United States District Court, Eastern District of New York
May 7, 1990
GRACE C. ADIPIETRO, PLAINTIFF,
CHUBB LIFE AMERICAN AND THE COLONIAL LIFE INSURANCE COMPANY OF AMERICA, DEFENDANTS.
The opinion of the court was delivered by: McLAUGHLIN, District Judge.
MEMORANDUM AND ORDER
Plaintiff, Grace C. Adipietro, is a New York citizen.
Defendant Colonial Life Insurance Company of America
("Colonial") is an insurance company incorporated under the
laws of New Jersey with its principal place of business in New
Jersey.*fn1 This Court's jurisdiction is based upon diversity
of citizenship. 28 U.S.C. § 1331.
On September 1, 1982 Loriann Adipietro, plaintiff's daughter,
suffered severe injuries which left her comatose for three and
one-half months. Loriann was hospitalized from September 1,
1982 until November 1983. Thererafter, Loriann received therapy
at Children's Specialized Hospital in Mountainside, New Jesey
on an out-patient basis until May 1984.
During this therapy, Loriann's physician recommended that she
continue her treatment at a facility closer to her home. To
that end, Loriann sought and gained admission to the New York
University Medical Center Head Trauma Rehabilitation Program
(the "Program") beginning in fall 1984.
At the time Loriann entered the Program, her mother,
plaintiff Grace C. Adipietro, was employed full-time by TDK
Electronics Corp. According to plaintiff, all full-time
employees of TDK were entitled to family medical benefits under
Colonial Group Policy Number 305377-000 (the "Policy").
Apparently, plaintiff sought assurance from Colonial that she
would be reimbursed for Program expenses incurred by Loriann.
On approximately June 21, 1984, Colonial informed plaintiff
that Program expenses would not be covered under the Policy.
In December 1984 plaintiff brought an action in this Court
captioned Grace C. Adipietro v. The Chubb Life American and the
Colonial Life Insurance Company of America, 84 CV 4873 (the
"1984 Action"). Plaintiff brought the 1984 Action to recover
compensatory and punitive damages for Colonial's allegedly
"arbitrary" denial of benefits, and for a judgment declaring
that the Policy obligated
Colonial to "pay for all cognitive therapy prescribed up to the
present time . . ." (Affidavit In Support of Motion ("Aff. In
Supp."), Exh. A at 7).
On October 1, 1985 the parties entered into a stipulation
settling the 1984 Action (the "Stipulation"). The present
controversy centers on the Stipulation, which provides in part
1. Defendant [Colonial] agrees to reimburse
plaintiff for the cost of plaintiff's daughter
Loriann's participation in the [Program]
as described in . . . Exhibit 1.
2. Reimbursement shall be for the fees actually
incurred and limited to the amount of
$24,910.00 as set forth in Exhibit 1.
3. Plaintiff agrees to accept the foregoing
reimbursement in full satisfaction of all
plaintiff's claims set forth in the complaint
and the [1984 Action] is discontinued with
prejudice . . ., and
4. [E]vidence of this . . . settlement shall
be admissible in any future litigation
pertaining to any future treatment
programs for plaintiff's daughter . . .
Exhibit 1 of the Stipulation provides a detailed description of
the Program's intensive remedial phase.
Subsequently, Loriann participated in the Program's intensive
remedial phase. Colonial fulfilled its obligation under the
Stipulation by reimbursing plaintiff for $24,910.00 in fees
incurred in connection with this treatment.
After the intensive remedial phase completed by Loriann, most
patients progress to the second and final Program phase — the
"occupational trial." (Aff. In Supp. at 24-25). When Loriann
completed the intensive remedial phase, however, it was
concluded that she was not prepared to enter an occupational
From March 6, 1986 until July 10, 1986, Loriann participated
in a "second cycle" of the intensive remedial phase. This
"second cycle" of therapy was conducted within the same
"framework" or "format" as the first cycle, and involved
repetition of cognitive exercises performed therein. (Aff. In
Supp., Exh. J at 33-34). The second cycle differed from the
first because "the exercises were special clinical problems
tailor-designed for [Loriann]." (Id. at 33). These exercises
were intended to address areas in which Loriann made
insufficient progress during the first cycle.
On October 17, 1986 plaintiff filed the complaint in the
instant action, alleging that Colonial improperly refused to
pay plaintiff medical benefits under the Policy. The payment at
issue relates to fees incurred by Loriann during the "second
cycle" of the Program.
Defendant Colonial moves for summary judgment pursuant to
Fed.R.Civ.P. 56(b) on the ground that plaintiff's benefits
claim is precluded by the Stipulation. Plaintiff contends that
defendant is not entitled to summary judgment because, among
other things, it is a question of fact whether the "second
cycle" was a future treatment program outside the scope of the
I. SUMMARY JUDGMENT STANDARD
Summary judgment is appropriate "after adequate time for
discovery . . . against a party who fails to make a showing
sufficient to establish the existence of an element essential
to that party's case, and on which that party will bear the
burden of proof at trial." Celotex Corp. v. Catrett,
477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The
movant bears the initial responsibility of setting forth the
basis for its motion and identifying any portions of the record
which demonstrate the absence of a genuine issue of fact. Id.
at 323, 106 S.Ct. at 2552. The non-movant, however, "`may not
rest upon mere allegations or denials of his pleadings, but
. . . must set forth specific facts showing that there is a
genuine issue for trial.'" Anderson v. Liberty Lobby, Inc.,
477 U.S. 242, 248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986)
(quoting Fed.R.Civ.P. 56(e)). If the nonmovant "fails to
substantiate the existence of a genuine dispute, a proper
concern for judicial efficiency and the mandate of Rule 56(c)
require summary disposition of the issue." Shering Corp. v.
Home Ins. Co., 712 F.2d 4, 9 (2d Cir. 1983).
II. THE STIPULATION
Effectively, the Stipulation caps at $24,910 Colonial's
liability for the treatment described in Stipulation Exhibit 1.
Defendant has already reimbursed plaintiff $24,910 for this
treatment. Defendant contends that the "second cycle" of
treatment is merely a repeat of the treatment described in
Exhibit 1 and, therefore, that plaintiff is not entitled to
reimbursement for the "second cycle." Plaintiff maintains that
whether the "second cycle" is a mere repeat or a different
"future treatment program" is a question of fact which
precludes summary judgment.
Whether the "second cycle" of treatment is covered by the
Policy is an issue not presently before this Court. Under the
Policy, plaintiff is entitled to benefits only if medically
necessary treatment is rendered for a specific illness. (Aff.
In Supp., Exh. C at 4). The only issue presently before this
Court, however, is whether the Stipulation extinguishes
Colonial's obligation to reimburse plaintiff for the "second
cycle" of treatment, assuming that such an obligation exists
under the Policy.
Before measuring the preclusive effect of the Stipulation, I
must determine whether it is ambiguous. Burger King Corp. v.
Horn & Hardart Co., 893 F.2d 525, 527 (2d Cir. 1990). I
conclude that it is.
Whether contract language is ambiguous is a question of law
for this Court. Burger King, 893 F.2d at 527; Curry Road Ltd.
v. Kmart Corp., 893 F.2d 509, 511 (2d Cir. 1990); Pantone Inc.
v. Esselte Letraset, Ltd., 878 F.2d 601, 605 (2d Cir. 1989).
Language is ambiguous if it is:
capable of more than one meaning when viewed
objectively by a reasonably intelligent person who
has examined the context of the entire integrated
agreement and who is cognizant of the customs,
practices, usages and terminology as generally
understood in the particular trade or business.
Pantone, 878 F.2d at 606 (quoting Eskimo Pie Corp. v. Whitelawn
Dairies, Inc., 284 F. Supp. 987, 994 (S.D.N.Y. 1968)); Burger
King, 893 F.2d at 527.
The critical language at issue is the description of the
Program in Exhibit 1, and the phrase "future treatment
program." After considering these phrases, I conclude that each
is reasonably susceptible to more than one interpretation.
See Burger King, 893 F.2d at 528.
Exhibit 1 describes the intensive remedial phase of the
Program and details the different treatments administered
therein. It is unclear whether a program involving variations
of such treatments is a "future treatment program" not covered
by the Stipulation. It is also unclear whether Program
treatments other than the intensive remedial phase
(i.e., an occupational trial) are "future treatment programs".
Similarly, and for the same reasons, it is unclear exactly what
treatments are within the scope of the description in
Stipulation Exhibit 1.
Contracts generally must be interpreted so as to effectuate
the intentions of the parties. Hunt Ltd. v. Lifschultz Fast
Freight, Inc., 889 F.2d 1274, 1277 (2d Cir. 1989). Because the
Stipulation is reasonably susceptible to more than one
interpretation it is appropriate to consider extrinsic evidence
of the parties' intent. Burger King, 893 F.2d at 527, 528.
2. Extrinsic Evidence of Intent
In support of its contention that the "second cycle" of
treatment received by Loriann is the same as the treatment it
paid for pursuant to the Stipulation, Colonial offers the
deposition testimony of Dr. Yehuda Ben-Yishay, director of the
Program. Dr. Ben-Yishay testified that at the conclusion of the
"first cycle" of the intensive remedial phase, Loriann was not
prepared to advance to an occupational trial. (Aff. In Supp.,
Exh. J at 32-33). Dr. Ben-Yishay also testified that it was
recommended that Loriann "come back for another
round" of "post-graduate" work in the intensive remedial phase.
Further, Colonial points out that the fee for Loriann's
"second cycle" was virtually identical to the fee charged for
the intensive remedial phase. According to Colonial, all of
this evidence demonstrates that plaintiff's instant claim is
the same as the claim plaintiff compromised by entering the
On the other hand, plaintiff asserts that the "second cycle"
was different from the treatment described in the Stipulation.
In support of her contention, plaintiff relies on Dr.
Ben-Yishay's testimony that the second cycle involved "no
repetition" of Loriann's previous treatment. To clarify this
testimony, Dr. Ben-Yishay explained that the second cycle was
administered in the "same framework" as the prior treatment,
but that the contents were different because Loriann performed
exercises "tailor-designed" for her. (Aff. In Supp., Exh. J at
In Burger King, 893 F.2d at 528, the Second Circuit
considered an ambiguous settlement agreement and stated that
"[s]ummary judgment normally is inappropriate when a
contractual term is ambiguous because `a triable issue of fact
exists as to its interpretation.'" Id. (quoting Leberman v.
John Blair & Co., 880 F.2d 1555, 1559 (2d Cir. 1989)). When the
parties present conflicting evidence of intent, "the district
court may only identify the issues at the summary judgment
stage, not resolve them." Burger King, 893 F.2d at 528; see
Schering Corp. v. Home Ins. Co., 712 F.2d 4, 9-10 (2d Cir.
1983). Accordingly, Colonial is entitled to summary judgment
only if the evidence of intent it presents does not conflict
with plaintiff's evidence.
The evidence of intent is, however, conflicting. Colonial
offers evidence tending to prove the "second cycle" was a mere
repeat of the intensive remedial phase. Plaintiff's evidence
tends to prove the second cycle was a "future treatment
program" not contemplated by the Stipulation. The resolution of
this dispute is a factual question properly reserved for trial.
Accordingly, Colonial's motion for summary judgment is denied.
III. AMENDMENT OF PLAINTIFF'S COMPLAINT
Plaintiff moves pursuant to Fed.R.Civ.P. 15(a) for leave to
amend her complaint by increasing the ad damnum clause from
$14,000 to $25,000. Colonial does not substantively oppose this
motion, but merely states that "the cross-motion to amend the
complaint [should] be denied as academic." (Reply Aff. at 13).
Fed.R.Civ.P. 15(a) provides that leave to amend a pleading
"shall be freely given when justice so requires." In light of
this provision and the lack of opposition by defendant,
plaintiff's motion is granted.
For the reasons set forth above, defendant's motion for
summary judgment is denied and plaintiff's motion for leave to
amend her complaint is granted.