Appeal from the United States District Court for the Southern District of Indiana, Indianapolis Division.
No. IP 93-1321 CM/S--Larry J. McKinney, Judge.
Before POSNER, Chief Judge, and DIANE P. WOOD and EVANS, Circuit Judges.
DIANE P. WOOD, Circuit Judge.
Submitted December 9, 1996 *fn*
Billie J. Roe, now Billie Chisman, has spent a number of years trying to secure long-term disability benefits under an insurance policy she briefly held from the Massachusetts Casualty Insurance Company (MCIC). In the first appeal in this case, Massachusetts Casualty Insurance Co. v. Roe, 93 F.3d 323 (7th Cir. 1996), we affirmed the district court's judgment for MCIC, which reached us on certification under Fed. R. Civ. P. 54(b). While that appeal was pending, proceedings continued in the district court on Roe's claims against third-party defendants Brent Sewell and Thomas Dyer (two insurance agents) and Sun Life of Canada (MCIC's parent corporation.) Once again, Roe failed to convince the court that she was entitled to a trial. The district court granted summary judgment to all three third-party defendants, bringing this litigation to a close. We agree that Sun and Dyer are entitled to judgment as a matter of law, but we find that Roe has alleged enough under Indiana law to proceed with her case against Sewell.
Because we have already described the facts in some detail in Massachusetts Casualty, we review here only those that are necessary for the present case. We recount them, as we must, from the standpoint most favorable to Roe, recognizing that it is entirely possible that a finder of fact might not see things this way. Brent Sewell was an insurance agent authorized to sell insurance policies for MCIC, for Sun, and for other companies. Sewell worked in an office managed by Thomas Dyer. Roe herself had been an insurance agent for a period of time, but she was working as a store manager for the grocery chain Aldi, Inc., by the time the events in this case took place. In early June 1991, Roe met with Sewell to discuss her interest in obtaining long-term disability insurance. Sewell gave her an application for an MCIC disability policy. Roe filled out parts of it, and Sewell completed other parts with her help.
Question 6 of the application form specifically asked the applicant to "describe all disability coverage in force and any pending applications with all companies." Roe informed Sewell that she had long-term disability insurance through Aldi, but that she did not know any of the details about that coverage. Sewell recorded on the form that she had short-term disability insurance through her employer, Aldi, but at the time he left the rest of that question blank. Sewell promised Roe that he would investigate Aldi's long-term coverage for her and complete question 6 later. At the close of that meeting, Roe signed the MCIC application, despite this omission. She placed her signature just below a five-paragraph statement on the last page of the application, which began as follows:
To the best of my knowledge and belief, all of the foregoing statements and all of those in Part II (Medical Exam), if any, of the Application are true, complete, and correctly stated. They are offered to Massachusetts Casualty Insurance Company as the basis for any insurance issued on this Application. I understand that any false statements may result in the loss of coverage under the policy. . . .
Because she had not yet decided whether to apply for the MCIC policy, Roe also asked Sewell to leave the date blank on the application. A few days later, she called him and told him to proceed.
Sewell never contacted Aldi or otherwise found out about Roe's other long-term disability insurance. Noting the problem, Dyer told Sewell that he had to obtain the missing information or return the application to Roe. Sewell responded by disappearing into his office for a few moments and returning with the news that he had just talked with Roe and had found out what he needed to know. As Dyer and Sewell reviewed the entire application, they reached question 6 and Dyer asked whether Roe had any other coverage. Sewell replied (based on his alleged telephone conversation) that she did not; Dyer wrote "No Other" on the application form. The agents forwarded the application to MCIC on June 24, 1991.
In late September or early October 1991, MCIC issued a long-term disability policy for Roe with an effective date of July 23, 1991. Sewell promptly mailed this policy to Roe, and also informed her by telephone that she would need to pay the premiums due for July, August, and September. Roe received her copy of this policy but objected to the idea of paying premiums "retroactively." She accordingly asked Sewell to have a new policy issued for her with an October 1, 1991 effective date. He agreed to ask MCIC to do this, which it did. Without the new policy in hand, Roe began paying her monthly premiums in October. Meanwhile, MCIC mailed the policy to Sewell, but it languished in Sewell's office between November 8, 1991, the date when he received it, and December 3, 1991, the date when Roe called to let him know she had suffered an injury that day at work. Two days later, Sewell met with Roe and personally delivered the policy (with attached application) and a Statement of Health form that asked Roe to certify that her health had not changed since she completed the application. At Sewell's suggestion, Roe falsely so certified, thereby concealing the fact that two days earlier her health had taken a significant change for the worse.
At no time after her initial June meeting with Sewell did Roe read the completed application: not before Sewell and Dyer submitted it to MCIC, not when the first (rejected) policy reached her, and not even on December 5, when she received the reissued October 1 policy. Indeed, when she submitted her claim to MCIC for long-term disability benefits, she truthfully disclosed that she had other long-term insurance through Aldi. MCIC paid benefits to her from mid-1992 until the end of the year, when it discovered the incorrect "No Other" statement on her application. In Massachusetts Casualty, we affirmed the district court's decisions allowing MCIC to rescind the policy and recover the money it had paid to Roe, and declaring that the policy did not cover Roe's injuries. Those decisions necessarily rejected Roe's claim that she was entitled to benefits from MCIC under the policy.
This appeal covers the third-party claims that Roe filed alleging that Sewell, Dyer, and Sun (as well as MCIC) had "carelessly and negligently" failed to do what they had promised, namely, to determine what other long-term disability insurance Roe had and accurately to report this information on her application. She claimed that Sewell and Dyer had acted as agents of MCIC and Sun, and that in their capacity as agents they had represented on the form that Roe had "no other" benefits. Under these circumstances, she argued, MCIC and Sun were responsible for the negligent actions of their agents. Roe denied that Sewell ever called her for any ...