Opinion
No. 7:04-CV-074-R.
August 2, 2004
FINDINGS, CONCLUSIONS AND RECOMMENDATION OF THE UNITED STATES MAGISTRATE JUDGE
Pursuant to the provisions of 28 U.S.C. § 636(b), and an Order of the Court in implementation thereof, the subject cause has previously been referred to the United States magistrate judge. The findings, conclusions and recommendation of the magistrate judge, as evidenced by his signature thereto, are as follows:
FINDINGS AND CONCLUSIONS:
Type of Case: This is a diversity action brought pursuant to 28 U.S.C. § 1332.
Parties: Plaintiff is an inmate confined in the Allred Unit of the Texas Department of Criminal Justice in Iowa Park, Texas. Defendant is a Tennessee corporation with its principle place of business in Nashville, Tennessee. Complaint pp. 1-2. No process has been issued in this case. Statement of the Case: Plaintiff, Alvin S. Sanderson, seeks over $5,000,000.00 in monetary damages from American General Life Accident Insurance Company ("American General") on claims of fraudulent inducement, constructive fraud, fraudulent concealment, fraudulent representation and breach of contract. Complaint pp. 14-29. On May 3, 2004, questions were issued to Plaintiff, his answers to which were filed on June 21, 2004. Although Plaintiff's answers to the Court's questions were untimely and the action was dismissed, the final judgment was vacated and the case reopened for further review.
Plaintiff is proceeding in forma pauperis in this action. Therefore, the screening provisions of 28 U.S.C. § 1915(e)(2) are applicable. On June 14, 2004, Defendant filed a motion to dismiss the case. Because the case is subject to summary dismissal by the Court at the screening stage and because process can issue only upon order of the Court, Defendant's appearance in this case is premature. See 28 U.S.C. § 1915(d) ("officers of the court shall issue and serve all process" in proceedings in forma pauperis).
The facts of this case, as provided by Plaintiff, are as follows. Ollie L. Sanderson, Plaintiff's mother, passed away on June 10, 1998. Id. pp. 3 28. At that time, Plaintiff was incarcerated by the State of Texas. Id. p. 9; Plaintiff's Answer to the Court's Question No. 1. Ollie Sanderson had four life insurance policies through American General with Plaintiff designated as the primary beneficiary on each policy. Complaint p. 3. The four policies had an aggregate death benefit value of $11,586.73. Id. p. 13.
At the screening stage, this Court presumes that Plaintiff's factual allegations are true. The presumption of truth does not apply to any legal conclusions or other conclusory allegations offered by Plaintiff in his pleadings. See Fernandez-Montes v. Allied Pilots Ass'n, 987 F.2d 278, 284 (5th Cir. 1993); Van Cleave v. United States, 854 F.2d 82, 84 (5th Cir. 1988).
Plaintiff claims that American General conspired with his aunt, Billie Jean Hylender, his brother, Joseph S. Sanderson, his wife, Margot M. Sanderson and a funeral home director, James Ware, to fraudulently deprive him of the insurance policy proceeds to which he was rightfully entitled. Id. p. 4. Plaintiff states that American General unlawfully provided a claim number to either his aunt or his brother and that the number was used on a document in an attempt by his family to obtain an assignment of the insurance proceeds. Id. p. 6. However, Sanderson concedes that he sent the assigning document to his wife and that it was never submitted to American General. Plaintiff's Answer to the Court's Question No. 10.
On or about September 1, 1998, Plaintiff received correspondence from Defendant related to the insurance policies. The correspondence read as follows:
(1) The below named person(s) are listed as beneficiary to the insured:
Alvin S. Sanderson
(2) [We] were informed by your brother, Joseph Sanderson, that you are unable to receive the benefit payments at your location. If this is the case, do you have another address that you wish to send them to? If so, you must submit a notarized letter requesting the address change.
(3) To submit a claim, you must submit the enclosed claim form to the Texas Regional Office. It's located at: . . .Complaint p. 7.
On or about October 1, 1998, Plaintiff mailed a claim form and a letter to Defendant asking that the delivery address for the policy benefits be changed to his wife's P.O. Box and stating that the insurance proceeds should be paid to his wife. Plaintiff's Exhibit A. He informed American General that he would provide a Power of Attorney to his wife so that she could act as an agent on his behalf. Id. Sanderson told the insurance company that he would follow-up with a copy of his mother's death certificate which he was attempting to obtain from the County Clerk's office. Id. Sanderson claims that the death certificate was required by American General prior to the release of the proceeds. Complaint p. 8. On or about October 1, 1998, Plaintiff mailed a Power of Attorney to his wife, Margot M. Sanderson, giving her the legal authority to act as his agent in conducting transactions involving the death benefits payable under the life insurance policies. Id. p. 9.
On January 26, 1999, Plaintiff sent a letter to Defendant informing the company that he had not yet provided a certificate of death or a copy of the policy as required prior to disbursement of funds. Id. p. 10. On June 1, 1999, Plaintiff received a letter from Defendant informing him that four checks made payable to him were mailed to his wife, Margot, in February 1999. Id. p. 11; Plaintiff's Exhibit B. Plaintiff has provided copies of the canceled checks. Plaintiff's Exhibits C1-C4. Each check is signed "Alvin Sanderson" and "Margot Sanderson P.O.A." Plaintiff believes that the signature is that of his wife, Margot M. Sanderson. Plaintiff's Answer to the Court's Question No. 25.
The essence of Plaintiff's complaint is that Defendant conspired with his family members and made a material misrepresentation, thereby committing fraud, when it sent him the letter indicating that the company had been informed by his brother that he could not receive insurance policy proceeds while incarcerated. Complaint p. 14. Plaintiff states that he can, in fact, receive such funds deposited directly into his prison trust account but that he relied on the representation of American General at that time in believing that he could not receive the funds. Id. p. 9. He asserts that this fraudulent misrepresentation on the part of Defendant resulted in the loss of the insurance benefits, the dissolution of his marriage, irreparable damage to his relationship with his brother and severe emotional distress. Id. pp. 16, 20, 23.
According to Plaintiff, his brother informed Defendant that he could not receive the insurance proceeds in prison. Defendant stated to Plaintiff in its letter that, "if this [was] the case," let the company know if he had another address to which he wanted the funds sent. This Court does not believe that such a statement on the part of an insurance company evinces fraud. Moreover, Plaintiff has not been able to articulate knowledge of any fraudulent representations on the part of the Defendant, American General, its representatives or any of his family members. See Plaintiff's Answers to the Courts Questions No. 4-6. Plaintiff concedes that he took it upon himself to have the insurance funds sent to his wife and he voluntarily executed a power of attorney allowing her to enter into transactions concerning the funds. The fact that Plaintiff may not have exercised due diligence in determining whether or not he could receive the funds in his prison trust account does not render the acts of Defendants in disbursing the funds fraudulent. However, assuming arguendo that Plaintiff could eventually articulate some factual support for his claims of fraud, the action is clearly barred by limitations.
Under Texas law, claims for fraud are subject to a four-year statute of limitations regardless of the remedy sought. Tex. Civ. Prac. Rem. Code § 16.051 (West 2004); Castillo v. First City Bancorporation of Texas, Inc., 43 F.3d 953, 962 (5th Cir. 1994); Williams v. Khalaf, 802 S.W.2d 651, 658 (Tex. 1990). A limitation period begins to run when a cause of action accrues. "For purposes of limitations, a cause of action accrues when facts come into existence by which a party knows, or should know, that it is entitled to seek a judicial remedy." City of Dallas v. Lowenberg, ___ S.W.3d ___, 2004 WL 1274389 p. 2 (Tex.App. — Eastland 2004) (citing Murray v. San Jacinto Agency, Inc., 800 S.W.2d 826, 828 (Tex. 1990)). In cases alleging fraud, the statute of limitations will begin to run when a reasonably prudent person exercising reasonable diligence should have discovered the defendant's wrongful acts. E.g. In re Estate of Herring, 970 S.W.2d 583, 587 (Tex.App.-Corpus Christi 1998, no pet.); Hoerster v. Wilke, 140 S.W.2d 952, 956 (Tex.Civ.App.-Austin 1940), aff'd, 158 S.W.2d 288 (Tex. 1942). This standard is also applicable in cases such as the instant case, where fraudulent concealment is alleged. "Fraudulent concealment tolls limitations until the plaintiff discovers the fraud or could have discovered the fraud with reasonable diligence." Gilbert v. Bartel, ___ S.W.3d ___, 2004 WL 1596271 p. 5 (Tex.App.-Fort Worth 2004).
In the case at bar, exercising due diligence, Plaintiff should have discovered the alleged fraud in May of 1999 when he received a letter from Defendant stating that the insurance proceeds checks were drawn payable to him and mailed to his wife, Margot. Complaint, Exhibit B. Assuming that this letter would not raise a question to a reasonably prudent person, Plaintiff should have known of the accrual of any cause of action at the very latest, on September 7, 1999, the date he received copies of the canceled checks with his wife's signature on them. Complaint p. 12. The instant complaint was filed on April 9, 2004, well after the four-year limitation period ran. Therefore, Sanderson's causes of action for fraud cannot proceed. Similarly, his claim for breach of contract is barred by the four-year statute of limitations. See Tex. Civ. Prac. Rem. Code § 16.051 (West 2004); Dallas Fire Ins. Co. v. Texas Contractors Sur. Cas. Agency, 128 S.W.3d 279, 301 (Tex.App.-Fort Worth 2004) (noting that the statute of limitations for breach of contract is four years).
In the case at bar, Plaintiff was given the opportunity to expound on the factual allegations of his complaint by way of questionnaire. See Eason v. Thaler, 14 F.3d 8 (5th Cir. 1994) (requiring further development of insufficient factual allegations before dismissal is proper); Watson v. Ault, 525 F.2d 886, 892-93 (5th Cir. 1976) (affirming use of a questionnaire as a proper means for the court to develop the factual basis of a pro se plaintiff's complaint). However, he failed to articulate facts which, if taken as true, would demonstrate that he can maintain a claim for fraud or breach of contract against American General in light of the statute of limitations.
Where it is clear from the face of a prisoner's complaint that the claims set forth are time-barred, the complaint may be dismissed as frivolous. See Gartrell v. Gaylor, 981 F.2d 254, 256 (5th Cir. 1993); Slack v. Carpenter, 7 F.3d 418, 419 (5th Cir. 1993).
RECOMMENDATION:
For the foregoing reasons, it is recommended the complaint be dismissed with prejudice pursuant to 28 U.S.C. § 1915(e)(2)(B)(i) as frivolous.
A copy of this recommendation shall be transmitted to Plaintiff and to Counsel for Defendant.