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Paul Revere Life Insurance Co. v. Fink

November 14, 2007

THE PAUL REVERE LIFE INSURANCE COMPANY,
PLAINTIFF,
v.
STEVEN R. FINK, DEFENDANT.



The opinion of the court was delivered by: Hon. William J. Martini

OPINION

The Paul Revere Life Insurance Company moves under Federal Rules of Civil Procedure 9(b) and 12(b)(6) to dismiss Steven R. Fink's Counterclaims. This Motion is GRANTED.

FACTS AND PROCEEDINGS

This is in essence a relatively simple contract dispute, which concerns only one term in a disability insurance contract. In 1992, Paul Revere issued a disability insurance policy to Fink that provided for a monthly benefit should Fink fall under total disability. (Compl. ¶ 5.) The policy defined total disability as a condition caused by sickness or injury that (1) prevented Fink from performing his job, and (2) could not be alleviated by "Physician's Care." (Compl. ¶ 7.) The policy defined "Physician's Care" to mean "the regular and personal care of a Physician which, under prevailing medical standards is appropriate for the condition causing the disability." (Compl. ¶ 8.)

This dispute arose in 2005 when Fink submitted an application for disability insurance to Paul Revere. (Compl. ¶ 10.) In the application, Fink alleged that he had carpal tunnel syndrome and was unable to continue his work as a dentist. (Compl. ¶ 10; Countercl. ¶¶ 15--16.) Initially, Paul Revere accepted Fink's application and paid Fink monthly benefits under his disability policy. (Compl. ¶ 11.) After investigating, however, Paul Revere determined that Fink could alleviate his carpal tunnel syndrome with surgery. (Compl. ¶ 12--16; Countercl. ¶ 20.) Fink refused to undergo this surgery. (Compl. ¶ 17.)

Paul Revere then filed this suit. It seeks a declaratory judgment that Fink does not meet the policy's definition of total disability because he refuses to undergo appropriate treatment. (Compl. ¶ 27--28.) Paul Revere accordingly seeks also a declaratory judgment that it is not obligated to pay Fink disability benefits, that it is entitled to reimbursement of benefits already paid, and that it is entitled to all of Fink's past due premiums. (Compl. ¶ 30.) Thus essentially, Paul Revere seeks a declaratory judgment that surgery for Fink constitutes "the regular and personal care of a Physician which, under prevailing medical standards is appropriate for the condition causing the disability." Despite these contentions, Paul Revere has paid and will continue to pay Fink monthly benefits until this suit is resolved. (Compl. ¶ 11.)

Fink counterclaimed. Unlike Paul Revere, Fink does not view this case as a simple contractual dispute. Rather, Fink vaguely alleges that the insurance policy does not require him to undergo surgery before receiving benefits and that Paul Revere has engaged in a premeditated, fraudulent scheme to condition payment of disability benefits on requirements outside of the disability policy. (Countercl. ¶¶ 1--40.) Under this theory, Fink alleges that Paul Revere has violated New Jersey's Consumer Fraud Act, has committed common law fraud, and has breached Fink's disability policy. (Countercl. ¶¶ 41--63.)

Paul Revere now brings this Motion to Dismiss Fink's counterclaims under Rules 9(b) and 12(b)(6). (Mt.) Paul Revere's Motion presents several arguments, of which this Court will only address two.*fn1 First, Paul Revere argues that Fink's statutory and common law fraud claims fail to satisfy Rule 9(b)'s pleading requirements. Second, Paul Revere argues that Fink fails to allege facts that state a cause of action for breach of contract.*fn2

DISCUSSION

I. Standard of Review Under Rule 12(b)(6)

Under Rule 12(b)(6), this Court may dismiss a claim if the pleadings fail to state a cause of action. To survive a Rule 12(b)(6) motion to dismiss, the pleadings must set forth factual allegations sufficient to raise the probability of a right to relief above pure speculation. Bell Atl. Corp. v. Twombly, 127 S.Ct. 1955, 1964--65 (2007). While these factual allegations need not be detailed, they must contain more than legal conclusions and formulaic recitations. Id. If the pleadings meet these standards, the claim may proceed-even if recovery is "remote and unlikely." Scheuer v. Rhodes, 416 U.S. 232, 236 (1974).

When engaging in this analysis, courts assume that the allegations in the complaint (or here the counterclaim) are true, even if they are doubtful. Twombly, 127 S.Ct. at 1965. This treatment applies to the interpretation of ambiguous contract provisions. Martin Marietta Corp. v. Int'l Telecomm.s Satellite Org., 991 F.2d 94, 97 (4th Cir. 1992); see Operative Bricklayer's Union No. 64 Welfare Fund v. Bricklayer's Local Union No. 1 Welfare Fund, 45 F.R.D. 429, 431 (E.D. Pa. 1968). Thus, given that it is ambiguous whether the disability policy requires Fink to undergo surgery as a precondition to receiving benefits, this Court will assume for this Motion that it does not.

II. Fink's Fraud Claims Fail to Satisfy Rule 9(b)'s Pleading Requirements

Paul Revere argues that Fink has failed to plead his fraud claims with sufficient specificity to satisfy Rule 9(b). (Mt. 7, 11--14.) Paul Revere reasons that Fink has failed to allege details such as precisely what misrepresentations were made, by and to whom they were ...


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