Opinion
No. 1:03-cv-401.
July 30, 2004
MEMORANDUM
The plaintiff, Jefferson-Pilot Life Insurance Company ("Jefferson-Pilot"), seeks a declaratory judgment that the defendant, Amy Glenn Harris ("Harris"), may not recover under the terms of a life insurance policy applied for by her late fiancé. [Court File No. 1]. Harris has answered the complaint and brings a counterclaim seeking to recover $300,000 from Jefferson-Pilot. [Court File No. 4]. Jefferson-Pilot is a North Carolina corporation, with its principal place of business in North Carolina, and Harris is a resident of Tennessee; accordingly, jurisdiction is asserted on the basis of diversity of citizenship pursuant to 28 U.S.C. § 1332.
Jefferson-Pilot now moves for summary judgment. [Court File No. 6]. The merits of this motion have been addressed in Harris's response [Court File No. 17] and in Jefferson-Pilot's reply [Court File No. 18]. For the reasons expressed below, the plaintiff's motion for summary judgment will be GRANTED.
I. Standard of Review
Summary judgment is appropriate where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. FED. R. CIV. P. 56(c). In ruling on a motion for summary judgment, the Court must view the facts contained in the record and all inferences that can be drawn from those facts in the light most favorable to the non-moving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587 (1986); National Satellite Sports, Inc. v. Eliadis Inc., 253 F.3d 900, 907 (6th Cir. 2001). The Court cannot weigh the evidence or determine the truth of any matter in dispute. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 249 (1986).
The moving party bears the initial burden of demonstrating that no genuine issue of material fact exists. Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). To refute such a showing, the nonmoving party must present some significant, probative evidence indicating the necessity of a trial for resolving a material factual dispute. Celotex Corp., 477 U.S. at 322. A mere scintilla of evidence is not enough. Anderson, 477 U.S. at 252; McLean v. Ontario, Ltd., 224 F.3d 797, 800 (6th Cir. 2000). The Court's role is limited to determining whether the case contains sufficient evidence from which a jury could reasonably find for the non-moving party. Anderson, 477 U.S. at 248, 249; National Satellite Sports, 253 F.3d at 907.
II. Facts
This case involves a question of whether or not James A. Massengale ("Massengale") was covered under a Jefferson-Pilot life insurance policy or a conditional receipt for a Jefferson-Pilot life insurance policy at the time of his death. It is undisputed that in a Hardee's restaurant, on April 22, 2003, Massengale met with insurance agent Tim Thomas ("Thomas") who assisted him in completing the application for a Jefferson-Pilot life insurance policy. Only Massengale and the insurance agent were present at the meeting. The standard document used by Jefferson-Pilot consisted of a seven page application with an eighth page that served as a "tear out" conditional receipt explaining additional steps necessary before "interim" coverage became effective pending approval or rejection of the application. One requirement addressed in the standard conditional receipt was the need for the applicant to have a medical examination. On the same day, Massengale also provided a check payable to Jefferson-Pilot, in the amount of the first premium payment for the life insurance.
Seven days later Massengale died. Since his death, a signed conditional receipt has not been located among his possessions. At the time of his death, the medical exam associated with the insurance coverage had been scheduled, but not yet performed. At issue in this case is whether the condition that the applicant pass a medical examination prevents Massengale's fianceé and designated beneficiary, Harris, from recovering under the $300,000 life insurance policy or the terms of the conditional receipt for the policy.
III. Analysis
The plaintiff, Jefferson-Pilot, seeks summary judgment in its suit for a declaratory judgment that it is not liable to Harris due to Massengale's application for life insurance. The resolution of this issue necessarily encompasses Harris's counter claim that she is owed $300,000 under the terms of the policy.
Generally, the Tennessee courts have explained that "[i]f a contract of insurance is ambiguous, then the language is to be construed most favorably to the insured. Where there is no ambiguity, however, construction of the policy language is not permitted." Bills v. Conseco Ins. Co., No. M2002-01906-COA-R3-CV, 2003 WL 22455399, *5 (Tenn.Ct.App. Oct. 28, 2003) (citing Moore v. Life Cas. Ins. Co., 40 S.W.2d 403 (Tenn. 1931). In this case the Court is asked to consider both the terms of a missing conditional receipt for an insurance application and the terms of the application for insurance absent the conditional receipt.
Like the insurance contract itself, courts have enforced the terms of a conditional receipt for life insurance when the terms are unambiguous. Gibson v. Commonwealth Ins. Co., No. 95-5629, 1996 WL 301723, *2 (6th Cir. 1996) (citing Seals v. Appalachian Nat'l Life Ins. Co., 597 S.W.2d 904, 907 (Tenn.Ct.App. 1979), Arnold v. Locomotive Engr's Mut. Life Acc. Ins. Ass'n, 204 S.W.2d 191, 194 (Tenn.Ct.App. 1946), McLendon v. Woodmen of the World, 64 S.W. 36, 39-40 (Tenn. 1901)). However, if the terms of the receipt are ambiguous, then "usually ambiguous language on the receipt will result in a contract for temporary `interim' insurance creating liability in the event that the applicant dies before the application was acted upon." Id. (citing American Nat'l Ins. v. J.C. Thompson, 316 S.W.2d 52, 56 (Tenn.Ct.App. 1957); Liberty National Life Ins. Co. v. Hamilton, 237 F.2d 235, 237 (6th Cir. 1956)).
Harris suggests that this Court should look to the Tennessee Court of Appeals' holding in Life Casualty Ins. Co. v. Vertrees, 318 S.W.2d 559 (Tenn.Ct.App. 1958), when deciding this case. In Vertrees, however, the court looked at a receipt given at the time an application for life insurance was completed which provided that interim insurance would be in effect as of the date of the application unless a medical exam was requested by the company. Id. at 560. The Vertrees court held that since a medical exam was not requested until after the death of the applicant, the term of the receipt was a not a condition precedent, and the receipt given provided insurance from the date of the application which was "subject only to a subsequent rejection by the company, if made during the life of . . . [the proposed insured]." Id. at 566 (quoting Hamilton, 237 F.2d at 237). The case currently before this Court, however, is easily distinguishable.
Jefferson-Pilot has provided the deposition testimony of the insurance agent, Thomas, in which he states that he always gave a conditional receipt to his clients. [Court File No. 18, Ex. 1 at 46-47]. Copies of the first seven pages of the relevant application form are present in the court file and, as would be consistent with the delivery of a conditional receipt to Massengale, the eighth page contained conditional receipt is not attached to the rest of the form. [Court File No. 8, Ex. 3]. Furthermore, contained within the first seven pages of the document was a question which asked whether the conditional receipt was given to the applicant and it is marked with a check in the "yes" box. [Court File No. 8, Ex. B at question 47].
A copy of the conditional receipt bearing Massengale's signature has not been provided to the Court. However, a sample copy of the eighth page of the Jefferson-Pilot life insurance application has been provided. [Court File No. 8, Ex. A]. Harris does not challenge Jefferson-Pilot's assertion that the sample produced correctly reflects the terms of the conditional receipt, rather she suggests that these terms do not apply. To the extent that the terms of a lost or misplaced conditional receipt as gleaned from a sample copy are enforceable, they are not ambiguous. The conditional receipt provides a list of conditions including the following: "All medical examinations and tests required by the Company's initial underwriting requirements must be completed and received at its Service Office during the lifetime of the Proposed Insured, but in any case within 60 days of the completion of Part I of the application." [Court File No. 8, Ex. A]. This statement is followed by the following text:
Beginning Date: If all the conditions in this receipt have been fulfilled exactly, coverage under the policy applied for, subject to the Amount Limitations may begin on the insurabiliy date, which is the latest of (a) the date of completion of Part I of the application or (b) the date of completion of all medical examinations, test or other evidence required by the Company, or (c) the policy date, if any, requested in the application. [Court File No. 8, Ex. A]. It is undisputed that at the time of his death, a medical exam for Massengale had been scheduled, but had not occurred. [Court File No. 18, Ex. 1 at 47]. The Jefferson-Pilot conditional receipt contains none of the ambiguities found in the receipt that was the subject of the court's decision in Vertrees. See Vertrees, 318 S.W.2d at 560.
Harris appears to contend that Massengale may not have had an opportunity to read the conditional receipt before signing it. [Court File No. 17 at 4, 5, 10]. The Supreme Court of Tennessee, however, has stated that "[i]t will not do for a man to enter into a contract, and, when called upon to respond to its obligations, to say that he did not read it when he signed it, or did not know what it contained. If this were permitted, contracts would not be worth the paper on which they are written." Webber v. State Farm Mutual Auto. Ins. Co., 49 S.W.3d 265, 274 (Tenn. 2001) (quoting De Ford v. National Life Acc. Ins. Co., 185 S.W.2d 617, 622 (Tenn. 1945) (quoting Upton v. Tribilcock, 91 U.S. 45, 50 (1875))). Therefore, if the conditional receipt was in fact signed by and provided to Massengale, as the deposition testimony of Thomas states and Harris has presented no evidence to refute, it would then be irrelevant that he did not read the terms before signing the document.
Harris also argues that because the conditional receipt cannot be found, it cannot apply to prevent her recovery on the grounds that Massengale failed to satisfy the terms stated on the receipt, yet she insists that while not limited by the terms, the interim insurance is still in force. In support of this argument, Harris relies on the holding in Holland v. Kentucky Central Life Ins. Co., No. 89-253-II, 1989 WL 143999 (Tenn.Ct.App. 1989). In Holland, the insurance agent completed an application for life insurance for Mr. Holland and the next day went to Mrs. Holland's place of employment to collect the premium, however, when collecting the premium, the agent forgot to deliver the conditional receipt. Id. at *1. Before she could deliver the receipt the next day, Mr. Holland died. Id. The court held that neither the fact that the conditional receipt was marked with a different date than the application, as prohibited in the conditional receipt, nor the insurance company's later contention that Mr. Holland would not have met the condition that "[e]very person proposed for insurance must be insurable at standard premium rates for the amount and plan of insurance . . .," prevented Mr. Holland from being determined to be covered under the conditional receipt at the time of his death. Id. at *1, 3. Regarding the date on the receipt, the court held that the fact that the receipt must bear the same date as the application was not communicated to the Hollands and therefore the agent's mistake would not be held against them. As to the rates required for insuring Mr. Holland, the court found that a question for the jury had existed and did not disturb the result reached by the jury which suggested their determination that Mr. Holland would have been insured at standard rates. Id. at *2, 3.
The Court does not agree that the facts of the Holland case are sufficiently similar to this case to suggest the same result. The Holland court did not apply the term of the receipt requiring the same date as the application, only because it was never delivered to the applicants. The Jefferson-Pilot conditional receipt in this case had a line for the signature of the proposed insured. Without that signature agreeing to the terms, the receipt would not be enforceable, thus, even if not given to Massengale, as suggested by Harris, for the receipt to provide any interim insurance, Massengale would have had to sign it and would be charged with the knowledge of its contents. Also unlike the Holland case, Jefferson-Pilot did not have to make any discretionary decisions related to the terms of the receipt which would determine whether interim insurance was in force.
In the absence of the receipt, Harris is left with the terms of the application for insurance consisting of the seven page document which bears Massengale's signature. The sixth page of the application contains the following language:
Each of the Undersigned declares that:
. . .
2. Unless otherwise provided by the Conditional Receipt, the Company will have no liability under this application unless and until: a) it has been received and approved by the Company and its Service Office; b) the policy has been issued and delivered to the policyowner; c) the first premium has been paid to and accepted by the Company; and d) at the time of delivery and payment, the facts concerning the insurablity of each person proposed for insurance are as stated in this application.
[Court File No. 8, Ex. B]. Accordingly, to the extent that Harris argues the conditional receipt was never delivered to Massengale, the Court would then be left to interpret only the seven pages of the contract which bear Massengale's signature. The absence of the conditional receipt, however, does not help Harris because the unambiguous paragraph quoted above still acts to deny coverage because at the very least, condition (b) is not satisfied. Harris has produced no evidence that a policy was ever issued to Massengale which would meet condition (b), thus, conditions (a) and (d) are likely unsatisfied as well.
Simply stated, this Court declines to accept Harris's apparent assertion that by cashing Massengale's check for the amount of the first premium, the insurance company became liable under a policy when neither the terms contained in application nor the terms in the conditional receipt were satisfied. If the conditional receipt was signed by Massengale, its terms control and Massengale was not insured because he did not complete the medical exam. If the conditional receipt was not given to Massengale, the terms of the application control the analysis and the signed application dictates the same result because Massengale had not received the policy. There exists no genuine issue of material fact in dispute which could lead to the conclusion that Massengale was covered under a Jefferson-Pilot life insurance policy, or by interim insurance under the terms of a conditional receipt, at the time of his death. Accordingly, a declaratory judgment will be entered in favor of Jefferson-Pilot and Harris's counterclaim will be dismissed.
IV. Conclusion
For the reasons expressed above, Jefferson-Pilot's motion for summary judgment will be GRANTED. A judgment will enter.
JUDGMENT
For the reasons stated in the accompanying memorandum, Jefferson-Pilot Life Insurance Company's motion for summary judgment is GRANTED. Accordingly, the Court DECLARES pursuant to 28 U.S.C. § 2201, the application for life insurance signed by James Massengale on April 22, 2003, which named Amy Glenn Harris as his beneficiary, did not mature into an enforceable contract for life insurance prior to James Massengale's death, nor did James Massengale satisfy the terms of the conditional receipt which, if completed, would have provided interim coverage.Amy Glenn Harris's counterclaim against Jefferson-Pilot Life Insurance Company asserting that the company is liable to her in the amount of $300,000 under the same policy is necessarily resolved by the Court's decision regarding the plaintiff's motion for summary judgment. Therefore, Amy Glenn Harris's counterclaim is DISMISSED. Each party shall bear their own costs.
This is a Final Judgment. The Clerk of Court shall close the case.
SO ORDERED.