Iraheta v. United of Omaha Life Insurance Co.

Full title: YENIS IRAHETA v. UNITED OF OMAHA LIFE INSURANCE CO., et al

Court: United States District Court, D. Maryland

Date published: Mar 28, 2005

Civil Action No. DKC 2004-794 (D. Md. Mar. 28, 2005)

Opinion

Civil Action No. DKC 2004-794.

March 28, 2005

MEMORANDUM OPINION

DEBORAH CHASANOW, District Judge

Presently pending and ready for resolution in this diversity action is Defendants' motion for reconsideration. The issues have been fully briefed and the court now rules, no hearing being deemed necessary. Local Rule 105.6. For the following reasons, the motion will be granted and, upon reconsideration of Defendants' motion for partial summary judgment, the motion will be granted.

I. Background

Plaintiff's complaint alleges that Defendant United of Omaha Life Insurance Co. ("United of Omaha"), an affiliate of Defendant Mutual of Omaha Insurance Co. ("Mutual of Omaha"), issued a term life insurance policy, No. UA8349743, to Ruben Alberto Hidalgo-Gongora on or about January 1, 2002, which provided that in the event of his death, the amount of $200,000 would be paid to his fiancé, Plaintiff Yenis Iraheta. On or about July 30, 2002, United of Omaha issued a permanent life insurance policy, No. UA8467366, in the amount of $100,000, which provided that that sum would be paid to Plaintiff in the event of Mr. Hidalgo-Gongora's death. On September 1, 2002, Mr. Hidalgo-Gongora died as a result of a car accident. Despite proper notice, the benefits have not been paid and Plaintiff claims entitlement to $300,000.

Defendants United of Omaha and Mutual of Omaha deny that any payments are due under either policy, but for differing reasons. First, they contend that the second policy, the $100,000 permanent life policy, replaced the earlier term policy, thus precluding any recovery on the $200,000 policy, and, second, they contend that even the $100,000 policy was not in effect because of a misstatement made by the decedent in the original application process. The first contention was the subject of a partial summary judgment motion. The court denied summary judgment because of an apparent inconsistency between Defendants' answer and their summary judgment papers. They now move for reconsideration, and to amend their answer, to explain and clarify their position.

II. Analysis

A. Motion for Reconsideration

Plaintiff opposes Defendants' request that the court reconsider the denial of summary judgment, arguing that there is no rule allowing review. Plaintiff is incorrect. Neither the time limits of the Federal Rules of Civil procedure nor the grounds for relief available under Rules 59 or 60 apply when a trial court has denied a motion for summary judgment.¹ Such a non-appealable interlocutory order is subject to reconsideration. For example, in Washington v. Digital Equipment Corp., 968 F.2d 1213, 1992 WL 167946, **7 (4^th Cir. Jul. 21, 1992) (per curiam), the court stated:

1 However, this court's local rule relating to motions for reconsideration still applies. Local Rule 105.10.

The determination not to grant summary judgment is not the kind of final judgment of an issue that requires application of the law of the case rule. A decision not to grant summary judgment does not resolve any factual or legal issue, and is not appealable as a final order. It is well accepted that no more justification need be offered to support a trial judge's reversal of his or another district judge's negative ruling on a summary judgment motion than the mere assertion that the judge changed his or her mind, or disagreed with the conclusion of his or her predecessor. Cale v. Johnson, 861 F.2d 943, 948 (4^th Cir. 1988); Foster v. Tandy Corp., 828 F.2d 1052, 1058 (4^th Cir. 1987); Shouse v. Ljunggren, 792 F.2d 902, 904 (9^th Cir. 1986).

Courts in other circuits concur. For example:

The Fifth Circuit holds that "because the denial of a motion for summary judgment is an interlocutory order, the trial court is free to reconsider and reverse its decision for any reason it deems sufficient, even in the absence of new evidence or an intervening change in or clarification of the substantive law." Lavespere v. Niagara Machine Tool Works, Inc., 910 F.2d 167, 185 (5^th Cir. 1990), citing Fed.R.Civ.P. 54(b). Such matters are left to the trial court's discretion, Xerox Corp. v. Genmoora Corp., 888 F.2d 345, 356 n. 62 (5^th Cir. 1989), and this discretion to reconsider prior orders in the interest of justice and economy extends to prior rulings of another judge in the same case. Abshire v. Seacoast Products, Inc., 668 F.2d 832, 837-38 (5^th Cir. 1982).

American Stone Diamond, Inc. v. Lloyds of London, 934 F.Supp. 839, 841 (S.D.Tex. 1996). Moreover, the First Circuit has recognized:

Rule 59(e) provides a party with ten days to move to alter or amend a judgment, and the district court may not enlarge the time frame. See Feinstein v. Moses, 951 F.2d 16, 19 (1^st Cir. 1991). But Rule 59(e) does not apply to motions for reconsideration of interlocutory orders from which no immediate appeal may be taken, see United States v. Martin, 226 F.3d 1042, 1048 (9^th Cir. 2000), including summary judgment denials, see Pacific Union Conf. of Seventh-Day Adventists v. Marshall, 434 U.S. 1305, 1306, 98 S.Ct. 2, 54 L.Ed.2d 17 (1977) (Rehnquist, J., in chambers). Interlocutory orders such as these "remain open to trial court reconsideration" until the entry of judgment. Geffon v. Micrion Corp., 249 F.3d 29, 38 (1^st Cir. 2001) (quoting Pérez v. Crespo-Guillén, 25 F.3d 40, 42 (1^st Cir. 1994)). Thus, the district court could reconsider its initial summary judgment ruling even though appellees did not seek reconsideration within ten days of the ruling.

Nieves-Luciano v. Hernandez-Torres, 397 F.3d 1, 4 (1^st Cir. 2005). Accordingly, the court is empowered to reconsider its denial of the motion.

Defendants' motion, and accompanying request to amend its answer, clarify what appeared to the court to be a contradiction. Defendants contend that the $100,000 policy is not in effect only because of an alleged material misrepresentation by the insured in the original application process. If there is no ground to rescind the insurance, then Defendants would agree that the later, $100,000 policy was the one in effect. Thus, there is no reason for the court not to address the merits of Defendants' motion concerning the insured's replacement of the original $200,000 term policy with a permanent policy in a lower amount.

B. Motion for Summary Judgment

The standard for review of a summary judgment motion was set forth in the court's earlier memorandum and will not be repeated here. The facts, taken in the light most favorable to Plaintiff, are as follows:

In December 2001, Suzanne Katz, a representative of Mutual of Omaha, held a meeting with Ruben Alberto Hidalgo-Gongora, an employee of A.L. Smith Glass Company, during which he completed an application for a $200,000 term life insurance policy. The application was approved and was issued effective January 1, 2002, with premium payments to be made through his employer's payroll deduction program.

Several months later, Mr. Hidalgo-Gongora contacted Ms. Katz and they met on June 6, 2002, to discuss replacing the policy with permanent coverage. He signed an application for a $100,000 policy. According to Ms. Katz, a box indicating that the new policy was not replacing another was at first mistakenly marked "no" but she changed it to "yes" before Mr. Hidalgo-Gongora signed it. The application was processed by Mutual of Omaha because the Term policy provided the insured with the right to convert without additional proof of insurability. Payment of the premiums for the initial policy was through payroll deduction of $26.34 per month. The premium for the new policy was to be $52.00 per month, also to be paid through payroll deduction.

Mutual of Omaha processed the conversion and issued the new policy effective August 1, 2002. August 1, 2002 was also the cancellation date of the former policy. Ms. Katz received the new policy and delivered it to Mr. Hidalgo-Gongora on August 30, 2002, and received a written receipt from him. She noticed, however, that the monthly premium was incorrectly stated to be $104, rather than $52, so she took back the policy to verify that it had been issued with the correct premium.

Early the next week she learned of Mr. Hidalgo-Gongora's untimely death. On September 6, 2002, she went to his employer to obtain a check for the balance due on the first month's premium on the new policy and received a check for $26.55 (the balance due was actually $25.66).²

2 By continued payroll deduction, the amount of $26.34 had been paid. Mutual of Omaha credited that amount to the new policy, thus, creating a balance of $25.66.

Plaintiff contends that the $200,000 term policy was still in place because that was the only policy for which Mr. Hidalgo-Gongora had authorized a payroll deduction for the premium before his death. Without proper consideration for the new policy, Plaintiff contends that it could not be effective and thus could not replace the first policy. Further, Plaintiff contends that the written application with the change to the box regarding replacement violates section 12-206(c)(1) of Maryland's Insurance Article. See Md. Code Ann., Ins. § 12-206(c)(1) (2003).

Neither of the issues raised by Plaintiff affects the uncontroverted facts that the decedent replaced one policy with another effective August 1, 2002. Before that date, he met with a representative of Defendant; expressed a desire to obtain permanent, rather than term, coverage; understood that the premiums would be higher so that he could afford only lower coverage; and signed the necessary forms to replace the policy. The new policy was issued effective August 1, 2002, and the new policy was in fact delivered to him on August 30, 2002, but because of a mistake on the recitation of the amount of the new premium, the policy was taken back for correction. Given the unambiguous offer and acceptance, a contract of insurance was formed as of August 1, 2002. Mitchell v. AARP Life Ins. Program, 140 Md.App. 102, 779 A.2d 1061 (Md.Ct.Spec.App. 2001).

The actual payment of the premium ordinarily is of no moment to the effectiveness of acceptance. The general rule is stated in Am. Jur. 2d Insurance § 211:

In the absence of any express provision in this respect, the actual prepayment of the premium on a policy is not a condition precedent to the consummation of the contract and assumption of risk by the insurer because the obligation of the insured to pay is consideration for the promises of the insurer.

The policy in question here was issued by Defendants, subject to lapsing or cancellation if the premiums were not paid. Nothing in the contract documents indicated that payment of the higher premium was a condition precedent to the issuance of the new policy.

Nor does the correction on the form undermine the conclusion that Defendant issued the new policy. According to the uncontroverted declaration of Ms. Katz, the change was made before Mr. Hidalgo-Gongora signed the form. Furthermore, the absence of information on the forms concerning the prior insurance is not material; both the prior insurance and the replacement policy were with Defendants, and Plaintiff provides no authority for the proposition that the blanks on the forms precluded the issuance of the new policy.

III. Conclusion

Accordingly, Defendants are entitled to partial summary judgment as to count I. If any insurance was in effect, it was the second, $100,000 permanent life insurance policy UA8467366. A separate order will be entered.