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Benson v. MVP Health Plan (2008-055)

2009 VT 57

[Filed 29-May-2009]

NOTICE:  This opinion is subject to motions for reargument under V.R.A.P. 40 as well as formal revision before publication in the Vermont Reports.  Readers are requested to notify the Reporter of Decisions, Vermont Supreme Court, 109 State Street, Montpelier, Vermont 05609-0801 of any errors in order that corrections may be made before this opinion goes to press.

2009 VT 57

No. 2008-055

Brian Benson as Administrator of the

Estate of Alan H. Benson

Supreme Court

On Appeal from

     v.

Windsor Superior Court

MVP Health Plan, Inc.

December Term, 2008

Walter M. Morris, Jr., J.

Amanda T. Rundle of Dakin & Benelli, P.C., Chester, for Plaintiff-Appellant.

Shapleigh Smith, Jr. and Angela R. Clark of Dinse, Knapp & McAndrew, P.C., Burlington, for

  Defendant-Appellee.

PRESENT:  Reiber, C.J., Dooley, Johnson, Skoglund and Burgess, JJ.

1.             SKOGLUND, J.  Brian Benson, as administrator of Alan Bensons estate, appeals from a Windsor Superior Court order dismissing his suit against MVP Health Plan, Inc. (MVP) on statute-of-limitations grounds.  We reverse and remand.

2.             The relevant facts are not in dispute.  Alan Benson died on October 18, 2002 after twenty-three days of hospitalization.  On December 2, 2002, Brian Benson was appointed administrator of his estate.  Beginning in January 2003, the administrator made a series of unsuccessful attempts on behalf of the estate to secure payment of the decedents medical bills from decedents insurer, MVP.  On August 30, 2007, the administrator filed suit against MVP, alleging two counts of breach of contract and one count of bad faith. 

3.             MVP moved to dismiss, arguing that the claim was barred by the two-year limitations period set forth in 12 V.S.A.  557(a).  That statute reads as follows:

If a person, by or against whom an action may be brought, dies before the expiration of the time within which such action may be commenced as provided by this chapter or dies within thirty days after the expiration of such times, the period of limitation as to such action shall cease to operate at the date of his death.  After the issuance of letters testamentary or of administration, such action, if the cause of action survives, may be commenced by or against the executor or administrator within two years, and not after.

Id.  The administrator filed a memorandum in opposition to MVPs motion to dismiss, arguing that  557(a) was inapplicable to claims that accrue after death, and that the estates claims against MVP did not accrue until MVP repeatedly and unreasonably denied payment to the estate.  The trial court recognized that, under the administrators theory, the applicable limitations period would be the six-year period set forth in the general statute of limitations, 12 V.S.A.  511.*  However, the trial court, quoting 557, granted MVPs motion, reasoning:

Even if we assume, for the sake of argument, that the Estates cause of action did not accrue until after MVP denied its requests (during 2003), the statute does not set forth any exception for actions accruing after death.  Rather, the statute applies when a person dies before the expiration of the time within which [an] action may be commenced. 

4.             On appeal, the administrator argues that the tolling provision of 557(a) is not applicable to the estates cause of action.  Thus, a question of law is presented, which we review de novo.  Main St. Landing, LLC v. Lake St. Assn, 2006 VT 13, 7, 179 Vt. 583, 892 A.2d 931 (mem.).  In cases of statutory interpretation, our review is nondeferential and plenary.  Dept of Corr. v. Human Rights Commn, 2006 VT 134,  7, 181 Vt. 225, 917 A.2d 451.  Our primary objective is to effectuate the intent of the Legislature.  Id.  Our first step is to look at the language of the statute itself; we presume the Legislature intended the plain, ordinary meaning of that statute.  Weale v. Lund, 2006 VT 66,  6, 180 Vt. 551, 904 A.2d 1191.  Here, the language of the statute resolves the issue on appeal.  We hold that the limitation period set forth in  557(a) does not apply to causes of action that accrue to the estate after a decedents death.

5.             A cause of action does not accrue until each element of the cause of action exists.  White v. White, 136 Vt. 271, 273, 388 A.2d 386, 388 (1978); Lycoming Fire Ins. Co. v. Batchelder, 62 Vt. 148, 152, 19 A. 982, 983 (1890).  A cause of action for breach of contract accrues when the breach occurs, Alexander v. Morrissey, 137 Vt. 20, 24, 399 A.2d 503, 505 (1979), and a cause of action against an insurance company for bad faith accrues when the company errs, unreasonably, in denying coverage.  Bushey v. Allstate Ins. Co., 164 Vt. 399, 402, 670 A.2d 807, 809 (1995).  The estates complaint alleges that MVP breached the contract when it failed to pay a valid claim submitted by the administrator and repeatedly refused to respond to the administrators grievances and requests for information and relief.  The complaint alleges bad faith on the grounds that MVP denied the claim without a reasonable basis.  Therefore, assuming these allegations to be true, see Winfield v. State, 172 Vt. 591, 593, 779 A.2d 649, 652 (2001) (In reviewing the trial courts disposition of a motion to dismiss, we assume that all well pleaded factual allegations in the complaint are true, as well as all reasonable inferences that may be derived therefrom.), the estates causes of action accrued after the decedents death.   

6.             Section 557(a) tolls the ordinary limitations period between a decedents death and the appointment of an administrator of the decedents estate, Pike v. Chucks Willoughby Pub, Inc., 2006 VT 54,  9, 180 Vt. 25, 904 A.2d 1133 (characterizing  557(a) as a tolling provision), and imposes a new two-year limitations periodbeginning at the time of the appointment of letters testamentary or of administrationfor certain actions.  The statute contains only one direct statement of applicability.  Section 557(a) applies if a person by or against whom an action may be brought . . . dies before the expiration of [the ordinary limitations period for that action] or dies within thirty days of such times.  12 V.S.A. 557(a).  Should the above-described situation occur, the period of limitation as to such action shall cease to operate at the date of his death.  Id.  Based on the statutory language quoted above, MVP argues that  557(a) applies to causes of action that accrue after death because a person who dies before a cause of action accrues necessarily dies before the expiration of that actions limitations period.  This clever reading is flawed, however, because if the cause of action accrues after the persons death, it could not be brought by him or against him; it could only be brought by or against the decedents estate.  Mortimore v. Bashore, 148 N.E. 317, 319 (Ill. 1925) (The capacity to sue or be sued exists only in persons in being, and not in those who are dead, . . . and so cannot be brought before the court.)  The statute applies to causes of action that exist before a decedents deathcauses that could be brought by him or against him while he was alive.  From a plain-language reading of the text,  557(a) does not apply to causes of action that accrue after death.

7.             Additionally,  557(a) applies only if the cause of action survives.  12 V.S.A.  557(a) (emphasis added).  The Legislatures use of the word survives indicates that it intended to craft a statute of limitations for certain survival actions.  See, e.g., In re Peters, 171 Vt. 381, 386, 765 A.2d 468, 473 (2000) (characterizing  557(a) as a statute of limitations for survival actions).  Survival actions are generally understood to be lawsuits on behalf of a decedents estate for injuries or damages incurred by the deceased before dying, Blacks Law Dictionary 712 (8th ed. 2004), and do not include causes of action accruing to an estate after a decedents death.

8.             MVP asserts two public-policy arguments in favor of applying  557(a) to claims that accrue to an estate after a decedents death.  Neither is convincing.  First, citing Estate of Harris v. Eichel, MVP contends that applying 557(a) to such claims would be consistent with the Legislatures purpose of plac[ing] the value of finality in the affairs of a decedent and his estate over the interest in preserving the general period of limitations in favor of the estate. 152 Vt. 180, 183-84, 565 A.2d 1281, 1283 (1989).  MVP takes our reasoning in Harris out of context.  In the quoted portion of Harris, we were rejecting the argument that  557(a) operated only to lengthen, but not to shorten, the limitations period for survival actions.  Our pronouncement about legislative preference for finality in the affairs of a deceased simply referred to the Legislatures having drafted  557(a) in a way that could shorten the limitations period for some survival actions.  It was not, as MVP would have it, a broad conclusion of legislative intent that should control this case.

9.             MVPs second public-policy argument is that reading  557(a) to establish a limitations period only for claims that accrue before death undermines the Legislatures policy preference for certainty.  Citing Leo v. Hillman, MVP contends that  557(a) is a broad statute written so that an executor or administrator need not guess when an action might be brought . . . [and] [t]hat certainty is an important element of the cause of action.  Leo v. Hillman, 164 Vt. 94, 103, 665 A.2d 572, 579 (1995).  However, our decision herethat  557(a) is inapplicable to causes of action that accrue after a decedents deathclarifies for administrators which statutes of limitation govern claims by or against an estate, thus providing that certainty.

10.         Our interpretation of  557(a) is also in harmony with this Courts prior decisions.  MVP does not point out any cases, nor are we aware of any, where this Court has applied  557(a) to a cause of action that accrued after death.  Cf. In re Peters, 171 Vt. at 386-87, 765 A.2d at 473-74 (evaluating statutes applicability to suit brought by deceased wifes estate for husbands sexual battery); Leo, 164 Vt. at 103, 665 A.2d at 578-79 (upholding application of  557(a) to pain-and-suffering claim brought by estate on behalf of deceased); Martel v. Stafford, 157 Vt. 604, 615, 603 A.2d 345, 351 (1991) (same); Estate of Harris, 152 Vt. at 182-83, 565 A.2d at 1282 (upholding application of  557(a) to suit by administrator of deceaseds estate against attorney who prepared documents for deceased); Laws Admin. v. Culver, 121 Vt. 285, 287, 155 A.2d 855, 857 (1959) (stating that  557(a) applies to survival action for bodily hurt). 

11.         In conclusion, the plain language of  557(a) establishes a limitations period only for causes of action that could have been brought by or against the deceased during his lifetime and does not apply to causes of action by or against an estate that accrue after the decedents death.  Accordingly, the trial court erred in concluding that the estates claim was barred by  557(a).

Reversed and remanded.

FOR THE COURT:

Associate Justice

*  Section 511 reads as follows: A civil action, except one brought upon the judgment or decree of a court of record of the United States or of this or some other state, and except as otherwise provided, shall be commenced within six years after the cause of action accrues and not thereafter.