# Petition for Writ of Certiorari — Burak v. General American Life Insurance

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## Record

- **Collection:** Supreme Court brief
- **Document type:** Petition for Writ of Certiorari
- **Published:** January 1, 1988
- **Citation:** 488 U.S. 828

## Text

IN THE SUPREME COURT OF THE UNITED STATES

October Term, 1987

PAMELA J. BURAK, Pezztioner,
v.

GENERAL AMERICAN LIFE INSURANCE COMPANY,
Respondent.

PETITION FOR A WRIT OF CERTIORARI TO THE
UNITED STATES COURT OF APPEALS
FOR THE TENTH CIRCUIT

SAMUEL LEE ANDERSON
323 South College Avenue,
Suite 3
Fort Collins, CO 80524
(303) 482-4011
Counsel of Record

KENT N. CAMPBELL
323 South College Avenue,
Suite 3
Fort Collins, CO 80524
(303) 482-4011
Counsel for Petitioner

QUESTION PRESENTED

The parties filed early cross motions for summary judgment
to resolve a life insurance coverage issue. The sole issue raised was
the effective date of coverage. Petitioner beneficiary was granted
summary judgment. The court of appeals reversed and granted
respondent insurer summary judgment.

The question presented is:

1. Whether a federal appeals court may, consistent with
the requirements of the Fifth Amendment Due Process
Clause, the Seventh Amendment right to jury trial and
Fed. R. Civ. P. 56, grant summary judgment to an
appellant rather than remand for trial when there are
genuine litigable issues of material fact that were rendered
moot by the trial court’s grant of summary judgment but
which were revived when the appeals court reversed?

The circuit courts of appeals are in conflict as to this issue and
the Tenth Circuit Court of Appeals’ directive appears to conflict
with an applicable decision of this Court on this federal question.

{Note: Petitioner reserves the right to argue the following ques-
tion in the event certiorari is granted on the above question, but
does not include the following question among the reasons for the
grant of certiorari. |

2. Whether a court of appeals violates the Eve Doctrine
when it construes an ambiguous life insurance policy
endorsement against a widow beneficiary despite that con-
trolling state law requires any ambiguity be construed
against the insurer?

3

TABLE OF CONTENTS

Page
QUESTION PRESENTED ..........000cccccccscceseeens ;
TAME OF AUITHOMITIOS 5.05. nee
OPSNONS BOW. SO eee 1
JURBENCTION ....... eee 2
CONSTITUTIONAL PROVISIONS AND RULE

BIVOLVED nunc ee eee 2
STATEMENT OF THE CASE .............:..+:+0s+.-+: 3
REASONS FOR GRANTING THE WRIT ................ 7

I. The Tenth Circuit’s Order Granting Summary
Judgment to An Appellant Rather Than Remand-
ing for Trial Where There Remain Genuine Litig-
able Issues of Material Fact Conflicts With a Prior
Decision of This Court and Presents an Important
Question of Federal Law Which Should Be Settled
If Ic Is Noe Alseadt (00... cone eee eee we 7

II. The Tenth Circuit’s Decision Conflicts With the
Decisions of Other Federal Courts of Appeals on
the Same Matter For Which There Is Need for a
Uniform Rule «ox cik »

jeopardy of life or limb; nor shall be compelled in any criminal case
to be a witness against himself, nor be deprived of life, liberty, or
property, without due process of law; nor shall private property be
taken for public use, without just compensation.

Umited States Constitution, Amendment VII — Civil Trials

In Suits at common law, where the value in controversy shall
exceed twenty dollars, the right of trial by jury shail be preserved,
and no fact tried by a jury, shall be otherwise reexamined in any
Court of the United States, than according to the rules of che
common law.

Fed. R. Cw. P. 56. Summary Judgment
Due to the length of the provision, the pertinent text of Rule
56 is reprinted in the appendex hereto, p. 20a, infra.

STATEMENT OF THE CASE

Upon removal of this action from the state court by respon-
dent, the jurisdiction of the United States District Court was in-
voked under 28 U.S.C. §1332 because of diversity of citizenship,
the petitioner being a citizen of Colorado and the defendant a citizen
of Missouri.

Petitioner is the surviving wife of decedent Ronald James Burak
who died on October 27, 1983 as the result of injuries sustained
in an automobile accident as decedent was driving to work at
Laramie, Wyoming from his Fort Collins, Colorado home. The com-
plaint alleged that petitioner's decedent was insured under respon-
dent's group life insurance policy for life and accidental death in-
surance coverage in the amount of $42,000 for each coverage. The
complaint further alleged that respondent had breached its cove-
nant of good faith and fair dealing by refusing to process any claim
by or on behalf of petitioner. Petitioner sought recovery of monetary
damages including coverages under the life and accidental death
provisions of the insurance policy.

Respondent answered by denying that coverage was in effect
on the decedent's date of death. Respondent petitioned the district
court for removal of the action on the basis of diversity of citizen-
ship under 28 U.S.C. §1332 and on the basis of federal question

a

jurisdiction pursuant to the Employee Retirement Income Security
Act (“‘ERISA’’), 29 U.S.C. §1001.

Petitioner demanded a jury trial. Because of the precarious
financial condition of the petitioner and in the interest of judicial
economy, petitioner filed an early motion for summary judgment
on the ‘‘coverage’’ issue seeking a determination that the effective
date of coverage pre-dated decedent's death.' The effective date
of the policy was January 1, 1983. Petitioner's decedent was
employed by the respondent on September 16, 1983. Decedent died
on October 27, 1983.

The insurance policy provided that the ‘individual eligibility
date’ required active work on a full-time basis for one month and
further provided that the ‘‘effective date of personal insurance’’ was
on the date the employee was eligible. Petitioner contended that
insurance coverage for decedent became effective October 17, 1983.
Respondent contended that the effective date of insurance was
November 1, 1983, four days after decedent's death. Respondent
contended that the ‘effective date of personal insurance’’ was con-
trolled by an endorsement which stated:

The following provisions of the policy are changed as follows:

1) The ‘‘Effective Date of Personal Insurance’’ and Part 2) of the

' Prior to commencement of the action, petitioner could not obtain any informa-
tion from respondent's office in Laramie, Wyoming concerning the group policy.
All information, such as it was, had to be obtained from the home office of respon-
dent in St. Louis, Missouri, which was limited to a pamphlet entitled "Your Group
Insurance Plan (for Monolith Portland Cement Company employees]"’, petitioner's
Exhibit 2 in the dastrict court, which was received by petitioner's counsel in January,
1984. Because of the denial of coverage and refusal to process a claim by respon-
dent, the action was commenced on March 23, 1984. A copy of the document
represented by respondent to be the actual policy which was held in the respon-
dent's office in Glendale. California was identified to the petitioner's counsel by
respondent's attorney on April 6, 1984. It was later obtained from respondent's
office in California. Based on the apparent strength of obtaining summary judg-
ment based solely on the so-called ‘‘actual’ policy, petitioner elected to file her
motion for summary judgment which was filed May 31, 1984. The idea behind
proceeding with a motion for summary judgment was to resolve the coverage issue
more quickly and limit discovery and expenses. An issue still to be litigated con-
cerns what the true policy consists of and whether any informaiion regarding
coverage of policy terms was brought to decedent's attention.

4.

‘Effective Date of Dependent Insurance’’ are changed to provide that
the insurance of an individual shall be effective on the earlier of:

a) the first day of the policy month which coincides with the day
it would otherwise be effective, or

b) the first day of the policy month which next follows the day
it would otherwise be effective.

Petitioner contended that the aforementioned endorsement was
ambiguous and must be construed against the insurer and in favor
of coverage, according to controlling California law.

Respondent filed a cross-motion for summary judgment on the
coverage issue. The issue as thereby joined concerned only the
ambiguity or non-ambiguity of the policy language as it pertained
to the effective date of coverage. The cross-motions for summary
judgment left unresolved all other litigable issues, fact questions
and discovery concerning coverage, including the questions of
whether the endorsement relied on by respondent was ‘‘con-
spicuous’’ which, if not, would render it unenforceable under
applicable California law, and what information, if any, decedent
received when he signed his enrollment card with respondent on
October 4, 1983, concerning when coverage would take effect.

These and other issues were mooted by the trial court’s order
entered October 12, 1984, holding that the above-quoted endorse-
ment was ambiguous and therefore to be construed against the
respondent in favor of coverage on the effective date of coverage
question.

The district court’s order granting petitioner summary judg-
ment allowed $42,000 under the life insurance provision and an
additional $42,000 for accidental death. On October 15, 1984, the
district court entered summary judgment in the amount of $84,000
plus interest. On November 2, 1984, the district court amended
its October 12 order allowing judgment in favor of petitioner in
the amount of $42,000, the coverage under the life insurance
provision, and leaving the parties to litigate the applicability of the
double indemnity accidental death provision in the state court. On
December 14, 1984, the district court further amended its initial
judgment of October 12 by modifying the November 2, 1984 order
to reflect that the district court retained jurisdiction for deter-

r, &

mining the remaining issue, the applicability of double indemnity
under the accidental death provision.

Trial on the accidental death provision was held on May 29,
1985 before the district court, petitioner having waived her jury
demand as to the remaining issue of accidental death coverage only.
Upon completion of the trial the district court entered judgment
in favor of the respondent and against the petitioner by order dated
May 29, 1985. On June 11, 1985, the district court amended its
judgment to reflect that the petitioner be awarded $42,000 under
the life insurance provision and that the claim for double indem-
nity was dismissed.

In due course, the parties filed cross-appeals with the United
States Court of Appeals for the Tenth Circuit. Petitioner appealed
the trial court’s dismissal of her double indemnity accidental death
claim and respondent appealed the grant of summary judgment to
petitioner on the life insurance coverage effective date question.?
The parties invoked the Tenth Circuit’s jurisdiction under 28 U.S.C.
§1291 to review ‘‘final decisions’ of district courts.

The Tenth Circuit, applying a de movo standard of review, inter-
preted the key endorsement language as precluding coverage on the
date of decedent’s death. Having concluded that summary judg-
ment was improperly entered against respondent on the underly-
ing coverage question, the court of appeals declined to address the
double indemnity issue. The appellate court accordingly reversed
and remanded to the district court. However, instead of remanding
for trial on the issues which were mooted by the district court’s grant
of summary judgment, the appellate court directed the district court

2 In accordance with Fed. R. App. P. 28(h), petitioner (plaintiff in the district
court) was designated as the appellant in the court of appeals. However, respon-
dent was in reality an appellant as to the coverage issue.

> The court of appeals applied a test of ‘‘detailed scrutiny’’ to petitioner rather
than subjecting the policy language to the rule required by applicable California
law that if the policy language is ambiguous it must be construed against the insurer
and in favor of coverage. According to California law, an exclusion in coverage
must be stated in language which is plain and clear in the sense it is comprehen-
sible to lay persons including the use of words which are part of the working
vocabulary of average lay persons. Pomder v. Blue Cross of Southern Cahfornia,
145 Cal. App. 3d 709, 193 Cal. Rptr. 632, 643 (Cal. Ct. App. 1983).

hs

to vacate its amended judgment and ‘‘enter judgment in favor of
the defendant.’’ See p. 7a, infra.

Petitioner filed a timely petition for rehearing wherein she raised
the constitutional deprivation caused by the Tenth Circuit’s deci-
sion not to remand to the district court for a trial of the remaining
issues which could establish insurance coverage. Petitioner pointed
out that the effect of the Tenth Circuit’s direction on remand was
to grant summary judgment to an appellant. Petitioner sought
remand to the district court for a retrial on the coverage and
accidental death issues.

The Tenth Circuit, by order entered March 10, 1988, denied
the petition for rehearing.

REASONS FOR GRANTING THE WRIT
I.

The Tenth Circuit's Order Granting Summary Judgment
to An Appellant Rather Than Remanding for Trial Where
There Remain Genuine Litigable Issues of Material Fact
Conflicts With a Prior Decision of This Court and Presents
an Important Question of Federal Law Which Should Be
Settled If It Is Not Already

The Tenth Circuit has established a dangerous precedent by
denying a litigant a full trial on the merits concerning issues as to
which the deprived party had no opportunity to present evidence
before the trial court by granting summary judgment to an appellant
instead of remanding for trial. This decision conflicts with this
Court’s holding in Fountain v. Filson, 336 U.S. 681 (1949) and with
the reasoning underlying Horme/ v. Helvenng, 312 U.S. 552 (1941).
Such a drastic decision sacrifices rules of fundamental justice and
threatens to deprive future litigants of judicial consideration of legal
theories not able to be presented in the trial court by virtue of the
manner of development of the case. This threat to fundamental
justice deserves this Court’s attention. See, e.g., United States v.
Doe, 465 U.S. 605, 610 (1984) (certiorari granted due to conflict
with reasoning underlying prior decision); Lugar v. Edmonson Oil
Company, 457 U.S. 922, 926 (1982) (certiorari granted due to con-
flict with prior decision).

'
|
'

The Tenth Circuit, in a footnote to its opinion, p. 7a, imfra.,
noted that petitioner had argued on appeal that public policy
disallows insurance companies to mislead consumers through in-
conspicuous endorsements. The Tenth Circuit did not address the
issue, however, as ‘‘[t]he record on appeal does not indicate that
the district court was asked to make a factual determination of
whether the endorsement at issue was inconspicuous so as to mislead
consumers... .’’ Id. Rather than remanding to the trial court for
determination of this and other issues not necessary to the cross-
motions for summary judgment on the ambiguity question, the
Tenth Circute directed entry of judgment in favor of respondent.
See p. 7a, infra.

The district court could not have been asked to make a factual
determination on the conspicuousness of the endorsement as the
case developed. The parties pursued early cress-motions for sum-
mary judgment to determine the effective date of coverage only.
Factual issues concerning whether the endorsement was ever brought
to the attention of the decedent and whether it was conspicuous
were rendered moot by the trial court’s grant of summary judgment
to petitioner on the effective date question. Had the trial court
denied petitioner summary judgment on the effective date of
coverage question, that issue and all other issues, including con-
spicuousness of the endorsement, would have proceeded to trial.
Had the endorsement been determined to be inconspicuous it could
not have been enforced and the effective date of coverage would
have been as provided in the policy thereby allowing coverage.

The Fountain Court held that an appellate court erred in depriv-
ing a litigant of an opportunity to dispute facts material to a claim
by ordering summary judgment against that litigant when the litigant
against whom summary judgment was ordered had no opportunity
to present a defense before the trial court on a new issue which had
not been raised as part of the motion for summary judgment in
the district court. The Court explained:

There was no occasion in the trial court for Mrs. Fountain to dispute
the facts material to a claim that a personal obligation existed, since
the only claim considered by that court on her motion for summary
judgment was the claim that there was a resulting trust.

336 U.S. at 683.

In the instant case there was no occasion for petitioner to litigate
in the trial court the questions concerning whether the policy en-
dorsement was brought to the decedent’s attention and whether
it was inconspicuous as against public policy. The cross-motions for
summary judgment were strictly limited to construing the endorse-
ment language to determine the effective date of coverage. Since
the only issue considered by the trial court on the motions for sum-
mary judgment was the effective date of coverage question, the Tenth
Circuit erred by not remanding to the trial court for a trial on the
remaining issues.

The Court in Horme/ announced that “‘[t]here may always be
exceptional cases or particular circumstances which will prompt a
reviewing or appellate court, where injustice might otherwise result,
to consider questions of law which were neither pressed nor passed
upon by the court or administrative agency below.’’ 312 U.S. at
557. The Horme/ Court added, in words particularly relevant to the
Tenth Circuit’s refusal to remand for trial,

[rlules of practice and procedure are devised to promote the ends
of justice, not to defeat them. A rigid and undeviating judicially
declared practice under which courts of review would invariably and
under all circumstances decline to consider all questions which had
not previously been specifically urged would be out of harmony with
this policy. Orderly rules of procedure do not require sacrifice of the
rules of fundamental justice.

ld.

The Horme/ Court cited approvingly other cases which have
been remanded because the lower courts failed to give considera-
tion to a phase of the case involving legal theories not presented,
including United States v. Rio Grande Dam and Irngation Com-
pany, 184 U.S. 416, 423 (1902) (remanding for further develop-
ment of the record). 312 U.S. at 558 and n.7.

Good judicial administration requires that this important issue
be resolved in such a way that the case be remanded to the district
court and that decision of the ultimate questions involved in this
case be reserved until the record presents a more solid basis of com-
plete findings following a trial. See Kennedy v. Silas Mason Com-
pany, 334 U.S. 249, 257 (1948).

The conflict between the instant case and the important

-9-

principles articulated in Fountain and Horme/ presents an ideal op-
portunity for this Court to reaffirm an important principle of federa!
law. This principle is that an appellate court may not order sum-
mary judgment for an appellant where issues remain to be tried.

We submit that Fountain, having reversed the court of appeals
for ordering summary judgment for the appellant, has settled this
issue.‘ If the issue raised has not already been settled by this Court,
this case presents an important question of federal law which should
be settled by this Court. See Lehman v. Lycoming County Children’s
Services Agency, 458 U.S. 502, 507 (1982).

II.

The Tenth Circuit’s Decision Conflicts With The Deci-
sions of Other Federal Courts of Appeals on the Same
Matter For Which There is Need for a Uniform Rule

Because of the ‘‘threat to the goal of uniformity of federal pro-
cedure posed by the decision below,’’ Hanna v. Plumer, 380 U.S.
460, 463 (1965), this Court should review this case involving con-
struction of the Federal Rules of Civil Procedure. See Hickman v.
Taylor, 329 U.S. 495 (1947).

The decision below is in conflict with the decisions of numerous
other federal courts of appeals. The Ninth Circuit Court of Appeals,
for instance, has remanded for a full trial in a situation virtually
indistinguishable from that presented by the instant case. Sth
v. United States, 362 F.2d 366, 368 (9th Cir. 1966). That case
involved a motion to dismiss which, because matters outside the
record were submitted, was treated as a motion for summary judg-
ment. During oral argument in the court of appeals there was a
suggestion made that another possible legal theory existed apart from
that raised in the motion. The court there stated that ‘‘[a] full

4 Professor Moore, in his treatise on federal practice, believes that Founsain does
not deny the existence of an appellate court to dispose of a case by reversing with
directions to enter judgment for the appellant. 6 J. Moore, Federal Practice, Part
2, 956.27[2] (2d ed. 1987). However, even Moore recognizes that the power must
be cautiously used to the end that the appellee is not deprived of a trial of gen-
uine issues of material fact underlying her claim or defense. Id.

-10-

—

development of the facts pertaining to these and other cir-
cumstances’ would make it possible to resolve the question raised
in the motion with ‘‘considerably more assurance’ than was possi-
ble on the record then before it, explaining,

[a]s this case was presented in the district court it was not apparent
that any such issue of fact was involved. As the case unfolded in this
court, however, genuine issues of material fact, as noted above, have
been revealed. Under these circumstances we think the proper course
is to send the case back for a full trial.

Id. at 367, 368.

The Ninth Circuit dealt with this issue again in Roderts v.
Hollandsworth, 582 F.2d 496 (9th Cir. 1978). That case reached
the court of appeals on appeal from the grant of a summary judg-
ment. Not until arguments on appeal did counsel advance another
legal theory than that raised in the motion. The Ninth Circuit noted
that the new legal theory could well provide a valid claim for relief
and concluded that the trier of the facts, the court or a jury, had
to pass on the issue of fact thereby created. Jd. at 499. The court
there mentioned its awareness of the rule that a federal appellate
court does not generally consider an issue not passed upon by the
lower court, but that the doctrine as set forth in Horme/ v. Helver-
ing, supra — that where justice might otherwise result, such an
unraised issue will be considered — is equally well-recognized. 582
F.2d at 500. The Ninth Circuit held that a ‘‘substantial injustice’
might result if it did not remand for clarification of the newly raised
issue. Id.

Equally in conflict with the decision below is Tomalewski v.
State Farm Life Insurance Company. 494 F.2d 882 (3d Cir. 1974).
There the Third Circuit, faced with an appeal of cross-motions for
summary judgment, held that if the pleadings present a genuine
issue as to a material fact, there can be no valid summary judgment
of the disputed facts. Jd. at 884. The Third Circuit rejected an argu-
ment that a party by motion for summary judgment waives any right
to assert a claim when an issue of fact is clearly presented by the
pleadings. Id. at 885. It accordingly reversed the judgment and
remanded for further proceedings in the district court. Id.

The Fifth Circuit is also in conflict with the decision below.
In Black Warnor Electnc Membership Corporation v. Mississippi

oh.

Power Company, 413 F.2d 1221, 1226 (Sth Cir. 1969), the Fifth
Circuit, recognizing that the district court had not reached a ques-
tion not raised in a motion for summary judgment, remanded for
further proceedings explaining that ‘‘[i]f this issue requires decision
it is initially for the district court.’’

The extent of the inter-circuit conflict is made manifest by M.
Snower & Company v. United States, 140 F.2d 367 (7th Cir. 1944),
which involved cross-motions for summary judgment and judgment
on the pleadings. The court of appeals concluded there was still a
material issue of fact before the trial court after the motions had
been made. Accordingly, the judgment for plaintiff entered by the
trial court on its motion for summary judgment was reversed and
the cause remanded for further proceedings. Jd. at 371.

Only the Tenth Circuit has deprived a litigant of litigating
material factual questions not necessary to nor raised in the motions
for summary judgment heard in the trial court. The Tenth Circuit
seeks justification for this deviation by noting that the record does
not indicate that the district court was asked to make a factual deter-
mination of the issue first raised on appeal. See p. 7a, infra.

That rationale reflects a fundamental misunderstanding about
the policy and purpose of summary judgment as embodied in Fed.
R. Civ. P. 56. It is well-established that ‘‘the purpose of the rule
is not to cut litigants off from their right of trial by jury if they really
have issues to try.’’ Poller v. Columbia Broadcasting System, Inc ,
368 U.S. 464, 467 (1962). No matter how reasonable, a surmise
that a party is unlikely to prevail at trial is not a sufficient basis for
refusing her her day in court. Robertson v. White, 635 F. Supp.
851, 872 (W. D. Ark. 1986).

Relief by way of summary judgment is drastic, and should be
applied with caution to the end that litigants will have a trial on
all bona fide factual disputes. Jones v. Ne/son, 484 F.2d 1165, 1168
(10th Cir. 1973); Machinery Center, Inc. v. Anchor National Life
Insurance Company, 434 F.2d 1, 6 (10th Cir. 1970). Summary judg-
ment is not to be entered unless the movant has established his right
to a judgment with such clarity as to leave no room for controversy
and that the other party is not entitled to recover under any discern-
ible circumstances. Ozark Milling Company, Inc. v. Allied Mulls,
Inc., 480 F.2d 1014, 1015 (8th Cir. 1973). Summary judgment

72.

does not serve as a substitute for trial. Redhouse v. Quality Ford
Sales, Inc., 511 F.2d 230, 234 (10th Cir. 1975).

The Tenth Circuit's decision emasculates these fundamental
principles of federal civil procedure and undermines predictability
and confidence in federal jurisprudence. If allowed to stand, the
Tenth Circuit's decision will subvert the goals of just, speedy and
inexpensive determination of actions in the Tenth Circuit which goals
are articulated in the rules of civil procedure. Litigants will be reluc-
tant to test legal issues with early summary judgment motions if
they are to be precluded from litigating other issues not necessary
to be raised as a predicate to the motion. This uncertainty will no
doubt frustrate federal practice which relies heavily on the mechanism
of summary judgment for early disposition of cases and may cause
litigation costs to rise sharply as litigants pursue costly discovery
instead of seeking quick determinations on threshold legal issues.

The national impact of letting the lower court decision stand
would be widespread confusion and encouragement of forum shop-
ping. Cautious litigants will seek to file federal cases in those cir-
cuits which elevate concepts of fundamental justice over procedure.
It is vital that the question presented be decided finally by this Court
in order that there be a uniform rule on the point. Commissioner
v. Bilder, 369 U.S. 499, 501 (1962).

The requirements of due process of law as set forth in the Fifth
Amendment to the United States Constitution, like the rules of civil
procedure, demand uniformity in application. As stated by the Court
in Mathews v. Eldndge, 424 U.S. 319, 333 (1976), ‘‘[t]he fundamen-
tal requirement of due process is the opportunity to be heard ‘at
a meaningful time and in a meaningful manner.’ *’ Fulfillment of
this requirement is accomplished by providing the recipient timely
and adequate notice detailing the reasons for the proposed depriva-
tion and an effective opportunity to defend by confronting any
adverse witnesses and by presenting one’s own afguments and
evidence orally. Goldberg v. Kelly, 397 U.S. 254, 267-68 (1970).

“e\ttioner here had no notice that the appellate court would
deprive her of the opportunity to litigate remaining factual and legal
issues should it reverse the district court’s grant of summary judg-
ment to her. It is beyond argument that she has been denied the
opportunity to present her own arguments and evidence on the

‘$4

remaining issues, including public policy considerations connected
with the inconspicuousness of the insurance policy endorsement,
which has deprived her of substantial life and accident insurance
benefits.

Not only does the Tenth Circuit’s decision deprive the peti-
tioner of her constitutional rights; it also has so far departed from
the accepted and usual course of judicial proceedings as to call for
an exercise of this Court’s power of supervision.»

In the words of Justice Stevens, ‘‘[a]s the Court of last resort
in the federal system, we have supervisory authority and therefore
must occasionally perform a pure error-correcting function in federal
litigation.’’ Flonda v. Rodnquez, 469 U.S. 1, 7 (1984) (Stevens,
J., dissenting); accord, McNabé v. United States, 318 U.S. 332, 341
(1943).

The result reached below is unduly harsh in its impact. This
Court should grant certiorari to correct the injustice and insure that
it is not repeated in a multitude of future cases. See, e.g., Montoya
v. Kennedy, 366 U.S. 308, 309 (1961) (where certiorari was granted
‘‘in view of the apparent harshness of the result entailed’’); see a/so
Southern Construction Company v. Pickard, 371 U.S. 57, 60 (1962)
(where certiorari was granted to consider the applicability of a federal
rule of civil procedure in unusual circumstances).

The Tenth Circuit has created a confusing precedent, likely to
disrupt the uniformity of federal civil procedure by undermining
predictability and encouraging forum shopping. It is a precedent
directly at odds with the decisions of numerous other circuits and
this Court. Plenary consideration of the matter by this Court is
essential.

> 28 U.S.C. §2072 states in relevant part that “‘[t}he Supreme Court shall have
the power to prescribe by general rules, . . . the practice and procedure of the

. courts of appeals of the United States in civil actions. . . ."’ The section also
provides that ‘‘{sJuch rules shall not abridge, enlarge or modify any substantive
right and shall preserve the right of trial by jury as at common law and as declared
by the Seventh Amendment to the Constitution.”’

-14-

The Decision Below Creates an Intra-Circuit Conflict
Relating to a Recurring and Important Issue

The Tenth Circuit has previously dealt with this issue by stating
that ‘‘[t}he rights of the parties should be determined after a full-
fledged trial of the merits.’’ Eagle v. Loussiana and Southern Life
Insurance Company, 464 F.2d 607, 609 (10th Cir. 1972). In that
case, like here, a widow brought suit to recover on a group life
insurance policy for the death of her husband. Both sides moved
for summary judgment. The court granted plaintiff's motion and
denied that of defendant's. The opinion acknowledged that presen-
tation of cross-motions for summary judgment does not concede
the absence of a material issue of fact. Jd. at 608; accord, United
States Trotting Association v. Chicago Downs Association, Inc., 665
F.2d 781, 785 (7th Cir. 1981) (stating that the filing of a cross-motion
for summary judgment does not prevent a plaintiff from contend-
ing on appeal that there is a dispute as to material facts); Case and
Company, Inc. v. Board of Trade of the City of Chicago, 523 F.2d
355, 360 (7th Cir. 1975) (holding that the filing of a cross-motion
for summary judgment does not preclude a plaintiff from contend-
ing that summary judgment was inappropriate because there are
certain disputed questions of fact); Capital Temporanes, Inc. of Hart.
ford v. Olsten Corporation, 506 F.2d 658, 667 (2d Cir. 1974)
(accepting plaintiff-appellant’s argument that the fact that the plain-
tiff himself cross-moved for summary judgment does not bar his
raising on appeal material issues of fact which could not be deter-
mined without a trial by jury).

The Eag/e court, unlike the panel below, permitted the widow
a full-fledged trial of the merits where a genuine controversy of a
material fact concerning policy coverage existed. This irreconcilable
conflict relates to a recurring and important issue concerning the
power of an appellate court to order summary judgment be entered
for the appellant, thus depriving the other party of her right to trial
on remaining issues which, if litigated, could spell victory for the
deprived party. Certiorari should be granted to resolve this intra-
circuit conflict. See, e.g., John Hancock Mutual Life Insurance

-15-

Company v. Bartels, 308 U.S. 180, 181 (1939) (certiorari granted
because of intra-circuit conflict and the importance of the question);
Dickinson v. Petroleum Conversion Corporation, 338 U.S. 507, 508
(1950) (certiorari granted ‘‘because of this intracircuit conflict’):
Scarborough v. United States, 431 U.S. 563, 567 n.4 (1977) (cer-
tiorari granted because of ‘‘split among the Circuits,’’ one circuit
being noted as having an intra-circuit conflict).

CONCLUSION

For these various reasons, this petition for certiorari should be
granted. Petitioner reiterates that Question 2 is presented herein,
not as a reason for granting certiorari, but because of the posture
of this case this is the only opportunity for petitioner to seek review
of the ultimate ruling of the Tenth Circuit directing entry of judg-
ment against her. If the petitioner is correct in urging that the Tenth
Circuit has improperly deprived her of the right to proceed to trial
on the merits, the matter should be remanded to the district court
for appropriate disposition, after a full development of the facts con-
cerning insurance coverage. Indeed, in view of the conflict of the
decision below with past decisions of this Court, the Court may wish
to consider summary reversal.

Respectfully submitted,

SAMUEL LEE ANDERSON
323 South College Avenue,
Suite 3
Fort Collins, CO 80524
(303) 482-4011
Counsel of Record

KENT N. CAMPBELL
323 South College Avenue,
Suite 3
Fort Collins, CO 80524
(303) 482-4011
Counsel for Petitioner

APPENDIX

FILED
PUBLISH United States Court of Appeals
Tenth Circuit
UNITED STATES COURT ,
OF APPEALS JAN 12 1988
FOR THE TENTH CIRCUIT ROBERT L. HOECKER
Clerk

PAMELA J. BURAK.

Plaintiff-Appellant
Cross Appellee ,

)
)
)
)
)
v. ) Nos. 85-1970
) 85-1971
GENERAL AMERICAN LIFE)
INSURANCE COMPANY, )
)
}
)

Defendant-Appellee
Cross- Appellant

APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT GF COLORADO
(D.C. Civil Action No. 84-K-782)

Kent N. Campbell (Samuel L. Anderson with him on the briefs)
of Anderson, Sommermeyer, Wick & Dow, Fort Collins, Colorado,
for Plaintiff-Appellant/Cross-Appellee.

Donald M. Burkhardt (Charles H. Haines, Jr. with him on the briefs)
of Grant, McHendrie, Haines and Crouse, Denver, Colorado, for
Defendant-Appellee/Cross-Appellant.

-la-

Before McKAY and BALDOCK, Circuit Judges, and BROWN,
District Judge.*

McKAY, Circuit Judge.

In this nonjury case, two issues are presented on appeal: (1)
whether Ronald J. Burak was covered under a company group life
insurance policy when he died, and if so, (2) what amount of death
benefits are payable to the beneficiary.

Ronald J. Burak began employment with Monolith Portland
Cement Company (Monolith) on September 16, 1983. On October
4, 1983, Mr. Burak signed an enrollment card for coverage under
a noncontributory group life insurance policy (Policy) issued to
Monolith by defendant, General American Life Insurance Company.
Mr. Burak named plaintiff, Pamela J. Burak, as the Policy's
beneficiary. On October 27, 1983, Mr. Burak was pronounced dead
at the scene of a single car collision with a bridge abutment. An
autopsy revealed that Mr. Burak had suffered a nonsurvivable basilar
skull fracture from the collision. The autopsy also revealed that Mr.
Burak was having a myocardial infarction or ‘‘heart attack’’ when
the collision occurred.

Plaintiff filed a claim with defendant for $42,000 in death
benefits on the Policy and for an additional $42,000 in benefits pur-
suant to the accidental indemnity clause contained in the Policy.
Defendant denied plaintiff's claim on the ground that Mr. Burak’s
death preceded the effective date of the Policy. Defendant also
denied that the cause of death was accidental.

Plaintiff filed suit to collect the death and accidental death
benefits in state district court, and defendant removed the suit to

* Honorable Wesley E. Brown, United States Senior District Judge for the District
of Kansas, sitting by designation

-2a-

federal district court on the basis of diversity of citizenship. 28 U.S.C.
§1332 (1982). On October 12, 1984, the district court granted sum-
mary judgment for plaintiff. The district court ruled that the pro-
vision establishing the effective date of the Policy (Effective Date
Provision) was ambiguous and allowed an interpretation that
coverage existed at Mr. Burak’s death. The court also ruled that Mr.
Burak’s death resulted from the accident and that plaintiff was
entitled to an additional payment under the Policy’s double indem-
nity clause.

Upon reconsideration, the district court amended the October
12th order by requiring the parties to litigate the benefits granted
under the double indemnity clause. After hearing evidence, the
district court dismissed plaintiff's double indemnity claim. Final
Amended Judgment was entered on June 11, 1985, munc pro tunc
May 29, 1985. This judgment awarded plaintiff $42,000 in death
benefits plus interest, but denied the double indemnity benefits.

Plaintiff now appeals the district court’s denial of her double
indemnity claim. Defendant cross-appeals the district court’s sum-
mary judgment ruling that the Policy was effective at Mr. Burak’s
death. Because the issue of whether Mr. Burak was covered by the
Policy is determinative, we need not reach the double indemnity
claim.

Il.

In considering defendant’s challenge of the summary judgment,
we apply a de novo standard of review. Wheeler v. Hurdman, 825
F.2d 257, 260 (10th Cir.), cert. dented, 1 EF 8d 5
Hydro Conduit Corp. v. Amencan-First Title & Trust Co., 808 F.2d
712, 714 (10th Cir. 1986). Summary judgment was proper if, as
a matter of law, Mr. Burak was covered under the Policy when he
died. Coverage under the Policy becomes effective when the
individual belongs to an eligible class, the individual completes the
one-month waiting period, and the Policy is activated by the Effec-
tive Date Provision. See Record, vol. 1, at 15. The parties do not
contest that Mr. Burak satisfied the eligibility class and waiting period
criteria. The sole question then is to determine Mr. Burak’s eftec-
tive date under the Policy.

-4a-

The Policy provides that its provisions are to be governed by
California law. Record, vol. 1, at 37. The basic Policy is a standard
form insurance contract issued by defendant. The Effective Date
Provision states that ‘‘personal insurance shall be made effective on
the date the employee is eligible.’’ Jd. at 15. The individual elig-
ibility date could be established when an employee completed full-
time work for the required waiting period — one month — or at
‘‘the effective date of this [P]olicy, if later.’’ Id.

The face of the Policy states that ‘‘[t]he first premium is due
on the effective date. Future premiums are due each month on the
first of the month. Policy months after the first [month] begin on
the first of the month.’’ Jd. at 14 (emphasis added). Thus, it appears
at first reading that Mr. Burak should have been eligible when his
one-month waiting period ended on October 16th, and that his
insurance should have become effective on that date; his first
premium would have been due on October 16th with subsequent
premiums payable on the first of each month thereafter.

However, as is true with most form contracts, a company choos-
ing a policy may also select various endorsements that modify par-
ticular policy provisions. Monolith’s Policy contains not only the
standard Effective Date Provision but also an endorsement. The
endorsement provides:

that the insurance of an individual shall be effective on the earlier of:

a) the first day of the policy month which coincides with the day
it would otherwise be effective, or

b) the first day of the policy month which next foilows the day
it would otherwise be effective.

Record, vol. 1, at 16. The parties agree that ‘‘the day it would other-
wise be effective’ is the end of the waiting period or October 16th
in Mr. Burak’s case. However, the effect that this date has in
establishing ‘‘the first day of the policy month,”’ or effective date,
remains in conflict.

Plaintiff asserts that the Policy could have easily been revised to
incorporate the endorsement language into the Effective Date Pro-
vision. Since this was not done, plaintiff claims that the ‘* ‘origina!
policy’ and the ‘endorsement’ appear to be mutually effective at
the same time, thereby constituting an ambiguity’’ that should be

-4a-

resolved in her favor. Plaintiff-Appellant’s Reply Brief at 7; see
Beaumont-Gribin-Von Dyl Management Co. v. California Union
Ins. Co., 63 Cal. App. 3d 617, 622, 134 Cal. Rptr. 25, 27 (1976)
(ambiguities are to be construed against the drafter).

Plaintiff's argument strikes upon a serious problem in the
insurance industry. Insurance providers routinely issue standard
policies and when those policies need to be amended, the insurer
does not rewrite the appropriate provisions but merely attaches an
endorsement to the standard policy. The result of this practice 1s
that the body of the policy may cffer a type of coverage that is
expressly taken away by a subsequent endorsement. In addition,
insurance companies frequently fail to calculate how the endorse-
ment may affect nonreferenced sections of the policy.

Despite their great potential for misleading consumers, the use
of endorsements is allowed and accepted. Moreover, under California
law, an endorsement to a policy becomes part of the policy and ‘‘it
there is a conflict in meaning between an endorsement and the body
of the policy, the endorsement controls.’’ Continental Casualty Co.
v. Phoentx Constr. Co., 46 Cal. 2d 423, 431, 296 P.2d 801, 805
(1956); Southwestern Funding Corp. v. Motors Ins. Corp., 59 Cal.
2d 91, , 28 Cal. Rptr. 161, 162, 378 P.2d 361, 362 (1963).
Therefore, based upon California law, an endorsement which con-
flicts or varies from the standard policy does not create an ambigu-
ity in terms, but must instead control. Accordingly, the effective
date ot Mr. Burak’s Policy is governed primarily by the language
of the Policy’s endorsement, and to the degree that the endorse-
ment conflicts with or varies from the standard Policy, the endorse-
ment must stand. The terms of the endorsement provide the key
to whether Mr. Burak was covered by the Policy at the time of his
death.

Defendant contends that the endorsement means that, if the
policy holder completes his one-month waiting period on the first
day of a calendar month, the insurance coverage begins that day.
If, however, he completes his waiting period on the second day of
the month or on any day thereafter in the month, he must wait
until the first day of the next calendar month before coverage begins.
Since Mr. Burak ended his waiting period on October i6, 1983,
a day which does not coincide with the first day of the month,

-Ja-

subparagraph (a) would not apply. Thus, Mr. Burak’s effective date
would be controlled by subpatagraph (b) and would be the ‘‘first
day of the policy month which next follows,’’ or November 1, 1983.

Plaintiff maintains that the endorsement can be interpreted
in at least two other ways. First, plaintiff argues that the policy month
may not be the same as the calendar month, but could be inter-
preted to mean the day the waiting period ended, or October 16,
1983. Thus, under this interpretation of subparagraph (a), the ‘‘first
day of the policy month’’ and the ‘‘day it would otherwise be
effective’ would coincide on October 16, 1983, and make the policy
effective. Second, even if the policy month is synonymous with a
calendar month, plaintiff suggests that subparagraph (a) can also
be understood to mean that the Policy is effective on the first day
of the particular month in which the individual satisfies his waiting
period. Thus, since the first day of the policy month or calendar
month that coincided with October 16, 1983, was October 1, 1983,
the Policy could have become effective the first day of October.

Plaintiff also contends that subparagraph (b) ‘‘can be read as
either November 1, 1983 (the first day of the policy month which
next follows the day it would be effective), or as October 17, 1983
(if ‘policy month’ is not read to be the same as a calendar month
...).’’ Plaintiff-Appellant’s Reply Brief at 14. Therefore, under
either of the alternative interpretations which plaintiff proposes, sub-
paragraph (a) would always establish an effective date before that
established by subparagraph (b).

Having reviewed plainuff's and defendant’s interpretations of
the endorsement, the Policy, and the record; we find that plain-
tiff’s interpretations cannot withstand detailed scrutiny. Plaintiff’ s
first interpretation requires the policy months to be other than calen-
dar months, when the face of the Policy expressly provides that policy
months are to “‘begin on the first of the month.’’ Record, vol. 1,
at 37. Plaintiff's second interpretation inappropriately uses the word
‘coincide’ to modify policy month rather than ‘‘the first day of
the policy month.”’ Even if we did not find that plaintiff's inter-
pretations strained the language of the endorsement, they do not
give effect to each of the subparagraphs. Thus, plaintiff's interpreta-
tions of the endorsement effectively read the ‘‘earlier of’’ language
and subparagraph (b) out of the contract.

te.

While California law requires us to interpret the policy to
indemnify the plaintiff's losses if ‘‘semantically permissible, Crane
y. State Farm Fire and Casualty Co., 5 Cal. 3d 112, 115, 95 Cal.
Rptr. 513, 514, 485 P.2d 1129, 1130 (1971), we are not allowed
to achieve this result by writing out parts of the contract. We are
bound to give each subsection effect if possible. Ho/z Rubber Co.
v. American Star Ins. Co., 14 Cal. 3d 45, 56, 120 Cal. Rptr. 415,
421, 533 P.2d 1055, 1061 (1975) (‘‘An insurance policy, like any
other contract, must be construed as an entirety, with each clause
lending meaning to the other.’’); Jurd v. Pacific Indemnity Co.,
57 Cal. 2d. 699, ____, 21 Cal. Rptr. 793, 795, 371 P.2d 569, 571
(1962); see Cal. Civ. Code, §1641 (Deering 1987) (‘‘The whole of
a contract is to be taken together, so as to give effect to every part,
if reasonably practicable, each clause helping to interpret the
other.’’); see also Harborside Refrigerated Services, Inc. v. IARW
Ins. Co., 759 F.2d 829, 830 (11th Cir. 1985) (‘‘If possible, the court
must adopt a construction which will give effect to the total instru-
ment and its provisions.’’). The endorsment is poorly written and
obscure. However, because plaintiff's interpretations of the endorse-
ment fail to give the ‘‘earlier of’’ language and subparagraph (b)
effect, we reject plaintiff's interpretations in favor of the one pro-
posed by defendant which does give effect to the entire endorse-
ment. We conclude that summary judgment was improperly entered
against defendant. Mr. Burak was not covered under the Policy and,
accordingly, plaintiff’s appeal as to her right to double indemnity
benefits is dismissed.*

REVERSED and REMANDED to the district court with direc-
tions to vacate its amended judgment and enter judgment in favor
of the defendant.

* We note that the plaintiff makes reference to a public policy argument that
insurance companies should not be allowed to hold out coverage in the policy and
then limit the coverage through exceptions or endorsements that are hidden in
the fine print of the contract. Plaintiffs-Appellant’s Reply Brief at 11. The record
on appeal does not indicate that the district court was asked to make a factual
determination of whether the endorsement at issue was inconspicuous so as to
mislead consumers and thus violate public policy. Accordingly, we do not reach
the issue.

~)/a-

MARCH TERM - March 10, 1988

Before Honorable Monroe G. McKay, Honorable Bobby R. Baldock,
Circuit Judges, and Honorable Wesley E. Brown, District Judge*

PAMELA J. BURAK,

Plaintiff-Appellant,
Cross-Appellee,

v. Nos. 85-1970 and
85-1971
GENERAL AMERICAN LIFE

INSURANCE COMPANY,

Defendant-Appellee,
Cross-Appellant.

Nem” Nee Ne Nee Nee Nee Nee Nee Nee Nee “See Se

The petition for rehearing filed in the captioned cause by
plaintiff-appellant/cross-appellee Pamela J. Burak is denied.

ROBERT L. HOECKER, Clerk

/s/ Patrick Fisher
Chief Deputy Clerk

* of the United States District Court for the District of Kansas. sitting by
designation.

=%5-

IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

CIVIL ACTION NO. 84-K-782

PAMELA J. BURAK,

FILED
Plaintiff, United States District Court
Denver, Colorado

ve 10 12 1984
GENERAL AMERICAN LIFE JAMES R. MANSPEAKER
INSURANCE COMPANY, Clerk

Defendant.

ORDER

KANE, J.

This action was originally brought in the District Court of
Larimer County, Colorado, alleging that defendant, General
American Insurance Company, has breached its covenant of good
faith and fair dealing by refusing to process any claim by or on behalf
of plaintiff. The complaint also alleges that plainuff is entitled to
recover punitive damages under the provisions of Colo. Rev. Stat.
§13-21-102 (1973). Plaintiff also seeks to recover her costs and
attorney fees.

The parties are before me on defendant’s petition for removal
from the Larimer County District Court, plainuff’s motion to remand
the action, and cross motions for summary judgment on the matters
averred in the complaint. All issues have been briefed by the parties.

Plaintiff is the surviving spouse of Ronald J. Burak, who died
October 27, 1983, as a result of injuries sustained in an auto acci-
dent which occurred October 27, 1983, while driving on U.S.
Highway 287 near milepost 355, northwest of Fort Collins, Colorado.
At the time of death, the deceased was employed by Monolith

-9a-

Portland Cement Company, a California corporation doing business
in Laramie, Wyoming where Burak was employed. Burak began
employment with Monolith September 16, 1983. As an employee,
Burak was entitled to benefit from a group insurance plan that was
offered by Monolith to its employees. Availing himself of this
opportunity, Burak executed a General American Group Coverage
Certification Form #4563, an enrollment card, on October 4, 1983.
General American was the insurance company chosen by Monolith,
the policy holder, to administer the group insurance plan. Burak
took out life insurance with coverage of $42,000, naming plaintiff
as the beneficiary of the policy. Upon notification to General
American in a letter dated December 27, 1983 by plaintiff's counsel,
to the effect that Mrs. Burak intended to file a claim to collect the
proceeds of the policy, General American responded, in a letter to
plaintiff's counsel, that it was the position of General American that
the policy in question was not in effect at the time of Burak’s death;
that the effective date of the policy would have been November
1, 1983, four days after decedent’s death. Plaintiff alleges that the
effective date of the policy was October 16, 1983, the completion
of the waiting period under the terms of the policy or, in the alter-
native, October 1, 1983; that the language in the policy lends itself
to this interpretation, and that the court should construe the policy
in favor of plainiff.

PETITION FOR REMOVAL AND MOTION TO REMAND

General American has petitioned the court to remove this action
from the Larimer County District Court to the United States District
Court under the provisions of Title 28 U.S.C. §1441 and 1446, and
Rule 81 (d) of the Federal Rules of Civil Procedure. Defendant's
petition was accompanied by a bond with sufficient surety in the
sum of $1,000 to cover costs and disbursements incurred, should
I determine that this action cannot be properly removed.

As grounds for removal, General American asserts that this court
has jurisdiction under Title 28 U.S.C. §1332 because there exists
complete diversity of citizenship; that plaintiff is a resident of
Colorado and defendant corporation is a corporate resident of
Missouri, with its principal place of business in St. Louis, Missouri

-10a-

for jurisdictional purposes. Defendant has submitted a certificate
of corporate good standing, issued by the Secretary of State of
Missouri, which reflects that General American was incorporated
under the laws of Missouri in June, 1933. The amount in controversy
exceeds $10,000, the $42,000 policy amount. Also, as grounds for
removal, defendant asserts that a federal question is presented
inasmuch as plaintiff's claims are governed by the terms of the
Employee Retirement Income Security Act (ERISA), Title 29 U.S.C.
§1001 e¢ seg. The ERISA contention relates to plaintiff's punitive
damages claim.

Plainuff moves for an order remanding this action to the
Laramie [sc] County District Court on the following grounds: (1)
diversity of citizenship does not exist between the parties, and (2)
no federal question is presented.

In a petition for removal, the burden falls squarely on the
removing party to establish its right to a federal forum by competent
proof. See R.G. Barry Corporation v. Mushroom Makers,
Incorporated, 612 F.2d 651, 655 (2d Cir. 1979). Plaintiff argues
that diversity does not exist because General American is a mutual
insurance company, which is a cooperative enterprise in which its
members constitute both the insurer and the insured; that the
beneficial ownership of the profits and surplus of a mutual insurance
company inure to the policyholders. Plaintiff reasons that since the
policyholder is both the insurer and the insured, each member of
General American is possessed with citizenship of each state in which
the business of General American is conducted. Therefore, accord-
ing to plaintiff, diversity is destroyed since defendant, plaintiff, and
Monolith (the policyholder) are citizens of Colorado. The
metaphysical permutations of this argument are almost overwhelm-
ing. | cannot agree with plaintiff; it is the domicile of the corpora-
tion which is controlling for diversity purposes, and not that of the
shareholders. See Puerto Rico v. Russell & Company, 288 U.S. 476,
479, 53 S.Ct. 447, 77 L.Ed. 903 (1933). Therefore, diversity of
citizenship between the parties does exist for juridictional purposes
under 28 U.S.C. §1332. I need not address the ERISA federal ques-
tion contention at this time with respect to the jurisdictional re-
quirements. Defendant has met its burden.

-lla-

CROSS MOTIONS FOR SUMMARY JUDGMENT

It is well established that summary judgment can be granted
only where there is no genuine issue of material fact. Securities &
Exchange Commission v. Murphy, 626 F.2d 633, 640 (9th Cir. 1980).
The same rule applies in cross motions for summary judgment. Bue//
Cabinet Company, Inc., 608 F.2d 431, 433 (10th Cir. 1979). The
standards to be applied in deciding cross motions are the same as
those applied when only one party has filed a summary judgment
motion. Selected Risks Insurance Company v. Schwabenbauer, 540
F.Supp. 22, 24 (E.D. Pa. 1982). The mere fact that inherently con-
tradictory claims have been made does not constitute an agreement
that if one is rejected the other is necessarily justified. Id.

General American denied plaintiff's claim, as beneficiary under
decedent's policy, on the basis that decedent was not covered under
the terms of the policy at the time of his death, October 27, 1983:
that the ‘“‘effective date’’ of coverage would have been November
1, 1983. The language contained in the subject policy that sets forth
the ambit of coverage for an insured is at the core of this dispute.
General American argues that the language which grants coverage
is unambiguous; plaintiff argues it is not; that the disputed coverage
provision is capable of an interpretation to the effect that decedent's
coverage took effect as of October 16, 1983, one month after dece-
dent was hired by Monolith.

The policy states that it shall be governed by California law.
On page thirteen of the policy under the heading of ‘*General Pro-
visions’’ and ‘‘Entire Contract’’ it is stated in the first paragraph
that the subject policy represents the entire contract between the
parties. Under California law, I must determine whether the
language in the disputed provision is ambiguous as a matter of law.
See United States v. Haas and Haynie Corporation, 577 F.2d 568,
572 (9th Cir. 1978) (citations omitted). If the disputed coverage
provision is ambiguous, the insurance contract shall be construed
against the party who prepared it. See Beaumont-Gnbin-Von Dy/
Management Company v. California Union Insurance Company,
63 Cal. App. 3d 617, 134 Cal. Rptr. 25, 27 (2d Dist. 1977); Previews,
Incorporated v. California Union Insurance Company, 640 F.2d
1026, 1029 (9th Cir. 1981). This rule applies to insurance companies

-l2a-

with special force, and where uncertain language is used, any
reasonable doubt will be resolved against the insurance company,
whether the doubt relates to the extent or fact of coverage (as in
this instance), the peril insured against, the amount of liability, or
other operative provisions. Beaumont, supra, at 27.

The conditions of effective policy coverage of the subject policy
are set forth as follows:

The ‘Effective Date of Personal Insurance’ to provide that insurance
of an individual shall be effective on the earlier of a) the first day of
the policy month which coincides with the day it would otherwise be
effective, or b) the first day of the policy month which next follows
the day it would be effective

Decedent was employed by Monolith, the group policyholder, on
September 16, 1983, and died October 27, 1983. Decedent signed
an enrollment card as an employee of Monolith on October 4, 1983,
and completed his one month eligibility waiting period October
16, 1983. Pursuant to the above provision, the insurance was to be
effective on ‘‘the first day of the policy month which coincides with
the day it would otherwise be effective . . ."’ Given the comple-
tion by decedent of the thirty day waiting period as of October 16,
1983, the policy would ‘‘otherwise"’ have been effective on that date.
The first day of that ‘‘policy month’’ (October) which coincides with
that day, October 16, is October 16. I find that the policy coverage
provision permits such an interpretation and that October 16 was
earlier than November 1. Therefore, section ‘‘b’’ of the provision
yields. Section ‘‘b’’ defines the effective date of the policy as *‘the
first day of the policy month which next follows the day it would
otherwise be effective.’’ Thus, this could be read as either November
1, (the first day of the policy month which next follows), or as
October 16, (which is ‘‘the first day . . . which next follows the
day it would otherwise be effective.’’).

General American contends that the first page of the policy
states that ‘‘policy months after the first [policy month] begin on
the first day of the month,’ and that this language mandates that
decedent's policy as having an effective date of either October |
or November 1, and nothing in between. If this language were stand-
ing alone, that result would follow. But an insurance policy must
be read in its entirety. In reading the policy in its entirety, I conclude

-l3a-

that the policy coverage effective date provision and the related pro-
vision concerning policy months, which must necessarily be read
in conjunction with the effective date language, are ambiguous and
open to several interpretations. Clearly, one reasonable interpreta-
tion of the cryptic provision presents the effective date of October
1. I construe the ambiguous language against General American
which drafted the policy, and in favor of the plaintiff.

ERISA

Plaintiff seeks punitive damages. Defendant argues chat
punitive damages are not allowed because the Employees Retire-
ment Income Security Act, Title 29 U.S.C. section 1001 ef seq.,
according to defendant, preempts state law actions and remedies
that which otherwise might be available.

I have already found that diversity of citizenship existed be-
tween the parties for jurisdictional purposes. | reserved discussion
of ERISA earlier in this order. | now find and conclude that General
American's assertion that ERISA preempts state law in this action
is unpersuasive. It is well established that ERISA was intended by
Congress to preempt the entire field of employee benefit plan regula-
tion. See Lederman v. Pacific Mutual Life Insurance Company, 484
F.Supp. 1020, 1022 (C.D. Cal. 1980). This action does not, however,
attack in any manner the integrity or administration of the group
insurance plan that Monolith provided for its employees; rather,
the essence of this action is simply to pursue a claim for the pro-
ceeds plaintiff asserts is due her as a beneficiary of the policy in ques-
tion. There is no basis for the conclusion that Congress found it
necessary of appropriate to interfere with the substantial regulation
of insurance companies operating in California, and that every claim
against an insurance company under its group insurance plan should
be litigated in federal court with exclusive ERISA remedies. Jd.
ERISA is not controlling here with respect to plaintiff's punitive
claim.

Under California law, punitive damages may be awarded where
it can be shown that defendant is guilty of oppression, fraud and
malice. Defendant must act with the intent to vex, injure or annoy,
or with a conscious disregard of plaintiff's rights. See Si/berg v.

-14a-

California Life Insurance Company, \\ Cal. App. 3d 465, 113 Cal.
Rptr. 711, 718, 521 P.2d 1103 (1974). Even where if General
American violated its duty of good faith and fair dealing, as alleged
here, such does not necessarily establish that it acted with the re-
quisite intent to injure plaintiff. Jd. at 718. There is no evidence
that General American acted with malice in refusing to process plain-
tiff’s claim. Therefore punitive damages under Cal. [Civil] Code
section 3294 are disallowed.

ATTORNEY FEES

Plaintiff seeks to recover attorney fees, costs, aiid expenses aris-
ing from this action. Absent contractual or statutory authorization,
the general rule is that attorney fees are not recoverable either as
damages or costs. See Mustachio v. Ohto Farmers Insurance Com-
pany, 44 Cal. App. 3d 358, 118 Cal. Rptr. 581, 584 (2d Dist. 1975).

Plaintiff has alieged that General American violated its duty
of good faith and fair dealing by refusing to pay the proceeds of
the policy to plaintiff. Under California law, in every insurance con-
tract there is an implied covenant that requires the insurer to deal
in good faith and fairly in handling the insured's claim against it.
This duty is imposed by law and does not arise from the terms of
the contract. See Richardson v. Employers Liability Assurance Com-
pany, 25 Cal. App. 3d 232, 102 Cal. Rptr. 547, 552 (1972). When
an insurer unreasonably and in bad faith withholds payment of the
claim of its insured, it is subject to liability in tort. Mustachio, supra.
118 Cal. Rptr. 584. Where the insurer's tortious conduct makes it
reasonable for the insured to seek protection of counsel, the insurer
is responsible for that item of damages. Jd. But every decision
denying benefits is not evidence of bad faith. See Mason v. Mer.
cury Casualty Company, 64 Cal. App. 3d 471, 134 Cal. Rptr. 545,
547-48 (1976). | earlier found that the disputed provision was suscep-
tible of varied interpretations. | conclude that General American
simply was pursuing its own economic interests in asserting its legal
rights and defenses. It did not act unreasonably or in bad faith in
denying the claim of plaintiff-beneficiary. No malice is shown here,
just sloppy draftsmanship. Based on the foregoing, | deny plaintiff's

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request for attorney fees. Since plaintiff has prevailed on her main
claim, she is entitled to recover costs.

THE POLICY AMOUNT

The first page of the #4563 policy states that it is a life and
accidental death and dismemberment insurance coverage policy. On
the enroliment card signed by decedent, the insurance coverage is
listed at $42,000. Under the *‘ Accidental Death"’ provision, it reads
in part on page six of the policy:

1) if injury results in joss of life, the amount of insurance in effect
on the date of injury will be payable to the beneficiary. The beneficiary
is the same as under the Life Insurance unless the insured individual
names a separate beneficiary.

| find that Ronald James Burak died as a result of injuries he received
in an auto accident October 27, 1983, and plaintiff is therefore
entitled, as beneficiary of the life insurance policy, to recover $42,000
under the life insurance and an additional $42,000 for accidental
death. The $42,000 amount recoverable under the accidental death
provision is derived from the provision itself that the amount of
insurance in effect on the date of decedent's death was $42,000.
It is therefore

ORDERED that defendant's motion for summary judgment
is denied; it is further

ORDERED that plaintiff's motion for summary judgment is
granted; it is further

ORDERED that plaintiff shall have and recover from defen-
dant her costs; it is further

ORDERED that judgment shall enter against defendant and
for plaintiff in the amount of $84,000, plus interest at the legal
rate from the date of filing of the complaint.

DATED at Denver, Colorado this 12th day of October, 1984.

/s/ John L. Kane, Jr.

UNITED STATES DISTRICT
JUDGE

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Civil Action No. 84-K-782

PAMELA J. BURAK,

FILED
Plaintiff, United States District Court
Denver, Colorado
sia OCT 15 1984
GENERAL AMERICAN LIFE JAMES R. MANSPEAKER
INSURANCE COMPANY, Clerk

Defendant.

JUDGMENT

PURSUANT TO and in accordance with the Order entered by
the Honorable john L. Kane, Jr., United States District Court Judge,
on October 12, 1984, it is

ORDERED AND ADJUDGED that summary judgment is
hereby entered for the piaintiff, Pamela Burak, and against the
defendant General American Life Insurance Company in the amount
of $84,000.00, plus interest at the legal rate of 11.36% from the
date of the filing of the complaint. It is

FURTHER ORDERED that the plaintiff shall have her costs
upon the filing of a Bill of Costs with the Clerk of the Court within
ten days of the entry of this judgment.

DATED at Denver, Colorado this 15th day of October, 1984.

FOR THE COURT:
JAMES R. MANSPEAKER, Clerk

By: /s/ Stephen P. Ehrlich
Stephen P. Ehrlich, Chief
Deputy

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Civil Action No. 84-K-782

PAMELA J. BURAK,

FILED
Plaintiff, United States District Court
Denver, Colorado
si NOV 2 1984
GENERAL AMERICAN LIFE JAMES R. MANSPEAKER
INSURANCE COMPANY, Clerk

Defendant.

AMENDED ORDER

The motion of defendant General American to this court for
reconsideration of the Order of October 12, 1984 or, in the alter-
native, for a motion to alter the judgment to reflect no determina-
tion of the applicability of the double indemnity provision under
the #4563 policy; it is

ORDERED that the judgment is modified. without prejudice
to the parties to litigate the applicability of the double indemnity
provision in the state court, to reflect that judgment shall enter for
plaintiff and against defendant in the amount of $42,000, the
coverage under the life insurance provision under the policy, plus
costs, and interest at the legal rate from the date of the filing of
the complaint.

DATED at Denver, Colorado this 2nd day of November, 1984.

/s/ John L. Kane, Jr.

UNITED STATES DISTRICT
JUDGE

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IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF COLORADO

Case No. 84-K-782

PAMELA J. BURAK,
Plaintiff,

VS.

GENERAL AMERICAN LIFE
INSURANCE COMPANY,

Defendant.

MINUTE ORDER — JUDGE KANE

Summary judgment as to all parties and claims was entered
October 12, 1984 in the above captioned matter. An order entered
November 2, 1984 modified the initial judgment to reflect that the
issue of the applicability of double indemnity under the accidental
death provision of the policy was left undetermined, and that the
parties could litigate that issue in the state court. The initial judg-
ment of October 12 is deemed not final as to all parties and claims;
that the November 2 order is modified to reflect that partial sum-
mary judgment is entered on the issue of the construction of the
policy; and that the court retains jurisdiction for the purpose of deter-
mining the only remaining issue, the applicability of double indem-
nity under the accidental death provision, which shall be determined
by a trial on the merits, which is set for May 31, 1985 at 9:00 AM
at the United States Courthouse for the District of Colorado, Room
C200. The parties shall submit a pretrial order at least thirty days
prior to the trial date. Defendant's motion for reconsideration or
for alternative relief is Denied.

Mary Clark, Secretary DATED: December 14, 1984

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Rule 56. Summary Judgment

(a) For Claimant. A party seeking to recover upon a claim,
counterclaim, or cross-claim or to obtain a declaratory judgment may,
at any time after the expiration of 20 days from the commencement
of the action or after service of a motion for summary judgment
by the adverse party, move with or without supporting affidavits
for a summary judgment in the party's favor upon all or any part
thereof

(b) For Defending Party. A party against whom a claim,
counterclaim, or cross-claim is asserted or a declaratory judgment
is sought may, at any time, move with or without supporting affi-
davits for a summary judgment in the party’s favor as to all or any
part thereof.

(c) Motion and proceedings thereon

The motion shall be served at least 10 days before the time
fixed for the hearing. The adverse party prior to the day of hearing
may serve opposing affidavits. The judgment sought shall be
rendered forthwith if the pleadings, depositions, answers to inter-
rogatories, and admissions on file, together with the affidavits, if
any, show that there is no genuine issue as to any material fact and
that the moving party is entitled to a judgment as a matter of law
A summary judgment, interlocutory in character, may be rendered
on the issue of liability alone although there is a genuine issue as
to the amount of damages.

(d) Case not fully adjudicated on motion

If on motion under this rule judgment is not rendered upon
the whole case or for all the relief asked and a trial is necessary, the
court at the hearing of the motion, by examining the pleadings and
the evidence before it and by interrogating counsel, shall if practi-
cable ascertain what material facts exist without substantial contro-
versy and what material facts are actually and in good faith contro-
verted. It shall thereupon make an order specifying the facts that
appear without substantial controversy, including the extent to which
the amount of damages or other relief is not in controversy, and
directing such further proceedings in the action as are just. Upon
the trial of the action the facts so specified shall be deemed estab-
lished, and the trial shall be conducted accordingly.

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Source: Frix Law Library, https://www.frixlaw.com/law-library/documents/brief%3Amicro_IA40385019_1941%3A1. Public record. Not legal advice.