Not for Publication in West's Federal Reporter
United States Court of Appeals
For the First Circuit
No. 07-2668
JOHN L. MCGILL,
Plaintiff, Appellant,
v.
MINNESOTA MUTUAL LIFE INSURANCE COMPANY,
Defendant, Appellee.
APPEAL FROM THE UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
[Hon. William E. Smith, U.S. District Judge]
Before
Lynch, Chief Judge,
O’Connor,* Associate Justice (Ret.),
and Torruella, Circuit Judge.
Alan J. Pierce, with whom Hancock & Easterbrook, LLP, was on
brief for appellant.
Melissa Lang, with whom Timothy Bliss was on brief for
appellee.
June 30, 2008
* The Hon. Sandra Day O’Connor, Associate Justice (Ret.) of the
Supreme Court of the United States, sitting by designation.
O'CONNOR, Associate Justice (Retired). Appellant John
McGill appeals the district court’s grant of summary judgment
against him on his claims that his insurer breached its insurance
contract and its fiduciary duty, and engaged in misrepresentation
and fraud. Because the insurer never contracted to pay McGill
disability benefits until age 65, we affirm.
I.
As this case arises on summary judgment, we state the
facts in the light most favorable to appellant. Anderson v.
Liberty Lobby, Inc., 477 U.S. 242, 256-57 (1986); Maldonado-Denis
v. Castillo-Rodriguez, 23 F.3d 576, 581 (1st Cir. 1994).
John McGill was employed by Eastern Shore Printing
Corporation of Virginia, later renamed the Interflex Group
(“Interflex”). In May of 1992, McGill spoke with a broker, who
sold insurance through appellee Minnesota Mutual Life Insurance
Company (“MML”), about obtaining disability insurance.
McGill applied for insurance that would have provided
benefits, if disabled, until he reached the age of 65. On his
application, he included both his home address and his work
address, and indicated that he wished MML to send correspondence
to his work address.
After he submitted his application, MML went through
standard procedures to determine coverage: It sent a nurse to
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his office to perform a physical, and obtained McGill’s medical
records. On the basis of that information, MML chose not to
issue a policy that would provide benefits until McGill reached
65. Instead, MML countered the offer McGill made in his
application by writing on the application a limited period of
five years of benefits. On July 2, 1992, MML issued a policy
containing the limited term of five years and sent it to McGill
at his work address, as McGill had requested.
The human resources director at Interflex received and
filed a copy of the policy, and Interflex issued checks to pay
McGill’s premiums. McGill has testified that he never saw the
policy that MML issued, and was unaware that the policy’s terms
differed from his initial application.
In April of 1994, McGill was diagnosed with obstructive
sleep apnea. More than a year later, the condition had become so
severe that he was unable to continue working. He entered into a
severance agreement with Interflex, and thereafter filed a claim
for disability benefits with MML. It was only in 1996, while
discussing this claim with MML, that McGill learned that the
policy had been issued with a five-year benefit cap.
MML paid McGill benefits under the policy for five
years and then terminated the payments.
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McGill filed the instant lawsuit in 2005, alleging
breach of contract, misrepresentation, fraud, and breach of
fiduciary duty. The district court held that McGill’s policy did
not provide benefits until age 65, and granted summary judgment
to MML.
II.
McGill claims that he did not personally receive the
terms of the insurance contract, that his application should
govern the terms of the policy, and that he never consented to
MML’s provision of a five-year benefit cap.
We must take as fact that McGill neither saw nor read
the policy terms. Nevertheless, the July 2, 1992 policy
containing the five-year limitation was sent to McGill at his
office address at MML as he requested. There is no dispute that
MML mailed a copy of the July, 1992 policy and that McGill’s
employer, Interflex, retained a copy in its files. McGill
testified that he did not ask the broker who sold him the
insurance policy to show him the policy. He never inquired of
his employer whether the policy had been delivered.
Even so, McGill claims that MML’s alteration cannot
constitute the terms of the policy. Under Virginia law, “[n]o
alteration of any written application . . . shall be made by any
person other than the applicant without his written consent.”
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Va. Code § 38.2-3511. McGill claims that MML’s handwritten
changes to his application were made without his consent, and
were thus ineffective and could not bind him.
We agree that under Virginia law, it appears McGill
could not be bound by MML’s handwritten changes. The question we
must resolve in this case, however, is not whether McGill was
bound by the policy changes, but whether MML was bound to provide
disability benefits until McGill reached age 65. The conclusion
to be drawn from this statute is not that MML must be held to the
terms for which McGill initially applied, but that McGill’s
initial offer to purchase insurance was rejected by MML’s
counter-offer. If McGill never accepted that counter-offer,
under Virginia law, no meeting of the minds occurred and no
contract was formed.
Virginia law establishes that an application for
insurance is not itself a contract. Instead, “an application for
insurance is merely an offer to enter into a contract. The
insurance policy is the contract between the parties.” Smith v.
Colonial Ins. Co. of Cal., 515 S.E.2d 775, 777 (Va. 1999); see
also Hayes v. Durham Life Ins. Co., 96 S.E.2d 109, 111 (Va. 1957)
(“The application for insurance is a mere proposal for a contract
on the part of applicant. It is one of two prerequisites in the
creation of the contract, the other consisting of the acceptance
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of the offer. No contractual relationship exists between the
parties until acceptance by the insurer. . . .”).
McGill’s application for insurance, then, did not by
itself establish coverage; he offered to purchase coverage at a
given price. In order to form a contract, McGill must
demonstrate that the insurer accepted his offer. There is no
evidence that the insurer did so. Instead, the record
unequivocally demonstrates that MML responded to McGill’s
application with a more limited counter-offer.
The undisputed facts establish that MML did not accept
McGill’s initial offer to buy coverage until age 65. At most,
MML proceeded on the assumption that it was required to provide
no more than five years of disability benefits. McGill has not
established that MML agreed to provide coverage for a longer
period.
III.
Because the district court properly granted summary
judgment to MML on the grounds that McGill’s insurance contract
did not provide benefits until age 65, we need not rule on MML’s
alternate grounds for summary judgment.
AFFIRMED.
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