Opinion
No. COA11–1009.
2012-07-17
Richard MEADLOCK, Plaintiff–Appellant, v. AMERICAN FAMILY LIFE ASSURANCE COMPANY OF COLUMBUS, and Glenn H. Carter, Defendants–Appellees.
Crawford & Crawford, LLP, by Robert O. Crawford, III; and Hemmings & Stevens, P.L.L.C., by Aaron C. Hemmings, for Plaintiff–Appellant. Nelson Mullins Riley & Scarborough LLP, by Christopher J. Blake and Leslie Lane Mize, for Defendant–Appellee American Family Life Assurance Company of Columbus.
Appeal by Plaintiff from order entered 25 April 2011 by Judge Beverly T. Beal in Superior Court, Caldwell County. Heard in the Court of Appeals 10 January 2012. Crawford & Crawford, LLP, by Robert O. Crawford, III; and Hemmings & Stevens, P.L.L.C., by Aaron C. Hemmings, for Plaintiff–Appellant. Nelson Mullins Riley & Scarborough LLP, by Christopher J. Blake and Leslie Lane Mize, for Defendant–Appellee American Family Life Assurance Company of Columbus.
Parker Poe Adams & Bernstein LLP, by Melanie Black Dubis and Scott E. Bayzle, for Defendant–Appellee Glenn H. Carter.
McGEE, Judge.
Richard Meadlock (Plaintiff) filed a complaint on 23 September 2009 against American Family Life Assurance Company of Columbus (Aflac), and Glenn H. Carter (Mr. Carter), (collectively Defendants). Plaintiff's complaint set forth nineteen causes of action arising out of Aflac's denial of a claim submitted by Plaintiff for the death benefits of a life insurance policy purchased by Plaintiff's wife, Terri Meadlock (Mrs. Meadlock). Defendants filed a motion for summary judgment on 19 November 2010. The trial court granted Defendants' motion and entered judgment in favor of Defendants in an order entered 25 April 2011.
I. Background
The undisputed facts show that on 6 March 2008, Mr. Carter worked as an authorized agent of Aflac. Mr. Carter, along with a new trainee, Cassa Mason (Ms. Mason), met with Mrs. Meadlock on 6 March 2008 in Mrs. Meadlock's office to discuss life insurance. Ms. Mason's mother was a friend of Mrs. Meadlock and established the business connection between Ms. Mason, Mr. Carter, and Mrs. Meadlock. The events surrounding the 6 March 2008 meeting in Mrs. Meadlock's office are in dispute and will be discussed in more detail below.
Mrs. Meadlock died of ventricular fibrillation on 1 January 2009. After Mrs. Meadlock's death, Mrs. Meadlock's secretary, Beverly Gaebel (Ms. Gaebel), discovered a copy of a life insurance policy (the policy) “in some of [Mrs. Meadlock's] files at the office.” The policy was issued to Mrs. Meadlock by Aflac on 1 April 2008 and listed Plaintiff as primary beneficiary. Plaintiff filed a claim for benefits with Aflac on 28 February 2009. In a letter dated 25 June 2009, Aflac denied Plaintiff's claim for death benefits. Aflac asserted that Mrs. Meadlock, in her life insurance policy application, had provided a false answer to a question regarding her medical history. After Aflac's denial of Plaintiff's claim, Plaintiff notified Aflac that “the life insurance application mistakenly indicated that the policy was not intended to replace an existing policy and that there were serious doubts as to whether [Mrs.] Meadlock signed the Aflac life insurance application.” On 3 August 2009, Plaintiff “again demanded that ... [Aflac] pay the death benefit due under the life insurance policy.” Aflac again denied Plaintiff's claim and Plaintiff filed the complaint in this action.
A. Misrepresentations in the Insurance Application
The policy that was found in Mrs. Meadlock's office included a copy of an application completed in Mrs. Meadlock's name (the application). The application contained questions concerning Mrs. Meadlock's medical history, including, inter alia, whether she had ever been treated for heart disease, heart disorder, or a tumor. The application indicated negative responses to these questions, despite the fact that Mrs. Meadlock had suffered a heart attack in August 2000 and had been diagnosed with, and later treated for, colon cancer.
B. Procedural History
Plaintiff filed his complaint on 23 September 2009, setting forth nineteen causes of action against Aflac and Mr. Carter. Plaintiff alleged the following claims against Aflac: (1) “Vicarious Liability/Respondent [sic] Superior [;]” (2) breach of contract; (3) “Unfair and Deceptive Trade Practices, Unfair Claims Practices[;]” (4) fraud; (5) constructive fraud; (6) negligence; (7) breach of fiduciary duty; (8) “Unfair and Deceptive Trade Practices[;]” (9) “Unfair and Deceptive Trade Practices, Twisting[;]” (10) bad faith; and (11) punitive damages. Plaintiff's claims against Mr. Carter are for (1) negligence; (2) “misrepresentation in application”; (3) fraud; (4) constructive fraud; (5) breach of fiduciary duty; (6) “Unfair and Deceptive Trade Practices”; (7) “Unfair and Deceptive Trade Practices, Twisting”; (8) punitive damages; and (9) breach of contract.
Plaintiff's complaint alleged that Mr. Carter completed the application on behalf of Mrs. Meadlock during the 6 March 2008 meeting of Mrs. Meadlock, Mr. Carter, and Ms. Mason. Plaintiff alleged that Mr. Carter was aware of Mrs. Meadlock's medical history, but that Mr. Carter misrepresented her medical history on the application and then signed the application in Mrs. Meadlock's name “without authorization, permission, or giving ... [Mrs.] Meadlock the opportunity to review the answers[.]”
C. Dispute Concerning the Application Process
The central dispute between the parties concerns specific events that occurred on 6 March 2008. Plaintiff alleges that Mr. Carter, in assisting Mrs. Meadlock with completion of the application, was aware of Mrs. Meadlock's medical history, but that Mr. Carter omitted questions concerning that history when he reviewed the application with Mrs. Meadlock. Further, Plaintiff contends Mr. Carter forged Mrs. Meadlock's signature on the application. Thus, Mrs. Meadlock's application contained misrepresentations attributable only to Mr. Carter and not to Mrs. Meadlock.
Defendants contend the application was completed by Mr. Carter, Ms. Mason, and Mrs. Meadlock, together. Mr. Carter and Ms. Mason testified in deposition that they read the questions from the screen of a laptop computer to Mrs. Meadlock, who answered the questions and could see the screen of the laptop at all times as her answers were recorded. Ms. Mason and Mr. Carter also testified during their depositions that they personally observed Mrs. Meadlock sign the application using an electronic signature capturing device (the Topaz device).
In support of his position, Plaintiff produced an affidavit from a handwriting expert, Emily Will (Ms. Will), concerning the authorship of the signature on the application. Ms. Will examined known examples of Mrs. Meadlock's signature and the data available from the Topaz device. It was the opinion of Ms. Will that:
Because there are both similarities and differences in the comparisons of the known and questioned signatures, and because the data captured and reported by both Aflac and the opposing expert is incomplete and questionable, it is my opinion that according to the principles of forensic document examination no conclusion of authorship of the questioned Terri W. Meadlock signature is possible.
Plaintiff also produced an affidavit from Ms. Gaebel, who was an office manager for Mrs. Meadlock for “several years[.]” Ms. Gaebel stated in her affidavit that, from her duties as office manager, she was familiar with Mrs. Meadlock's signature. Ms. Gaebel also stated that she had “reviewed the Signature Page of the Life Insurance Policy for [Mrs.] Meadlock ... and it [was] [Ms. Gaebel's] opinion that the signature [was] not that of [Mrs.] Meadlock.”
Defendants provided the deposition testimony of both Ms. Mason and Mr. Carter, who stated that they did not participate in any scheme to mislead Aflac by providing misrepresentations in the application. Further, each testified that they personally saw Mrs. Meadlock sign the application using the Topaz device. Defendants also presented the expert opinion of William Flynn (Mr. Flynn), a handwriting expert, who opined that the signature on the application was that of Mrs. Meadlock.
II. Issues on Appeal
On appeal, Plaintiff raises the issues of whether: (1) the trial court erred in granting Defendants' motion for summary judgment because “there are genuine issues of material fact for trial[;]” (2) the trial court erred by considering the opinion of Defendants' expert witness; and (3) the trial court erred in granting Defendants' motion for summary judgment because “the competent evidence raised genuine issues of material fact as to whether [Aflac] engaged in unfair claim settlement practices.”
III. Standard of Review
We review a trial court's ruling on a motion for summary judgment de novo. Forbis v. Neal, 361 N.C. 519, 524, 649 S.E.2d 382, 385 (2007). “Summary judgment is appropriate if ‘the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that any party is entitled to a judgment as a matter of law.’ “ Id. at 523–24, 649 S.E.2d at 385 (citation omitted). “The trial court may not resolve issues of fact and must deny the motion if there is a genuine issue as to any material fact.” Id. at 524, 649 S.E.2d at 385. “Moreover, ‘all inferences of fact ... must be drawn against the movant and in favor of the party opposing the motion.’ “ Id. (citation omitted).
“ ‘The rule is designed to permit penetration of an unfounded claim or defense in advance of trial and to allow summary disposition for either party when a fatal weakness in the claim or defense is exposed.’ “ Southeastern Asphalt v. American Defender Life, 69 N.C.App. 185, 189, 316 S.E.2d 311, 313 (1984) (citation omitted). “The moving party ... has the burden of showing that no material issues of fact exist.” Id. “In rebuttal, the nonmovant must then set forth specific facts showing that genuine issues of fact remain for trial.” Id. Our Supreme Court has stated that “an issue is genuine if it is supported by substantial evidence ... and [a]n issue is material if the facts alleged ... would affect the result of the action[.]” DeWitt v. Eveready Battery Co., 355 N.C. 672, 681, 565 S.E.2d 140, 146 (2002) (internal citations and quotation marks omitted). “ ‘ “Substantial evidence is such relevant evidence as a reasonable mind might accept as adequate to support a conclusion,” ‘ ... and means ‘more than a scintilla or a permissible inference [.]’ “ Id. (citations omitted).
A defendant may show entitlement to summary judgment by “(1) proving that an essential element of the plaintiff's case is nonexistent, or (2) showing through discovery that the plaintiff cannot produce evidence to support an essential element of his or her claim, or (3) showing that the plaintiff cannot surmount an affirmative defense.” ... Summary judgment is not appropriate where matters of credibility and determining the weight of the evidence exist.
“ ‘Once the party seeking summary judgment makes the required showing, the burden shifts to the nonmoving party to produce a forecast of evidence demonstrating specific facts, as opposed to allegations, showing that he can at least establish a prima facie case at trial.’ “
Draughon v. Harnett Cty. Bd. of Educ., 158 N.C.App. 208, 212, 580 S.E.2d 732, 735 (2003) (citations omitted).
IV. Issues of Fact
Plaintiff states in his brief that “[t]he crux of the issue to be determined in this appeal is whether the sworn deposition testimony of [Mr. Carter] and [Ms. Mason] is credible and worthy of belief.” Plaintiff first argues that there are genuine issues of material fact as to “the credibility of [Mr.] Carter's claim that the medical history questions were propounded to decedent [Mrs.] Meadlock and were accurately recorded.” Plaintiff next argues that there was a genuine issue of fact as to the credibility of Mr. Carter's denial of having forged Mrs. Meadlock's electronic signature. Plaintiff also contends there is a genuine issue of fact as to whether Mrs. Meadlock signed the application because: (1) the trial court should not have relied on Defendants' expert, Mr. Flynn, due to evidentiary concerns arising from the unavailability of some of his test materials; and (2) Ms. Gaebel's lay opinion, that the signature was not that of Mrs. Meadlock, created an issue of fact.
Plaintiff testified during his deposition that the policy was found in Mrs. Meadlock's office among her files. The policy submitted to Mrs. Meadlock stated in clear language: “This is a legal contract between the policy owner and Aflac. READ YOUR POLICY CAREFULLY!” The policy also contains the following language: “YOUR RIGHT TO EXAMINE THIS POLICY It is important to us that you are satisfied with this policy and that it meets your insurance goals. If you are not satisfied, you may return it within 30 days after you receive it.” The policy provides further that: “This policy may be contested if we rely on material misrepresentation in the application.”
A copy of Mrs. Meadlock's application for the life insurance policy was included as a part of the policy found in Mrs. Meadlock's office. The policy contains the following language:
WHAT IS THE CONTRACT WITH US? This policy is issued in consideration of the application and the first premium payment. This policy, the application, any attached Riders, and any attached amendments constitute the entire contract.
The application contains the questions at issue in the present case, and clearly shows the “x” marks indicating negative responses to the questions. The last page of the application contains the following final paragraph:
I have read, or had read to me, the completed application. I realize that policy issuance is based upon statements and answers provided herein, and they are complete and true. All statements made in this application are deemed representations and not warranties. I realize that any material misrepresentation therein may result in loss of coverage under the policy.
This language is followed by Mrs. Meadlock's purported electronic signature.
We find instructive the reasoning in Baggett v. Summerlin Ins. & Realty, Inc., 143 N.C.App. 43, 545 S.E.2d 462,rev'd,354 N .C. 347, 554 S.E.2d 336 (2001). Our Supreme Court reversed the decision of this Court for the reasons stated in the dissenting opinion, in which it was noted:
The majority's opinion points out that policyholders in North Carolina are under a duty to read their insurance policies.
“[A]n insurance agent is not required to affirmatively warn his customers of provisions contained in insurance policies.” .... Persons entering contracts of insurance, like other contracts, have a duty to read them and ordinarily are charged with knowledge of their contents.” ...
“[T]he receipt and retention of the policy by the insured has been held to preclude the right to a reformation.” .... Where a party has reasonable opportunity to read the instrument in question, and the language of the instrument is clear, unambiguous and easily understood, failure to read the instrument bars that party from asserting its belief that the policy contained provisions which it does not.
The North Carolina Court has frequently said that where no trick or device had prevented a person from reading the paper which he has signed or has accepted as the contract prepared by the other party, his failure to read when he had the opportunity to do so will bar his right to reformation.
Baggett, 143 N.C.App. at 53, 545 S.E.2d at 468–69 (Tyson, J. dissenting, citations omitted); see also State Farm Mut. Auto. Ins. Co. v. Gaylor, 190 N.C.App. 448, 452, 660 S.E.2d 104, 107 (2008).
In the present case, Plaintiff's claims are based on a theory of the case in which Mrs. Meadlock was unaware of the misrepresentations in her application. Plaintiff asserts Mrs. Meadlock was unaware because Mr. Carter either did not read Mrs. Meadlock all of the questions or because Mr. Carter purposefully recorded Mrs. Meadlock's answers incorrectly, in order to obtain a commission for the policy. Finally, Plaintiff asserts that Mrs. Meadlock cannot be said to have participated in the misrepresentations contained in the application by virtue of her signature, because Plaintiff contends Mrs. Meadlock did not actually sign the application at all. Plaintiff contends Mr. Carter forged Mrs. Meadlock's signature.
However, Plaintiff's own evidence indicates that the policy was found, along with other papers, in Mrs. Meadlock's office. Thus, we conclude that Mrs. Meadlock had the opportunity to read the policy. As stated above, there is a duty imposed by law upon policyholders to read their policies. Id. The application contained within the policy clearly contained the misrepresentations involved in the current action, as well as the purportedly fraudulent signature. A policy provision also stated that material misrepresentations would result in contested coverage. We hold that, even if Plaintiff's theory of the case were true, Plaintiff's claims are defeated by the fact that Mrs. Meadlock received a copy of the policy, had a duty to read it, and failed to correct the misrepresentations contained within.
In light of the facts of the present case, we find that Plaintiff failed to forecast evidence suggesting that Mrs. Meadlock was unaware of the questions contained in the application, of the misrepresentative responses thereto, or of the signature on the application. Therefore, even assuming the truth of Plaintiff's allegation that Mr. Carter completed and signed the application with knowledge of Mrs. Meadlock's medical history, there was also evidence that Mrs. Meadlock was aware of this misrepresentation and did nothing to correct it. Therefore, we conclude that Plaintiff's arguments as to the alleged issues of fact concerning the medical history questions and the genuineness of the signature on the application are not material in the present case and are without merit.
V. Unfair Claim Settlement and N.C. Gen.Stat. § 75–1.1
Plaintiff's complaint also contained causes of action brought pursuant to alleged violations of N.C. Gen.Stat. § 75–1.1. This Court has held that the “prohibited acts listed in N.C. Gen.Stat. § 58–63–15(11) are also acts which are unfair, unscrupulous, and injurious to consumers, and that such acts therefore fall within the ‘broader standards' of N.C. Gen.Stat. § 75–1.1.” Country Club of Johnston Cty., Inc. v. U.S. Fidelity & Guar. Co., 150 N.C.App. 231, 246, 563 S.E.2d 269, 279 (2002) (citation omitted). Thus, a violation of N.C.G.S. § 58–63–15(11) may constitute an unfair and deceptive act for the purposes of N.C.G.S. § 75–1.1.
We first note that Plaintiff's complaint simply states that Aflac's “acts and omissions violated one or more provisions of the Unfair Claims Settlement Act, N.C.G.S. § 58–63–15(11).” In his complaint, Plaintiff did not indicate the subsections of that statute that Aflac violated. During the hearing on Defendants' motion for summary judgment, Plaintiff's attorney indicated to the trial court the subsections of N.C. Gen.Stat. § 58–63–15(11) that Aflac violated.
However, we note that, while violations of N.C.G.S. § 58–63–15(11) may constitute unfair or deceptive acts or practices for the purposes of N.C.G.S. § 75–1.1, Plaintiff must still show that he was injured by such conduct. See, e.g., First Atl. Mgmt. Corp. v. Dunlea Realty Co., 131 N.C.App. 242, 252, 507 S.E.2d 56, 63 (1998) (stating that elements of an N.C.G.S. § 75–1.1 claim are that the defendant engaged in (1) “an unfair and deceptive act or practice; (2) in or affecting commerce; and (3) that plaintiff was injured thereby”).
A. Timeliness and Action
Plaintiff argues that Aflac failed to acknowledge and act reasonably upon communications with respect to claims arising under Mrs. Meadlock's life insurance policy. N.C. Gen.Stat. § 58–63–15(11)(b) (2011) prohibits an insurer from “[f]ailing to acknowledge and act reasonably promptly upon communications with respect to claims arising under insurance policies [.]” Plaintiff also contends that Aflac failed to affirm or deny coverage of Plaintiff's claim within a reasonable time after proof of loss statements had been completed. N.C.G.S. § 58–63–15(11)(e) prohibits an insurer from “[f]ailing to affirm or deny coverage of claims within a reasonable time after proof-of-loss statements have been completed[.]” Plaintiff argues that he filed his claim for death benefits under the policy in February 2009 and that Aflac denied his claim approximately four months later, on 25 June 2009. Plaintiff also states that: “On 3 August 2009, ... [P]laintiff again demanded payment which Aflac refused.” Plaintiff argues that there is a genuine issue of material fact as to whether Aflac's “nearly seven month delay in responding to” the claim was an unfair claim settlement practice.
We note that the time between Plaintiff's claim and Aflac's response was approximately four months, and not seven, as Plaintiff argues. Further, we note that Plaintiff cites no authority in support of this argument other than N.C. Gen.Stat. § 58–63–15(11)(b), which requires that insurers act reasonably promptly. Plaintiff points to no evidence in the record that would allow a jury to make a determination of the reasonableness of Defendants' response to Plaintiff's filing, nor were we able to find any. We, therefore, are not convinced that the trial court erred in concluding there was no genuine issue of fact to be determined.
B. Reasonable Standards
Plaintiff contends that Aflac “failed to adopt and implement reasonable standards for prompt investigation of claims arising under their insurance policies specifically including use of readily available computer software to capture data from electronic signatures.” N.C.G.S. § 58–63–15(11)(c) prohibits an insurer from “[f]ailing to adopt and implement reasonable standards for the prompt investigation of claims arising under insurance policies[.]” Again, however, Plaintiff cites no authority in support of his argument. Plaintiff contends there was software available that would have captured sufficient forensic information to allow his expert to offer a conclusive opinion as to whether Mrs. Meadlock's signature was genuine, but that Aflac failed to use such software.
Plaintiff has also shown no evidence as to the injury he suffered as a result of this practice. Given that we have determined that Aflac properly denied Plaintiff's claim on the grounds that Mrs. Meadlock was aware of the misrepresentations in the application, the availability of more data concerning Mrs. Meadlock's signature would not have been relevant to Plaintiff's claim. Therefore, assuming arguendo that Aflac violated N.C.G.S. § 58–63–11(c) by failing to implement the measures Plaintiff cited, we hold that Plaintiff failed to forecast any evidence that such failure proximately caused an injury to Plaintiff. This argument is therefore without merit.
Affirmed. Chief Judge MARTIN and Judge CALABRIA concur.
Report per Rule 30(e).