Opinion
06 Civ. 1400 (JSR).
August 24, 2006
MEMORANDUM ORDER
Plaintiff Jeffrey Stern, whose son suffered severe brain damage at birth and consequently lost the use of three of his limbs, brings this suit against his insurer for benefits under his employee welfare benefit plan. Presently pending before the Court is plaintiff's motion for summary judgment entitling him to the maximum amount of coverage under the Policy.
The pertinent facts are largely undisputed. Jeffrey Stern and his son Joshua were covered under an employee welfare benefit plan (the "Policy") maintained by Morgan Stanley Dean Witter Co. and insured by Life Insurance Company of North America ("LINA"). See Ex. A attached to Certification of Exhibits of David L. Trueman ("Trueman Certification") dated June 26, 2006. The Policy provided benefits in the event of, inter alia, "accidental" paralysis. Id. Stern elected a one million dollar coverage under the Policy. Plaintiff's 56.1 Statement ("Pl. St.") ¶ 1; Def. Mem. of Law at 3.
After Joshua's birth, Stern filed a claim for accident benefits. See Ex. B attached to Trueman Certification. Although LINA initially denied Stern's claim, Stern appealed the decision, and the denial of any liability was ultimately overturned by LINA in a letter dated August 26, 2005. Pl. St. ¶¶ 3-4, 7; Defendant 56.1 Statement ("Def. St.") ¶¶ 3-4, 7. However, during the pendency of the appeal, LINA notified Stern's counsel of its view that the maximum benefit payable under the terms of the Policy was $100,000. See Ex. E attached to Trueman Certification. Accordingly, after determining it had some liability, LINA, on October 5, 2005, sent Stern (via his counsel) a check in the amount of $100,000. Stern, however, maintained that he and his son were entitled to $1,500,000. Stern therefore returned the check and filed this lawsuit. See Exs. H, I attached to Trueman Certification.
On the instant motion, Stern argues that the contract should be interpreted as follows: Rider Number One to the Policy provides that the benefit amount for the "Loss of use of three limbs" is "3/4 the Principal Sum," which, in this case, would be $750,000. Then, because the second paragraph of the Increased Dependent Child Benefit Rider provides that if the Dependent Child sustains "more than one Covered Loss from a single Covered Accident," LINA will "pay double the Benefit Amount only for the one largest amount to which the Dependent Child is entitled," the $750,000 figure should be doubled to $1,500,000.
This is one reasonable interpretation of the contract, but it is not the only one. LINA argues that it fails to give adequate effect to another provision, the Family Plan Rider, which provides that the benefit for the Insured child is "20% of the Principal Sum subject to a maximum Principal Sum Benefit of $50,000." Assuming that the Family Plan Rider is operative, the maximum total benefit would be $100,000 because the benefit for the Insured child would then be 20% of $750,000, i.e., $150,000, subject to the maximum limitation of $50,000. Then, under the Increased Dependent Child Benefit Rider, that $50,000 amount would be doubled for a total benefit of $100,000.
Each side offers still further arguments in support of their respective positions. For example, plaintiff argues that the Increased Dependent Child Benefit Rider was intended to supplant the Family Plan Rider and add a new increased benefit for dependent children; but LINA argues that this is not a plausible interpretation of the clause in the Increased Dependent Child Benefit Rider that states that "[e]xcept for the above, this rider does not change the policy in any way." It seems clear to the Court, however, that both plaintiff and defendant have provided reasonable interpretations of the Policy, and that the Policy is therefore, as a matter of law, ambiguous on its face.See, e.g., Andy Warhol Found. for the Visual Arts, Inc. v. Fed. Ins. Co., 189 F.3d 208, 215 (2d Cir. 1999).
Plaintiff argues, as a fall-back position, that if the Policy is ambiguous, that ambiguity should be construed against the insurer. However, "[w]hen a court decides, after examination of the contractual language, that an insurance policy is ambiguous, it looks outside the policy to extrinsic evidence, if any, to ascertain the intent of the parties." Id.; see also Dicola v. Am. S.S. Owners Mut. Prot. Indem. Ass'n, Inc., 158 F.3d 65, 77 (2d Cir. 1998). Because the Policy here is ambiguous, reference must be made to extrinsic evidence to determine whether such evidence can establish the intent of the parties. Only if extrinsic evidence fails to establish their intent should the Court interpret the Policy "in accordance with the reasonable expectations of the insured when he entered into the contract," which will often mean construing the Policy against the insurer.See Andy Warhol Found. for the Visual Arts, Inc., 189 F.3d at 215. Because discovery is not yet complete, and the Court has not had the opportunity to consider whatever extrinsic evidence may be relevant to ascertaining the parties' intent, or whether, in any event, genuine disputes exist as to such extrinsic evidence as would require a trial to resolve, summary judgment is not appropriate at this time.
Accordingly, for the foregoing reasons, the Court hereby denies plaintiff's motion for summary judgment.
SO ORDERED.