Klaxon Co. v. Stentor Electric Mfg. Co., 313 U.S. 487, 496-96, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941). Washington courts generally enforce choice-of-law provisions. Schnall v. AT & T Wireless Services, Inc., 171 Wn.2d 260, 259 P.3d 129, 131-32 (2011) (internal quotations and citations omitted).
In the instant matter, though the choice-of-law provision is found in the Master Policy rather than the Certificate of Insurance, it governs both. The Supreme Court, in Boseman v. Connecticut Gen. Life Ins. Co., 301 U.S. 196, 57 S.Ct. 686, 81 L.Ed. 1036 (1937), held that a choice-of-law provision in a group insurance policy governed the individual insured's coverage as manifested by a certificate of insurance. The Supreme Court explained that
Boseman, 301 U.S. at 203, 57 S.Ct. 686.
As in Boseman, the instant Master Policy does not declare the Certificate of Insurance to constitute part of the contract, and the Certificate does not alter any of the Master Policy's terms. See Dkt. # 156-2, Ex. S, p. 28. Where a provision of the Certificate of Insurance conflicts with the Master Policy, the Certificate will ordinarily be held to control. See Fritro v. Lincoln Nat. Life Ins. Co., 111 Wn.2d 46, 757 P.2d 1374, 1378 (1988) (concluding that "as a matter of public policy, insurance companies operating under a statutory mandate to issue certificates of coverage
The Court's determination that Virginia law governs Karpenski's individual coverage is undergirded by the unique choice-of-law rules that apply in the group insurance policy context. "Rights against the insurer under a group policy are generally governed by the law of the state where the master policy was delivered." Erickson v. Sentry Life Ins. Co., 43 Wn.App. 651, 719 P.2d 160, 162 (1986). The rationale behind this rule recognizes that "it is desirable that each individual insured should enjoy the same privileges and protection." Restatement (Second) of Conflict of Laws § 192, comment h (1971). When coupled with a choice-of-law provision, this rule gives effect to the "purpose of the parties to the contract that everywhere it shall have the same meaning and give the same protection, and that inequalities and confusion liable to result from applications of diverse state laws shall be avoided." Boseman, 301 U.S. at 206, 57 S.Ct. 686. The validity of a choice-of-law provision is even more likely to be upheld in the group disability insurance context than the individual insurance context due to the stronger bargaining position that the organization procuring the master policies possesses relative to the individual. Restatement § 192, comment h (explaining that the choice-of-law provision for a group disability insurance contract "is less likely to have a `take-it-or-leave-it' character").
Giving effect to the choice-of-law provision in the Master Policy is also consistent with the results reached by courts in other states. See, e.g., Hofeld v. Nationwide Life. Ins. Co., 59 Ill.2d 522, 322 N.E.2d 454, 460 (1975) ("The prevailing view is that a choice of law made in the basic group policy will be honored by the courts, particularly where the selection is the state of the group policy holder."); Silvest v. Monumental General Ins. Co., 998 F.2d 1016, at *3 (7th Cir.1993) (explaining that "as long as the choice of law provision to be applied does not conflict with the public policy of Illinois and the certificate does not contain a provision that conflicts with the master policy, the master policy's provision will be applied"); Kahn v. Great-West Life Assur. Co., 61 Misc.2d 918, 307 N.Y.S.2d 238 (1970) (enforcing choice of law provision for group disability insurance policy even where law of forum state would strike the application from evidence under New York attachment statute); Lindstrom v. Aetna Life Ins. Co., 203 N.W.2d 623 (Iowa 1973); Monson v. Life Ins. Co. of No. Am., 558 F.Supp. 1354 (D.Nev.1983).
Plaintiff argues that even if the Court finds the Master Policy's choice-of-law provision to be applicable, it should refuse to enforce it where doing so would contravene Washington public policy. Plaintiff thereby moves the Court to engage in a conflict of law analysis to determine whether the selection of Virginia law will be upheld with regards to Plaintiff's attachment statute claim.
Accordingly, in order to "effectively void a choice of law provision, a court must find that the chosen state has no substantial relationship to the parties or that the application of the chosen law would be contrary to a fundamental policy of" the state with a materially greater interest than the chosen state and which would otherwise be the state of the applicable law. Schnall, 259 P.3d at 132, citing Erwin, 167 P.3d at 1122.
As to the threshold question, the Court is not persuaded that a conflict exists between the applicable Virginia and Washington attachment statutes. As an initial matter, the Court finds that RCW 48.21.060, rather than RCW 48.18.080(1) as argued by Defendants, governs the attachment of Karpenski's Application under Washington law. RCW 48.18.080(1) provides that "No application for the issuance of any insurance policy or contract shall be admissible in evidence in any action relative to such policy or contract, unless a true copy of the application was attached to or otherwise made a part of the policy when issued and delivered." RCW 48.18 deals with insurance contracts generally while RCW 48.21 governs aspects of group and blanket disability insurance in particular. RCW 48.21.060 mandates specific requirements for the furnishment of an individual insured's application under a group disability policy. As the more specific statute, RCW 48.21 is not displaced by the later amended, more general RCW 48.18. See Radzanower v. Touche Ross & Co., 426 U.S. 148, 153, 96 S.Ct. 1989, 48 L.Ed.2d 540 (1976) ("It is a basic principle of statutory construction that a statute dealing with a narrow, precise, and specific subject is not submerged by a later enacted statute covering a more generalized spectrum."). It is also clear that RCW 48.18.080(1) is inapposite in light of the facts of this case. The attachment requirement of RCW 48.18.080 applies in instances where the actual
Both parties agree that under Virginia law, Va.Code Ann. § 38.2-3529 governs the admissibility of Karpenski's Application. Section 38.2-3529 provides, in relevant part, that each group accident and sickness insurance policy shall contain a provision stating that:
Washington's attachment statute for group disability insurance policies is nearly identical. RCW 48.21.060 provides, in relevant part, that:
Plaintiff concedes that the two statutes are substantially similar. See Dkt. # 190, p. 2. The only difference between the two statutes is the addition of the words "or has been" to RCW 48.21.060. Defendants contend that the use of the disjunctive conjunction "or" between "is" and "has been" sets forth two ways by which an application may be furnished "in any contest:" 1) presently or 2) at some time prior to or during the contest. See Dkt. # 189, pp. 10-15, citing Black v. National Merit Ins. Co., 154 Wn.App. 674, 688, 226 P.3d 175, 182 (2010) (noting that "`or' is most commonly used in the disjunctive and employed to indicate an alternative."). The Court agrees that per the plain meaning of RCW 48.21.060, "or" is used in the disjunctive sense. Where, as here, the Application is furnished to the individual insured, the requirements of both statutes are met. While neither Washington nor Virginia courts have interpreted either statute, courts of both states would be unlikely to reach a different result in doing so.
Plaintiff relies on Whitaker v. Spiegel, Inc., 95 Wn.2d 408, 623 P.2d 1147, 1150, as amended 95 Wn.2d 661, 637 P.2d 235 (1981), to argue that Washington law must be applied to Plaintiff's attachment statute claim because doing so would contravene a fundamental public policy of forum state. Plaintiff's argument is unavailing. In Whitaker, a usury case, the Supreme Court of Washington invalidated the parties' choice of Illinois law to govern their contract because applying Illinois law would contravene the fundamental public policy expressed in RCW 19.52.020, providing a 12% ceiling on the rate that may be exacted for the loan or forbearance of any money. The Whitaker Court undertook a conflict of law analysis only upon acknowledging an actual conflict between the applicable law of Illinois and Washington: the contract provided for a 19.8% service charge, which was permissible under Illinois law but not under RCW 19.52.020. As explained supra, no such conflict is present in this case where the applicable statutes of Washington and Virginia are substantially similar.
Furthermore, critical to the Whitaker Court's analysis was a Washington statutory provision, RCW 19.52.034, which specifically required that Washington's usury statutes be applied to all loans, whether made within or without the State.
Having found that Virginia law applies, the Court determines that Virginia law does not bar the introduction of Karpenski's application into evidence. Va. Code Ann. § 38.2-3529 nowhere states that failure to furnish an application with the insurance certificate precludes a group carrier from relying upon the application to disclaim coverage. Rather the statute provides that the Policy must state that no written statement made by the insurer may be used in any contest unless a copy of the same is furnished to the person. In the instant case, it is undisputed that Karpenski received her Application in connection with the rescission contest. See, e.g., Dkt. # 175-2, Ex. 2 (letter dated June 3, 2010 referencing enclosure of Karpenski's entire claim file). Karpenski's statements made on her Application were in her possession during her appeals of U.S. Life's decision. See Id. at Ex. 3, 4 (referencing ongoing appeals process).
Southland Life Ins. Co. v. Donati, 201 Va. 855, 114 S.E.2d 595 (1960), relied on by Plaintiff, supports, rather than contradicts, this conclusion. The statute at issue in Southland, Va.Code. Ann. § 38.1-393 (1950), provided that an insurer could not rely on any statement made by the insured unless it was "contained in a written application and unless a copy of such statement [] be endorsed upon or attached to the policy when issued." Southland Life Ins. Co., 114 S.E.2d at 595. Similar to RCW 48.21.080(1), the Southland statute contained an explicit timing requirement, mandating that the application be attached to the policy "when issued." No such timing requirement is present in Va.Code Ann. § 38.2-3529. The difference between these two statutes further evidences the legislative intent that, according to the plain meaning of § 38.2-3529, group disability applications must simply be provided to the insured prior to or during the course of a contest. See Breault v. Berkshire Life Ins. Co., 821 F.Supp. 410, 414 n. 5 (E.D.Va.1993) ("Had the Virginia legislature intended to permit applicants to escape
This Court's decision to admit Karpenski's Application accords with the interpretation that several courts have given to statutory language similar to that of Va. Code Ann. § 38.2-3529 and RCW 48.21.060. In Aliaga v. Continental Insurance Co., 2006 WL 3290099, at *4 (D.N.J. 2006), the district court interpreted a virtually identical New Jersey statute to require that all statements made by the individual insured "are admissible as evidence in an action involving the policy so long as the insurance company provides a copy of the alleged misstatement prior to admitting it into evidence." The court contrasted the group disability attachment statute with the individual insurance attachment statute, similar to that considered in Southland. The court explained that having separate standards for admissibility "makes sense:"
Id. at * 5. Other jurisdictions have followed the rule that statutes similar to Va.Code Ann. § 38.2-3529 and RCW 48.21.060 require that a copy of the alleged misstatement be provided prior to admitting it into evidence during a contest. See McGeehan v. Am. Gen. Assurance Co., 2004 WL 2584670 (E.D.Pa.2004); Prousi v. Unum Life Ins. Co., 77 F.Supp.2d 665, 668 (E.D.Pa.1999); Coleman v. Aetna Life Ins. Co., 261 F.2d 296, 299 (7th Cir.1958).
This result is particularly appropriate where, as here, the individual insured completed the application herself and has had multiple opportunities to defend her alleged misstatements both to the insurance company and now to the Court. In Johnson v. Prudential Ins. Co. of Am., 519 S.W.2d 111, 114 (Tex.1975), the Court interpreted a similar attachment statute to require that, for group life insurance policies, the insurer "promptly furnish" the individual insured or his beneficiary a copy of his application. The Johnson court was concerned with preventing a situation where an application for insurance is "filled out or written by an insurance agent or others and only signed by the insured." Such a situation is not present in the instant case. See also, Manz v. Continental Am. Life Ins. Co., 119 Or.App. 31, 849 P.2d 549 (1993) (construing RCW 48.21.060 in light of Johnson). Moreover, the concern presented in the context of group life insurance contracts, that the individual insured have the opportunity to correct and defend any misrepresentations during her lifetime, is not present with respect to Karpenski's group disability application. Cf. Layman v. Continental Assur. Co., 430 Pa. 134, 242 A.2d 256, 258 (Penn.1968) (following the decision of New York courts to construe similar attachment language to require that the company furnish the application before the insured's death under a life insurance policy).
For all these reasons, the Court finds that in this case, the requirement of the applicable attachment statute has been met where Plaintiff received the group
Defendants claim that they are entitled to rescind Plaintiff's Application based on alleged misrepresentations as well as her alleged violation of the good health provision in her Application. Plaintiff contends that U.S. Life's decision to rescind her disability insurance coverage constitutes breach of contract. Both parties have briefed these issues with respect to Washington statutory and case law under the assumption that Washington law governs the parties' rights under Karpenski's insurance contract. As the Court has found the Master Policy's choice-of-law provision valid and enforceable, it will proceed to analyze the parties' remaining claims under Virginia law. Consequently, the Court defers summary judgment pending further briefing by the parties on the application of Virginia law to the remaining claims asserted in their respective motions for summary judgment.
For the reasons stated herein, it is hereby ORDERED that:
