Chiurazzi, W. v. Metlife Investors ( 2015 )

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NON-PRECEDENTIAL DECISION - SEE SUPERIOR COURT I.O.P. 65.37
WAYNE M. CHIURAZZI IN THE SUPERIOR COURT OF
PENNSYLVANIA
Appellee
v.
METLIFE INVESTORS DISTRIBUTION
COMPANY
Appellant No. 1236 WDA 2014
Appeal from the Order June 30, 2014
In the Court of Common Pleas of Allegheny County
Civil Division at No(s): G.D. 13-003841
BEFORE: BENDER, P.J.E., LAZARUS, J., and MUNDY, J.
MEMORANDUM BY LAZARUS, J.: FILED MARCH 30, 2015
MetLife Investors Distribution Company (MetLife) appeals from the trial
court’s order denying its motion for summary judgment in this declaratory
judgment action. After careful review, we quash.
Wayne M. Chiurazzi and his wife at the time, Janna P. Chiurazzi
(former wife/ex-wife),1 were issued an annuity contract by MetLife; both
Chiurazzi and his former wife were joint owners of the contract. 2 Under the
contract, a joint owner is defined as “[i]f there is more than one Owner,
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1
The Chiurazzis subsequently divorced.
2
Chiurazzi put $50,000 into the annuity. The rider guaranteed Chiurazzi his
minimum income benefit which, as of the date of the reconsideration
hearing, was $20,000 more than the pure increase in value from the original
contribution. N.T. Reconsideration Hearing, 7/31/14, at 6.
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each Owner shall be a Joint Owner of the Contract.” Annuity Contract, GMIB
Termination Provisions - Definitions, 6/5/06, at 4. The annuity had a
Guaranteed Minimum Income Benefit Rider (Rider) which enhanced the
financial value of the annuity contract. The Chiurazzis paid a quarterly fee
for the Rider. According to the termination provisions of the annuity
contract, the Rider “will terminate upon the earliest of . . . [c]hange of
owner or [j]oint owner, for any reason, subject to our Administrative
Procedures.” Id. at (e). Although an owner of the contract may be changed
at any time, the change will become effective on the date notice of the
change is signed and any change of owner “is subject to [MetLife’s]
underwriting rules in effect at the time of the request.” Id. at General
Provisions, at 5.
As part of his marital property settlement agreement, Chiurazzi
executed a policy service request form asking that MetLife change the
contract and delete his former wife as a joint owner. In response to this
request, MetLife stated it would terminate the Rider to the contract after
Chiurazzi returned an acknowledgement form indicating that the ownership
change would terminate the Rider. When Chiurazzi failed to return the
change in ownership form, MetLife proceeded to process his requested
ownership change, removed ex-wife as a joint owner, and terminated the
Rider.
Subsequently, Chiurazzi asked MetLife to reverse the ownership
change. The request was approved, pending receipt by MetLife of a letter
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from the Chiurazzis saying that they had consulted a tax advisor and that
they wished to reinstate the Rider and reverse the ownership change. No
letter was received so the case was closed. Ultimately, on December 29,
2011, MetLife restored the Rider, adding Chiurazzi’s ex-wife back onto the
contract. Subsequently, Chiurazzi asked that ex-wife again be removed
from the contract and that the Rider remain intact. MetLife refused to
remove her; the Rider currently remains intact.
On March 1, 2013, Chiurazzi3 filed the underlying declaratory
judgment action4 alleging that MetLife acted in bad faith.5 MetLife filed an
answer denying any wrongdoing and asserting that the terms of the Rider
expressly provide for its termination should there be a change of the joint
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3
The trial court incorrectly states in its opinion that MetLife instituted the
declaratory judgment action.
4
Declaratory Judgments Act, 42 Pa.C.S. §§ 7531-7541.
5
Pennsylvania’s Bad Faith Statute, 42 Pa.C.S. § 8371. Under section 8371,
to constitute bad faith it is not necessary that the insurer's conduct be
fraudulent. However, mere negligence or bad judgment is not bad faith;
rather, to support a finding of bad faith, the insurer's conduct must be such
as to import a dishonest purpose. Condio v. Erie Ins. Exch., 899 A.2d
1136, 1143 (Pa. Super. 2006). In other words, a plaintiff must show that
the insurer breached its duty of good faith through some motive of self-
interest or ill-will. Id.; see Brown v. Progressive Ins. Co., 860 A.2d 493(Pa. Super. 2004) (bad faith requires proof that insurer: (1) lacked
reasonable basis for denying coverage or benefits, and (2) knew or
recklessly disregarded its lack of a reasonable basis in denying the claim).
Moreover, under section 8371, when an insured proves that an insurer has
acted in bad faith, he or she can be awarded: (1) interest on the amount of
the claim from the date the claim was made; (2) punitive damages; and/or
(3) court costs and attorney fees. 42 Pa.C.S. § 8371(1), (2), (3).
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owners for any reason. Chiurazzi claims that his divorce did not constitute a
“change of ownership” of the contract and that the Rider should be
reinstated. On November 4, 2013, MetLife filed a motion for summary
judgment. While a hearing on the motion was scheduled to take place on
December 16, 2013, the record is devoid of any evidence that a hearing ever
occurred.
On June 30, 2014, the trial court denied MetLife’s summary judgment
motion by way of order, stating:
IT IS HEREBY ORDERED that Defendant’s Motion is DENIED.
There are public policy implications in this case that warrant
denial. The termination of the policy is due to Plaintiff’s divorce
with no consideration for what has been paid before and no
effort or even willingness to recalculate, form an actuarial basis,
the benefit available on premium going forward. Further, this
case has [a] chilling effect on access to marital law.
Trial Court Order, 6/30/14, at 2.
On July 11, 2014, Metlife filed a motion for reconsideration of the
court’s summary judgment decision, claiming that nowhere in his complaint
did Chiurazzi allege that the Rider violates Pennsylvania public policy or that
it has any “chilling effect on access to marital law,” and that the court sua
sponte raised those issues at argument.6 Argument on the reconsideration
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6
Citing its grounds for reconsideration, MetLife argued that the court may
have misapprehended that the case involved cancellation of the contract
itself, rather than the true issue -- cancellation of the rider to the annuity
contract. See Defendant’s Motion for Reconsideration, 7/11/14, at 3.
Moreover, MetLife claimed that the case dealt strictly with contract
interpretation and did not involve any public policy considerations. Id. at 4.
(Footnote Continued Next Page)
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motion was scheduled for July 31, 2014. However, on July 29, 2014, Metlife
filed a notice of appeal from the trial court’s order denying summary
judgment.7
Before addressing the merits of the issues raised on appeal, we must
first examine the apparent interlocutory nature of the order from which the
appeal is taken.
Instantly, MetLife appeals from an order denying summary judgment.
Generally, an order is final and appealable if it disposes of all claims and all
parties, is explicitly defined as a final order by statute, or is certified as a
final order by the trial court. See Pa.R.A.P. 341 (Final Orders). The
Declaratory Judgment Act provides:
§ 7532. General scope of declaratory remedy
Courts of record, within their respective jurisdictions, shall have
power to declare rights, status, and other legal relations whether
or not further relief is or could be claimed. No action or
proceeding shall be open to objection on the ground that a
declaratory judgment or decree is prayed for. The declaration
may be either affirmative or negative in form and effect, and
such declarations shall have the force and effect of a final
judgment or decree.
_______________________
(Footnote Continued)
Finally, MetLife asserted that the instant case does not violate public policy
or have a chilling effect on marital law. Id. at 5.
7
We note that on July 30, 2014, the trial court lost jurisdiction over the
case as thirty days elapsed from the date of the underlying summary
judgment order without the trial court expressly granting MetLife’s motion
for reconsideration. See Pa.R.A.P. 1701(b)
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42 Pa.C.S. §7532 (emphasis added). Moreover, the appealability of orders
entered in declaratory judgment actions has been analyzed as follows:
A trial court order is final and immediately appealable pursuant
to Pa.R.A.P. 341(b)(2), when the court enters a declaratory
judgment order either affirmatively or negatively declaring the
rights and duties of the parties, effectively disposing of the
claims presented, even if the order does not expressly dispose of
all claims or specify that the claims were declaratory in nature[.]
See also General Acc. Ins. Co. of America v. Allen, 692 A.2d
1089 (Pa. 1997) (holding trial court's determination of insurer's
duty to defend was final and appealable under Pa.R.A.P.
341(b)(2) and Section 7532 as well as Rule 341(b)(1), even
though trial court did not expressly determine insurer's duty to
indemnify, where order was final determination as to legal rights
and obligations of parties arising out of insurance policy, and
effectively disposed of all claims presented in declaratory
judgment action). Conversely, if the court makes no such
declaration, the order is interlocutory. Nationwide Mus. Ins.
Co. v. Wickett, 763 A.2d 813, 817 (Pa. 2000).
Nat'l Cas. Co. v. Kinney, 90 A.3d 747, 754 (Pa. Super. 2014).
As a general matter, a party seeking summary judgment contends
that, in considering the pleadings, depositions, answers to interrogatories,
admissions on file, and affidavits, there exists no genuine issue of material
fact and, therefore, the moving party is entitled to judgment as a matter of
law. Pa.R.C.P. 1035.2. Thus, a record that supports summary judgment will
either: (1) show the material facts are undisputed or (2) contain insufficient
evidence of facts to make out a prima facie cause of action or defense and,
therefore, there is no issue to be submitted to the jury. Lineberger v.
Wyeth, 894 A.2d 141, 146 (Pa. Super. 2006) (citation omitted).
Conversely, a record that does not support the grant of summary judgment
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will either involve disputed material facts or contain sufficient evidence of
facts to make out a prima facie cause of action or defense to be submitted to
a factfinder.
Here, MetLife’s summary judgment motion action alleged that the
unambiguous and clear language of the annuity contract justified
termination of the Rider upon a change of ownership for any reason and that
MetLife’s decision was made in good faith and was reasonable based upon
the contract’s clear language. By denying summary judgment, the trial
court essentially concluded that the language of the contract was not so
clear and unambiguous that, as a matter of law, the Rider should have been
terminated when Chiurazzi removed his ex-wife as a joint owner.
Lineberger, supra; Pa.R.C.P. 1035.2 (Note). The order permits the action
to proceed due to the fact that genuine issues -- regarding MetLife’s duty to
keep the Rider intact with the removal of ex-wife and whether its actions
constituted bad faith under section 8371 -- still exist.
The trial court states in its Pa.R.A.P. 1925(a) opinion that “MetLife
then brought this declaratory judgment action seeking a declaration that [it]
can terminate the Rider.” Trial Court Opinion, 8/15/14, at 2 (emphasis in
original). However, the trial court is incorrect in its interpretation of the
procedural history of this case. Chiurazzi brought this declaratory judgment
action against MetLife claiming that the Rider should be able to remain intact
without ex-wife as a joint owner and that MetLife’s actions constituted bad
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faith. Accordingly, while the trial court may have decided that MetLife was
not entitled to summary judgment at this juncture in the litigation, there has
been no final determination as to MetLife’s exact obligations when removing
an owner under the annuity contract and whether its actions constituted bad
faith under section 8371 by refusing to permit former wife to be removed
from the contract with the Rider intact. Cf. Wickett, 763 A.2d 813 (Pa.
2000) (where trial court sustained defendant’s preliminary objections against
plaintiffs where that order ended plaintiffs’ declaratory judgment action and
“essentially constituted a declaration that the plaintiffs had no legal basis to
recover underinsured motorist benefits under the insurance contract against
these . . . defendants,” order was final and appealable).
MetLife claims in the Statement of Jurisdiction section of its brief that
the instant order is final because it has been expressly defined as a final
order by statute, specifically, the Declaratory Judgments Act (42 Pa.C.S. §
7531). Our Court addressed this very issue in Kinney, supra, where an
insurer filed a declaratory judgment action asking the court to determine
whether the insured’s right to seek recovery for personal injuries and
damages sustained in a motor vehicle accident should be limited to a claim
under the Workers’ Compensation Act8 (where defendants were in the
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8
77 P.S. §§ 1-1041.4, 2501-2708.
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course and scope of their employment at the time of the accident) and for a
declaration that it had no coverage obligations relative to any injuries or
damages sustained by defendants in the accident. When the court denied
the insurer’s motion for summary judgment, the insurer argued on appeal
that the order was immediately appealable because it “ended the declaratory
judgment litigation, leaving no questions of law or disputed issues of
material fact for resolution.” Id. at 753.
Relying heavily upon our Supreme Court’s decision, Wickett, supra,
our Court in Kinney agreed with the insurer, concluding that by denying the
insurer’s motion for summary judgment, the trial court effectively ruled that
the insurer had a legal obligation to the insured, where the injured
defendants were not acting in the course and scope of their employment at
the time of the motor vehicle accident. Id. at 755. Thus, the Court held
that “the [trial] court’s order denying summary judgment effectively
resolved all issues presented in [the insurer’s] declaratory judgment
action.” Id. (emphasis added).
Instantly, the insured, Chiurazzi, filed the underlying declaratory
judgment action. Therefore, unlike the procedural posture in Kinney and
Wickett, the party moving for summary judgment is not the same party
that originally sought declaratory relief. Therefore, there has been no
affirmative or negative declaration of rights and duties of the parties or
effective disposition of the claims presented. Kinney, supra; Wickett,
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supra. In fact, the public policy implications discussed by the court in its
order denying summary judgment seem to be one of the genuine issues of
material fact remaining in the case of potential bad faith on MetLife’s part.
See Trial Court Opinion, 6/30/14, at 2 (action sought by MetLife “struck
[trial judge] as being against public policy and had a chilling effect on access
to marital law”).
Our full Court recently stated that:
[O]ur Supreme Court made clear that its holding in Wickett did
not render an order, that did not fully release a party or
completely resolve the dispute, a final order. Rather such an
order would be deemed a partial declaration of the parties’ rights
and would not be immediately appealable.
Modern Equipment Sales & Rental Co. v. Main Street Amer. Ass. Co.,
106 A.3d 784, 788 (Pa. Super. 2014) (en banc) (citing Pa. Bankers Ass'n
v. Pa. Dep't of Banking, 948 A.2d 790 (Pa. 2008)) (emphasis in original).
Here, Chiurazzi sought a declaration that MetLife was obligated to keep the
Rider in effect even with ex-wife being removed from the contract as a joint
owner and that MetLife engaged in bad faith by refusing to remove ex-wife
from the contract and uphold the Rider. Because the trial court’s order did
not completely resolve the dispute in the instant case, we find that MetLife
has not appealed from a final order. Modern Equipment Sales, supra;
Pa. Bankers Ass’n, supra. Thus, we quash. See Pa.R.A.P. 301.
Appeal quashed.
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Judgment Entered.
Joseph D. Seletyn, Esq.
Prothonotary
Date: 3/30/2015
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