United States Court of Appeals
For the First Circuit
No. 04-1743
DARLENE M. MCCORD,
Plaintiff, Appellant,
v.
HORACE MANN INSURANCE COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF MASSACHUSETTS
[Hon. Nathaniel M. Gorton, U.S. District Judge]
Before
Lynch, Circuit Judge,
Campbell and Stahl, Senior Circuit Judges.
R. Mark Petersen with whom Michelle M. Hansen was on brief for
appellant.
Michael L. Snyder with whom McGovern & Ganem, P.C. was on
brief for appellee.
December 1, 2004
CAMPBELL, Senior Circuit Judge. Plaintiff-Appellant,
Darlene M. McCord, brought an action in the district court against
Defendant-Appellee, Horace Mann Insurance Company ("Horace Mann"),
for breach of its insurance policy insuring her home (the "Policy")
and for violation of Mass. Gen. Laws ch. 93A. Horace Mann moved
for judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) on
the grounds that McCord failed to comply with a condition precedent
in the Policy, inserted under Massachusetts law, that required the
amount of loss to be submitted to a panel of referees prior to the
bringing of an action to recover for the loss. See Mass. Gen. Laws
ch. 175, § 99. The district court entered judgment in Horace
Mann's favor and dismissed the case without prejudice. The
district court subsequently denied McCord's motion to alter or
amend the judgment pursuant to Fed. R. Civ. P. 59(e). We affirm.
I. Background
On February 5, 2002, McCord’s home in Holden,
Massachusetts was destroyed by a fire. McCord sought to recover
insurance under the Policy issued by Horace Mann. McCord’s public
adjuster, Sadick Public Insurance Adjusters ("Sadick"), submitted
a statement to Horace Mann, estimating that the damages caused by
the fire were $162,553.22. On November 15, 2002, Horace Mann sent
a letter to McCord, formally denying all coverage or liability
under the Policy, on the grounds that she, or persons acting at her
direction, intentionally set the fire at her home. The letter
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quoted excerpts from the Policy, including the requirement that "a
disagreement as to the dollar amount of loss" be "referred to a
three member board of referees" in accordance with Massachusetts
law. The letter also referred to a provision of the Policy stating
that "no suit may be brought against [Horace Mann] unless all the
terms of [the Policy] have been complied with." The letter further
stated:
Horace Mann specifically reserves all of its
rights and defenses with regard to the
resolution of amount of loss. . . . Horace
Mann specifically rejects [Sadick's]
calculation as being an accurate determination
of the amount of loss. Accordingly, Horace
Mann specifically reserves all of its rights
and defenses with regard to resolution of any
dispute about the amount of loss as a result
of the subject fire.
On December 4, 2002, counsel for McCord sent Horace Mann a demand
letter in accordance with Mass. Gen. Laws ch. 93A. Horace Mann's
response, dated December 19, 2002, denied liability and stated:
Notwithstanding Horace Mann's denial of
coverage to [McCord], Horace Mann specifically
reserves all of its rights under the [Policy]
and M.G.L. c. 175, § 99 with regard to
resolution of any dispute about the amount of
loss caused by the subject fire. Horace Mann
specifically rejects [McCord's] assertion that
she sustained $66,205.86 in personal property
damage and $162,553.22 in property damage as a
result of the subject fire.
McCord brought an action against Horace Mann in the
Massachusetts state court, seeking damages for Horace Mann’s
refusal to pay her claim under the Policy. On February 7, 2003,
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Horace Mann, a resident of the State of Illinois, removed the case
to federal court, pursuant to 28 U.S.C. § 1446, alleging diversity
jurisdiction under 28 U.S.C. § 1332(a). In its answer to McCord's
complaint, Horace Mann raised McCord's "fail[ure] to comply with
the condition precedent of reference pursuant to M.G.L. c. 175,
§99" as one of its affirmative defenses. In its counterclaim
against McCord for breach of contract and deceit, Horace Mann also
stated that "McCord and Horace Mann have never reached an agreement
as to the amount of loss caused by the subject fire." McCord
admitted this statement in her answer to the counterclaim.
On June 11, 2003, Horace Mann moved for judgment on the
pleadings pursuant to Fed. R. Civ. P. 12(c). It asserted that the
parties had failed to agree on the amount of loss caused by the
fire, and that McCord's failure to submit her claim to a reference
proceeding, pursuant to Mass. Gen. Laws ch. 175, § 99, barred her
suit. McCord argued in opposition that Mass. Gen. Laws ch. 175,
§ 99 was inapplicable, because 1) the case was about a complete
denial of coverage rather than any disagreement over the amount of
loss and 2) Horace Mann had waived its rights to a reference
proceeding. In the alternative, McCord requested a stay of the
case pending the outcome of a reference proceeding.
On March 16, 2004, the district court dismissed the case
without prejudice, citing McCord's failure to have submitted her
claim to a reference proceeding prior to commencement of the
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action. The district court declined to issue a stay, because
McCord had not initiated reference proceedings before bringing
suit. The court noted it had granted a stay in another case where
a reference proceeding had been begun but was not completed by the
time the action was filed. See M.A.S. Realty Corp. v. Travelers
Cas. & Sur. Co. of Ill., 196 F. Supp. 2d 41, 47 (D. Mass. 2002).
It was not until after the dismissal of her case that McCord
requested a reference proceeding with Horace Mann. We were advised
by counsel at oral argument that Horace Mann refused to
participate, citing as a reason the expiration of the two-year
statute of limitations set forth in Mass. Gen. Laws ch. 175, § 99.
On March 29, 2004, McCord filed a motion to alter or amend judgment
under Fed. R. Civ. P. 59(e), which the district court denied. This
appeal followed.
II. Discussion
We review de novo both a district court's entry of
judgment on the pleadings pursuant to Fed. R. Civ. P. 12(c) and the
court's allowance of summary judgment pursuant to Fed. R. Civ. P.
56. Rafferty v. Cranston Pub. Sch. Comm., 315 F.3d 21, 25 (1st
Cir. 2002). However, the standard governing the allowance of a
Rule 12(c) motion is generally more generous to the nonmovant.
"Judgment on the pleadings under Rule 12(c) may not be entered
unless it appears beyond a doubt that the nonmoving party can prove
no set of facts in support of her claim which would entitle her to
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relief." Feliciano v. State of R.I., 160 F.3d 780, 788 (1st Cir.
1998) (citations omitted).
On occasion -- and this is such a case -- the parties'
actions during the proceeding will result in converting what begins
as a motion under Rule 12(c) to one for summary judgment under Rule
56. See Fed. R. Civ. P. 12(c) ("If, on a motion for judgment on
the pleadings, matters outside the pleadings are presented to and
not excluded by the court, the motion shall be treated as one for
summary judgment and disposed of as provided in Rule 56 . . . .");
Gulf Coast Bank & Trust Co. v. Reder, 355 F.3d 35, 38 (1st Cir.
2004). When this happens, the governing standard becomes that
applicable to summary judgment. See id.
Here, Horace Mann's Rule 12(c) motion relied upon
evidentiary submissions outside the pleadings, and McCord filed an
opposition that appended additional, outside evidentiary materials.
There is no indication the district court excluded these materials
from its consideration. The motion accordingly converted to one
for summary judgment. While a conversion cannot take place unless
the nonmoving party "is given adequate notice of the conversion and
a 'reasonable opportunity to present material made pertinent to
such a motion by Rule 56,'" McCord had constructive notice of the
potential conversion and, as noted, responded by attaching outside
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materials to its opposition. Collier v. City of Chicopee, 158 F.3d
601, 603 (1st Cir. 1998).1
Under Rule 56, the nonmovant has a heavier burden than
would be posed by Rule 12(c). Once the moving party has served a
supported motion asserting entitlement to summary judgment, the
party opposing the motion must demonstrate, by competent evidence,
a genuine issue of a material fact. Gulf Coast Bank, 355 F.3d at
39; see Garside v. Osco Drug, Inc., 895 F.2d 46, 48 (1st Cir.
1990). In reviewing a motion for summary judgment, we construe the
record in the light most favorable to the nonmovant and resolve all
reasonable inferences in her favor. Rosenberg v. City of Everett,
328 F.3d 12, 17 (1st Cir. 2003).
There are two issues on appeal: 1) whether McCord's
failure to submit her claim to a reference proceeding bars her
lawsuit pursuant to Mass. Gen. Laws ch. 175, § 99, and 2) whether
Horace Mann waived the reference condition precedent.2
1
In opposition to Horace Mann's motion for judgment on the
pleadings, McCord stated that the motion was a motion for summary
judgment. On appeal, neither party raises the issue of the nature
of the motion, although they refer to it as one for judgment on the
pleadings.
2
McCord has not briefed her Chapter 93A claim separately from
her contract claim, applying to both the general arguments
discussed herein. Accordingly, any separate arguments that might
be made with respect to the 93A claim alone, if such there be, are
waived for purposes of this appeal. See Frazier v. Bailey, 957
F.2d 920, 932, n.14 (1st Cir. 1992) (ruling that state law claims
not fully addressed in an appellate brief are waived).
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A. Mass. Gen. Laws ch. 175, § 99
Both parties rely upon Mass. Gen. Laws ch. 175, § 99 and
Massachusetts state case law. In so doing, they implicitly agree
that Massachusetts law governs.3 The Policy itself appears to be
drafted in accordance with the standard form for Massachusetts fire
insurance policies as required and set forth in Mass. Gen. Laws ch.
175, § 99. Section 99 states in pertinent part:
In case of loss under this policy and a
failure of the parties to agree as to the
amount of loss, it is mutually agreed that the
amount of such loss shall be referred to three
disinterested men . . . and such reference,
unless waived by the parties, shall be a
condition precedent to any right of action in
law or equity to recover for such loss . . . .
McCord argues that Mass. Gen. Laws ch. 175, § 99 is not applicable,
because there was no dispute as to the amount of loss but only a
total denial of coverage by Horace Mann. According to McCord,
Horace Mann did not state any amount of loss or provide specific
criticism of her public adjuster's statement.
But Section 99 is explicit that "[i]n case of . . . a
failure of the parties to agree as to the amount of loss,"
reference, unless waived, shall be a "condition precedent" to any
3
The choice of law analysis of the forum state, Massachusetts,
also warrants this result. Massachusetts state courts follow "a
functional choice of law approach that responds to the interests of
the parties, the States involved, and the interstate system as a
whole." Bushkin Assocs., Inc. v. Raytheon Co., 473 N.E.2d 662, 668
(Mass. 1985). Massachusetts has a strong interest in regulating
insurance policies covering homes in Massachusetts.
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right of action to recover for such loss. The Massachusetts courts
have enforced that requirement. See, e.g., Employers' Liab.
Assurance Corp. v. Traynor, 237 N.E.2d 34, 34-35 (Mass. 1968);
Molea v. Aetna Ins. Co. of Hartford, Conn., 95 N.E.2d 749, 752
(Mass. 1950); Bergeron v. Mechanics’ & Traders’ Ins. Co., 115 N.E.
318, 319 (Mass. 1917).
Even though an insurer denies liability, the reference
condition must be observed absent agreement as to the loss amount.
In Employers' Liability Assurance Corp. v. Traynor, an insurer
sought declaratory relief to determine whether it was liable for
the loss by theft of the defendants' property covered in an
insurance policy. 237 N.E.2d at 34. The Massachusetts Supreme
Judicial Court ("SJC") held that the trial court had properly
dismissed the bill as the insurer was initially required to refer
the issue of the value of the items stolen to referees pursuant to
Mass. Gen. Laws ch. 175, § 99 and the provisions of the policy.
Id. at 35. The SJC stated: "Questions of ultimate liability are
determinable following action on the reference, pending which the
insurer's rights relative thereto are protected." Id. See also
F.C.I. Realty Trust v. Aetna Cas. & Sur. Co., 906 F. Supp. 30, 33-
34 (D. Mass. 1995) (granting summary judgment to insurer, which
denied coverage except as to certain costs, because the insured
failed to comply with the reference condition precedent). Parties
are free to litigate questions of liability after resolving any
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dispute about the amount of loss in a reference proceeding. See
F.C.I. Realty Trust, 906 F. Supp. at 33 ("If the referees reach
questions of ultimate liability, those issues can be relitigated;
but that eventuality does not excuse the contractual requirement
that there be a reference before there be a law suit."); Fox v.
Employers' Fire Ins. Co., 113 N.E.2d 63, 66 (Mass. 1953) ("[The
referees'] views so far as ultimate liability goes are wholly
tentative and in no sense a decision on that underlying question.")
(citations omitted).
Drawing all reasonable inferences in McCord's favor,
there is no question that she failed to request a reference
proceeding prior to bringing suit.4 Therefore, absent waiver, the
reference condition precedent, pursuant to Mass. Gen. Laws ch. 175,
§ 99 and the provisions of the Policy, barred McCord from bringing
suit.5
4
It was not until after the district court dismissed the case
that McCord requested a reference proceeding.
5
McCord also argues that the district court should not have
dismissed her complaint, because a request for a reference
proceeding would have been futile. McCord speculates that Horace
Mann would not have agreed to a reference request on the ground
that Mass. Gen. Laws ch. 175, § 99 was not applicable, given its
denial of coverage. The law does not provide that such speculation
can permit a party to disregard the reference condition precedent
prior to filing suit. Cf. Molea, 95 N.E.2d at 751 (rejecting
insured's argument that reference would have been "a useless waste
of time and money").
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B. Waiver
Even if a reference were a condition precedent, McCord
points out that the condition precedent can be waived. McCord
contends that Horace Mann waived its right to a reference by
completely denying any liability under the Policy. Because waiver
is a question of fact, McCord further argues that the district
court erred in denying her right to a trial by jury on this issue.
The burden of proving waiver rests upon McCord who seeks to rely
upon it. Molea, 95 N.E.2d at 752.
In urging waiver, McCord points to the case of Lancaster
v. General Accident Insurance Co. of America, where the
Massachusetts Appeals Court held that a question of fact,
precluding summary judgment, existed as to whether the insurer
waived a reference condition precedent. 587 N.E.2d 246, 247 (Mass.
App. Ct. 1992). In that case, the insurer sent the insured a
letter denying any coverage on the claim, but the letter made no
mention of any reference requirement. Id. at 246. The court held
that the insurer's denial of liability coupled with its failure to
mention in its letter the reference condition "could, in these
circumstances, be found to be a waiver." Id. at 247. In other
cases finding waiver, there was an absence of evidence that the
insurer disputed the amount of loss. See, e.g., Goodman v. Quaker
City Fire & Marine Ins. Co., 241 F.2d 432, 436 (1st Cir. 1957)
(holding that an insurer's letter denying any liability constituted
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a waiver of any right to require arbitration); Moran v. Phoenix
Ins. Co., 390 N.E.2d 1139, 1140 (Mass. App. Ct. 1979) (error to
allow summary judgment where the sole basis of the insurer's
refusal to pay was a denial of liability and there was no evidence
that insurer disputed the amount of loss).
Besides denying liability, Horace Mann disputed the
amount of the loss and repeatedly called attention in its
correspondence with McCord to the existence of the reference
condition. Horace Mann's November 25, 2002 letter to McCord
referred to and quoted the provision of the Policy that sets forth
the reference condition precedent. In that same letter, Horace
Mann specifically rejected the amount of loss submitted by McCord's
public adjuster and reserved its rights with regard to the
resolution of the amount of loss. Horace Mann repeated its
rejection of the amount of loss submitted by McCord in its response
to her demand under Mass. Gen. Laws ch. 93A. Horace Mann's
reliance on the reference condition as an affirmative defense and
its allegation in its counterclaims, admitted by McCord, that they
had never reached an agreement on the amount of loss, also
indicates a dispute about the amount of loss. See F.C.I. Realty
Trust, 906 F. Supp. at 33-34 (finding no waiver where the insurer
raised the reference issue as an affirmative defense in its answer
and repeatedly refused to waive its rights under the policy).
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McCord argues, based on a footnote in Lancaster, that a
mere failure to agree as to the amount of loss does not mean that
there was ever a disagreement as to the amount. See Lancaster, 587
N.E.2d at 247 n.3. But here, unlike in Lancaster, Horace Mann
expressly rejected McCord's public adjuster's figure as to the
amount of loss. Horace Mann, moreover, in correspondence with
McCord, mentioned the reference condition several times, and
specifically reserved its rights as to a dispute about the amount
of loss. Considering the facts in the light most favorable to
McCord, she has failed to demonstrate, by competent evidence, the
existence of a genuine issue of material fact with respect to
waiver.
C. Motion to Alter or Amend Judgment
McCord's motion to alter or amend judgment, filed after
dismissal of her Rule 12(c) motion, did little more than reargue
the above-described grounds pursued in the Rule 12(c) motion. No
materially new grounds were raised. We review a district court's
denial of a motion under Fed. R. Civ. P. 59(e) for manifest abuse
of discretion. Vasapolli v. Rostoff, 39 F.3d 27, 36 (1st Cir.
1994). Once a motion to dismiss or a motion for summary judgment
has been allowed, we will overturn the district court's refusal to
reopen the proceedings "only if an appellant can persuade us that
the refusal to grant favorable reconsideration was a clear abuse of
discretion." Aybar v. Crispin-Reyes, 118 F.3d 10, 13 (1st Cir.
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1997) (quoting Mackin v. City of Boston, 969 F.2d 1273, 1279 (1st
Cir. 1992)).
As noted, McCord made no arguments in her Rule 59(e)
motion above and beyond those already raised under her Rule 12(c)
motion. As already discussed, the district court properly
determined that McCord's action was barred by Mass. Gen. Laws ch.
175, § 99, suit having been commenced without observance of the
reference condition precedent. The district court did not
manifestly abuse its discretion in refusing to alter or amend its
judgment for these same earlier-considered reasons.
Whether McCord might still be entitled, even now, to
insist upon a reference proceeding and, upon compliance with that
condition, to sue within the one additional year provided in Mass.
Gen. Laws ch. 175, § 99 (see also Policy language set forth in
Paragraph 10 of the "Massachusetts amendatory endorsement") is a
question nowhere raised, hence one we do not consider and upon
which we express no opinion. See United States v. Raphelson, 802
F.2d 588, 593 (1st Cir. 1986).
Affirmed.
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