Is it a crime against the covenant of good faith to save the life of a sick horse?
Watch the full video at https://rumble.com/v1i9mhd-insurer-not-a-horse-thief-but-a-life-saver.html and at https://youtu.be/4gW-Q307b0A
The parties litigated an insurance dispute concerning a champion show horse named Thomas. Thomas is alive and well, but Thomas’ owner, Julie Greenbank, sued her insurer, Great American Assurance Company, for failing to cover Thomas’ mortality.
IN Julie Greenbank v. Great American Assurance Company, No. 21-2622, United States Court of AppealsSeventh Circuit (August 30, 2022) Greenbank argued that Great American violated insurance policy and acted in bad faith by unreasonably withholding consent to Thomas̵
7; authorized humane destruction, choosing instead to perform a tenotomy that destroyed Thomas’ use as an athletic show horse.She also argued that Great American’s continued care and control of Thomas, long after the policy was terminated, constitutes conversion and theft. The district court rejected her motions at sentencing, and Greenbank appealed.
THE INSURANCE POLICE
In September 2017, Greenbank purchased an American Saddle-bred gelding named Awesome whose barn name was “Thomas” for $500,000. Greenbank intended to use Thomas as an athletic show horse for competition purposes.
Shortly after this purchase, Greenbank obtained a death insurance policy with Great American for Thomas’ full purchase price. The policy provided coverage in the event of Thomas’ “death” or “authorized humane destruction.”
Under the policy, a horse’s death or authorized humane destruction must be due in part to an illness, injury or specific operation.
To obtain coverage in the event of Thomas’ death or authorized humane destruction, the policy required Greenbank to meet certain conditions precedent. A condition precedent required Greenbank to immediately notify Great American if Thomas becomes ill. The policy notes that failure to provide prompt notification of Thomas’ illness “will void any claim under the policy.” If Thomas became ill, the policy allowed Great American, with Greenbank’s permission, to take control of Thomas’ treatment.
In addition to the mortality cover, the policy also includes a “Major Medical Endorsement” (MME) and a “Guaranteed Renewal Endorsement” (GRE).
THOMAS’S HEALTH
In December 2017, Greenbank boarded Thomas at Cedarwood Farms in Evansville, Indiana to begin training with Chuck Herbert. In February 2018, however, Thomas fell ill with colic and pneumonia. Thomas lost 50 pounds and developed cellulite in all four legs and uveitis in his eye. Based on this, Dr. Stone that Thomas was “very ill”. On top of this, Thomas later pulled his right gash, which left him lame in his right rear; Thomas’s ability to get up and down is compromised.
Greenbank reported Thomas’ pneumonia to Great American. After hearing from a veterinarian that Thomas may need to be euthanized, Great American, in accordance with policy, retained its own veterinarians to provide Thomas with treatment. Eventually, Thomas was transported to the Hagyard Equine Medical Institute, a facility in Lexington, Kentucky, where Dr. Kathy MacGillivray became Thomas’ primary veterinarian.
Dr. MacGillivray evaluated Thomas and determined that Thomas was suffering from a deep lung abscess and severe laminitis. Dr. MacGillivray advised that it would not be unreasonable to make a euthanasia recommendation based on Thomas’ declining health. She wanted to try treatment first, before recommending euthanasia.
Thomas first received treatment for his deep lung abscess, followed by his severe lameness. For the latter condition, veterinary podiatry specialist Dr. Brian Fraley recommended that Thomas undergo a tenotomy, which involves a 1-inch incision and cutting of the deep flexor tendon to restore blood flow and relieve pressure on the coffin bone. Greenbank objected to Thomas’s tenotomy on the basis that it would destroy Thomas’s future athleticism as a show horse; she requested more conservative treatments. But Dr. Fraley advised that the tenotomy was Thomas’ only chance to regain any athletic ability, as after a tenotomy the tendon would eventually heal and become functional. Dr. Fraley performed Thomas’s tenotomy, and as he would later testify, Thomas’s tenotomy went well and Thomas had a “remarkable” recovery.
Within a year of the surgery, Thomas gained weight and returned to trotting, running, running and galloping around Pine Ridge Farm, where he now lives.
MAJOR AMERICAN POLITICAL ACTIONS
Greenbank’s policy expired on September 28, 2018. To renew the policy under GRE, she sent a payment of $14,725,000. However, Great American denied the policy renewal based on Greenbank’s failure to meet several conditions precedent, including giving Great American immediate notice of Thomas’ illness in February 2018.
Although the policy has ended, Great American continues to care for and maintain control of Thomas.
Greenbank’s lawsuit is dismissed on summary judgment
The district court ruled that Great American did not violate the policy because there was no covered cause of loss: Thomas did not die of natural causes or approved humane destruction.
Breach of contract
Greenbank alleged that Great American breached the policy but failed to provide evidence that Great American breached the policy.
Mortality coverage
The current mortality policy only provides coverage in the event of Thomas’ “death” or “authorized humane destruction.” There is no doubt that Thomas did not die naturally or by authorized human destruction. That alone should end the investigation into whether Great American breached a death insurance contract. Thomas saw three veterinarians over a five-month period, and during that time, no veterinarian suggested that Thomas needed to be euthanized, much less certified that fact to Great American. The possibility of euthanasia is neither a certificate nor a decision that immediate euthanasia was absolutely necessary for humane reasons.
There was no evidence that Great American expressly agreed to euthanize Thomas and nothing in the policy required it to do so. Nothing in the contract said Great American was expected to protect Thomas’ use as a show horse. To protect against Thomas’ use as a show horse, Greenbank could have sought a loss-of-use policy. She cannot now seek to convert a death policy into a loss-of-use policy by claiming that Great American unreasonably withheld authorized humane destruction.
BAD FAITH
In addition to its breach of contract claims, Greenbank alleges that Great American acted in bad faith based on several policy actions related to (1) the mortality coverage and (2) the GRE.
Mortality coverage
Great American did not wrongfully deny mortality coverage, therefore Greenbank cannot show bad faith regarding this claim. Just because Great American did not choose the medical route Greenbank desired, or otherwise settle the claim to her liking, does not mean that Great American acted in bad faith.
GRE renewal
Because Greenbank failed to show Great American’s breach of contract under the GRE, her bad faith claim also fails for this reason.
Conversion and theft
Tortious conversion, or common law conversion, is either “the appropriation of the personal property of another to the party’s own use and benefit.” A plaintiff alleging tortious conversion must establish that he or she owned the property and that the defendant’s possession was unauthorized or without consent. If the defendant’s original possession of the plaintiff’s property is lawful, conversion occurs only after an unqualified demand for restitution, unless such a demand would be futile. There is no question that Great American’s original possession and control of Thomas was lawful based on the policy. The district court correctly rejected the claim.
It is unusual that Great American retained control of Thomas long after the policy ended. However, Greenbank has failed to show that Great American’s control of Thomas falls within the bounds of common law conversion, because of one very important fact – she never claimed Thomas, and she has failed to show that any claim against Thomas would have been pointless.
Statutory conversion and theft
Unlike tortious conversion, statutory conversion does not require a plaintiff to demand restitution. Although a claim for restitution is not required, a claimant must present evidence to establish a reasonable inference that the defendant was aware that their possession was unauthorized.
Contrary to the claims, there is no evidence for a jury to find that Great American knowingly or intentionally exercised unauthorized control over Thomas.
This is especially true when Greenbank’s attorney specifically stated during a telephonic court conference that Great American could keep Thomas: When the judge asked, “Do you want the horse or not?” Greenbank’s attorney replied, “No, as far as we’re concerned they can keep it .” Without any evidence that Great American knew that their continued control of Thomas was allegedly unauthorized, Greenbank’s statutory conversion and theft claims fail.
The district court’s judgment was upheld.
A horse owner who is upset that the insurer saved the horse’s life, at its expense, and the horse is now alive and well, is counterintuitive. Most horse owners want their horse to live and feel well. In this case, the insured wanted the horse dead because she could recover $500,000. She would get nothing back if veterinarians paid by the insurer nursed the horse back to health. The Seventh Circuit addressed all of the plaintiff’s outlandish arguments, particularly when she refused to own her half-million dollar horse that is now doing well and acting like a healthy horse.
(c) 2022 Barry Zalma & ClaimSchool, Inc.
Barry Zalma, Esq., CFE, now limits his practice to serving as an insurance consultant specializing in insurance coverage, insurance claims management, insurance bad faith and insurance fraud almost equally for insurers and policyholders. He practiced law in California for more than 44 years as an insurance coverage and claims attorney and more than 54 years in the insurance industry. He can be reached at http://www.zalma.com and zalma@zalma.com.
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