Standard Security Life Ins. Co. v. Bryan Berard, 684 Fed.Appx. 56 (2d Cir. March 27, 2017)

Bryan Berard, a former professional hockey player in the National Hockey League, made a claim for $6 million under an insurance policy for permanent and total disability, after he suffered a serious eye injury in March 2000 while in the League. Based on medical records, communications with treating physicians and other representatives, and news articles about Berard’s efforts to resume his professional hockey career, the insurer could not conclude that Berard’s injury was permanent and total or that he would never again be able to play professional hockey. Rather than continue investigating the claim, however, in May 2001 the insurer entered into a settlement with Berard, in which he accepted $6 million in exchange for a full release against the insurer and agreed that if he ever returned to a career in professional hockey he would refund the insurer in full. Notably, Berard was represented by both his insurance broker and sport agent during the pendency of the claim. In August 2001, Berard contemplated a return to professional hockey and at the end of September 2001 his lawyers negotiated a Repayment Agreement with the insurer that addressed the manner of Berard’s repayment obligations should he play professional hockey. Berard returned to professional hockey from 2001 to 2009 and refunded the $6 million to the insurer as agreed. Twelve years later, with a different lawyer, Berard accused the insurer of fraudulently inducing him to enter into the Release and Repayment Agreements and demanded $18 million to settle his claim.

In June 2014, the insurer commenced a lawsuit against Berard for declaratory and injunctive relief and for breaches of both the Release and the Repayment Agreements. Berard counterclaimed for breach of contract, fraud, bad faith and declaratory relief. The fraud claim was grounded in the theory that the insurer improperly and deceptively included in the Release Agreement a repayment obligation that was not contained in the Policy. The insurer moved for summary judgment on the ground that the terms of both the Release and Repayment Agreements and the statute of limitations barred Berard’s claims for relief. The SDNY granted summary judgment for the insurer and dismissed Berard’s counterclaim.

Berard appealed to the Second Circuit Court of Appeals, which affirmed the SDNY summary judgment. The Second Circuit agreed that the fraud claims were time-barred because by the end of September 2001, Berard had knowledge sufficient to plead the alleged fraud. Moreover, the Court held that even had the claims been timely filed, Berard could not show justifiable reliance on the alleged misrepresentation that there was a repayment obligation in the Policy, because he was in possession of the Policy when he signed the Release and Repayment Agreements and was presumed to have read the Policy regardless of his level of sophistication.

For inquiries about this case, please contact partners Jeffrey S. Weinstein or Emilie Bakal-Caplan.

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