Gold v. Rowland ( 2017 )

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RONALD GOLD, INDIVIDUALLY AND ON BEHALF
OF ALL OTHERS SIMILARLY SITUATED v.
JOHN ROWLAND ET AL.
(SC 19585)
Palmer, Eveleigh, McDonald, Espinosa and Robinson, Js.*
Argued October 17, 2016—officially released April 11, 2017
E.J. Robbin Greenspan, with whom were Matthew T.
Wax-Krell and Andrew W. Krevolin, for the appellants
(named plaintiff et al.).
Adam K. Levin, pro hac vice, with whom were Pat-
rick M. Fahey and Craig A. Hoover, pro hac vice, and,
on the brief, Charles L. Howard and Peter R. Bisio,
pro hac vice, for the appellees (defendant Anthem, Inc.,
et al.).
Opinion
PALMER, J. This certified class action, which arises
from a dispute over the proceeds of the 2001 demutuali-
zation of the defendant Anthem Insurance Companies,
Inc. (Anthem Insurance), comes before this court for
the second time. The plaintiffs are a class of state
employees and retirees who, at the time of the demutu-
alization, were enrolled in an Anthem Insurance group
health care insurance plan. They contend that their
participation in that plan entitled them to membership
in Anthem Insurance and a share of the demutualization
proceeds, and that Anthem Insurance and the other
insurance company defendants; see part I E of this
opinion; breached their contractual obligations by not
paying the plaintiffs for their membership interests and
instead distributing their share of the proceeds to the
defendant state of Connecticut. The first time we con-
sidered this case, we concluded that all of the plaintiffs’
claims against the named defendant, John Rowland, the
former governor of Connecticut, and the state were
barred by the doctrine of sovereign immunity or other-
wise should have been dismissed. See Gold v. Rowland,
296 Conn. 186, 205, 209–11, 994 A.2d 106 (2010). Follow-
ing our decision and a subsequent trial to the court
of the plaintiffs’ breach of contract claims against the
remaining defendants, the trial court, Bright, J., ren-
dered judgment for those defendants. On appeal, the
plaintiffs contend that the trial court incorrectly con-
cluded that the relevant contract provisions were
ambiguous and improperly consulted extrinsic evi-
dence to determine their meaning. Finding no error, we
affirm the trial court’s judgment.1
I
FACTUAL AND PROCEDURAL HISTORY
Familiarity with the complete factual record, as
detailed in the trial court’s memorandum of decision,
is presumed. The relevant facts, as found by the trial
court or stipulated to by the parties, and procedural
history may be briefly summarized as follows.
A
Merger of Anthem Insurance and Blue Cross
and Blue Shield of Connecticut, Inc.
The dispute between the parties arises from three
principal transactions and two group health care insur-
ance policies. The first occurred on July 31, 1997, when
Anthem Insurance, a mutual insurance company orga-
nized under Indiana law, merged with Blue Cross and
Blue Shield of Connecticut, Inc. (Blue Cross), a mutual
insurance company organized under Connecticut law.
The merger was executed pursuant to a November, 1996
agreement to merge, which included as attachments a
plan and joint agreement of merger, a proposed form
of Anthem Insurance’s third amended and restated arti-
cles of incorporation (1997 articles), and a form group
guaranty health care insurance policy and certificate
of membership (guaranty policy).2 Under the plan and
joint agreement of merger, Anthem Insurance was des-
ignated as the company that would survive the merger.
Three months prior to the merger, in April, 1997, the
directors and members of Anthem Insurance formally
adopted the 1997 articles. Following the merger,
Anthem Insurance, through its subsidiary, the defen-
dant Anthem East, Inc., continued the former Blue
Cross operations under the auspices of the defendant
Anthem Health Plans, Inc., doing business as Anthem
Blue Cross and Blue Shield of Connecticut (New CT-
Blue).
Prior to their merger, the two mutual insurance com-
panies took different approaches to membership. Under
Anthem Insurance’s premerger membership rules, each
employee or individual holder of a certificate of cover-
age under a fully insured group health care insurance
policy was an individual member and owner of Anthem
Insurance. The employer, membership organization, or
other group that procured the group coverage was not
an owner member.
Under Blue Cross’ premerger bylaws, by contrast,
the employers were the owner members. Each
employer was considered one policyholder and would
designate a representative to act on behalf of the group
for voting purposes. Individual employees who had
been issued insurance certificates were not considered
to be voting members with equity rights.
B
Relevant Health Care Insurance Policies
Before the merger, the state held two Blue Cross
group health care insurance policies relevant to the
present dispute.3 The first, known as Care Plus, pro-
vided Medicare supplement group health care insurance
for retired state employees and their dependents. The
state closed enrollment in Care Plus to new members
in 1994 but permitted enrolled members to retain their
coverage. The Office of the Comptroller was designated
as the voting member for that policy. In connection
with the merger, New CT-Blue delivered a guaranty
policy for Care Plus to the Office of the Comptroller.
The second plan originated as a Blue Cross health
care insurance policy that was offered to state employ-
ees and non-Care Plus state retirees prior to 1993. In
1993, the state converted this policy to a self-funded,
administrative services only contract with Blue Cross
(ASO agreement). It is undisputed that the ASO agree-
ment, as administered by Blue Cross after 1993, was
not an insurance policy. Both Care Plus and the ASO
agreement were active in 1997 when Anthem Insurance
and Blue Cross merged, and they remained in effect
through the first half of 1999.
On June 30, 1999, the state terminated the self-funded
ASO agreement and instead entered into a new, fully
insured group health care insurance policy from New
CT-Blue (1999 group policy). Under the 1999 group pol-
icy, New CT-Blue began providing health care insurance
benefits to substantially the same group of state employ-
ees and retirees who had been covered under the
ASO agreement.
The following year, in July, 2000, the state also termi-
nated the Care Plus plan. At that time, Care Plus covered
512 state retirees. Those retirees were given the option
of enrolling in the 1999 group policy or in any of the
other health care insurance plans available to state retir-
ees. Unless they opted out, Care Plus members were,
by default, enrolled in the 1999 group policy without a
lapse in coverage. Approximately 456 of the 512 former
Care Plus retirees ultimately were enrolled in the 1999
group policy without any lapse in coverage.
C
Demutualization of Anthem Insurance
The second key transaction that gave rise to the pres-
ent dispute occurred on June 18, 2001, when Anthem
Insurance’s board of directors approved a plan to con-
vert from a mutual insurance company to a stock corpo-
ration under Indiana law.4 Under the plan of conversion,
upon the effective date of the demutualization, all of
the outstanding capital stock of Anthem Insurance
would be issued to the defendant Anthem, Inc., and
eligible members of Anthem Insurance would become
entitled to receive stock in Anthem, Inc., or cash, in
exchange for the extinguishment of their membership
interests in Anthem Insurance. The plan of conversion
defined an eligible member as ‘‘a [p]erson who (a) is
a [s]tatutory [m]ember of Anthem Insurance on the
[a]doption [d]ate [June 18, 2001] and continues to be
a [s]tatutory [m]ember of Anthem Insurance on the
[e]ffective [d]ate [November 2, 2001], and (b) has had
continuous health care benefits coverage with the same
company during the period between those two dates
under any [p]olicy or [p]olicies without a break of more
than one day.’’ During the relevant period from June
18 through November 2, 2001 (eligibility period), the
plaintiffs continuously held certificates of coverage
under the 1999 group policy.
D
Stock Distribution
The third relevant transaction occurred between late
2001 and early 2002, when Anthem Insurance distrib-
uted more than 1.6 million shares of stock in Anthem,
Inc., to the state, on the basis of its determination that
the state—and not the individual state employees and
retirees—was the eligible member under the 1999 group
policy. Thereafter, the state sold the stock for
$93,768,950, transferred the proceeds to the general
fund; see Public Acts, Spec. Sess., May, 2002, No. 02-
1, § 39; and spent them. Gold v. Rowland, supra, 296
Conn. 193–94. Anthem Insurance made no distribution
to the individual state employees and retirees under
the 1999 group policy.
At the time of the demutualization, the state received
notice thereof and was given the option to receive its
share of the proceeds in stock or cash. There is no
evidence that individual enrollees in the 1999 group
policy received notice of the demutualization. However,
public hearings concerning the demutualization were
held before the Indiana Department of Insurance.
E
Procedural History
In January, 2002, the named plaintiff, Ronald Gold,
a state employee, brought this action on his own behalf
and on behalf of all others similarly situated, against
the defendants, former Governor Rowland, the state,
Anthem, Inc., New CT-Blue, Anthem East, Inc., and
Anthem Insurance.5 Gold initially filed a two count inter-
pleader action alleging that, pursuant to the plan of
conversion, he and other similarly situated state
employees enrolled in the 1999 group policy were enti-
tled to receive the 1.6 million shares of Anthem, Inc.,
stock that the insurance company defendants had
issued to the state. In a second amended complaint,
Gold claimed a right to the funds under various theories
sounding in unjust enrichment, constructive trust,
resulting trust, conversion of property, breach of duty,
and unconstitutional takings and procedural due pro-
cess violations.
Thereafter, former Governor Rowland and the state
filed a motion to dismiss Gold’s claims against them,
arguing, among other things, that the claims were
barred by the doctrine of sovereign immunity. The trial
court, Sheldon, J., concluded that Gold’s common-law
claims were barred by sovereign immunity and dis-
missed those claims. However, the court denied the
motion to dismiss Gold’s interpleader and state consti-
tutional takings claims. On appeal, this court concluded
that all of Gold’s claims against former Governor Row-
land and the state should have been dismissed. See
id., 223.
Following the return of the case to the Superior
Court, Gold filed the operative fourth amended com-
plaint,6 and Lois O’Connor, a former state employee
who retired in 1997, was added as a plaintiff. In 2011,
the case was assigned to the court, Bright, J. Class
certification was granted to the group of state employ-
ees and retirees who continuously held a certificate
of coverage under the 1999 group policy or who had
continuous health care insurance coverage under that
policy during the eligibility period but did not receive
compensation as a result of the demutualization.
In 2013, the plaintiffs and the insurance company
defendants filed separate motions for summary judg-
ment, each side claiming that the contract documents
that governed the demutualization process and Anthem
Insurance’s relationship with the state and state
employees required that judgment as a matter of law be
rendered in their favor. The court denied the motions,
concluding that the contract language regarding the
distribution of demutualization proceeds was ambigu-
ous7 and, therefore, that it was necessary to consult
extrinsic evidence of the parties’ intent, and that there
were genuine issues of material fact that needed to be
resolved at trial.
The court bifurcated the proceedings, and the case
proceeded to trial before the court solely on the issue
of liability. The court heard testimony from a number
of attorneys and other witnesses who were involved
with the transactions at issue. Following the trial, the
court issued a thoughtful and comprehensive memoran-
dum of decision in which it concluded that (1) the
various merger documents were all part and parcel
of the same transaction, (2) when construed together,
those documents are ambiguous with respect to the
plaintiffs’ entitlement to membership in Anthem Insur-
ance and a share of the demutualization proceeds, and
(3) the extrinsic evidence conclusively supported the
insurance company defendants’ interpretation of the
merger documents, pursuant to which the state, rather
than the plaintiffs, was the member entitled to the
group’s share of the demutualization proceeds. Consis-
tent with these conclusions, the trial court rendered
judgment in favor of the insurance company defen-
dants.
The plaintiffs timely appealed to the Appellate Court,
and we transferred the appeal to this court pursuant
to General Statutes § 51-199 (c) and Practice Book § 65-
1. On appeal, the plaintiffs contend that the 1997 articles
unambiguously entitled them to the demutualization
proceeds arising from the 1999 group policy and that
the trial court improperly considered extrinsic evidence
of the meaning of the relevant contract provisions. Con-
sistent with this contention, they further claim that they
are entitled to judgment as a matter of law. Additional
facts will be set forth as necessary.
II
LEGAL ANALYSIS
We begin our analysis of the plaintiffs’ claim by set-
ting forth the standard of review and governing legal
principles. ‘‘When the language of a contract is ambigu-
ous, the determination of the parties’ intent is a question
of fact . . . . [When] there is definitive contract lan-
guage, [however] the determination of what the parties
intended by their contractual commitments is a ques-
tion of law. . . . It is implicit in this rule that the deter-
mination as to whether contractual language is plain
and unambiguous is itself a question of law subject to
plenary review.’’8 (Citations omitted; internal quotation
marks omitted.) Cruz v. Visual Perceptions, LLC, 311
Conn. 93, 101–102, 84 A.3d 828 (2014).
Because the parties have agreed that Indiana law
governs the 1997 articles and other documents at issue
in this case, we apply the law of that state. See, e.g.,
Hottle v. BDO Seidman, LLP, 268 Conn. 694, 706, 846
A.2d 862 (2004). Under Indiana law, ‘‘[t]he ultimate goal
of any contract interpretation is to determine the intent
of the parties at the time that they made the agreement.
. . . [Indiana courts] begin with the plain language of
the contract, reading it in context and, whenever possi-
ble, construing it so as to render each word, phrase,
and term meaningful, unambiguous, and harmonious
with the whole.’’ (Citation omitted.) CitiMortgage, Inc.
v. Barabas, 975 N.E.2d 805, 813 (Ind. 2012). ‘‘Unless
the terms of a contract are ambiguous, they will be
given their plain and ordinary meaning.’’ Centennial
Mortgage, Inc. v. Blumenfeld, 745 N.E.2d 268, 273–74
(Ind. App. 2001).
‘‘A contract is ambiguous if a reasonable person
would find the contract subject to more than one inter-
pretation.’’ (Internal quotation marks omitted.) Citi-
Mortgage, Inc. v. Barabas, supra, 975 N.E.2d 813. ‘‘The
terms of a contract are not ambiguous merely because
controversy exists between the parties concerning the
proper interpretation of terms.’’ Centennial Mortgage,
Inc. v. Blumenfeld, supra, 745 N.E.2d 274.
‘‘If [a court] find[s] ambiguous terms or provisions
in the contract, [it] will construe them to determine
and give effect to the intent of the parties at the time
they entered into the contract.’’ (Internal quotation
marks omitted.) CitiMortgage, Inc. v. Barabas, supra,
975 N.E.2d 813. ‘‘If . . . any terms of a [contract] are
ambiguous, then the parties may introduce extrinsic
evidence of its meaning, and interpretation of that term
becomes a question of fact . . . .’’9 Beradi v. Hardware
Wholesalers, Inc., 625 N.E.2d 1259, 1261 (Ind. App.
1993). In such case, the finder of fact may consider any
relevant extrinsic evidence of the parties’ intent. See
University of Southern Indiana Foundation v. Baker,
843 N.E.2d 528, 535 (Ind. 2006). This includes the cir-
cumstances surrounding the drafting of the agreement;
see Grant v. North River Ins. Co., 453 F. Supp. 1361,
1366 (N.D. Ind. 1978); statements made between the
parties; see Washburn-Crosby Milling Co. v. Brown,
56 Ind. App. 104, 109, 104 N.E. 997 (1914); testimony
or affidavits from attorneys who drafted the agreement;
see University of Southern Indiana Foundation v.
Baker, supra, 535; the conduct of the parties to the
contract after it was formed; see Peterson v. First State
Bank, 737 N.E.2d 1226, 1229–30 (Ind. App. 2000); Pierce
v. Yochum, 164 Ind. App. 443, 451, 330 N.E.2d 102 (1975);
and subsequently prepared documents that reflect the
parties’ course of performance. See Tender Loving Care
Management, Inc. v. Sherls, 14 N.E.3d 67, 72–73 (Ind.
App. 2014).
In the event that review of extrinsic evidence of the
parties’ intent fails to resolve a contractual ambiguity,
Indiana courts then apply the doctrine of contra profer-
entem, pursuant to which such ambiguities are con-
strued against the drafter. See Indiana-Kentucky Elec-
tric Corp. v. Green, 476 N.E.2d 141, 146 (Ind. App. 1985).
This doctrine is used only as a tie breaker, however,
after all other rules of construction have been applied
and all indicia of the parties’ intent have been
exhausted. See id.; see also Bradley v. Western & South-
ern Financial Group, Docket No. 2:05 CV 39, 2005 WL
2709282, *7 (N.D. Ind. October 20, 2005) (‘‘the applica-
tion of contra proferentem is premature in situations
[in which] there has not yet been any attempt to resolve
the ambiguity through the ordinary interpretive
guides—namely, a consideration of the extrinsic evi-
dence’’ [internal quotation marks omitted]); Bradley v.
Western & Southern Financial Group, supra, *7
(explaining that, if doctrine of contra proferentem were
applied at outset upon finding of ambiguity, then rule
allowing for consideration of extrinsic evidence to inter-
pret ambiguous contracts would be meaningless).
It also is black letter law that ‘‘a contract is considered
as a whole so as to give effect to all its provisions
without narrowly concentrating [on] some clause or
language taken out of context.’’ Keystone Square Shop-
ping Center Co. v. Marsh Supermarkets, Inc., 459
N.E.2d 420, 422 (Ind. App. 1984). In addition, documents
that are part of the ‘‘same transaction or subject matter
will be construed together in determining the intent
underlying the contracts.’’ Noble Roman’s, Inc. v. Ward,
760 N.E.2d 1132, 1138 (Ind. App. 2002); see also State
ex rel. Keith v. Common Council, 138 Ind. 455, 461, 37
N.E. 1041 (1894) (contemporaneous writings so interre-
lated as to be deemed ‘‘ ‘part and parcel of the same
contract’ ’’ may be read as one); Salcedo v. Toepp, 696
N.E.2d 426, 435 (Ind. App. 1998) (‘‘[i]n the absence of
anything to indicate a contrary intention, writings exe-
cuted at the same time and relating to the same transac-
tion [or subject matter] will be construed together in
determining the contract’’). ‘‘Moreover, [as] long as two
or more instruments are part of the same transaction,
different execution times will not prohibit [the] instru-
ments from being construed together.’’ Centennial
Mortgage, Inc. v. Blumenfeld, supra, 745 N.E.2d 275;
see also Gold v. Cedarview Management Corp., 950
N.E.2d 739, 743 (Ind. App. 2011). The contemporaneous
document doctrine may even be applied when the docu-
ments at issue involve different parties, although cau-
tion must be exercised under those circumstances, and
the determination that the documents constitute a sin-
gle agreement must be made on a case-by-case basis.
Compare Lily, Inc. v. Silco, LLC, 997 N.E.2d 1055,
1068–69 (Ind. App. 2013) (applying doctrine even
though only one entity was party to all three agreements
at issue), transfer denied, 6 N.E.3d 950 (Ind. 2014), and
Roberts v. Vonnegut, 58 Ind. App. 142, 146–49, 104 N.E.
321 (1914) (construing contract executed between cor-
poration’s principal shareholders together with credi-
tors’ extension agreement), with Yessenow v. Hudson,
Docket No. 2:08-CV-353 (PPS), 2012 WL 2990643, *6–*7
(N.D. Ind. July 19, 2012) (declining to apply contempora-
neous document doctrine when indemnification agree-
ment at issue contained integration clause, was signed
on different date than merger documents were, and was
not necessary condition of completing merger), and
Murat v. South Bend Lodge No. 235 of the Benevolent &
Protective Order of Elks, 893 N.E.2d 753, 757–58 (Ind.
App. 2008) (declining to apply contemporaneous docu-
ment doctrine because deeds at issue served different
purposes and did not cross-reference each other, and
there was no evidence that parties intended them to
form unitary contract), transfer denied, 915 N.E.2d 989
(Ind. 2009); see also Beradi v. Hardware Wholesalers,
Inc., supra, 625 N.E.2d 1261–63 (construing together
documents signed by various corporate officers in both
their individual and representative capacities); Gilmore
v. Century Bank & Trust Co., 20 Mass. App. 49, 56,
477 N.E.2d 1069 (1985) (factors influencing whether
different instruments should be read together as compo-
nents of single transaction include ‘‘simultaneity of exe-
cution, identity of subject matter and parties, cross-
referencing, and interdependency of provisions’’).
Indiana courts have applied these principles in the
context of construing articles of incorporation in tan-
dem with other corporate organizational documents.
See, e.g., Bay Colony Civic Corp. v. Pearl Gasper Trust,
984 N.E.2d 231, 235 (Ind. App. 2013); Heritage Lake
Property Owners Assn., Inc. v. York, 859 N.E.2d 763,
765–66 (Ind. App. 2007); National Board of Examiners
for Osteopathic Physicians & Surgeons, Inc. v. Ameri-
can Osteopathic Assn., 645 N.E.2d 608, 617 (Ind. App.
1994). This reflects the principle that ‘‘[t]he relation
between a corporation and its stockholders is one of
contract in which the articles of incorporation,
[bylaws], provisions of the stock certificate, and perti-
nent statutes are embodied.’’ Scott v. Anderson Newspa-
pers, Inc., 477 N.E.2d 553, 558 (Ind. App. 1985).
With these principles in mind, we turn our attention
to the present dispute. The plaintiffs argue that (1)
the 1997 articles represent the entirety of the relevant
agreement, and (2) those articles unambiguously pro-
vide that the plaintiffs were members of Anthem Insur-
ance who were entitled to a share of the demutuali-
zation proceeds. Because the relevant contractual lan-
guage is unambiguous, the plaintiffs further contend,
the trial court improperly considered extrinsic evidence
of the parties’ intent. The insurance company defen-
dants respond that the relevant agreement encom-
passes not only the 1997 articles but also the other
merger documents. The insurance company defendants
further maintain that the 1997 articles, both standing
alone and when read in conjunction with the other
merger documents, are ambiguous with respect to the
plaintiffs’ membership status and entitlement to demu-
tualization proceeds. The insurance company defen-
dants therefore contend that the trial court properly
looked to extrinsic evidence to resolve this ambiguity.
We agree with the insurance company defendants
that the 1997 articles and the other merger documents
are part and parcel of the same transaction and that,
when read together, they are ambiguous as to the plain-
tiffs’ eligibility for membership in Anthem Insurance
and their entitlement to a share of the demutualization
proceeds relating to the 1999 group policy.10 Accord-
ingly, we conclude that the trial court properly con-
sulted extrinsic evidence of their meaning.
A
Whether the Merger Documents Were Part
and Parcel of a Single Transaction
We first consider whether the trial court correctly
concluded that the 1997 articles were ‘‘part and parcel
of the merger transaction’’ and, therefore, that it was
appropriate to construe those articles in tandem with
the other merger documents. As we previously noted,
Indiana courts consider a number of factors when
applying the contemporaneous document doctrine.
These include (1) whether the documents were exe-
cuted at the same time and by the same parties, (2)
whether they address the same matter or transaction,
(3) whether they reference or incorporate one another,
(4) whether the execution of each document or fulfill-
ment of the promises contained therein is a precondi-
tion for that of the others, and (5) whether the docu-
ments purport on their face to be fully integrated
agreements. In the present case, most if not all of these
factors favor construing the 1997 articles and the other
merger documents as components of a single agree-
ment.
First, there is little doubt that the 1997 articles and the
other merger documents all were drafted in conjunction
with the same transaction, namely, the 1997 merger
between Anthem Insurance and Blue Cross. Indeed, the
plaintiffs concede as much in their primary appellate
brief: ‘‘In connection with the proposed merger,
[Anthem Insurance’s] attorney . . . drafted the agree-
ment to merge . . . the plan and joint agreement of
merger . . . the guaranty policies . . . and the [1997]
. . . articles . . . .’’ (Citations omitted; emphasis
added.) Notably, the plaintiffs also acknowledge that
the membership rules contained in Anthem Insurance’s
existing articles of incorporation needed to be revised
in order to facilitate the merger with Blue Cross.
Second, the 1997 articles and the other merger docu-
ments contain multiple references to each other. Sec-
tion 7.6 (b) of the 1997 articles provides in relevant part
that, following a merger, former members of a qualified
mutual insurer shall ‘‘become members of [Anthem
Insurance] pursuant to, and shall be entitled to receive
guaranty insurance policies/membership certificates
. . . . Each such guaranty insurance policy/member-
ship certificate shall continue in effect and confer mem-
bership and other rights . . . .’’ Section 8.5 then lays
out the ‘‘[r]ights of [m]embers with [g]uaranty [p]oli-
cies’’ in the event that Anthem Insurance were ever
to demutualize. That section provides in relevant part:
‘‘Any member of [Anthem Insurance] who has an indi-
vidual guaranty insurance policy of [Anthem Insurance]
or a certificate of membership issued under a group
guaranty insurance policy . . . shall be entitled, upon
any . . . demutualization . . . of [Anthem Insurance]
. . . to distributions in the form of cash, securities or
other assets, and other membership and other rights
and privileges . . . .’’ It is clear, then, that the 1997
articles envision that guaranty policies, such as those
that were attached to the agreement to merge and sub-
sequently provided to Blue Cross members, are the
mechanism by which Blue Cross group policyholders
were converted into members of the merged entity and
invested with proprietary rights in the event of a subse-
quent demutualization. Section 7.6 (c) (2) of the 1997
articles also references the joint agreement of merger
pursuant to which Anthem Insurance would consum-
mate a merger with a qualified mutual insurer such as
Blue Cross and provides that the merger agreement
may restrict the conditions under which holders of cer-
tain types of insurance policies may become members
of Anthem Insurance.
At the same time, there are numerous references to
the 1997 articles throughout the agreement to merge,
as well as in the plan and joint agreement of merger
and the guaranty policy. For example, the agreement
to merge provides that ‘‘the [m]erger shall constitute
a ‘[q]ualified [m]embership [m]erger’ under [Anthem
Insurance’s 1997 articles]’’; the guaranty policy shall
grant rights in the event of demutualization of the sur-
viving corporation as set forth in the 1997 articles; and
the guaranty policy shall grant voting rights in Anthem
Insurance and rights in the event of demutualization as
provided under Indiana’s insurance law and in the 1997
articles. More significantly, an entire article of the
agreement to merge, article IV, is addressed to the 1997
articles and the bylaws of the surviving corporation.
Section 4.1 (a) requires that, ‘‘[a]t or before the [e]ffec-
tive [t]ime, the [a]rticles of [i]ncorporation of Anthem
[Insurance] shall be amended and restated substantially
in the form of the [t]hird [a]mended and [r]estated [a]rti-
cles of [i]ncorporation attached . . . as [e]xhibit C
. . . . Such [a]rticles of [i]ncorporation shall, together
with the provisions of the [p]lan and [j]oint [a]greement
of [m]erger, among other matters: (1) provide to each
former [Blue Cross] [m]ember the rights described in
Section 3.4 [of the agreement to merge] . . . .’’ As
required by that section, a proposed form of the 1997
amended articles was attached to the agreement to
merge as exhibit C. Section 4.1 (b) also requires an
amendment of the Anthem Insurance bylaws. The guar-
anty policies and the plan and joint agreement of
merger, which also were attached as exhibits to the
agreement to merge, likewise reference the 1997
articles.11
Third, and relatedly, it is clear that the agreement to
merge not only referenced the 1997 articles but required
their amendment as a condition of the merger. One of
the covenants on which the agreement was predicated
was that Anthem Insurance would amend the 1997 arti-
cles, substantially in the form proposed in exhibit C,
prior to the effective date of the merger. As we pre-
viously discussed, § 4.1 defined the rights that the 1997
articles needed to provide with respect to members of
the surviving entity. Moreover, § 9.1 of the agreement
to merge required that ‘‘[Blue Cross] and Anthem [Insur-
ance] . . . each take all actions necessary under their
respective [c]ertificate or [a]rticles of [i]ncorporation
and [bylaws] to convene a meeting of their respective
policyholders/members . . . to vote on the [m]erger
(and with respect to Anthem [Insurance], the adoption
of [Anthem Insurance’s] [t]hird [a]mended and
[r]estated [a]rticles of [i]ncorporation) . . . .’’
(Emphasis added.) Section 9.3 made the completion of
the merger conditional on the favorable outcome of
those votes. Finally, article X of the agreement to merge,
which is entitled ‘‘Conditions Precedent to Obligations
of [Blue Cross] and Anthem [Insurance],’’ expressly pro-
vided that ‘‘[t]he obligations of [Blue Cross] and Anthem
[Insurance] to consummate the [m]erger shall be sub-
ject to fulfillment as of or before the [e]ffective [t]ime
of each of the following conditions . . . .
‘‘The [a]rticles of [i]ncorporation of the [s]urviving
[c]orporation shall, prior to or as of the [e]ffective
[t]ime, be substantially in the form attached hereto as
[e]xhibit C . . . .’’ Section 11.2 further required that
Anthem Insurance comply with all of its obligations
under the agreement to merge as a condition precedent
to the obligations of Blue Cross. It is clear, then, that
Anthem Insurance’s adoption of the 1997 articles was
inextricably bound up with the merger agreement. This
is true even though the 1997 articles do not specifically
refer to the Blue Cross merger and were drafted to
accommodate not only that agreement but also any
similar mergers that might be consummated in the
future.
Fourth, the 1997 articles do not contain an integration
clause or otherwise purport to be a complete expression
of the agreement between Anthem Insurance and its
members. Although the agreement to merge does con-
tain an integration clause, that document also incorpo-
rates as attached exhibits both the 1997 articles and the
other merger documents. Accordingly, the integration
clause does not indicate that the parties to the
agreement to merge intended the agreement to be con-
strued separate and apart from the 1997 articles. See
Benkelman v. Baseline Engineering Corp., Docket No.
7:15CV5003, 2016 WL 1092476, *5 (D. Neb. March 21,
2016) (attached agreement treated as part of inte-
grated contract).12
It is apparent, then, that the 1997 articles are insepara-
bly intertwined with the other merger documents.
Amendment of the 1997 articles by the members of
Anthem Insurance was necessary to facilitate the
merger and, therefore, was made an express condition
precedent to the completion of the merger. As the trial
court found, ‘‘[t]he [1997] articles were an essential part
of the agreement to merge, and the merger could not
take place without the articles being approved.’’ At the
same time, the guaranty policies were the mechanism
by which the membership rights afforded by the 1997
articles were extended to both former members of Blue
Cross and new enrollees in New CT-Blue. For these
reasons, the trial court correctly concluded that the
1997 articles and the other merger documents were part
and parcel of a single transaction.
The plaintiffs reject this conclusion largely because
(1) the other merger documents were signed on differ-
ent dates than the 1997 articles were, and (2) whereas
Anthem Insurance and Blue Cross were parties to the
other merger documents, the parties to the 1997 articles
were Anthem Insurance and its members. To the extent
that these contentions are accurate, we are not per-
suaded that they tip the scales in favor of treating the
other merger documents as extrinsic evidence vis-a-vis
the 1997 articles. With respect to the dates of signing,
the relevant timeline of events is as follows:
(1) Spring, 1996: Blue Cross and Anthem Insurance
enter into merger negotiations;
(2) October 17, 1996: Anthem Insurance’s board of
directors casts a preliminary vote to approve the
1997 articles;
(3) November 8, 1996: Blue Cross and Anthem Insur-
ance sign the agreement to merge, with the proposed
1997 articles and guaranty policy attached, and approval
of the merger is sought from the Connecticut Insur-
ance Department;
(4) December 19, 1996: Anthem Insurance’s board of
directors casts the final vote to approve the 1997
articles;
(5) March 27, 1997: Anthem Insurance members vote
to adopt the 1997 articles, and Blue Cross members
vote to approve the merger;13
(6) April 17, 1997: The 1997 articles are executed;
(7) May 27, 1997: The Commissioner of the Indiana
Department of Insurance approves the 1997 articles;
and
(8) July 31, 1997: Anthem Insurance and Blue Cross
sign the plan and joint agreement of merger, and the
Connecticut Insurance Department approves the
merger, which becomes effective.
In light of the complexity of these transactions and
the need for multiple rounds of approval by Anthem
Insurance’s board of directors and membership of both
entities, in addition to approval by regulatory agencies
in two states, the fact that all of the relevant documents
were not executed simultaneously on one date does
not compel the conclusion that they were not intended
to be part and parcel of a single agreement. Rather, the
timeline suggests that drafting and approval of the 1997
articles transpired over a seven month period that dove-
tailed closely with the multistep approval of the merger.
It is noteworthy in this respect that the membership of
Blue Cross voted to approve the merger on the very
same date that their Anthem Insurance counterparts
signed off on the 1997 articles.
Nor are we persuaded by the plaintiffs’ argument that
the other merger documents are extrinsic to the 1997
articles because different parties entered into those
agreements. It is true that, technically, the 1997 arti-
cles—as well as the guaranty policy—represent agree-
ments between Anthem Insurance and its members,
whereas the agreement to merge and the plan and joint
agreement of merger were agreements between Anthem
Insurance and Blue Cross. The reality, however, is that
Anthem Insurance’s attorney drafted each of these doc-
uments, and each effectively required the approval of
Anthem Insurance, Blue Cross, and their respective
members. As we previously noted, the 1997 articles and
the guaranty policy were attached to the agreement
to merge and thereby incorporated into the contract
between Anthem Insurance and Blue Cross. At the same
time, the agreement to merge, as well as the plan and
joint agreement of merger, required the approval not
only of Blue Cross and Anthem Insurance, but also of
Anthem Insurance’s membership.14 For these reasons,
the fact that the Anthem Insurance members them-
selves were not signatories to each of the merger docu-
ments, or that Blue Cross was not a signatory to the
1997 articles, does not bar the conclusion that these
documents were part and parcel of a single transaction.
B
Whether the Merger Documents Were Ambiguous
Having concluded that the trial court correctly deter-
mined that the 1997 articles must be construed in tan-
dem with the other merger documents, we next turn
our attention to the question whether the court properly
determined that those documents, when read together,
are ambiguous with respect to whether the plaintiffs
were Anthem Insurance members entitled to a share
of the demutualization proceeds.15 We begin by setting
forth the relevant contract language.
1
1997 Articles
Because the plaintiffs’ claims arise primarily from
rights allegedly bestowed on them by the 1997 articles,
we begin by setting forth the relevant provisions of that
document. Article VII of the 1997 articles defines the
criteria for membership in Anthem Insurance. Section
7.1 provides that the members of Anthem Insurance
shall be ‘‘(a) all persons to whom certificates of mem-
bership are issued, and (b) all persons who have the
rights of members granted to them under insurance
agreements made between [Anthem Insurance] and
employers, or group agents, of such persons acting for
and on their behalf. Membership . . . shall be evi-
denced by certificates of membership . . . .’’ Sections
7.2 through 7.5 address the membership rights of former
members of two other mutual insurance companies that
merged with Anthem Insurance prior to 1997 and whose
membership rules had been similar to those of Blue
Cross, with group policyholders rather than individual
enrollees possessing membership rights. Section 7.6
essentially represents a generic version of those provi-
sions, which allowed Anthem Insurance to accommo-
date the Blue Cross merger and to honor Blue Cross’
membership rules, but was written in general terms so
that future ‘‘ ‘[q]ualified [m]embership [m]ergers’ ’’ with
mutual insurance companies similar to Blue Cross
could be accomplished without further need to amend
the articles of incorporation.
Section 7.6 (a) defines, among other things, the quali-
fied membership mergers to which § 7.6 applies. It is
undisputed that the merger between Anthem Insurance
and Blue Cross was a qualified membership merger
and that, following the merger, New CT-Blue was a
‘‘ ‘[q]ualified [m]embership [s]ubsidiary’ ’’ of Anthem
Insurance as defined in § 7.6 (a) (3).
Section 7.6 (b) of the 1997 articles is entitled ‘‘Former
Members of Qualified Mutual Insurers.’’ It addresses
the membership rights of groups and individuals who
were mutual members of companies such as Blue Cross
at the time of merger. Section 7.6 (b) provides: ‘‘Upon
effectiveness of a [q]ualified [m]embership [m]erger, all
of the members of the [q]ualified [m]utual [i]nsurer shall
(1) retain their insurance and/or medical and health
benefits under [q]ualified [c]ontracts, and (2) become
members of [Anthem Insurance] pursuant to, and shall
be entitled to receive guaranty insurance policies/mem-
bership certificates issued by [Anthem Insurance] in
respect of such [q]ualified [c]ontracts. Each such guar-
anty insurance policy/membership certificate shall con-
tinue in effect and confer membership and other rights
in [Anthem Insurance] as long as . . . the related
[q]ualified [c]ontract is in effect, or has been renewed,
amended, or replaced, without a lapse in coverage, by
any insurance policy or health care benefits contract
issued by a [q]ualified [m]embership [s]ubsidiary for
that [q]ualified [m]embership [m]erger . . . .’’ It is
undisputed that the state’s Care Plus policy with Blue
Cross was a qualified contract as defined in the 1997
articles.
Section 7.6 (c) of the 1997 articles is entitled ‘‘New
Members Under Post-Merger Policies, Contracts and
Certificates of Qualified Membership Subsidiaries.’’
Subdivision (1) of § 7.6 (c) provides in relevant part:
‘‘Except as set forth in [Section] 7.6 (c) (2) and (3) . . .
each holder of an individual insurance policy or health
care benefits contract, and each holder of a certificate
of coverage under a group insurance policy or health
care benefits contract, which individual or group policy
or contract is originally issued by a [q]ualified [m]em-
bership [s]ubsidiary for that [q]ualified [m]embership
[m]erger after the effectiveness of such [m]erger, shall
be entitled to receive a guaranty insurance policy or
certificate of membership from [Anthem Insurance].
Each such individual guaranty insurance policy and
each such certificate of membership issued under a
group guaranty insurance policy shall grant the follow-
ing rights: (i) voting rights on all matters that come
before the members of an Indiana domestic mutual
insurance company under Indiana [i]nsurance [l]aw
. . . (ii) a guarantee of the benefits provided under the
insurance policy or health care benefits contract issued
by the [q]ualified [m]embership [s]ubsidiary; and (iii)
rights in the event of a liquidation, merger, consolida-
tion, demutualization or conversion of [Anthem Insur-
ance] described in Section 8.1, as provided under the
Indiana [i]nsurance [l]aw and as set forth in [a]rticle
VIII.’’
Subdivision (3) of § 7.6 (c) provides in relevant part:
‘‘Section 7.6 (c) (1) shall apply only with respect to
insurance policies and health care benefits contracts,
and certificates of coverage thereunder, issued by a
[q]ualified [m]embership [s]ubsidiary after the effec-
tiveness of the [q]ualified [m]embership [m]erger and
shall not apply with respect to [q]ualified [c]ontracts
(or certificates of coverage thereunder) as described
in Section 7.6 (b), or any insurance policy or health
care benefits contract issued as a renewal, amendment
or replacement of such [q]ualified [c]ontracts (or certif-
icates of coverage thereunder) where there was no
lapse of coverage.’’ (Emphasis added.)
Article VIII of the 1997 articles, which is entitled,
‘‘Liquidation, Merger or Demutualization,’’ addresses
the rights of Anthem Insurance members in the event
of demutualization or other corporate change. Section
8.1 provides in relevant part that ‘‘[a]ll members of
[Anthem Insurance] shall be entitled, upon any . . .
demutualization or conversion of [Anthem Insurance]
from a mutual to a stock insurance company, to such
distributions in the form of cash, securities or other
assets, and such other membership and other rights
and privileges, as may from time to time be provided
by the Indiana [i]nsurance [l]aw. . . .’’
Section 8.4 of the 1997 articles specifically addresses
the rights of the former members of a qualified mutual
insurer such as Blue Cross in the event of a subsequent,
postmerger demutualization of Anthem Insurance. Sec-
tion 8.4 (a) provides in relevant part: ‘‘By virtue of a
[q]ualified [m]embership [m]erger . . . all of the mem-
bers of the [q]ualified [m]utual [i]nsurer become mem-
bers of [Anthem Insurance], and all of the assets and
surplus of the [q]ualified [m]utual [i]nsurer become
assets and surplus of [Anthem Insurance]. Accordingly,
upon any . . . demutualization or conversion of
[Anthem Insurance] . . . in the determination of the
rights of any member of [Anthem Insurance] who was
immediately prior to a [q]ualified [m]embership
[m]erger, a member of the [q]ualified [m]utual [i]nsurer,
full account and credit shall be given to such member of
its former interests in that [q]ualified [m]utual [i]nsurer,
which rights shall reflect and include in full . . . the
value of such member’s interests in that [q]ualified
[m]utual [i]nsurer immediately prior to the [q]ualified
[m]embership [m]erger . . . .’’ Section 8.5 of the 1997
articles further provides that an Anthem Insurance
member holding a guaranty policy or certificate of mem-
bership issued by a qualified membership subsidiary is
entitled, in the event of a demutualization, to asset
distributions equivalent to those to which a member
would be entitled if he or she had held a policy or
certificate issued by Anthem Insurance itself.
Section 8.6 of the 1997 articles is entitled ‘‘Rights of
Members with Substituted Policies’’ and further defines
the rights of members of a qualified mutual insurer,
such as Blue Cross, in the event of a postmerger demu-
tualization or other transaction. That section provides
in relevant part: ‘‘Upon any . . . demutualization or
conversion of [Anthem Insurance] . . . in the determi-
nation of the rights of any member of [Anthem Insur-
ance] who has had two or more insurance policies or
certificates of membership, including renewed,
amended or replaced policies or certificates, issued by
[Anthem Insurance] successively without any lapse in
coverage, full account and credit shall be given to such
member of the value of such member’s interest in
[Anthem Insurance] under all such policies or certifi-
cates. Without limiting the foregoing . . . (iii) in the
case of each member holding a [q]ualified [m]embership
[s]ubsidiary insurance policy or health care benefits
contract who was a member of the [q]ualified [m]utual
[i]nsurer immediately prior to the [q]ualified [m]ember-
ship [m]erger and whose [q]ualified [m]embership
[s]ubsidiary contract has been renewed, amended or
replaced by any policy or contract of a [q]ualified
[m]embership [s]ubsidiary in that [q]ualified [m]ember-
ship [m]erger without a lapse in coverage, such value
shall reflect and include in full the value of such mem-
ber’s interest in [Anthem Insurance] immediately prior
to the renewal, amendment or replacement . . . .’’
Finally, § 8.7 of the 1997 articles provides: ‘‘Whenever
any corporate transaction or event affects the members’
interests in [Anthem Insurance], consideration is to be
given to the members of [Anthem Insurance] who were
. . . (iii) immediately prior to a [q]ualified [m]ember-
ship [m]erger, members of the [q]ualified [m]utual
[i]nsurer or [Anthem Insurance], respectively, such that
their individual interests in the [q]ualified [m]utual
[i]nsurer or [Anthem Insurance], respectively, immedi-
ately prior to the [q]ualified [m]embership [m]erger are
fully and equitably reflected.’’
2
Other Merger Documents
We next set forth the relevant provisions of the other
merger documents. Turning our attention to the
agreement to merge, we note that §§ 3.3 and 3.4 of that
document address the rights of former Blue Cross group
policyholders after the merger, whereas § 8.6 (c)
addresses the rights of holders of new New CT-Blue
group policies issued after the merger. Section 3.3 pro-
vides in relevant part that ‘‘each [Blue Cross] [m]ember
shall, by virtue of the [m]erger and without any action
on the part of such person, receive in exchange for
such person’s interests in [Blue Cross] . . .
‘‘(b) a new [s]urviving [c]orporation guaranty policy
(the forms of which policies shall be substantially as
attached hereto as [e]xhibit B) which shall grant to
such person the rights described in Section 3.4.’’
Section 3.4 in turn provides in relevant part: ‘‘All
guaranty policies issued by the [s]urviving [c]orporation
pursuant to Section 3.3 shall grant the following rights:
‘‘(a) voting rights . . .
‘‘(b) insurance benefits . . . and
‘‘(c) rights in the event of the . . . demutualization
of the [s]urviving [c]orporation as set forth herein . . .
and in the [s]urviving [c]orporation’s . . . [a]rticles of
[i]ncorporation . . . . The [s]urviving [c]orporation
guaranty insurance policy shall continue in effect as
long as (1) the health insurance policy or healthcare
benefits contract assumed or issued by New CT-Blue
. . . is in effect or has been renewed, amended, or
replaced, without a lapse in coverage, by any New CT-
Blue health insurance policy or healthcare benefits con-
tract . . . .’’16
With respect to membership rights arising from new
group insurance policies issued by New CT-Blue after
the merger, § 8.6 (c) of the agreement to merge provides
in relevant part: ‘‘Except as set forth below . . . each
holder of a certificate of coverage under a group New
CT-Blue insurance policy or healthcare benefits con-
tract originally issued . . . after the [e]ffective [t]ime,
shall be entitled to receive an Anthem [Insurance] certif-
icate of membership issued under an Anthem [Insur-
ance] group guaranty insurance policy. Each such . . .
certificate of membership . . . shall grant . . . (1)
voting rights . . . (2) insurance benefits . . . and (3)
rights in the event of the . . . demutualization of
Anthem [Insurance] . . . .
‘‘This Section 8.6 (c) shall apply only with respect to
New CT-Blue insurance policies or healthcare benefits
contracts (and certificates of coverage thereunder)
originally issued after the [e]ffective [t]ime, and shall
not apply to New CT-Blue insurance policies or health-
care benefits contracts (or certificates of coverage
thereunder) required to be assumed or issued pursuant
to Article III. Nothing contained in . . . Section 8.6 (c)
shall affect or alter in any manner the obligations of
the parties under [a]rticle III.’’
In addition, § 4.1 of the agreement to merge requires
that ‘‘the [a]rticles of [i]ncorporation of Anthem [Insur-
ance] . . . be amended and restated substantially in
the form of the [t]hird [a]mended and [r]estated [a]rti-
cles of [i]ncorporation attached . . . as [e]xhibit C
. . . . Such [a]rticles of [i]ncorporation shall, together
with the provisions of the [p]lan and [j]oint [a]greement
of [m]erger, among other matters: (1) provide to each
former [Blue Cross] [m]ember the rights described in
Section 3.4; (2) provide to the extent applicable the
rights described in Section 3.4 to:
‘‘(i) each future New CT-Blue certificate holder under
a group insurance policy or healthcare benefits contract
originally issued after the [e]ffective [t]ime, and
‘‘(ii) each future holder of [a] New CT-Blue individual
insurance policy or healthcare benefits contract origi-
nally issued after the [e]ffective [t]ime,
‘‘who also holds a [s]urviving [c]orporation insurance
policy or membership certificate that guarantees the
benefits granted by such New CT-Blue certificate or
individual policy or contract . . . .’’
We next set forth the relevant language contained in
the Anthem Insurance guaranty policy that was sent to
Blue Cross group policyholders, including the state, at
the time of the merger. Exhibit B-2 to the agreement
to merge is entitled ‘‘[FORM] GROUP GUARANTY
HEALTH POLICY AND CERTIFICATE OF MEMBER-
SHIP.’’ Article IV of the guaranty policy addresses mem-
bership rights and provides in relevant part: ‘‘As long
as this [p]olicy is in effect, the Anthem [Insurance]
[m]ember shall be entitled to all of the rights of member-
ship in Anthem [Insurance] accorded to members of a
mutual insurance company under Indiana law, includ-
ing the right to one vote . . . and equity rights in the
event of . . . demutualization as provided in [Anthem
Insurance’s] [a]rticles of [i]ncorporation from time to
time in effect. Such equity rights . . . shall accrue
solely to the Anthem [Insurance] [m]ember. No
[e]nrollee or dependent of an [e]nrollee shall receive
any equity rights by virtue of being an [e]nrollee or
dependent of an [e]nrollee. As provided in [Anthem
Insurance’s] [a]rticles of [i]ncorporation from time to
time in effect, the Anthem [Insurance] [m]ember’s rights
shall reflect and include in full the value of the Anthem
[Insurance] [m]ember’s interest in Blue Cross . . .
immediately prior to the merger . . . together with any
subsequent accretions or reductions to that value . . .
resulting from changes in the entire net worth of
Anthem [Insurance] on a consolidated basis following
the merger.’’
The ‘‘[d]efinitions’’ section of the guaranty policy fur-
ther provides that the ‘‘CT-Blue Contract . . . shall
include any renewal or amendment, or any replacement
thereof issued by [New] CT-Blue,’’ and that an
‘‘[e]nrollee . . . means each person who has enrolled
for insurance or health care benefits under the . . .
[c]ontract and who was eligible to enroll for such bene-
fits . . . because of the person’s status as (1) an
employee of the Anthem [Insurance] [m]ember, if the
Anthem [Insurance] [m]ember is an employer . . . .’’
Finally, article VI of the guaranty policy governs the
term and termination of that policy and provides that,
‘‘[u]nless cancelled . . . this [p]olicy shall remain in
full force and effect for as long as the . . . [c]ontract
is in effect, or has been renewed, amended, or replaced
by any [New] CT-Blue [c]ontract without a lapse in
coverage, and the Anthem [Insurance] [m]embership
[f]ees are paid prior to the expiration of the [g]race
[p]eriod set forth in [a]rticle VII of this [p]olicy.’’
3
Arguments and Analysis
The plaintiffs contend that the plain language of the
1997 articles provides that they were members of
Anthem Insurance who were entitled to a share of the
demutualization proceeds. Specifically, the plaintiffs
rely on the facts that (1) they undisputedly held certifi-
cates of coverage under the 1999 group policy, which
was issued by New CT-Blue in 1999 and was, therefore,
a postmerger policy of a qualified membership subsid-
iary, and (2) pursuant to § 7.6 (c) (1) of the 1997 articles,
unless one of two exceptions applies, ‘‘each [individual]
holder of a certificate of coverage under a group insur-
ance policy . . . originally issued by a [q]ualified
[m]embership [s]ubsidiary . . . after the . . .
[m]erger . . . [is] entitled to receive a . . . certificate
of membership from [Anthem Insurance that shall
grant] . . . rights in the event of a . . . demutualiza-
tion . . . .’’ It is undisputed that the first exception to
§ 7.6 (c) (1), which is contained in § 7.6 (c) (2), does not
apply. The plaintiffs maintain that the second exception,
which is contained in § 7.6 (c) (3), also does not apply.
Subdivision (3) provides that § 7.6 (c) (1) ‘‘shall not
apply with respect to . . . any insurance policy or
health care benefits contract issued as a renewal,
amendment or replacement’’ of qualified contracts held
by members of a qualified mutual insurer such as Blue
Cross prior to the merger. (Emphasis added.) In other
words, if New CT-Blue issued a new group insurance
policy after the merger of Anthem Insurance and Blue
Cross, the employees who obtained coverage under that
group policy were entitled to membership in Anthem
Insurance unless the ‘‘new’’ policy was merely issued
as a renewal, amendment, or replacement for a Blue
Cross group policy that was in place before the merger.
In that case, the new policy would be treated as a
continuation of the premerger policy, and Blue Cross’
premerger membership rules—pursuant to which the
group policyholder, rather than its employees, is the
member—would remain in effect.
In the present case, it is undisputed that, although
the 1999 group policy did ultimately replace the state’s
Care Plus policy, it was not issued as a replacement
for that policy. Rather, the 1999 group policy was issued
in July, 1999, as a replacement for the ASO agreement,
which the parties agree was not a qualified insurance
policy. The 1999 group policy coexisted with Care Plus
for one year until Care Plus was terminated in July,
2000, and its enrollees defaulted into the 1999 group
policy. Under the plaintiffs’ theory of the case, then,
the exception contained in § 7.6 (c) (3) of the 1997
articles does not apply to state employees who obtained
coverage under the 1999 group policy, and a straightfor-
ward reading of § 7.6 conclusively establishes that they
became Anthem Insurance members upon receiving
certificates of coverage under that policy.17
Although the plaintiffs would conclude the analysis
there, they also argue that, to the extent that the other
merger documents are relevant, those documents sup-
port their reading of the 1997 articles. With respect to
the agreement to merge, for example, the plaintiffs point
to § 4.1 (a), which requires that the 1997 articles provide
membership rights to holders who are issued New CT-
Blue group certificates after the merger. The plaintiffs
also direct our attention to § 8.6 (c) of the agreement
to merge, which entitles such holders to receive certifi-
cates of membership.
In general, the view of the plaintiffs is that the merger
documents contain two parallel sets of provisions. One
set, exemplified by § 7.6 (b) of the 1997 articles, extends
membership rights to former members of qualified
mutual insurers, including policyholders, such as the
state, that held group policies under and were members
of Blue Cross. Those provisions ensure that, as long as
those policies remain in effect, the policyholders retain
the same equity interests in the merged entity as they
held in Blue Cross prior to the merger. The other set of
provisions, exemplified by § 7.6 (c) of the 1997 articles,
extends membership rights to individual enrollees in
new group health care insurance plans issued by quali-
fied membership subsidiaries such as New CT-Blue
after the merger and allows those enrollees, upon demu-
tualization, to recoup the equity generated by their post-
merger participation in Anthem Insurance. The plain-
tiffs contend that nothing in any of the merger docu-
ments suggests that these two sets of provisions are
mutually exclusive, or that a single Blue Cross cus-
tomer18 such as the state cannot simultaneously hold
(1) premerger group policies, under which the employer
qualifies as an Anthem Insurance member, and (2) unre-
lated, postmerger group policies, under which the
employee enrollees qualify as members.
By contrast, the insurance company defendants con-
tend, and we agree, that a reasonable person could
interpret the merger documents differently and, there-
fore, that the documents are ambiguous with respect
to the membership issue. Their view is that group poli-
cyholders that were Blue Cross members before the
merger became members of Anthem Insurance upon
their receipt of guaranty policies or membership certifi-
cates and that, thereafter, as long as they retained their
membership status (by maintaining a qualified policy
without lapse), their equity rights in Anthem Insurance
extended to any group policies that they held, including
new, unrelated policies issued by New CT-Blue. In other
words, those groups were grandfathered under the pre-
merger Blue Cross membership rules with respect to
any policies that they initially held or later came to
acquire.
In the present case, the state was issued a member-
ship certificate in Anthem Insurance by virtue of its
Care Plus policy and retained its membership status
until the demutualization because Care Plus was
replaced by the 1999 group policy. For this reason, the
insurance company defendants contend, the premerger
Blue Cross membership rules that were preserved in
§ 7.6 (b) of the 1997 articles apply to all enrollees in the
1999 group policy. This is true, the insurance company
defendants maintain, regardless of the fact that the 1999
group policy initially was issued as a new group policy
postmerger, rather than as a replacement for a pre-
merger policy, and initial enrollees may not have been
certificate holders under a state Blue Cross plan prior
to the merger.
Several provisions of the merger documents support
the interpretation advanced by the insurance company
defendants, or, at minimum, create an ambiguity with
respect to the membership question. First and foremost,
article IV of the guaranty policy, a copy of which was
given to the state and other former Blue Cross members,
clearly provides that ‘‘[a]s long as this [p]olicy is in
effect, the Anthem [Insurance] [m]ember shall be enti-
tled to all of the rights of membership in Anthem [Insur-
ance] . . . including . . . equity rights in the event of
. . . demutualization . . . . Such equity rights . . .
shall accrue solely to the Anthem [Insurance] [m]ember.
No [e]nrollee . . . shall receive any equity rights by
virtue of being an [e]nrollee . . . .’’ (Emphasis added.)
According to its plain terms, then, the certificate of
membership, which represents the state’s membership
contract with Anthem Insurance, provides that only the
Anthem Insurance member and no enrollees will be
entitled to equity rights in Anthem Insurance, as long
as the guaranty policy remains in effect. See footnote
16 of this opinion.
The plaintiffs respond that article IV of the guaranty
policy merely indicates that no individual was entitled
to become a member or receive equity rights by virtue of
being an enrollee in Care Plus. They contend, however,
that they are entitled to membership by virtue of being
enrollees in the 1999 group policy.
Although the plaintiffs’ interpretation of article IV is
perhaps plausible, it is certainly not the only reasonable
reading of that provision, let alone the better one. Noth-
ing in the guaranty policy indicates that the membership
and equity rights afforded by article IV are restricted
to a particular underlying health care benefits contract.
Moreover, although the definitions section of the guar-
anty policy does suggest that an attached schedule was
to have identified particular benefits contracts to which
other articles of the guaranty policy applied, the plain-
tiffs concede that the schedule that was delivered to
the state was not completed. The record also does not
contain any indication whether the 1999 group policy
was later added to that schedule.19
We note in this respect that the record does contain
a corresponding form group guaranty health care policy
that was given to policyholders who obtained new
group policies from New CT-Blue after the merger. The
section of that guaranty policy corresponding to article
IV provides that ‘‘equity rights . . . shall accrue solely
to the Anthem [Insurance] [m]ember. No [p]olicyholder
. . . shall receive any equity rights by virtue of being
a [p]olicyholder . . . .’’ It is undisputed that the state
never received any such guaranty policy in connection
with the 1999 group policy. Accordingly, we conclude
that it is at least ambiguous whether article IV of the
group guaranty health care policy precluded individual
enrollees in any state Blue Cross health care plans
from obtaining membership and equity rights in Anthem
Insurance, by virtue of their enrollment therein, as long
as the state maintained its membership status.
Second, the insurance company defendant’s interpre-
tation of the guaranty policy finds support in the
agreement to merge. Specifically, §§ 3.3 and 3.4 of the
agreement to merge appear to delink the membership
and equity rights afforded by a guaranty policy from
the specific underlying health care insurance policy or
policies. Subsection (a) of § 3.3 provides that, by virtue
of the merger, Blue Cross members were entitled to
receive a health care benefit contract from New CT-
Blue with the same terms and conditions as each Blue
Cross policy they held before the merger. Section 3.3,
by contrast, entitles each member to one guaranty pol-
icy ‘‘in exchange for [that member’s] interests in [Blue
Cross] . . . .’’ Similarly, § 3.4 (b) provides that the
guaranty policy will ‘‘guarantee the benefits granted
under each health insurance policy or [health care] ben-
efits contract issued or assumed by New CT-Blue’’;
(emphasis added); whereas § 3.4 (a) and (c), respec-
tively, require that the guaranty policy grant voting
rights and equity rights in the event of demutualization.
Read together, then, the relevant provisions of the
agreement to merge and the guaranty policy strongly
suggest that each former Blue Cross member such as
the state was to receive a single guaranty policy that
served two purposes. First, the policy guaranteed for
each premerger group health insurance plan held by
the member that the enrollees would be entitled to the
same health care benefits to which they were entitled
under Blue Cross. Second, the guaranty policy granted
membership, voting, and equity rights in the merged
entity, rights that the member would retain as long as
the member maintained a qualified policy without lapse.
Because these rights are granted in exchange for the
member’s interests in Blue Cross, and are not tied to
any particular health care contract, the provisions in
the guaranty policy that the ‘‘equity rights . . . shall
accrue solely to the Anthem [Insurance] [m]ember . . .
[and that] [n]o [e]nrollee . . . shall receive any equity
rights by virtue of being an [e]nrollee’’ are most reason-
ably understood to apply with respect to any qualifying
group plan effective during the course of the member’s
membership in Anthem Insurance.20 (Emphasis added.)
Third, although the relevant language of the 1997
articles generally favors the plaintiffs’ position, the
insurance company defendants point to certain ambigu-
ities in the 1997 articles themselves with regard to the
membership issue. The most compelling of these arises
from § 8.6, which provides in relevant part: ‘‘Upon any
. . . demutualization or conversion of [Anthem Insur-
ance] . . . in the determination of the rights of any
member of [Anthem Insurance] who has had two or
more insurance policies or certificates of membership,
including renewed, amended or replaced policies or
certificates, issued by [Anthem Insurance] successively
without any lapse in coverage, full account and credit
shall be given to such member of the value of such
member’s interest in [Anthem Insurance] under all such
policies or certificates. . . .’’ Unlike § 7.6 (c) (3), this
provision appears to extend to former Blue Cross mem-
bers equity rights in any policies that replaced qualifying
Blue Cross policies, and not only those new policies
that were ‘‘issued as’’ replacements thereof.21 It thus
provides support for the insurance company defen-
dants’ argument that the ‘‘issued as’’ language in § 7.6
(c) (3) of the 1997 articles merely reflected inartful
draftsmanship and was not intended to confer special
status on enrollees in health plans such as the 1999
group policy, which replaced but was not issued as a
replacement for Care Plus.22
Lastly, we note that, when confronted with similar
challenges brought by a class of employees and retirees
of the city of Cincinnati, Ohio, following the 1995 merger
of Anthem Insurance’s predecessor company with Com-
munity Mutual Insurance Company and the subsequent
demutualization of that predecessor company, the
United States Court of Appeals for the Sixth Circuit held
that the District Court properly had granted summary
judgment for the defendants. See Mell v. Anthem, Inc.,
688 F.3d 280, 290 (6th Cir. 2012). The Sixth Circuit relied
heavily on the provision of the corresponding guaranty
policy stating that ‘‘[n]o [e]nrollee . . . shall receive
any equity rights by virtue of being an [e]nrollee . . . .’’
(Internal quotation marks omitted.) Id., 288. For all of
the foregoing reasons, we conclude that the trial court
correctly determined that the merger documents are
ambiguous with respect to whether the plaintiffs were
entitled to membership in Anthem Insurance and the
associated demutualization proceeds by virtue of their
enrollment in the 1999 group policy.23
C
Use of Extrinsic Evidence and the Application
of the Rule of Contra Proferentem
Finally, we consider whether the trial court properly
determined, upon review of the extrinsic evidence, that
it was the intention of the parties to the 1997 articles
and the other merger documents that the plaintiffs and
others similarly situated would not be entitled to a share
of the proceeds in the event that Anthem Insurance
were to demutualize. In view of the abundant extrinsic
evidence supporting the insurance company defen-
dants’ position, the plaintiffs do not contest the court’s
factual finding that the parties to the agreement to
merge—Anthem Insurance and Blue Cross—intended
that, after the merger, only the state and not individual
enrollees in state Blue Cross health care insurance plans
would become member owners of Anthem Insurance.
Rather, the plaintiffs contend that the trial court
improperly (1) considered evidence of the parties’
intent that was never expressed to either the state or
the individual enrollees in state Blue Cross health care
plans, (2) considered evidence of intent that was not
expressed until after the adoption of the 1997 articles,
and (3) failed to apply the rule of contra proferentem
and to construe the 1997 articles against Anthem Insur-
ance, the primary drafter thereof.
The following additional facts are relevant to the
plaintiffs’ arguments. In its memorandum of decision,
the trial court considered, among other things, four
types of extrinsic evidence in determining that the rele-
vant contract language recognized premerger Blue
Cross group policyholders such as the state as member
owners of the merged entity and would not permit both
the state and the enrollees in the 1999 group policy to
simultaneously be member owners.
First, the court credited testimony by various officers
and agents of Blue Cross and Anthem Insurance that
both companies, when negotiating the merger, intended
that the Blue Cross membership system would be
retained for Blue Cross members, and that individual
enrollees in Blue Cross group health care insurance
policies would not become members of or acquire
voting or equity rights in Anthem Insurance. Of particu-
lar importance, the court credited testimony by Blue
Cross’ primary outside counsel, John E. Kreitler, and
Anthem Insurance’s primary outside counsel, Tibor D.
Klopfer, that the two attorneys frequently discussed the
membership issue prior to the merger. They agreed that
employers such as the state that held Blue Cross group
policies would be treated as ‘‘grandfathered groups’’
after the merger and that such a group would be treated
as the mutual member of Anthem Insurance with
respect to all of the policies that it held, including new
group policies purchased after the merger. Membership
rights for grandfathered groups and new groups that
obtained Blue Cross policies after the merger would
thus be mutually exclusive, so that a grandfathered
group and its employees could not simultaneously hold
membership rights in the merged entity. Put differently,
the attorneys both understood that § 7.6 (c) of the 1997
articles would apply only to policies obtained by cus-
tomers who were new to New CT-Blue after the merger.
Second, the court considered public statements that
Blue Cross and Anthem Insurance made to the Connect-
icut Insurance Department and the Indiana Department
of Insurance in connection with the regulatory approval
process. In Connecticut, the two insurers filed a ‘‘Form
A: Joint Statement Regarding the Proposed Merger of
[Blue Cross] with and into [Anthem Insurance], and the
Resulting Acquisitions of Anthem Health Plans, Inc.,
and Connecticut American, Incorporated’’ (Form A). In
that form and related discussions with the Connecticut
Insurance Department that took place between Novem-
ber, 1996, and March, 1997, representatives of the two
companies reiterated their view that grandfathered
groups would hold membership in the merged entity
consistent with Blue Cross’ premerger membership
rules and that only certificate holders in groups that
first enrolled with New CT-Blue after the merger would
be entitled to membership rights. Kreitler, for example,
expressed his views about the membership issue in a
November 21, 1996 letter to the Connecticut Insurance
Department. Cynthia S. Miller, Anthem Insurance’s vice
president and chief actuary, expressed similar senti-
ments in public hearings before the Indiana Department
of Insurance in June, 1997.
Third, the court considered a report that was attached
as an exhibit to Form A. The Report of Milliman &
Robertson, Inc., and Statement of Opinion of Dale Hag-
strom (fairness opinion) was written by Dale S. Hag-
strom, a consulting actuary retained by Blue Cross to,
among other things, (1) determine the postmerger rights
of policyholders in the event of an Anthem Insurance
demutualization, and (2) opine as to whether the merger
would be fair to Blue Cross members. Following his
review of the merger documents and discussions with
Miller, Kreitler, Klopfer, and other attorneys involved
in the merger, Hagstrom concluded that it was the
expressed intent of the parties that grandfathered Blue
Cross groups would continue to be the members of the
merged entity, even with respect to new policies issued
after the merger. He further opined that, according to
the parties, it was ‘‘inconceivable’’ that both a grandfath-
ered group such as the state and some of its enrollees
could simultaneously be members of Anthem Insur-
ance.
Fourth, the court considered two notices—an infor-
mation circular and a special meeting notice—that were
sent to Blue Cross members prior to their vote to
approve the merger. Those documents informed mem-
bers that the Blue Cross membership rules would con-
tinue to apply to them under the merged entity and that
their proprietary interests would be preserved in the
form of equivalent interests in Anthem Insurance. They
further explained that individual holders of certificates
of benefits issued under Blue Cross group policies did
not have membership proprietary rights.24 With due
regard to this background, we turn our attention to the
plaintiffs’ arguments.
1
Reliance on Testimony
We first consider the plaintiffs’ contention that it was
improper for the court to rely on the testimony of wit-
nesses such as Kreitler and Klopfer. The plaintiffs draw
our attention to the well established rule that ‘‘the intent
relevant in contract matters is not the parties’ subjective
intents but their outward manifestation of it. . . . The
cardinal rule of contract interpretation is to ascertain
the intention of the parties from their expression of
it. The court does not examine the hidden intentions
secreted in the heart of a person but, rather, examines
the final expression found in conduct.’’ (Citation omit-
ted.) Real Estate Support Services, Inc. v. Nauman,
644 N.E.2d 907, 910–11 (Ind. App. 1994). The plaintiffs
concede, as they must, that the intentions of Kreitler
and Klopfer with respect to the membership issue did
not remain hidden or secret. The court credited testi-
mony that the attorneys discussed the matter with each
other while negotiating the merger agreements, and
later with Hagstrom and others. Nevertheless, the plain-
tiffs contend that the trial court could not consider
extrinsic evidence of the attorneys’ intent because that
intent was never expressed to future members of
Anthem Insurance—in this case, either the state or
the plaintiffs.
There are several flaws in this argument. First,
although it may be technically correct that, under Indi-
ana law, the Anthem Insurance members were parties
to the merger agreement and associated covenants, the
plaintiffs have cited no authority for the proposition
that a court may not consider extrinsic evidence of the
intent behind a corporate agreement unless that intent
was expressed to all of the corporation’s members or
shareholders when the contract was negotiated and
executed. Rather, we think it likely that Indiana courts
would conclude that statements made by an attorney
working on behalf of a corporation and at the direction
of its officers are relevant, even if not dispositive, evi-
dence of the meaning of ambiguous contractual provi-
sions drafted by the attorney. See, e.g., Dept. of Public
Welfare v. Chair Lance Service, Inc., 523 N.E.2d 1373,
1377 (Ind. 1988) (‘‘[t]he fundamental principles regard-
ing the authority of an agent of a corporation are sub-
stantially the same as those applicable to agents
generally’’); see also Phillips v. National Trappers
Assn., 407 N.W.2d 609, 612 (Iowa App. 1987) (when
articles of incorporation were ambiguous, trial court
properly admitted testimony by drafter as to his intent);
18A Am. Jur. 2d 45, Corporations § 165 (2015) (when
confronted with ambiguous articles of incorporation,
court will consider history and surrounding circum-
stances to determine parties’ intent). Nor have the plain-
tiffs cited to any authority suggesting that Indiana
courts depart from the general rule that shareholders
are charged with knowledge of the provisions of a cor-
porate charter and are bound thereby. 18 Am. Jur. 2d
747, Corporations § 76 (2015); see also 18A Am. Jur.
2d, supra, § 633, p. 500 (shareholders may be bound by
corporate actions even if taken without their knowledge
or participation).
The second flaw in the plaintiffs’ argument is that,
even if the opinions of Kreitler and Klopfer were not
expressed directly to members of Blue Cross, those
opinions were made public via the regulatory approval
process to which the merger was subject. It is notewor-
thy in this respect that the information circular and
special meeting notice, both of which were sent to all
Blue Cross members prior to their approval of the
merger, each contained a section entitled ‘‘[r]egulatory
and [o]ther [a]pprovals.’’ Those sections informed mem-
bers that the merger would be subject to regulatory
approval, that the two merging companies had filed a
Form A with the Connecticut Insurance Commissioner
(commissioner), and that the commissioner would be
conducting public hearings regarding the merger.
Accordingly, at least the state, if not the plaintiffs, may
be charged with constructive knowledge of the contents
of Form A and of the statements of intent that the
parties’ representatives made to Connecticut and Indi-
ana regulators.
The third flaw in the plaintiffs’ argument is that,
regardless of what notice persons who were Blue Cross
members as of early 1997 were entitled to receive, it is
undisputed that the plaintiffs were not members of
either Blue Cross or Anthem Insurance at the time the
1997 articles were drafted and the merger was consum-
mated. The state was the Blue Cross member at that
time, and the plaintiffs were at best potential future
members of Anthem Insurance. In that respect, they
were more akin to potential third-party beneficiaries of
the 1997 articles than parties to that agreement. Under
Indiana’s ‘‘stranger to the contract’’ rule, however, ‘‘the
inadmissibility of parol evidence to vary the terms of
a written instrument does not apply to a controversy
between a third party and one of the parties to the
instrument.’’ (Internal quotation marks omitted.) Amici
Resources, LLC v. Alan D. Nelson Living Trust, 49
N.E.3d 1046, 1050 (Ind. App. 2016). Thus, the plaintiffs
cannot be heard to complain that the trial court consid-
ered extrinsic evidence that was not disclosed to them.
For all of these reasons, we conclude that it was not
improper for the trial court to consider the testimony
of Kreitler and Klopfer as to the meaning of the
merger documents.
2
Evidence of the Parties’ Intent Expressed
After the Adoption of the 1997 Articles
We next consider the plaintiffs’ argument that the
trial court improperly admitted evidence of the parties’
intent that was expressed after the adoption of the
1997 articles in April, 1997. The plaintiffs maintain, for
example, that the court should not have considered
testimony regarding statements that Miller made before
the Connecticut Insurance Department, because that
testimony was not given until June, 1997.
We already have explained why the trial court cor-
rectly concluded that the 1997 articles were part and
parcel of the other merger documents. See part II A of
this opinion. For that reason, statements that the parties
made in the context of drafting those documents or
obtaining approval of the merger are not irrelevant to
the present dispute. More generally, however, we dis-
agree with the plaintiffs that, under Indiana law, the
only intent that is relevant to the interpretation of an
ambiguous contract is that which existed at the time
of contracting. Rather, Indiana follows the general rule
that the parties’ course of conduct after forming a con-
tract may provide extrinsic evidence of the meaning of
ambiguous terms. See, e.g., Bank of America, N.A. v.
Ping, 879 N.E.2d 665, 671 (Ind. App. 2008); Noble
Roman’s, Inc. v. Pizza Boxes, Inc., 835 N.E.2d 1094,
1099–1100 (Ind. App. 2005). We do not believe that it
was irrelevant that the parties to the merger continued
to express before regulatory agencies charged with
approving the merger the very same sentiments that
they had expressed privately to each other at the time
they drafted the merger documents. In any event, any
possible error in this respect was harmless because
Miller’s testimony was merely cumulative of other evi-
dence properly considered by the trial court. See King
v. State, 460 N.E.2d 947, 950 (Ind. 1984).
3
Rule of Contra Proferentem
Finally, we consider the plaintiffs’ argument that,
because it was Anthem Insurance—in consultation with
Blue Cross—rather than the plaintiffs who drafted the
1997 articles and other merger documents, any ambigu-
ities in those documents should be construed against
Anthem Insurance according to the rule of contra pro-
ferentem. The plaintiffs further contend that the rule
applies with particular force in the present case because
they played no part in negotiating or drafting the docu-
ments and the merger documents thus represent a con-
tract of adhesion with respect to them.
As we already discussed, under Indiana law, an
ambiguous contract is construed against the drafter
only as a last resort, after all other indicia of the parties’
intent have been consulted. In the present case, the
trial court properly consulted extrinsic evidence and
concluded that it unequivocally supported the defen-
dants’ interpretation of the merger documents. Accord-
ingly, there was no reason for the court to apply the
rule of contra proferentem.
We further note that the plaintiffs’ argument that the
1997 articles were a contract of adhesion with respect
to them and should be construed in their favor because
they were not involved in drafting it would presumably
apply with equal force to any purported third-party ben-
eficiary to a contract. It would be a perverse rule indeed,
however, if any person claiming to be the intended
beneficiary of an ambiguous contract to which he was
not a party were automatically entitled to have the
contract construed in his favor precisely because he
had played no part in its drafting. Indiana wisely follows
a different approach. See, e.g., St. Paul Fire & Marine
Ins. Co. v. Schilli Transportation Services, Inc., 672
F.3d 451, 456 (7th Cir. 2012) (court is not required to
construe ambiguous contract against drafter in favor
of nonparty).
We thus conclude that the trial court properly consid-
ered extrinsic evidence of the parties’ intent and cor-
rectly construed the relevant contract language.
Accordingly, the trial court properly found in favor of
the insurance company defendants.
The judgment is affirmed.
In this opinion the other justices concurred.
* This appeal originally was argued before a panel of this court consisting
of Justices Palmer, Zarella, Eveleigh, McDonald, and Robinson. Thereafter,
Justice Zarella retired from the court, and Justice Espinosa was added to
the panel. Justice Espinosa has read the briefs and appendices, and listened
to a recording of oral argument prior to participating in this decision.
1
As an alternative ground for affirmance, Anthem Insurance, among other
defendants, contends that the trial court properly rendered judgment in its
favor on a second, independent basis. Specifically, the court (1) determined
that a provision in Anthem Insurance’s 2001 plan of conversion created
a presumption that Anthem Insurance’s membership determinations were
correct for the purpose of demutualization if the decisions were based on
Anthem Insurance’s records and were made in good faith, and (2) found that
both of those conditions were satisfied with respect to Anthem Insurance’s
distribution of the plaintiffs’ alleged membership interests to the state. The
plaintiffs challenge both the trial court’s legal conclusions and its factual
findings. Although our conclusion that the court properly construed the
relevant contract language means that we need not address the alternative
ground for affirmance, we note that we have considered the plaintiffs’ argu-
ments in this respect and find them to be without merit.
2
We refer collectively to the agreement to merge, the plan and joint
agreement of merger, the 1997 articles, and the guaranty policy as the
merger documents.
3
The trial court also considered the relevance of a third policy, denomi-
nated HUSKY, which the Department of Social Services obtained from Blue
Cross beginning in 1995.
4
‘‘Mutual insurance companies are owned by their members, who are
also insureds. . . . Stock insurance companies are owned by stockholders.’’
(Citation omitted.) Gold v. Rowland, supra, 296 Conn. 192 n.7.
After Indiana’s insurance commissioner approved the plan of conversion
with an effective date of November 2, 2001, Anthem, Inc., was organized as
a stock corporation under Indiana law to be the parent corporation of
Anthem Insurance.
5
We hereinafter refer to Anthem, Inc., New CT-Blue, Anthem East, Inc.,
and Anthem Insurance collectively as the insurance company defendants.
Equiserve Trust Company, N.A. (Equiserve), also was named as a defendant.
Equiserve is not a party to this appeal.
6
The fourth amended complaint alleged only the misdelivery of the
Anthem, Inc. stock, conversion of property, and breach of contract. Only
the breach of contract claim remains at issue.
7
At a prior stage of the proceedings, Judge Sheldon likewise concluded
that the relevant contract language was ambiguous. See Gold v. Rowland,
Superior Court, judicial district of Hartford, Docket No. HHD-CV-02-0813759-
S (January 10, 2005).
8
Although Indiana law governs the substantive issues in this appeal, the
parties appear to agree that our standard of review is established by Connect-
icut law. See Montoya v. Montoya, 280 Conn. 605, 613–14 and n.8, 909 A.2d
947 (2006). In any event, we do not believe that the standard of review
would be materially different under Indiana law. See, e.g., Deel v. Deel, 909
N.E.2d 1028, 1034 (Ind. App. 2009).
9
Indiana courts traditionally recognized a distinction between patent
ambiguities, which are apparent on the face of a contractual instrument
and arise by reason of an inconsistency or inherent uncertainty of language,
and latent ambiguities, which arise when the wording of an agreement is
facially clear and intelligible but gives rise to an ambiguity as applied to a
particular set of circumstances. See, e.g., Hauck v. Second National Bank,
153 Ind. App. 245, 261–62, 286 N.E.2d 852 (1972). The traditional rule was
that extrinsic evidence is admissible to explain or clear up a latent ambiguity
but is not admissible to explain or remove a patent ambiguity; id.; which
the court must resolve as a matter of law. See Simon Property Group, L.P.
v. Michigan Sporting Goods Distributors, Inc., 837 N.E.2d 1058, 1071 (Ind.
App. 2005), transfer denied, 855 N.E.2d 1003 (Ind. 2006). In 2006, however,
the Indiana Supreme Court abandoned this distinction between patent and
latent ambiguities, concluding that ‘‘it is proper to admit extrinsic evidence
to resolve any ambiguity.’’ (Internal quotation marks omitted.) Tender Lov-
ing Care Management, Inc. v. Sherls, 14 N.E.3d 67, 72 n.1 (Ind. App. 2014),
quoting University of Southern Indiana Foundation v. Baker, 843 N.E.2d
528, 535 (Ind. 2006).
10
Because we conclude that the 1997 articles and the other merger docu-
ments are components of a single agreement and are ambiguous when read
together, we need not determine whether the 1997 articles, standing alone,
are ambiguous with respect to the membership and demutualization issue.
11
The plan and joint agreement of merger refers to the 1997 articles at
recital C and §§ 1.2, 4.1, and 5.2. Article IV of the group policy provides that
Blue Cross members will retain their interests in Blue Cross prior to the
merger ‘‘[a]s provided in [Anthem Insurance’s] [a]rticles of [i]ncorpora-
tion . . . .’’
12
Article VII of the group guaranty policy issued to Blue Cross group
policyholders at the time of the merger also includes an integration clause.
As we noted, that document also was attached as an exhibit to the agreement
to merge and thus incorporated therein.
13
The record does not indicate the date on which the members of Anthem
Insurance voted to approve the merger.
14
Article IX of the agreement to merge mandates that members of both
Anthem Insurance and Blue Cross convene to approve the merger. Section
9.1 requires that Anthem Insurance convene a meeting as promptly as practi-
cable to vote on the merger and the amended articles of incorporation, and
§ 9.2 requires that Anthem Insurance’s members vote on the plan and joint
agreement of merger. Section 9.3 provides that, following favorable votes
by the members of both Anthem Insurance and Blue Cross, the proper
officers of those companies shall proceed to execute the merger.
Section 10.1 also makes clear that approval of both the agreement to
merge and the plan and joint agreement of merger by Anthem Insurance
members was a condition precedent to the consummation of the merger.
Section 13.1 further provides that the agreement to merge could be termi-
nated in the event that the membership of either merging company failed
to approve the merger. In addition, §§ 6.17 and 8.9 of the agreement refer
to a vote by Anthem Insurance’s membership.
15
To the extent that the plaintiffs contend that it was improper to consider
whether the merger documents and the 1997 articles were part and parcel
of the merger because the merger documents constitute extrinsic evidence
vis-a-vis the 1997 articles, the plaintiffs beg the question. If, as we have
concluded, those documents were part and parcel of the same transaction,
then, by definition, they do not constitute extrinsic evidence.
16
Section 3.1 of the plan and joint agreement of merger contains substan-
tially similar language. Section 5.2 of that document further provides that
‘‘each holder of a certificate of coverage under a group New CT-Blue insur-
ance policy or healthcare benefit contract originally issued after the [e]ffec-
tive [t]ime shall be entitled to receive an Anthem [Insurance] certificate of
membership issued under an Anthem [Insurance] group guaranty insur-
ance policy.’’
17
The plaintiffs do not dispute, however, that the state also remained a
member of Anthem Insurance because it continuously held qualified poli-
cies—first, Care Plus, and then the 1999 group policy that ultimately replaced
Care Plus—from the time of the merger until the demutualization.
18
In their briefs, the plaintiffs repeatedly emphasize that the 1997 articles
and other merger documents speak in terms of ‘‘members’’ and ‘‘policyhold-
ers’’ but generally do not use terms such as ‘‘customers’’ and ‘‘grandfathered
groups.’’ They argue that the trial court improperly adopted the insurance
company defendants’ use of such terminology, which, in their view, gives the
false impression that the merger documents distinguish between premerger
Blue Cross customers and new, postmerger customers. The plaintiffs instead
read the documents to distinguish only between premerger and postmerger
policies. Although, at times, we use the term ‘‘customer’’ for convenience
or to explain the insurance company defendants’ theory of the case, we
reach our ultimate conclusion—that both parties have articulated a plausible
reading of the merger documents—fully cognizant of the fact that the rele-
vant contractual provisions do not use such terminology.
19
As the insurance company defendants note, the 1999 group policy did
not necessarily need to be added to the schedule in order for the relevant
provisions of guaranty policy to apply to it. The guaranty policy defines the
‘‘Anthem [Blue Cross] Contract’’ to include not only the contract identified
on the attached schedule, but also ‘‘any renewal or amendment, or any
replacement thereof . . . .’’ Because the 1999 group policy replaced Care
Plus without lapse, the guaranty policy presumably remained in effect at
the time of demutualization.
20
It is true, as the plaintiffs note, that § 4.1 of the agreement to merge
extends the membership rights provided by § 3.4 to individual certificate
holders under New CT-Blue group policies issued after the merger. It does
so, however, only ‘‘to the extent applicable,’’ and only to individuals who
also hold an Anthem Insurance ‘‘insurance policy or membership certificate
that guarantees [those] benefits . . . .’’ There is no indication, however,
that the plaintiffs ever received certificates that would entitle them to such
benefits, and the extent to which § 4.1 is applicable to them is, of course,
the question we must resolve.
The same can be said of § 8.6 (c) of the agreement to merge, on which
the plaintiffs also rely. Although that provision indicates that individual
holders of certificates of coverage under new postmerger group policies are
entitled to receive certificates of membership, it also states that ‘‘[n]othing
contained in this [s]ection . . . shall affect or alter in any manner the obliga-
tions of the parties under [a]rticle III.’’
21
The plaintiffs contend that § 8.6 of the 1997 articles is inapplicable
because Anthem Insurance issued only one group policy to the state. Notably,
however, the plaintiffs themselves are equivocal on this point. In their princi-
pal appellate brief, they contend that Anthem Insurance issued only the
1999 group policy. In their reply brief, by contrast, they contend that Anthem
Insurance issued only the guaranty policy, and that it was the Anthem
Insurance subsidiary New CT-Blue that issued the 1999 group policy. Draw-
ing a distinction between policies issued by Anthem Insurance and its subsid-
iary makes little sense, however. Section 8.6 is clearly addressed to the
types of health care benefits contracts that would be issued by New CT-
Blue—those that are subject to regular renewal, amendment, or replace-
ment—and, indeed, § 8.6 proceeds to discuss the specific case of a ‘‘member
holding a [q]ualified [m]embership [s]ubsidiary insurance policy or health
care benefits contract . . . .’’
22
Although the plaintiffs are correct that, as a general rule, all words in
a contract must be given meaning; see, e.g., Magee v. Garry-Magee, 833
N.E.2d 1083, 1088 (Ind. App. 2005); the trial court correctly observed that
Indiana courts have at times departed from this rule in concluding that
certain phrasing is mere surplusage. See, e.g., Irwin v. Kilburn, 104 Ind.
113, 116–17, 3 N.E. 650 (1885).
23
The parties also disagree with respect to their interpretation of various
provisions of the merger documents that seek to ensure that Blue Cross
members such as the state will recoup their full interests in the merged
entity upon demutualization. The record before us is insufficient to evaluate
these arguments.
24
Although the trial court found that the plaintiffs each held certificates
of coverage under the 1999 group policy, there is no indication in the record
that the plaintiffs ever received guaranty policies, certificates of member-
ship, or other documents indicating that they were granted membership in
Anthem Insurance by virtue of their participation in the 1999 group policy,
or that they ever paid membership fees to Anthem Insurance or exercised
or sought to exercise voting rights or other privileges of membership.