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Paulsen v. Ability Ins. Co.

United States District Court, D. South Dakota, Northern Division

October 29, 2012

Dorothy PAULSEN, Plaintiff,
v.
ABILITY INSURANCE CO., f/k/a Ability Resources, Inc.; Medico Life Insurance Co.; Ability Reinsurance Holdings Ltd., a Bermuda Ltd. Co.; and Ability Reinsurance Ltd., a Bermuda Ltd. Co.; Defendant.

Page 910

Seamus Culhane, Nancy J. Turbak Berry, Turbak Law Office, P.C., Watertown, SD, for Plaintiff.

Daniel F. Duffy, Gregory James Erlandson, Terry G. Westergaard, Bangs, McCullen, Butler, Foye & Simmons, Rapid City, SD, Angela C. Zambrano, Weil, Gotshal & Manges, LLP, Dallas, TX, Kevin F. Meade, Weil, Gotshal & Manges LLP, New York, NY, for Defendant.

ORDER AND OPINION

CHARLES B. KORNMANN, District Judge.

Dorothy Paulsen filed a complaint against defendants alleging breach of contract, breach of the implied covenant of good faith and fair dealing, and seeking punitive damages. These accusations stem from a long-term care insurance policy

Page 911

purchased by plaintiff from Medico Life Insurance Company (" Medico" ) in 1996, a policy which defendants admit Ability Insurance Company (" Ability" ) has assumed the responsibility to adjust, manage and pay claims as appropriate under the policy. Plaintiff contends that defendants initially failed to pay benefits due under the policy and that, following appeal of this decision, only then did Ability provide benefits under the plan but only a portion of the benefits rightly due. Plaintiff alleges that only later, after filing this case, did defendants begin paying the full benefits owed.

Ability, joined by co-defendants Ability Reinsurance Holdings Limited and Ability Reinsurance Limited, filed a motion for partial summary judgment on plaintiff's claim of emotional damages resulting from the alleged breach of the covenant of good faith. Defendants argue that there is no evidence that plaintiff suffered emotional distress by defendants' actions because (1) plaintiff was never aware of Ability's coverage decisions and (2) plaintiff is unable to provide any objective proof that she suffered emotional distress caused by defendants. Defendants also argue that the harms alleged by plaintiff do not constitute an " exceptional case."

I. BACKGROUND

A. Standard of Review

Fed.R.Civ.P. 56 requires that this court dismiss all claims for which the movant shows there is no genuine issue as to any material fact and that the movant is entitled to summary judgment as a matter of law. The movant must support the motion with evidence admissible at trial in order to meet its initial burden showing the absence of a genuine issue of material fact. Adickes v. S.H. Kress & Co., 398 U.S. 144, 159, 90 S.Ct. 1598, 26 L.Ed.2d 142 (1970), superseded on other grounds by Celotex Corp. v. Catrett, 477 U.S. 317, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). If the moving party meets its initial burden, which may be achieved by showing a lack of evidence for a necessary element of plaintiff's claim, see Whitley v. Peer Review Sys., Inc., 221 F.3d 1053, 1055 (8th Cir.2000), abrogated on other grounds by Torgerson v. City of Rochester, 643 F.3d 1031 (8th Cir.2011), the nonmoving party cannot merely rest upon allegations or denials in its pleadings to defeat the motion, Forrest v. Kraft Foods, Inc., 285 F.3d 688, 691 (8th Cir.2002). Instead, the nonmoving party must " substantiate his allegations with enough probative evidence to support a finding in his favor" by citing to particular materials in the record which support the assertion that a fact is genuinely disputed. Roeben v. BG Excelsior Ltd. P'ship, 545 F.3d 639, 642 (8th Cir.2008). A genuine dispute arises " if the evidence is such that a reasonable jury could return a verdict for the nonmoving party." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986).

The court must view the admissible evidence in a light favorable to the nonmoving party and give that party the benefit of all reasonable inferences drawn from the evidence. Country Life Ins. Co. v. Marks, 592 F.3d 896, 898 (8th Cir.2010). However, the scope of admissible evidence is quite finite: " Only disputes over facts that might affect the outcome of the suit under the governing substantive law will properly preclude the entry of summary judgment." Liberty Lobby, 477 U.S. at 248, 106 S.Ct. 2505.

B. Factual Background

Viewing the evidence in the light most favorable to plaintiff, the facts are as follows. In November 1996, Medico Life Insurance Company (" Medico" ) sold plaintiff a long-term care policy (" policy" ). According to plaintiff, this ...


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