Carlton D. Klein v. John Hancock Mutual Life Insurance Company, A Foreign Corporation, 683 F.2d 358, 11th Cir. (1982)
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Scribd Government DocsCarlton D. Klein v. John Hancock Mutual Life Insurance Company, A Foreign Corporation, 683 F.2d 358, 11th Cir. (1982)
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Scribd Government Docs683 F.
2d 358
Carlton D. KLEIN, Plaintiff-Appellant,
v.
JOHN HANCOCK MUTUAL LIFE INSURANCE
COMPANY, a foreign
corporation, Defendant-Appellee.
No. 81-5255.
United States Court of Appeals,
Eleventh Circuit.
Aug. 19, 1982.
Virgin, Whittle & Garbis, Fred M. Kray, Gary E. Garbis, Miami, Fla., for
plaintiff-appellant.
Steel Hector & Davis, John M. Barkett, Miami, Fla., for defendantappellee.
Appeal from the United States District Court for the Southern District of
Florida.
Before MILLER * , Judge, TJOFLAT and CLARK, Circuit Judges.
CLARK, Circuit Judge:
This is an appeal by Carlton D. Klein from a summary judgment on behalf of
John Hancock Mutual Life Insurance Company (John Hancock) entered by the
district court below. We reverse.
Appellant is insured under five life insurance policies issued by John Hancock.
Each of these policies contains a provision whereby John Hancock agrees to
waive payment of premiums in the event the policyholder establishes that he is
totally disabled.
Klein first filed a waiver claim in June of 1976. At that time, his physician, Dr.
David Katzin, submitted to John Hancock statements of total disability based on
his diagnosis that Klein suffered from post-traumatic cephalgia, a laceration of
the scalp, cervical strain, headaches, neck pain, and weakness in the left arm.
4
John Hancock refused to waive payment on the basis that the injury did not
cause total disability. In 1977, Klein brought suit in state court, seeking a
declaration that the premiums due and owing were waived and damages for
mental distress and financial embarrassment.
On September 30, 1977, in consideration of.$6,502.30, Klein entered into an
agreement with John Hancock entitled "Release of All Claims." The amount of
premiums then in dispute was in excess of $30,000. The release encompassed:
6 actions, or causes of action, suits ... claims and demands whatsoever ... which the
all
undersigned ever had, now has or which may hereafter accrue for, upon or by reason
of any matter cause or thing whatsoever from the beginning of the world to the day
of the date of this release. This release includes all claims and causes of action,
asserted or which could have been asserted in, or related to or connected with that
certain cause now pending in the Circuit Court, 11th Judicial Circuit in and for Dade
County, Florida, styled (Klein v. John Hancock).
7
Four days later, the trial judge dismissed the case with prejudice based upon a
stipulation of the parties.
Klein continued to pay premiums without protest for about two years. Then, in
June of 1979, he filed a second claim with John Hancock. Dr. Katzin submitted
two reports similar to the ones submitted in 1976, stating that Klein suffered
from post-traumatic cephalgia.1 Thus, the claimed disabling condition is
essentially the same as in 1976 and arises from the same injury. As in 1976, the
insurance company refused to waive premiums. Klein filed suit in state court
and the defendant removed. John Hancock raised the release as an affirmative
defense arguing that the present action was barred thereby.
The district judge noted that on the face of the release all claims which could
have been asserted in the state case were included. Klein contended below that
his right to the waiver of future payments had not accrued at the time of the
first action and thus could not have been asserted, and thus John Hancock was
not released from liability therefor. The district court held that the claim of total
disability, present and future, was before the first court and that the release
covered all claims that would arise from that disability from the date of the
release forward.
The trial court misconceived the basis of Klein's claim. It was not based on his
10
11
The trial court misconceived the basis of Klein's claim. It was not based on his
disability but on the insurance carrier's failure to waive premiums because of
that disability. Although disability of the insured is a condition precedent to the
insurer's responsibility to waive premiums, it does not form the basis for the
cause of action. The cause arises when waiver is refused. The first lawsuit, as
this one, is based upon a long-term continuing contract. Such a contract can be
breached intermittently during its term. Litigation or settlement will not
automatically bar a later suit for a second, identical breach. An insurer, to bar a
subsequent claim for breach of contract arising from a failure to waive
premiums in the face of a similar or identical causative occurrence, must take
pains to make such a release absolutely clear.
At trial defendant sought summary judgment on its defense that the action is
barred by the prior release. The release in this case is extremely broad. It can be
read to include any claim Klein would have by reason of any matter, cause or
thing whatsoever from the beginning of the world to the date of the release. The
injury alone would be a "thing" giving rise to a claim. Nonetheless, the parties
properly focus on claims which were or could have been raised in the first
action. Those claims are based on John Hancock's alleged failure to perform its
contractual duty to waive premiums. This is a reasonable reading of the release
viewing the general language at the beginning of the release as being limited by
the more specific language at the end. Such a reading is also consistent with
Florida law.
12general release which is not restricted by its terms to particular claims or demands,
A
as in the case sub judice, will ordinarily be regarded as embracing all claims or
demands which had matured at the time of its execution.
13
Sottile v. Gaines Construction Company, 281 So.2d 558, 561 (Fla. 3d DCA
1973) (emphasis in original).
14
As noted above, the release included "all claims and causes of action asserted
...." In the initial state court action, Klein's complaint prayed that:
15
1. This Court find that the Plaintiff has complied with the terms and conditions
of the said insurance policies and that the premiums due and owing be and the
same are hereby waived under the said terms and conditions of the said
policies.
16
2. That the premium paid under protest by the Plaintiff to the Defendant while
the Plaintiff was disabled be and the same reimbursed to the Plaintiff.
17
3. That this Court award damages for the mental distress and financial
embarrassment that the Plaintiff has been caused to suffer and that this Court
assess punitive damages against the Defendant plus interest on the said
premiums paid by the Plaintiff under protest, plus court costs and reasonable
attorneys' fees.
18
(Emphasis supplied.) As is clear from the reading of the complaint, the claim
was limited to premiums "due and owing" and sought no relief with respect to
the waiver of future premiums.
19
The release also "includes all claims and causes of action, asserted or which
could have been asserted in, or related to or connected with that certain cause
now pending ...." Under Florida law, plaintiff's right of action was limited to
benefits which had accrued at the time of the action. Mutual Life Insurance Co.
v. Knight, 130 Fla. 733, 178 So. 898 (1937).
20
In Aetna Life Ins. Co. v. Smith, 345 So.2d 784 (Fla. 4th DCA 1977),
21
Smith sued Aetna alleging that he had become totally disabled and was entitled
to receive benefits under a group disability insurance policy. Aetna had initially
paid benefits under the policy but then discontinued payments. In his complaint
Smith demanded judgment for both past and future benefits under the policy,
punitive damages, and attorney's fee.
22
Id. at 786.
23
The court discussed the prospective damages claim.
24
Lastly, Aetna argues that the trial court erred in instructing the jury that it could
return damages for the life of the policy, thus allowing the jury to award future
damages. Since the record does not reflect that Aetna objected when the
instruction was given, we normally would not accept this issue on appeal.
Fla.R.Civ.P. 1.470(b). However, for the benefit of the trial court and counsel in
the event of a new trial we will consider the question.
25
The instruction is erroneous because future damages are not recoverable under
the circumstances of this case. A substantial number of jurisdictions have
adopted the view that the right of action based upon an insurer's failure to pay
periodic indemnity or benefits is limited to the installments which have accrued
at the institution of the action. 44 Am.Jur.2d, Insurance, 1598. This rule has
been followed in Florida. Mutual Life Insurance Co. v. Knight, 130 Fla. 733,
178 So. 898 (1937).
26
345 So.2d at 787. The Florida Supreme Court declined review of the Fourth
District Court of Appeal's decision. 353 So.2d 678 (1977). The First District
Court of Appeal has followed the rationale of the Fourth District. Monsanto
Company v. Fuqua, 280 So.2d 496 (Fla. 1st DCA 1973).
27
Although the Aetna line of cases deal with disability insurance rather than
waiver of premiums in the event of disability, the same rationale is applicable
in both circumstances. Thus, the claim now being asserted had not matured and
was not and could not have been asserted in the first action and, therefore, the
instant claim is not barred by the release. Therefore, this case must be
REVERSED and REMANDED for further proceedings in light of this opinion.
Honorable Jack R. Miller, Judge, for the U.S. Court of Customs and Patent
Appeals, sitting by designation
In the second report, the laceration and cervical strain were not mentioned.
Hypertension was listed. According to Dr. Katzin, Mr. Klein suffered from this
for many years and the condition was unrelated to the head injury. Thus, the
plaintiff now claims entitlement only for the post-traumatic cephalgia
