Barbara Ramsey v. Penn Mutual Life Insurance Company ( 2015 )

RECOMMENDED FOR FULL-TEXT PUBLICATION
Pursuant to Sixth Circuit I.O.P. 32.1(b)
File Name: 15a0106p.06
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
_________________
BARBARA RAMSEY, ┐
Plaintiff-Appellant, │
│
│ No. 14-3869
v. │
>
│
PENN MUTUAL LIFE INSURANCE COMPANY, │
Defendant-Appellee. │
┘
Appeal from the United States District Court
for the Northern District of Ohio at Cleveland.
No. 1:12-cv-01738—William H. Baughman, Jr., Magistrate Judge.
Argued: April 29, 2015
Decided and Filed: June 1, 2015
Before: CLAY, KETHLEDGE, and DONALD, Circuit Judges.
_________________
COUNSEL
ARGUED: Joseph William Diemert, Jr., DIEMERT & ASSOCIATES CO., L.P.A., Cleveland,
Ohio, for Appellant. Jeffrey D. Fincun, WESTON HURD LLP, Cleveland, Ohio, for Appellee.
ON BRIEF: Joseph William Diemert, Jr., Daniel A. Powell, DIEMERT & ASSOCIATES CO.,
L.P.A., Cleveland, Ohio, for Appellant. Jeffrey D. Fincun, Karen A. Davey, Shawn W. Maestle,
WESTON HURD LLP, Cleveland, Ohio, for Appellee.
_________________
OPINION
_________________
BERNICE BOUIE DONALD, Circuit Judge. In this case, Defendant-Appellee
Penn Mutual Life Insurance Company (“Penn Mutual”) refused to pay death benefits to Plaintiff-
Appellant Barbara Ramsey (“Plaintiff”) upon the death of her husband, John Ramsey
1
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 2
(“Mr. Ramsey”). The district court concluded that Mr. Ramsey had failed to inform
Penn Mutual of a change in the status of his health prior to the delivery of his life-insurance
policy, thereby breaching a representation in the contract and permitting Penn Mutual to deny
payment of benefits. Ramsey v. Penn Mut. Life Ins. Co., 36 F. Supp. 3d 761, 770-71 (N.D. Ohio
2014). On that basis, the district court granted summary judgment to Penn Mutual. Id. at 773.
We REVERSE.
I.
A.
The parties have stipulated to the following facts. On February 10, 2010, Mr. Ramsey
applied for $2 million in life insurance from Penn Mutual. The application consisted of two
parts. Part I, completed and signed by Mr. Ramsey, indicated that he was a firefighter for the
City of Cleveland for sixteen years, that his wife was his primary beneficiary, and that he had
last seen his personal physician for a checkup in February 2006. Part I also contained the
following representation:
I[ ], the Proposed Insured[ ], . . . represent that the statements and answers in this
part I of the application are written as made by me[ ] and are complete and true to
the best of my [ ] knowledge and belief. I[,] the Proposed Insured[ ], . . . agree
that they will be a part of the contract of insurance if issued; that I[ ] will be
bound by such statements and answers, and that [Penn Mutual], believing them to
be true, will rely and act upon them. I[ ] also understand and agree that:
1. Subject to the provisions of the temporary insurance agreement attached to
this application, no insurance will be in force until the first premium is
paid in full and the policy is delivered while the health, habits, occupation
and other facts relating to the Proposed Insured[ ] . . . are the same as
described in this Part I of the application, any Part II required by
[Penn Mutual] and any amendments or supplements to them.
Part II of the application, entitled “Medical Examiner’s Report,” involved a medical
examination of Mr. Ramsey at his home by a licensed professional nurse. The Medical
Examiner’s Report contained a series of medical history questions. As relevant to this appeal,
question 2(e) of the application asked whether Mr. Ramsey had “ever been treated for or had any
indicator of . . . [j]aundice, intestinal bleeding, ulcer, hernia, colitis, recurrent indigestion or other
disorder of the stomach, intestines, liver or gall bladder?” Mr. Ramsey disclosed that he suffered
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 3
from chronic ulcerative colitis, providing the following explanatory details: “1984. COLITIS.
COLON – INTESTINAL RESECTION[.] HOSPITAL X 4 DAYS. FULL RECOVERY
6 MOS. IAN LAVERY . . . LAST SEEN 2006. BX DONE. NORMAL FINDINGS[.]”
Penn Mutual’s underwriting guidelines define ulcerative colitis as “[a]n inflammatory disease of
the mucosa of the large bowel,” with symptoms including “[r]ectal bleeding, diarrhea, cramping,
abdominal pain, anorexia and weight loss . . . .” Since at least 1981, Mr. Ramsey had suffered
from chronic ulcerative colitis, which “occurs in a minority of patients.” In 1984, Dr. Ian
Lavery—a colorectal surgeon at the Cleveland Clinic—surgically removed Mr. Ramsey’s colon
in order to alleviate his colitis symptoms. According to Penn Mutual’s underwriting guidelines,
that procedure—called a “resection”—“is now rarely performed as persistent or recurrent
symptoms almost invariably occur, and there is a risk of cancer developing in the rectal stump.”
As with Part I, Mr. Ramsey signed Part II of the application, which contained the
following representation:
I represent that the statements and answers in this Part II are written as made by
me and are full, complete and true to the best of my knowledge and belief. I
agree that they will be a part of the contract of insurance if issued, that I will be
bound by such statements and answers, and that Penn Mutual . . . , believing them
to be true, will rely and act upon them.
Penn Mutual then proceeded with its underwriting process. On February 19, 2010, one of
Penn Mutual’s underwriters determined that, based on Mr. Ramsey’s disclosures in
question 2(e), Penn Mutual could not immediately approve his application. With Mr. Ramsey’s
authorization, Penn Mutual obtained various medical records, including biopsy reports prepared
by Dr. Lavery in 2001 and 2004 that indicated the presence of chronic ulcerative colitis. In mid-
April 2010, based on Mr. Ramsey’s history of ulcerative colitis, Penn Mutual offered him a
$2 million policy with a “Table 2” rating, which is one of the lowest ratings Penn Mutual offers
and which entails an above-average premium.
On April 28, 2010, Dr. Lavery examined Mr. Ramsey at the Cleveland Clinic.
Dr. Lavery’s notes indicated that Mr. Ramsey suffered from ulcerative colitis “for 20+ yrs but
has had no treatment for 10-12 yrs,” and that his April 28 visit was precipitated by “frequent
bloody [bowel movements] and feel[ing] bad.” Dr. Lavery prescribed several medications in
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 4
order to ease Mr. Ramsey’s symptoms. On May 17, 2010, Mr. Ramsey visited Dr. Lavery for a
follow-up examination. Dr. Lavery’s notes indicated that Mr. Ramsey’s medications had
brought about “some improvement in his symptoms,” but that he was “still having 15+ loose
stools a day.”
On June 1, 2010, Penn Mutual drafted and Mr. Ramsey signed two amendments to his
application. The amendments changed the value of Mr. Ramsey’s term-life policy to $500,000;
added a whole-life policy of $400,000; and added a $150,000 “Benefit Increase Rider.” The
June 1 amendments also altered Mr. Ramsey’s answer to question 2(e) as follows:
Have you ever been treated for or had any indication of: Jaundice, intestinal
bleeding, ulcer, hernia, colitis, recurrent indigestion or other disorder of the
stomach, intestines, liver or gall bladder? Yes, I had a colon resection in 1984
due to colitis. My last colonoscopy was in 2004. I have not had a colon[o]scopy
since 2004 and have had no gastrointestinal problems since that time.
On June 16, 2010, Mr. Ramsey visited Dr. Roop Kaw for an examination in anticipation
of a proctectomy1 by Dr. Lavery scheduled for June 24, 2010. Dr. Kaw’s notes indicated that
“[t]he condition requiring this surgery” was “[d]iarrhea and rectal bleeding [for] 5 months,” and
Dr. Lavery testified that the surgery was not exploratory and was intended only to relieve
Mr. Ramsey’s colitis symptoms. However, during the surgery on June 24, 2010, Dr. Lavery
discovered peritoneal seeding in Mr. Ramsey’s pelvis, which Dr. Lavery determined was “a
carcinoma that had probably come from the rectum.” Dr. Lavery aborted the proctectomy
procedure after determining “that to proceed was inappropriate as [Mr. Ramsey] would need
chemoradiotherapy for the rectal tumor.”
Mr. Ramsey was diagnosed with stage IV metastatic rectal cancer, which his doctors
determined was incurable. He died on September 20, 2011, due to complications from that
cancer.
1
A proctectomy is a procedure to remove the rectum.
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 5
Plaintiff submitted an application for death benefits to Penn Mutual on September 21,
2011.2 On February 27, 2012, Penn Mutual denied Plaintiff’s application for benefits.
Specifically, Penn Mutual stated:
Mr. Ramsey knew of his treatments between the time of application and the
delivery of the policies, and knew that they rendered untrue the statement in the
application that he “had no gastrointestinal problems since (2004).” The records
from Dr. Lavery, of the Cleveland Clinic, indicated that Mr. Ramsey was clearly
having gastrointestinal problems between the time of application and the delivery
of the policies.
Because Mr. Ramsey’s health was not the same at delivery as described in the
application signed on February 10, 2010, or the application amendment signed on
June 1, 2010, the condition precedent requiring it to be the same prevents
insurance from being in force under the policies. Also, based on the
misrepresentations in the application, which Mr. Ramsey had a continuing
obligation to correct, and the misrepresentations in the application amendment,
Penn Mutual rescinds the policies pursuant to Ohio Rev[.] Code Section 3911.06
by returning premiums.
Penn Mutual returned $14,761.45 in premiums to Plaintiff.
B.
On June 6, 2012, Plaintiff filed suit against Penn Mutual in the Court of Common Pleas
for Cuyahoga County, Ohio. The complaint alleged breach of contract and sought compensatory
and punitive damages. Penn Mutual removed the action to the United States District Court for
the Northern District of Ohio. Pursuant to 28 U.S.C. § 636(c)(1), the parties consented to having
their case adjudicated by a magistrate judge.
On May 3, 2013, the parties filed cross-motions for summary judgment. The district
court heard oral arguments on the motions on July 15, 2013. On August 7, 2014, the district
court granted Penn Mutual’s motion for summary judgment and denied Plaintiff’s motion for
summary judgment. Ramsey, 36 F. Supp. 3d at 773. The court entered judgment that same day,
declaring “that plaintiff Ramsey take nothing and that the action be dismissed on the merits.”
Plaintiff timely appealed.
2
The parties do not dispute that Mr. Ramsey was current on his premium payments to Penn Mutual up
through the time of his death.
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 6
II.
We review a district court order granting summary judgment de novo. Rose v. State
Farm Fire & Cas. Co., 766 F.3d 532, 535 (6th Cir. 2014). Summary judgment is appropriate “if
the movant shows that there is no genuine dispute as to any material fact and the movant is
entitled to judgment as a matter of law.” Fed. R. Civ. P. 56(a). A court reviewing a summary
judgment motion must construe all reasonable inferences in favor of the nonmoving party.
Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986). The central issues
are “whether the evidence—viewed in the light most favorable to the nonmoving party—presents
a sufficient disagreement to require submission to the fact-finder, or whether the evidence is so
one-sided that the moving party must prevail as a matter of law.” Martin Cnty. Coal Corp. v.
Universal Underwriters Ins. Co., 727 F.3d 589, 593 (6th Cir. 2013).
III.
We must first address Penn Mutual’s argument that we lack jurisdiction. Metro
Hydroelec. Co. v. Metro Parks, 541 F.3d 605, 610 (6th Cir. 2008). We then proceed to the
merits of the appeal.
A.
As an initial matter, Penn Mutual challenges Plaintiff’s notice of appeal as defective. The
notice referenced only the magistrate judge’s order granting summary judgment to Penn Mutual,
but failed to mention the court’s accompanying judgment—entered the very same day—
disposing of the case. According to Penn Mutual, this failure deprives us of jurisdiction because
Federal Rule of Appellate Procedure 3(c)(1)(B) requires that a notice of appeal “designate the
judgment, order, or part thereof being appealed.” We disagree.
It is true that we have held that Rule 3(c)(1)(B)’s requirements are “mandatory and [ ]
jurisdictional,” requiring “strict obedience” even in the face of “harsh results.” United States v.
Glover, 242 F.3d 333, 335 (6th Cir. 2001). But “[a] mistake in designating the judgment
appealed from is not always fatal, so long as the intent to appeal from a specific ruling can fairly
be inferred by probing the notice and the other party was not misled or prejudiced.” Sanabria v.
United States, 437 U.S. 54, 67 n.21 (1978); see also Caudill v. Hollan, 431 F.3d 900, 907
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 7
(6th Cir. 2005) (noting that Rule 3(c)(1)’s requirements “should be liberally construed and
applied”). Penn Mutual has not noted any serious confusion as to which ruling of the district
court Plaintiff intended to appeal. That is because it is obvious: her notice of appeal specifically
references an order that entered summary judgment in Penn Mutual’s favor. See Caudill,
431 F.3d at 905 (“An appeal referencing an order that directs entry of judgment in a case is a
sufficient equivalent to appealing the judgment itself, even though the judgment is entered as a
separate document.”). Nor has Penn Mutual identified any prejudice that would result from our
consideration of this appeal, which both parties have briefed and argued fully. Because the
imperfection in Plaintiff’s notice of appeal leaves “no genuine doubt . . . about who is appealing,
from what judgment, [and] to which appellate court,” Becker v. Montgomery, 532 U.S. 757, 767
(2001), we have jurisdiction to consider her appeal.
B.
As for the merits of Plaintiff’s appeal, Penn Mutual argues that Mr. Ramsey’s failure to
disclose his rectal bleeding and doctor visits in 2010 renders his “representation or warranty”3
that he had suffered no gastrointestinal problems since 2004 false, and in turn operates as a
complete defense to liability under the terms of the policy. Construing all reasonable inferences
in Plaintiff’s favor, we disagree.
As an initial matter, the district court’s reasoning—finding that Mr. Ramsey’s failure to
mention his April and May 2010 doctor visits was inconsistent with his representation that he
was “last seen” by Dr. Lavery in 2006—was erroneous. Ramsey, 36 F. Supp. 3d at 771. The
district court held that Mr. Ramsey’s “February 10, 2010, statement that he had last seen
Dr. Lavery in 2006 . . . ceased to be accurate as of April 28, 2010, when [Mr.] Ramsey was seen
by Dr. Lavery, and when he again saw Dr. Lavery on May 17, 2010.” Id. The district court’s
analysis proceeded as follows:
3
Penn Mutual does not distinguish between representations or warranties, but the two are not
interchangeable. A breach of warranty renders a policy void ab initio, while a misrepresentation merely renders a
policy voidable. Allstate Ins. Co. v. Boggs, 271 N.E.2d 855, 858 (Ohio 1971). Ohio courts disfavor warranties and
will not interpret contract language as such unless the language, “construed strictly against the insurer, requires such
an interpretation.” Id. Mr. Ramsey’s policy unequivocally provides that “[a]ll statements made in the application
for this policy are representations and not warranties.” Accordingly, Mr. Ramsey’s allegedly false answer to
question 2(e) is a representation and not a warranty.
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 8
While [Mr.] Ramsey argues that his condition was a chronic condition,
with regularly occurring symptoms, such that the 2010 visits to Dr. Lavery were
“nothing new,” the record is clear that [Mr.] Ramsey had represented to
Penn Mutual in February 2010 that however frequently his symptoms occurred, or
however severe those symptoms were, the symptoms had not been severe enough
for him to contact Dr. Lavery for approximately four years. The fact that within
the span of less than a month of making that representation [Mr.] Ramsey twice
sought treatment from Dr. Lavery for the first time in four years is manifestly
something new, and something [Mr.] Ramsey was obligated to report to
Penn Mutual.
Id. (footnote omitted).
This analysis is problematic for two reasons. First, Mr. Ramsey amended his original
answer to question 2(e), dated February 10, 2010, which contained the statement that he had “last
seen” Dr. Lavery in 2006. In his June 1, 2010, amendment, Mr. Ramsey changed his answer to
reflect that he had not had a colonoscopy since 2004. The June 1 amendment, which “[became]
a part of the representation contained in [Mr. Ramsey’s] application and [became] subject to the
agreements contained therein,” took the place of the February 10 answer.4 See Amend, Black’s
Law Dictionary (10th ed. 2014) (“[T]o formally alter . . . by striking out, inserting, or
substituting words.” (emphasis added)). In that sense, the district court’s focus on the “last seen”
language in the February 10 answer to question 2(e) misses the mark.
Second, even assuming, as the district court did, that the February 10 answer remains
relevant, the district court’s analysis fails to construe all reasonable inferences in Plaintiff’s
favor—as the district court must on summary judgment. For example, the district court inferred
from the “last seen [in] 2006” answer that Mr. Ramsey’s “symptoms had not been severe enough
for him to contact Dr. Lavery for approximately four years.” Ramsey, 36 F. Supp. 3d at 771.
That is not necessarily true; as his medical records indicate, Mr. Ramsey visited the doctor
regarding his colitis once every few years—in 1996, in 2001, in 2004, and in 2010. Moreover, as
Mr. Ramsey’s family indicated in affidavits, he “consistently and regularly experienced” colitis
symptoms, “rarely discussed the specifics of his symptoms,” “was not a ‘complainer[,]’ and had
an abnormally high tolerance for pain/discomfort.” Therefore, it is fair to infer—and a jury
could reasonably conclude—that Mr. Ramsey’s “last seen [in] 2006” answer and subsequent
4
While the amendment indicates that “[t]he signed original is to remain attached to the policy,” it does not
suggest that the original answer to question 2(e)—altered by the amendment—retains its binding effect.
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 9
doctor visits in 2010 connote nothing as to the ongoing severity or non-severity of his colitis
symptoms.
It is also fair to infer that Mr. Ramsey’s June 1, 2010, statement that he had suffered no
gastrointestinal problems since his last colonoscopy in 2004 was not a misrepresentation as to the
state of his health. Penn Mutual knew that Mr. Ramsey suffered from chronic ulcerative colitis,
which its own underwriting guidelines define as a disease “characterized by attacks of bloody
diarrhea punctuated by periods of remission.” Because Mr. Ramsey was up front with
Penn Mutual about this condition, there is at least a genuine issue of material fact as to whether
his rectal bleeding in 2010 was simply par for the course, or was, as the district court stated,
“manifestly something new.” Id.; see also Glatt v. Union Cent. Life Ins. Co., No. 92 CIV. 1227.,
1994 WL 329985, at *6-7 (S.D.N.Y. July 11, 1994) (denying summary judgment where there
were “questions of fact as to whether [the decedent’s chest] pains radiated from his chronic
shoulder condition, a condition disclosed on the Application, or rather, from heart or pulmonary
problems”). Indeed, there is no evidence in the record that either Mr. Ramsey or his doctors
knew that he had cancer prior to the delivery of his policy. To the contrary, Dr. Lavery testified
that rectal cancer “causes exactly the same symptoms that colitis does.”
Further, Penn Mutual knew about—and accounted for—this risk. Again, its underwriting
guidelines note that Mr. Ramsey’s colon resection procedure “is now rarely performed as
persistent or recurrent symptoms almost invariably occur, and there is a risk of cancer
developing in the rectal stump.” Penn Mutual was aware not only of Mr. Ramsey’s chronic
condition and all of its attendant symptoms, but also of a prior surgical procedure that increased
his risk of cancer. It accordingly charged him a higher premium and rated him at one of the
lowest ratings offered by the company. Taken in the light most favorable to Plaintiff, all of this
evidence adds up to a genuine dispute as to whether the state of Mr. Ramsey’s health at the time
of the delivery of his policy was the same as described in his application.
Moreover, even if we found no genuine dispute that Mr. Ramsey’s answer to
question 2(e) was a false representation regarding the state of his health, Ohio law dictates that
while such a misrepresentation renders the policy voidable at the insurer’s option, it “may not be
used to avoid liability arising under the policy after such liability has been incurred.” James v.
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 10
Safeco Ins. Co. of Ill., 959 N.E.2d 599, 602 (Ohio Ct. App. 2011) (quoting Boggs, 271 N.E.2d at
857) (internal quotation marks omitted). Penn Mutual incurred liability to pay death benefits
under the policy prior to cancelling it based on Mr. Ramsey’s alleged misrepresentations. As
such, Penn Mutual cannot now rely on said misrepresentations as a defense to liability.
Finally, for the reasons stated above, Penn Mutual’s argument that Mr. Ramsey’s policy
is voidable under Ohio Rev. Code § 3911.06 based on his allegedly false answer to question 2(e)
also fails. That section provides:
No answer to any interrogatory made by an applicant in his application for a
policy shall bar the right to recover upon any policy issued thereon, or be used in
evidence at any trial to recover upon such policy, unless it is clearly proved that
such answer is willfully false, that it was fraudulently made, that it is material,
and that it induced the company to issue the policy, that but for such answer the
policy would not have been issued, and that the agent or company had no
knowledge of the falsity or fraud of such answer.
Ohio Rev. Code § 3911.06. Under § 3911.06, an insurer may use an answer to an application
question as a bar to recovery if it can clearly prove that: “(1) the applicant willfully gave a false
answer[,] (2) such answer was made fraudulently[,] (3) but for such answer the policy would not
have been issued[,] and (4) neither the insurer nor its agent had any knowledge of the falsity of
such answer.” Jenkins v. Metro. Life Ins. Co., 173 N.E.2d 122, 125 (Ohio 1961). The statute
requires an insurer to show only “that the applicant knowingly provided a false answer,” not
necessarily fraudulent intent. Johnson v. Conn. Gen. Life Ins. Co., 324 F. App’x 459, 467
(6th Cir. 2009). But § 3911.06 is not appropriate as a defense where, as here, there is “evidence
that the insured made an honest mistake.” Id. As noted above, a jury could reasonably conclude
on this record that Ramsey honestly believed that he had fully disclosed his medical conditions.
For these reasons, summary judgment for Penn Mutual based on Mr. Ramsey’s answer to
question 2(e) was inappropriate.
C.
Penn Mutual asserts numerous alternative grounds in support of the district court’s grant
of summary judgment. First, Penn Mutual argues that Mr. Ramsey’s life-insurance policy never
came into force because the “same [health] as described” provision was a condition precedent to
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 11
the formation of the contract, as made plain by the language indicating that “no insurance will be
in force” otherwise. As we have already noted, there is a genuine issue of material fact as to
whether Mr. Ramsey’s health remained the same as described in the application. However, even
if we held otherwise, the district court properly rejected Penn Mutual’s argument that the
policy’s “same [health] as described” provision was a condition precedent. See Ramsey,
36 F. Supp. 3d at 768.
Ohio law “disfavors conditions precedent.” Evans, Mechwart, Hambleton & Tilton, Inc.
v. Triad Architects, Ltd., 965 N.E.2d 1007, 1013 (Ohio Ct. App. 2011). “Consequently, absent
an explicit intent to establish a condition precedent, courts will not interpret a contractual
provision in that manner . . . .” Id. at 1014. Ohio law defines a condition precedent as “one that
is to be performed before the agreement becomes effective. It calls for the happening of some
event, or the performance of some act, . . . before the contract shall be binding on the parties.”
Mumaw v. W. & S. Life Ins. Co., 119 N.E. 132, 135 (Ohio 1917); see also Ohio Nat’l Life
Assurance Corp. v. Satterfield, 956 N.E.2d 866, 870 (Ohio Ct. App. 2011) (“A condition
precedent is an act or event, other than a lapse of time, which must exist or occur before a duty of
immediate performance of a promise arises.” (internal quotation marks omitted)). Provisions
that merely require that a “state of facts . . . remain[ ] true” are not conditions precedent.
Satterfield, 956 N.E.2d at 871. Ohio courts have interpreted language virtually identical to the
relevant language in this case and have determined that “no material change” clauses are not
conditions precedent.5 See, e.g., id. Hence, a change in Mr. Ramsey’s health as described in the
application prior to delivery of the policy would render his contract voidable, not void ab initio.
Id. at 873.
Nevertheless, Penn Mutual asserts that two decisions—Abella v. Jackson National Life
Insurance Co., No. 97-3498, 1998 WL 708706 (6th Cir. Oct. 1, 1998) (unpublished), and
Langley v. Federal Kemper Life Assurance Co., No. 01AP-129, 2001 WL 1143019 (Ohio Ct.
App. Sept. 28, 2001) (unpublished)—require the conclusion that this provision was a condition
precedent and that the alleged change in Mr. Ramsey’s health vitiated the contract. The district
5
This Court—sitting in diversity—must apply Ohio law. See Erie R.R. Co. v. Tompkins, 304 U.S. 64, 79
(1938); Kurczi v. Eli Lilly & Co., 113 F.3d 1426, 1429 (6th Cir. 1997).
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 12
court relied on these cases in granting summary judgment to Penn Mutual. Ramsey,
36 F. Supp. 3d at 769. But neither case squarely applies here.
In Abella, the relevant insurance policy contained a provision stating, “I understand that
if my health or any of my answers or statements change prior to delivery of the policy, I must so
inform the Company in writing.” 1998 WL 708706, at *1. Assuming without deciding that this
provision was a condition precedent, see id. at *4-5 & n.3, we held that the insured—who had
experienced chest pains prior to the delivery of his policy—had breached the condition. Id. at
*5. By contrast, there is no provision in Mr. Ramsey’s policy setting forth an affirmative duty to
inform Penn Mutual of any changes in his health. See id. (noting that courts should not read into
the language of a policy a clause that is not present in the policy as written). Accordingly, Abella
does not dictate summary judgment in Penn Mutual’s favor.
Similarly, in Langley, the relevant policy contained an affirmative “promise to tell the
Company of any change in the health or habits of the Proposed Insured that occurs after
completing this application.” 2001 WL 1143019, at *3. Based on this provision, the court held
that the company could deny death benefits where the decedent failed to disclose that he had
been coughing up blood “between his application for life insurance and the date the life
insurance was to take effect.” Id. at *4. Again, no such affirmative duty appears in
Mr. Ramsey’s policy. Furthermore, to the extent Langley considered language requiring “the
health and habits of the Proposed Insured [to] remain as stated in [the] application” to be a
condition precedent, see id., the district court should not have relied on it. See Kurczi, 113 F.3d
at 1429 (noting that federal courts should not apply decisions of intermediate state courts that
incorrectly reflect state law). As the Ohio Supreme Court held in Mumaw, such a provision is
not a condition precedent. 119 N.E. at 135-36.
For the foregoing reasons, we reject Penn Mutual’s argument that Mr. Ramsey breached
a condition precedent to the formation of the contract.
D.
Finally, Penn Mutual argues that Mr. Ramsey breached his common-law duty of good
faith to disclose a material deterioration in his health prior to the delivery of his policy.
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 13
Penn Mutual relies on the Supreme Court’s statements in Stipcich v. Metropolitan Life Insurance
Co., 277 U.S. 311 (1928). There, the Court stated that “[i]nsurance policies are traditionally
contracts uberrimae fidei and a failure by the insured to disclose conditions affecting the risk, of
which he is aware, makes the contract voidable at the insurer’s option.” Id. at 316; see also id. at
317 (“If, while the company deliberates, [the insured] discovers facts which make portions of his
application no longer true, the most elementary spirit of fair dealing would seem to require him
to make a full disclosure.” (footnote omitted)). However, as we have already held, there is a
genuine dispute regarding whether Mr. Ramsey’s health as described in the application changed
prior to the policy’s delivery. Moreover, even if Mr. Ramsey breached his duty of good faith by
misrepresenting the status of his health, Ohio law does not allow Penn Mutual to void the policy
on that basis after incurring liability under its terms. James, 959 N.E.2d at 602.
In sum, summary judgment was inappropriate because there is a genuine dispute as to
whether Mr. Ramsey misrepresented the state of his health by failing to disclose his rectal
bleeding and doctor visits in 2010, and because the policy would be only voidable on that basis,
not void.
IV.
The parties also dispute the propriety of the district court’s denial of Plaintiff’s cross-
motion for summary judgment. Specifically, Penn Mutual argues that there is a genuine dispute
as to whether Penn Mutual delivered Mr. Ramsey’s policy after his cancer diagnosis—i.e., after
the June 1, 2010, date that appears on the amendments. The district court did not address this
argument, and it only denied Plaintiff’s motion for summary judgment as a matter of course after
concluding that summary judgment for Penn Mutual was appropriate. See Ramsey,
36 F. Supp. 3d at 773 (“Having concluded as a matter of law that Penn Mutual properly denied
coverage for death benefits under the policies, I also conclude as a matter of law that
Penn Mutual did not act in bad faith by doing so.” (footnote omitted)). The case is remanded to
allow the district court to consider in the first instance the parties’ arguments related to Plaintiff’s
cross-motion for summary judgment.
No. 14-3869 Ramsey v. Penn Mutual Life Ins. Page 14
V.
For the reasons stated above, we REVERSE the district court’s grant of summary
judgment to Penn Mutual and REMAND the case for further proceedings consistent with this
opinion.