Summary: Defendant Allstate Insurance Company brought a motion for summary judgment on plaintiff Pamela Kramer’s claim for coverage on an automobile accident. Defendant Allstate, her insurer, denied coverage on the accident citing a lapse in her insurance coverage due to the failure to pay the insurance premium. Kramer alleges that Allstate should be equitably estopped from denying coverage because of its past treatment of late payments, or in the alternative the previous late payments should extend coverage to the date of the accident. The court denied the motion for summary judgment, finding a reasonable fact finder could find either a breach of contract or a basis for equitable estoppel.
Case Name: Pamela Kramer v. Allstate Insurance Co.
Case Number: A3-00-107
Docket Number: 27
Date Filed: 11/28/01
Nature of Suit: 110
IN THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF NORTH DAKOTA
SOUTHEASTERN DIVISION
Pamela Kramer,
Allstate Insurance Company,
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) ) ) ) ) Civil No. A3-00-107 ) ) ) ) ) |
ORDER
Before the court is the motion for summary judgment of defendant Allstate Insurance Company (“Allstate”)(Doc #19). Allstate alleges no genuine issues of material fact exist in the above captioned matter and that it is entitled to judgment as a matter of law. Plaintiff Pamela Kramer (“Kramer”) opposes the motion, claiming the doctrine of equitable estoppel applies in this case, or in the alternative that her previously accepted late insurance payments extended coverage beyond the date in question. Kramer alleges there are issues of material fact that must be tried before a jury. For the reasons outlined below, Allstate’s motion for summary judgment is denied.
BRIEF FACTUAL BACKGROUND
On October 17, 1996, plaintiff Pamela Kramer was operating a 1979 Chevrolet Caprice when she alleges she was struck by an uninsured motorist who failed to obey a stop sign. Defendant Allstate Insurance Company, Kramer’s insurer, was appraised of the damages at all pertinent times. Kramer’s insurance premium for the time in question was due on October 10, 1996, and on the policy notice Allstate clearly stated that non-payment of the premium would result in a cancellation of the policy. In addition Allstate sent out notices including a Special Notice in advance of October 10, 1996 alerting her to the fact that payment must be made, otherwise the policy would no longer be in effect. The Special Notice, sent September 23, 1996, alerted Kramer that unless Allstate received the full minimum amount due, the cancellation notice would be enforced. Kramer failed to pay her premium by the October 10th due date. Instead she paid the premium on October 18, 1996, the day after her accident, for which she was issued a conditional receipt, and the payment credited to her account on October 19, 1996. Shortly thereafter Allstate denied Kramer’s claim for coverage for the October 17, 1996 accident, citing the fact that the policy was not in effect during the time of the accident because of Kramer’s failure to pay her premium by the due date.
Before October, Kramer had been late paying her insurance premiums six out of twelve payments. Each time Allstate had received a late payment, it credited the payment to Kramer’s account without cancelling or lapsing her policy, or sending her a refund for the period during which payment was late. After Kramer paid her October premium, however, Allstate promptly returned the portion of her payment for the eight days in which payment was late, and notified her that her policy had lapsed during those eight days. Coverage was reinstated as of October, 19, 2001. Allstate then denied coverage for the October 17, 1996 accident which occurred during the eight day lapse in policy coverage.
LEGAL STANDARD
Summary judgment is appropriate only when there is no genuine issue of material fact and the moving party is entitled to judgment as a matter of law. Fed. R. Civ. P. 56(c)(2001). A fact is “material” if it might affect the outcome of a case, and a factual dispute is “genuine” if the evidence is such that a reasonable jury could return a verdict for the nonmoving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 91 L. Ed. 2d 202, 106 S. Ct. 2505 (1986).; Herring v. Canada Life Assur. Co., 207 F.3d 1026, 1028 (8th Cir. 2000).
For purposes of summary judgment the inquiry is “[w]hether the evidence presents a sufficient disagreement to require submission to a jury or whether it is so one sided that one party must prevail as a matter of law.” Kinserlow v. CMI Corp., 217 F.3d 1021, 1025 (8th Cir. 2000)(quoting Anderson, 477 U.S. at 251-52). The court must view the facts and any inferences drawn from the facts in the light most favorable to the nonmoving party. Gregoire v. Class, 236 F.3d 413, 416 (8th Cir. 2000)(citation omitted); Anderson, 477 U.S. at 255. Where “reasonable minds could differ as to the import of the evidence,” summary judgment is inappropriate. Anderson, 477 U.S. at 250; see also Hocevar v. Purdue Frederick Co., 223 F.3d 721, 728 (8th Cir. 2000)(in dissenting opinion, quoting Anderson). The court in Celotex, in relevant part, states “Rule 56(c) mandates the entry of summary judgment, after adequate time for discovery and upon motion, against a party who fails to make a showing sufficient to establish the existence of an element essential to that party’s case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 91 L. Ed. 2d 265, 106 S. Ct. 2548 (1986). The court must look to substantive law to determine whether an element is essential to a case, and “[o]nly disputes over facts that might affect the outcome of the suit under the governing law will properly preclude the entry of summary judgment.” Anderson, 477 U.S. at 248.
ANALYSIS
Kramer alleges Allstate breached the contract of insurance or alternatively should be estopped from treating her insurance policy as lapsed, and because there are genuine issues of material fact regarding these issues, summary judgment should be denied.
Kramer alleges that coverage was in effect under her Allstate policy on the date of the accident, and Allstate has breached the insurance contract by refusing to provide coverage for the accident. Allstate takes the position that coverage lapsed under the policy if payment of the premium was not received by the tenth of the month. Kramer made six of her thirteen premium payments after the tenth of the month. If each of those payments is applied consistent with Allstate’s treatment of the October 1996 payment and its position in this lawsuit, Kramer contends there was coverage on October 17, 1996. As indicated in an attachment to her brief, Kramer made the November 1995 payment seven days beyond the tenth of the month, the December 1995 payment ten or eleven days beyond, the January 1996 payment five days beyond, the May 1996 payment seven days beyond, the June 1996 payment four days beyond, and the September 1996 payment ten days beyond, for a cumulative period of forty-three or forty-four days. Allstate did not return any portion of these premiums for the lapse period and did not reduce the next month’s statement to reflect a shorter billing cycle. Therefore, according to Kramer, under Allstate’s position coverage lapsed for seven days in November 1995, and acceptance of payment of the late premium should have extended coverage until December 17, 1995, with each additional lapse period and late premium payment resetting the coverage period further, until by October 1, 1996 there were forty-three or forty-four additional days of coverage. In this scenario coverage would have been in effect on October 17, 1996, the date of the accident.
Alternatively, if the policy was not in effect on the date of the accident, Kramer alleges Allstate’s practice of accepting previous late premium payments without lapsing her policy estops Allstate from lapsing her policy on October 10, 1996. Kramer acknowledges her policy premium was paid after the October 10th deadline and does not dispute the fact that Allstate followed state regulations regarding cancellation notices regarding insurance. She differs with Allstate on the conclusiveness of those facts in light of the circumstances.
As codified in North Dakota law, equitable estoppel is as follows:
When a party, by that party's own declaration, act, or omission, intentionally and deliberately has led another to believe a particular thing true and to act upon such belief, that party shall not be permitted to falsify it in any litigation arising out of such declaration, act, or omission.
N.D.C.C. §31-11-06.
The elements of equitable estoppel as set forth in Hanson v. Cincinnati Life Insurance Co., govern this case.
To establish equitable estoppel, a plaintiff must show, on the part of the defendant:
(1) Conduct which amounts to a false representation or concealment of material
facts, or, at least, which is calculated to convey the impression that the facts are
otherwise than those which the [defendant] subsequently attempts to assert; (2) the
intention, or at least the expectation, that such conduct will be acted upon by, or
will influence, the [plaintiff]; and (3) knowledge, actual or constructive, of the real
facts....
The plaintiff also must show, on her own part:
(1) lack of knowledge and of the means of knowledge of the truth as to the facts in question; (2) reliance, in good faith, upon the conduct or statements of the [defendant]; and (3) action or inaction based thereon, of such a character as to change the position or status of the [plaintiff], to his injury, detriment, or prejudice.
571 N.W. 2d 363, 369 (N.D. 1997)(quoting In Matter of Estate of Helling, 510 N.W. 2d 595, 597 (N.D. 1994)).
As per Hanson, Kramer must show on the part of Allstate three elements. The first element, conduct which amounts to a false representation or concealment of material facts, or which is calculated to convey the impression that the facts are otherwise than those the defendant subsequently attempts to assert, may be shown by the following: Kramer was untimely in her payments to Allstate on six of twelve occasions, and on each of those occasions Allstate accepted her payment and applied it to coverage back to the due date. Allstate never gave notice that it lapsed her policy, nor did it give back that part of Kramer’s premium which corresponded with the period of time in which payment was overdue. Although Allstate cites the fact that Kramer knew when her premiums were due and what would happen if she did not pay, Allstate’s acceptance of late payments without giving notice of a lapse in the policy or returning a portion of Kramer’s premium for the lapse period could communicate that it was acceptable to pay premiums late. For the second element, it may be reasonable to expect this acceptance of late payments would influence Kramer in her future timing of policy premium payments irrespective of whether Allstate followed North Dakota law and industry standards. Lastly, Allstate makes clear in its briefing of this issue it was aware of its contractual right to declare a lapse due to late payments, as it is now asserting.
Additionally, Plaintiff must show on her own part three elements. For the first element, Allstate alleges that Kramer had the knowledge and the means of knowledge of the truth that late payments create a lapse in policy coverage. However, Kramer alleges her own experience taught her that late payments were acceptable and did not result in a lapse. In this respect, she alleges, she did not know the “truth.” It may be reasonable to infer that Allstate reinforced Kramer’s belief that late payments were permissible by accepting her late payments on six prior occasions. Second, Kramer has demonstrated her reliance on Allstate’s conduct of accepting late payments by paying her premiums late -- which, after the October 10th payment, numbered seven untimely payments of thirteen premiums due. Allstate advances the theory that if Kramer had relied on its statements that the policy would lapse if payment was not received in a timely fashion, she would have paid her premium on time. However, the conduct Kramer refers to is not the written statements provided by Allstate, but rather the conduct of accepting late payments with no ramifications. Lastly, Kramer relied upon Allstate’s past conduct to her detriment: She did not pay her October 1996 premium until October 18, and Allstate refused to cover her accident of October 17, 1996.
Kramer has produced facts from which a reasonable fact finder could find either a breach of contract or a basis for equitable estoppel. Because there are genuine issues of material fact on each of those claims, this matter is one which must be tried, and is improper for summary judgment.
CONCLUSION
Based on the foregoing, this court finds there are issues of material fact that must be tried. Accordingly, Defendant’s Motion for Summary Judgment (Doc. #19) is DENIED.
Dated this ______ day of November, 2001.
______________________________________
Karen K. Klein
U.S. Magistrate Judge