IN THE UNITED STATES COURT OF APPEALS
FOR THE FIFTH CIRCUIT
No. 96-11110
Summary Calendar
HERMAN E. MITCHELL,
Plaintiff-Appellant,
versus
ALLSTATE LIFE INSURANCE COMPANY,
Defendant-Appellee.
Appeal from the United States District Court for the
Northern District of Texas, Dallas
(3:94-CV-1562-R)
March 14, 1997
Before GARWOOD, JOLLY and DENNIS, Circuit Judges.*
PER CURIAM:
Plaintiff-appellant Herman E. Mitchell (Mitchell) appeals the
district court’s summary judgment dismissal, on the basis of
limitations and res judicata, of his fraud suit against defendant-
appellee Allstate Life Insurance Company (Allstate). We affirm,
being essentially in agreement with the reasoning of the district
*
Pursuant to Local Rule 47.5, the Court has determined that
this opinion should not be published and is not precedent except
under the limited circumstances set forth in Local Rule 47.5.4.
court.
Mitchell’s instant suit asserts that Allstate committed fraud
by not including in the group long term disability insurance policy
issued by Allstate in the spring of 1988 to Mitchell’s employer,
Herring Marathon Group, Inc. (Herring), a “Presumptive Disability
Benefit based on a 50% loss of earnings basis” that Allstate’s
written proposal furnished to John O’Leary (O’Leary), the
independent broker assisting Herring in purchasing its insurance,
had said would be included, and which O’Leary had accordingly
informed Herring and Mitchell, Herring’s Chief Financial Officer
and Vice President for Administration who “was in charge of
procuring” the policy for Herring, would be provided.
On May 9, 1988, Mitchell, on behalf of Herring, wrote Allstate
requesting that a change be made in the policy definition of
disability to be “own occupation.”
Allstate subsequently transferred all its disability benefits
business to Metropolitan Life Insurance Company (Metropolitan).
Thereafter, in June 1989, Mitchell filed with Metropolitan a claim
for disability benefits under the policy because of eye problems.
Metropolitan denied the claim August 11, 1990. Mitchell, by his
August 18, 1989, letter to Metropolitan, enclosed a copy of the
policy definition of disability and said he met it. Metropolitan
responded by its letter of August 23, 1989, in substance advising
that the enclosure to Mitchell’s August 18 letter was correct, but
that Mitchell did not meet the definition. Mitchell in his
2
September 25, 1989, letter to Metropolitan stated that “[a]fter
review of the policy and your previous letter” he did not
understand why his claim was denied.1 Mitchell then retained
counsel, who wrote Metropolitan about the claim, but Metropolitan
again denied it on February 2, 1990.
Mitchell filed suit against Allstate and Metropolitan in June
1990 (the “first suit”) seeking to recover on the policy, and also
making a general claim of fraud against Allstate. The case was
removed to the United States District Court for the Eastern
District of Texas. In an order entered October 11, 1991, the
district court ruled that the case was governed by ERISA and
Mitchell would not be entitled to a jury trial except on his “cause
of action for fraud in the sale of the insurance policy by Allstate
Life Insurance Company. To the extent that plaintiff has
adequately pled such a cause of action and that it survives
defendants’ motions for summary judgment, plaintiff will be
entitled to a jury trial on this cause of action.” On October 10,
1991, Mitchell had filed in the first suit an opposition to
defendants’ motion for summary judgment supported by his affidavit
and by two affidavits of O’Leary. O’Leary’s first affidavit
attaches a copy of Allstate’s written proposal for Herring which
Allstate had furnished O’Leary in early March 1988 and which
1
In his complaint below Mitchell alleges he “was not given a
copy of the complete insurance policy . . . until on or about
September 4, 1990.”
3
includes the Presumptive Disability Benefit language,2 and a copy
of O’Leary’s March 14, 1988, letter to Mitchell, at Herring. The
March 14, 1988, letter states that the Allstate policy would
include:
“1) Total Disability for own occupation to age 65 . . .
2) Presumptive Disability Benefit based on 50% loss of
earnings test.
. . . .”
O’Leary’s second affidavit states that “based on the oral and
written representations of Allstate, I represented to my client
[Herring] that the Allstate policy had a Presumptive Disability
Benefit——if insured earns less than 50% of earnings because of
disability, then the insured will be presumed as totally disabled.”
Mitchell’s affidavit states: “In 1990, I earned less than one
third of the income that I earned in 1985.” It also states:
“At the time the policy was sold to the Herring
Marathon Group Inc. (in 1988) by Defendant Allstate, I
was in charge of procuring such a policy for the
employer. The policy that I was told I was purchasing
for the Herring Marathon Group Inc. was an ‘own
occupation’ policy. This was explained to me as a policy
that provided benefits if I was unable to perform any one
of the materials [sic] duties of my occupation. This was
also verified to me by letter dated march [sic] 14, 1988
from J. Brock O’Leary to me.”
The district court on January 6, 1993, rendered judgment in
the first suit that Mitchell take nothing by his suit and that it
2
O’Leary’s affidavit in the present suit says that he
“presented” this Allstate written proposal to Herring.
4
be dismissed on the merits. Mitchell filed a motion for new trial
directed, inter alia, to his fraud claim. The district court
denied the motion for new trial by order dated May 27, 1993, noting
that “plaintiff claims that this Court improperly dismissed his
claim for misrepresentation in the sale of an insurance policy.”
The court focused on the claim that Mitchell was told an “own
occupation” policy meant he would be entitled to benefits if he was
unable to perform any one of his duties and that this was verified
in the O’Leary March 14, 1988, letter. The court noted that the
letter was not inconsistent with the policy as regards “own
occupation.” It also noted that Mitchell’s fraud pleadings did not
meet the requirements of Fed. R. Civ. Pro. 9(b). Mitchell
appealed, and this Court affirmed March 3, 1994.
The present suit was filed in May 1994 and was removed to the
court below, the United States District Court for the Northern
District of Texas.
Mitchell argues that the first suit is not res judicata
because his fraud claim there related only to the “own occupation”
matter, not to the Presumptive Disability issue. We are not
persuaded. In the first place, the Presumptive Disability issue
was plainly raised by O’Leary’s affidavits that Mitchell filed in
opposition to the defendants’ summary judgment motion in the first
suit, as well as by Mitchell’s affidavit there that he relied on
the March 14, 1988, letter and that his earnings were less than a
5
third of what they had been. In the present suit, Mitchell has
filed one or more affidavits stating that he realized Allstate had
committed fraud respecting the Presumptive Disability matter when
on September 29, 1991, he read the Allstate proposal for Herring
which he got from O’Leary,3 that “since June 23, 1989 . . . I have
been unable to perform work providing me with 50% or more of my
pre-disability basic monthly earnings . . . in fact, I have earned
less than 33% of my basic monthly earnings,” that he relied on the
O’Leary March 14, 1988, letter in believing that the policy would
include a Presumptive Disability Benefit based on a 50% loss of
earnings test, and that Herring would not have purchased the policy
had it not been represented by the March 14 letter to include both
a Presumptive Disability Benefit and an “own occupation” provision.
Moreover, in his amended (and final) complaint in the present case,
Mitchell expressly characterizes his prior suit as having included
a claim for fraud based on the policy’s not including the provision
for Presumptive Disability based on 50% loss of earnings.4
3
As the district court in the present action pointed out,
there is no allegation or evidence that Allstate’s proposal was not
always readily available to Mitchell through O’Leary.
4
The amended complaint alleges that in the first suit:
“Plaintiff asserted a cause of action for Allstate’s
fraud and misrepresentation of the actual benefits to be
conferred under the insurance policy to induce
Plaintiff’s employer to purchase the insurance policy
which became, when issued, the subject ERISA plan.
Specifically, the insurance policy was to provide
‘presumptive disability’ coverage to Plaintiff, in
particular a loss of fifty percent or more in earnings
6
Finally, on appeal of the dismissal of the first suit to this
Court, Mitchell specifically argued that the district court erred
by dismissing his claim of fraud against Allstate on the basis that
Allstate had represented in its proposal that its policy would
contain a provision that a loss of fifty percent or more in earning
constitutes total disability but did not include any such provision
in the policy when it was issued.
However, even if Mitchell’s first suit had raised only the
fraud claim that Allstate did not include in its policy as issued
the sort of “own occupation” provision he and Herring had been
informed by Allstate, through O’Leary, that it would contain,
nevertheless this would not suffice to avoid res judicata. In
determining whether the prior federal court judgment was on the
same cause of action for res judicata purposes, this Court follows
a transactional test which focuses on whether the two suits arise
from “the same nucleus of operative facts.” Matter of Howe, 913
F.3d 1138, 1144 (5th Cir. 1996). “Res judicata ‘bars all claims
that were or could have been advanced in support of the cause of
action on the occasion of its former adjudication, . . . not merely
those that were adjudicated.” Id. See also Nilsen v. City of Moss
Point, 701 F.2d 556, 559 (5th Cir. 1983); Hogue v. Royce City, 939
F.2d 1249, 1252 (5th Cir. 1991). Accordingly, any failure by
Mitchell to specifically plead in the prior suit Allstate’s failure
would deem an employee automatically totally disabled.”
7
to include in the policy the Presumptive Disability provision which
its proposal represented would be included, and any failure by the
district court in the first suit to specifically address or rule on
that particular matter, is simply irrelevant to res judicata (as
distinguished from collateral estoppel), because the district court
in the first suit rendered judgment that Mitchell take nothing by
his entire suit, and the fraud claim respecting the Presumptive
Disability provision was one which could have been advanced in that
suit. Here both the first suit and the present suit relate to the
same transaction and nucleus of operative facts, namely Allstate’s
alleged fraud in representing by its proposal for Herring delivered
to O’Leary, and O’Leary’s consequent representations to Mitchell in
respect thereto (principally the March 14, 1988, letter), as to
what would be in the 1988 policy, when the policy as issued did not
contain the provisions as represented, all to the prejudice of
Mitchell’s single disability claim.
Nor can Mitchell avoid res judicata by claiming that Allstate
and Metropolitan stonewalled or lied in response to discovery in
the first suit. In the first place, Mitchell, as his affidavit in
this suit reflects, by September 1991 at the latest, knew and was
able to prove the contents of the Allstate proposal to Herring
including its Presumptive Disability provision, that it had been
authored by Allstate and furnished to O’Leary, that O’Leary had
informed him and Herring about it before the policy issued,
8
including by Herring’s March 14, 1988, letter to him, that the
policy did not contain such a provision, and that he met the test
of the Presumptive Disability provisions of the proposal and of the
March 14, 1988, letter; and by that time, at the latest, Mitchell
believed Allstate had been guilty of fraud in this respect.5 The
first suit was not tried until over a year later, in December 1992.
Mitchell’s fraud claim was not rendered unavailable or unprovable
in the first suit by any of the conduct or misconduct therein of
Allstate or Metropolitan of which Mitchell now complains.6 In the
second place, even if Allstate or Metropolitan were guilty of
misconduct in the first suit which clearly produced an unjust
result therein but which was not rectifiable by appeal and which
was such as to justify setting aside the final judgment therein,
Mitchell’s remedy would be to seek to set aside the judgment in the
first case by a motion therein under Fed. R. Civ. Pro. 60(b) or (an
even greater stretch) by an independent action in the Eastern
District of Texas (which rendered the judgment in the first suit)
to set aside that judgment; but Mitchell has not filed such a
motion or action, and the present suit is in the Northern District
5
Mitchell’s amended (and final) complaint in the present suit
alleges that “Plaintiff did not discover the fraud,
misrepresentation and other actions of Defendant complained of in
the Plaintiff’s First Amended Complaint until September 29, 1991.”
6
What was fatal to Mitchell’s fraud claim in the first suit
was his failure to properly plead it and his singular emphasis on
the “own occupation” matter to the near total exclusion of the
Presumptive Disability matter.
9
of Texas, which is not the proper forum to set aside a judgment of
the Eastern District of Texas. See Russell v. Sunamerica
Securities, Inc., 962 F.2d 1169, 1176-77 (5th Cir. 1992).7
The judgment of the district court is correct and is therefore
AFFIRMED.
7
Even in the present action, Mitchell has not sought to set
aside the judgment in the first suit. He merely seeks to “estop”
Allstate from relying on it. That is simply an impermissible
evasion of the rules of res judicata.
10