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Brown v. Savings Bank Life Insurance Company of Massachusetts

Appeals Court of Massachusetts, Middlesex

July 18, 2018


          Heard: May 10, 2017.

         Civil action commenced in the Superior Court Department on March 20, 2015.

         The case was heard by Dennis J. Curran, J., on motions for summary judgment, and a motion for leave to file an amended and supplemental complaint was considered by him.

          Anil Madan (Marc Redlich also present) for the plaintiff.

          Megan C. Deluhery (Edward Kelley Kimball also present) for the defendant.

          Present: Trainor, Vuono, & Sullivan, JJ.

          SULLIVAN, J.

         The plaintiff, Michelle Brown (Michelle), appeals from a judgment entered in favor of the defendant, Savings Bank Life Insurance Company of Massachusetts (SBLI or insurer), on the parties' cross motions for summary judgment. The plaintiff's claims brought against the insurer arose from the loss of life insurance coverage for her deceased husband, Daniel Brown (Daniel), [1] On appeal Michelle[2] concedes that her contract and contract-related claims were properly dismissed because they were time barred under the insurance policy, but maintains that the judge erred when he dismissed her tort and tort-related G. L. c. 93A claims on the merits. The insurer asserts that the judge's ruling was correct not only for the substantive reasons stated by the motion judge, but because all of Michelle's contract, tort, and statutory claims are barred by the limitations period in the policy requiring that claims "on or in respect to this policy" be filed no later than two years after her cause of action accrued. Michelle also appeals from the judge's order denying her motion to amend her complaint, and from the order denying her motion for partial summary judgment. We affirm in part and reverse in part.


         Viewed in the light most favorable to the plaintiff, see Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. 117, 120 (1991), the material facts are as follows. Michelle and her husband, Daniel, purchased three life insurance policies from SBLI in 2001 and 2002. Daniel's policy, in the amount of one million dollars, named Michelle as the beneficiary.[3] All three policies contained terms that stated the annual premium for the initial ten-year term would be a level premium. At the end of the ten-year term, the premium on each policy increased significantly. In Daniel's case, the premium increased from $440 to $5, 340 annually.

         Daniel's policy and one of Michelle's policies reached the end of the ten-year term on November 28, 2011. Before the end of the term, employees of the insurer called the Browns' home in Hopedale regarding the increase in the policy premium applicable to each policy. The insurer, as a matter of business practice, recorded telephone calls by way of a voice-call recording system. Transcripts of several calls were included in the summary judgment record, and the content of the recorded calls is undisputed.

         On August 2, 2011, SBLI sales agent Terry Melville called and left a message at the Hopedale house stating "that [Michelle's] policy is going into its eleventh year in November and the premium goes through the roof when that happens and I'm sure you won't keep that policy. . . . [T]here may be some options available with us so that you could continue coverage ongoing. And I'd like to speak with you about those." Michelle testified to a similar telephone call from SBLI employee David Wood during August or September (the 2011 conversation), in which they discussed the options available under both spouses' policies, although this call was not recorded.[4] According to Michelle, Wood recommended that both Michelle and Daniel purchase new policies. Melville made a third call on the date the policy term ended, November 28, 2011. In this call he left a message using substantially the same language, and made reference to both Michelle's and Daniel's policies.

         In deposition testimony, Wood acknowledged that it was SBLI company policy to tell an insured to keep a policy in place until a new policy issues if the new policy is a replacement policy -- that is, a policy issued before the old policy lapses. In this situation, SBLI requires the agent[5] to fill out a disclosure form approved by the Commissioner of Insurance. See generally G. L. c. 175, § 204; 211 Code Mass. Regs. §§ 34.00, et seq. (1995). Wood, who had been both a sales manager and a sales agent, said that it was "the practice of the sales division to make sure that everybody keeps their insurance in force while they are going through underwriting" because they could be refused, and "no insurance agent would write a new contract on any client and tell them to cancel their old policy first and then apply with us. You always want to keep the old policy, whether it's ours or somebody else's, in force while you are going through the underwriting process." He considered the failure to do so to be grounds for termination.[6]

         Daniel did not pay any portion of the $5, 340 premium as of November 28, 2011, nor did he apply for a new policy before the policy lapsed. The policy contained a thirty-day grace period, but this too passed without payment. On January 6, 2012, the insurer sent a notice of policy lapse to Daniel at the parties' home in Hopedale. The letter notified Daniel that he could seek to revive the policy by filling out an application for reinstatement of coverage and returning it with the overdue premium.

         On January 11, 2012, Wood called the Brown home in Hopedale regarding the policies. At that juncture, Daniel and Michelle were separated (although not legally so) and Daniel had moved to their summer home in Sandwich. Wood spoke with Michelle and reiterated that the original policy premiums jumped dramatically and that is "why you didn't pay them," further stating: "I think when you saw the bill you probably said, 'This is crazy.'" When Michelle asked, "What are our options [for coverage] at this point?" Wood stated, "If you still need coverage you need to reapply for new contracts."

         Michelle was concerned that Daniel's policy had already lapsed and she was "nervous that Dan is not covered at all at this point." Wood's response was that if she wanted to "try to cover him now we'd have to do a reinstatement. You'd have to pay $5, 340 . . . [t]o reinstate that contract. But I don't think you want to do that. . . . Because it'd be far cheaper for him to maybe apply for a new [ten]-year plan." At no time during this conversation did Wood offer reinstatement of Daniel's policy as an option pending approval of the new policy. Although the policy provided for installment payments, Wood did not discuss with Michelle whether she could make an installment payment to maintain coverage while the new application was pending, or whether any portion of the premium (in whatever amount paid) could be refunded in the event that a new policy was issued.[7]

         Michelle again expressed concern, telling Wood, "[L]ike I said I'm nervous that now we have nothing." In response, Wood explained the application process and stated that Daniel is "probably going to be without insurance probably for about [thirty] days." Michelle told Wood to send an application for a new one million dollar policy for Daniel.

         The application called for a release of medical records, and contained several questions regarding medical status. Acting on Wood's instructions, Michelle told Daniel via electronic mail message (e-mail) about the application and an impending visit from a paramedic for a blood draw.[8] Daniel complied with all requests for medical information. On March 14, 2012, Wood spoke directly to Daniel, requesting that he sign and send certain forms, and Daniel complied. Reinstatement pending approval of the new policy was not mentioned.

         At Wood's deposition, he acknowledged that the "only way" he could earn a commission was if Daniel purchased a new policy. Wood would not have received a commission if Daniel had continued his old policy.

         On May 2, 2012, SBLI notified Daniel that his application for a new term life insurance policy was denied. Although Wood had promised Michelle that all correspondence would be sent to her as well, the letter was addressed only to Daniel at the Sandwich address. As a result, Michelle was unaware of the denial until after Daniel died on June 6, 2012. Under the policy, Daniel was permitted to seek reinstatement of the policy for up to five years after the end of the grace period for the unpaid premium, but there was no right to reinstatement of the lapsed policy once Daniel had died.

         On December 4, 2012, Michelle wrote to the insurer asking for a claim form for Daniel's death benefits, stating that she did not timely receive the notice denying Daniel's application for a term life insurance policy. The insurer responded on December 10, 2012, stating that Daniel's original policy had lapsed and no new policy had issued.

         After an exchange of G. L. c. 93A demand letters and responses, the complaint in this action was filed on March 20, 2015, claiming: breach of contract for failure to automatically renew the original ten-year term life insurance policy (count I); deceit (count II); negligent supervision of employee Wood (count III); and breach of G. L. c. 93A (count IV). In its motion for summary judgment, the insurer argued that Michelle's complaint was time barred because it was brought more than two years after the policy at issue had lapsed and/or the application for a new policy had been denied. The argument was based in part on the following language in the policy.

"Section 1. Policy Fundamentals.
"Time Limit for Filing Suit
"Any suit brought on or in respect to this policy shall be brought against us no later than two years after the date the alleged cause of action accrues, or three years if the policy was issued in Maine or Rhode Island."

         In a memorandum of decision, the motion judge ruled that the contract claims were barred by the two-year statute of limitations contained in the policy, and that there was no deceit, negligence, or violation of the consumer protection statute as a matter of law. The judge also denied Michelle's motion to file an amended complaint, which attempted to incorporate facts learned during discovery, to refine the legal theories in light of discovery, and to state that Michelle was suing both in her individual capacity and as personal representative of her husband's estate. Lastly, the judge denied Michelle's cross motion for partial summary judgment, which she had premised on the proposed amended complaint. This appeal ensued.


         A. The original complaint.

         We review a grant of summary judgment de novo, "to determine 'whether, viewing the evidence in the light most favorable to the nonmoving party, all material facts have been established and the moving party is entitled to judgment as a matter of law.'" District Attorney for the N. Dist. v. School Comm. of Wayland, 455 Mass. 561, 566 (2009), quoting from Augat, Inc. v. Liberty Mut. Ins. Co., 410 Mass. at 120. "Material facts are those that might affect the outcome of the suit under governing law." Genesis Technical & Financial, Inc. v. Cast Nav., LLC, 74 Mass.App.Ct. 203, 207 (2009) .

         1. Contract claims.

         As we have noted, the policy contained a clause which stated that "[a]ny suit brought on or in respect to this policy" must be brought within two years of accrual of the claim. Michelle acknowledged before the motion judge and on appeal that her breach of contract claim for failure to automatically renew the policy was properly dismissed. Michelle agrees that the two-year time period in the policy had already lapsed by the time suit was filed on March 20, 2015, [9] and makes no argument that the limitations period is unenforceable as to the contract claim. See G. L. c. 175, § 22; Creative Playthings Franchising Corp. v. Reiser, 463 Mass. 758, 760-761 (2012) .[10]

         2. Tort and consumer protection claims.

         Michelle's remaining claims were threefold: (1) SBLI agent Wood deceived and misled her and Daniel by telling her, in the 2011 conversation, to have Daniel buy a new policy without telling her to continue to pay the premium on the old policy, and by failing in January, 2012, to offer the option of reinstating the old policy, once lapsed, while the application for a new policy was pending; (2) SBLI was negligent in its supervision of Wood; and (3) SBLI violated G. L. c. 93A by failing to provide mandated ...

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