Opinion
NO. 2019-CA-000053-MR
04-03-2020
Timothy J. MCALPIN, Appellant v. AMERICAN GENERAL LIFE INSURANCE COMPANY; American General Life and Accident Insurance Company; and David Leeson, Appellees
BRIEFS FOR APPELLANT: William C. Rambicure, Lexington, Kentucky. BRIEF FOR APPELLEES, AMERICAN GENERAL LIFE INSURANCE COMPANY AND AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY: Clayton O. Oswald, Ashley P. Hoover, London, Kentucky.
BRIEFS FOR APPELLANT: William C. Rambicure, Lexington, Kentucky.
BRIEF FOR APPELLEES, AMERICAN GENERAL LIFE INSURANCE COMPANY AND AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE COMPANY: Clayton O. Oswald, Ashley P. Hoover, London, Kentucky.
BEFORE: COMBS, KRAMER, AND K. THOMPSON, JUDGES.
OPINION
KRAMER, JUDGE:
Timothy McAlpin appeals the Fayette Circuit Court's summary dismissal of various civil claims he had asserted against the above-captioned appellees, all of which were rooted in the following premise: In McAlpin's view, insurance agent David Leeson breached a professional obligation owed to him when, on February 14, 2008, Leeson offered to sell him life insurance but did not offer to sell him accidental death insurance. Upon review, we affirm.
Under given circumstances, an insurance agent may expressly or implicitly assume a "duty to advise." See Mullins v. Commonwealth Life Ins. Co. , 839 S.W.2d 245 (Ky. 1992). In this appeal, the scope of an insurance agent's purported "duty to advise" is a dispositive issue. In Mullins , the Kentucky Supreme Court stated:
As discussed below, the appellees moved for summary dismissal on several additional grounds, including what they asserted was McAlpin's failure to demonstrate any duty was owed to him under the circumstances; and his failure to demonstrate proximate causation. Considering our disposition of this matter, it is unnecessary to address those additional grounds.
When an insurance company or an agent "holds itself out" to the public as a counselor and/or advisor, the scope of [the] duty to advise is commensurate with the obligation assumed by the insurance company or agent selling the insurance. See Sandbulte v. Farm Bureau Mut. Ins. Co. , 343 N.W.2d 457, 464 (Iowa 1984) ; Trotter [v. State Farm Mut. Auto. Ins. Co.], supra 377 S.E.2d [343] at 347 [ (App. 1988) ] ; 88 A.L.R. 4th 270, § 5[b].
The principle involved here is simply that a person who holds himself out to the public as possessing special knowledge, skill or expertise must perform his activities according to the standard of his profession. If he does not, he may be held liable under ordinary tort principles of negligence for the damage he causes by his failure to adhere to the standard.
Darner Motor Sales v. Universal Underwriters , 140 Ariz. 383, 682 P.2d 388 (1984), citing Prosser and Keeton on Torts , supra , § 32.
When circumstances present an issue of an insurance company and/or agent "holding itself out" as a counselor and/or advisor, proof of the standard in this type of case may require expert testimony at trial. Id.
Id. at 249.
Here, both sides of this dispute deposed experts regarding the standard of care applicable to any "duty to advise" Leeson may have owed McAlpin regarding insurance matters on or before February 14, 2008. And, the opinion most favorable to McAlpin's case (i.e. , that of McAlpin's expert, Thomas Lee Ballard) was as follows:
[A]gents representing the carrier had a common law duty to the customer to provide any possible solutions to the customer's needs once the problems were brought forward and the agents knew they had a product that could solve the problems. The fact that the possible solutions may not have been the best in the minds of the agents, did not bar them from providing the information to the customer. Nor did it release them from the duty of offering possible coverage to the customer.[ ]
This opinion was set forth in a written report Ballard provided in this matter, and Ballard reiterated this opinion over the course of his deposition.
Thus, Ballard opined that an agent's advice is required to present "possible solutions" to "needs" or "problems" that a customer has "brought forward."
With that in mind, we now turn to the "needs" or "problems" that McAlpin "brought forward" in his dealings with Leeson. The undisputed facts are as follows. In 2008, McAlpin was the President and owner of High Street Title Company, Inc., in Lexington, and his son, Jay, was the Vice President and Office Manager. McAlpin had purchased several term life policies to insure his own life for $1.2 million, and he was also considering insuring his son's life in an equivalent amount for business purposes. In his deposition, he explained:
MCALPIN: We were doing a lot of volume and we were making a lot of money, and so I had had insurance on my life and Jay was the beneficiary of it.
Q: Unrelated to the business you carry your own personal insurance?
MCALPIN: Well, call it whatever you want to call it –
Q: Okay.
MCALPIN: – key man or whatever – we – that was – our goal was – at that point in time was to have each other covered if something was to happen to the other one.
Q: But what you're telling me is you were carrying insurance on yourself prior to ’08 –
MCALPIN: Yes.
Q: – with Jay as the beneficiary?
MCALPIN: Yes.
Q: Okay.
MCALPIN: Absolutely. And then as we grew along and he came to be an intricate part of the company and it was clearly obvious that if anything was to happen to me it would be very detrimental for Jay and vice versa, and so we said, hey, you know, this is what we need to do, I've already got insurance in place for you, and I said, I need for you to get insurance in place for me. So we kind of – if anything happens to me, you've got something there that will help you get by and go on and carry on, and
if anything happened to you, I would need the same thing.
(Emphasis added.)
To summarize: McAlpin was concerned that "something" or "anything" could happen to himself or Jay. He believed the term life insurance he carried, which provided coverage of over $1 million, adequately addressed the risk of "something" or "anything" happening to himself. And, he needed "the same thing" for Jay.
In early February 2008, Leeson was employed as an agent for American General Life and Accident Insurance Company (AGLA), the successor-in-interest to American General Life Insurance Company (AGLIC), and he visited the McAlpins’ office for the first time to solicit potential insurance business. McAlpin testified that when Leeson arrived,
I said, well, you can help us out, we need to – this is what we're trying to do, we're trying to get life insurance on – on Jay and I could even – I even want a little more life insurance , and so take care of us.
(Emphasis added.)
McAlpin testified that during this initial visit and in subsequent communications, he informed Leeson of the respective positions he and his son, Jay, held in High Street Title; that his plan was for Jay to become a 25% shareholder in the company; and, consistently with his goal outlined above, that he wanted to insure Jay's life for $1 million. Further elaborating on this point, McAlpin testified he told Leeson:
MCALPIN: You know, I just meant to be the – the beneficiary or the – you know, however it was supposed to be where we were – both had insurance –
Q: Okay.
MCALPIN: – in the business to where if something happened to one, the other one would get paid. Partners insurance – whatever you call it – I don't know.
(Emphasis added.)
Based upon what McAlpin related to him, Leeson surmised that if insurance covered Jay against the same kinds of risks that McAlpin's insurance covered, and in an amount of $1 million, that McAlpin's needs would be met. Accordingly, his recommendation was for McAlpin to purchase a $1 million life insurance policy for Jay.
On February 14, 2008, McAlpin and Jay met with Leeson at their office to further discuss applying for and obtaining life insurance. During these discussions, Leeson advised that as a precondition to the issuance of a life insurance policy the two of them would need to have medical examinations which included drawing their blood for HIV testing. Whereupon, Jay stated he was afraid of needles and that no one would obtain any blood sample from him. Consequently, he refused to apply for any life insurance policy and left the meeting.
Regarding the abrupt end to their meeting due to Jay's sudden exit, McAlpin testified, "I didn't make a big deal out of it." He also acknowledged that over the ensuing ten months he took no further steps to acquire any kind of insurance to cover Jay. Unfortunately, on January 1, 2009, Jay died of a gunshot wound.
On February 13, 2013, McAlpin filed suit against the appellees in Fayette Circuit Court. As to what prompted his suit, he testified:
MCALPIN: I learned after the fact that you can get accidental death insurance without a physical exam. I didn't know that then.
Q: How did you learn that?
MCALPIN: Well, I – I became consciously aware of it when I was watching TV one night and there was an advertisement
on there about insurance and it said, hey, you can get $250,000 for $19 a month accidental death, no physical exam, no medical check, and that's when I began to kind of think about it.
Q: Now, I'm not asking you –
MCALPIN: And I thought, well, gosh, I wish that would have been offered to me and Jay in early 2008.
...
Q: Is it true that they could have on that day issued an accidental death policy?
...
MCALPIN: All right. Well, because, I mean, you know, I just thought that they did because they're a big insurance company, and after I saw that ad I thought anybody could do it.
Q: So then ultimately we get to paragraph 20 [of McAlpin's complaint ] where you say, had these facts – i.e., that American General had such policies of accidental death insurance that did not require the medical exams – if that had been disclosed to you and your son, you would have applied for and obtained a $1 million accidental death policy insuring the life of your son Jay through American General, and I take it that would have been your intention?
MCALPIN: Absolutely.
In Paragraph 20 of his verified complaint, McAlpin claimed: "Had these facts been so disclosed to Plaintiff McAlpin and his son, Robert ("Jay") McAlpin at the time, Plaintiff McAlpin would have applied for and obtained a $1,000,000 accidental death insurance policy insuring the life of his son, Robert J. ("Jay") McAlpin through Defendants AGL and/or AGLA."
In his complaint, McAlpin asserted the following claims against Leeson, each of which sounded in negligence: (1) "common law negligence"; (2) "negligent misrepresentation"; and (3) "breach of express and/or implied duties to advise." Similarly, with respect to AGLA and AGLIC, his claims were: (1) "agency/respondeat superior"; and (2) "negligent training/supervision." And, as McAlpin's testimony set forth above tends to indicate, his claims were based upon the same assumptions. Namely, had he known about accidental death insurance in February 2008, he assumed: He would have been interested in it as an "alternative" to life insurance; he would have been able to purchase such a policy with a coverage amount of $1 million; and such a policy would have provided coverage for the type of death that his son, Jay, suffered on January 1, 2009.
The appellees answered, denying liability. Afterward, discovery progressed and revealed that while AGLA and AGLIC did , in February 2008, offer standalone accidental death insurance policies with no explicit requirement of a physical examination, the maximum coverage such a policy could have provided was $500,000. Moreover, as the term "accidental death insurance" implies, such policies cover fewer risks than life insurance policies. This was an uncontested point further explained by Burke Christensen, one of the several experts deposed in this matter:
Q: Your typical life insurance policy, whether it be term whole life, some other – convertible, you know, whatever the other names are – they would generally provide coverage for death under any circumstances, including accidental death?
CHRISTENSEN: Generally speaking, that's true. There are some, what I'll call residual exclusions, like war. Some policies have an aviation exclusion. But generally speaking, you're correct. A life insurance policy that's not identified as a special policy, meaning accidental death, will pay for death of an insured regardless
it will pay for death of an insured regardless of the cause of death.
Q: Okay.
CHRISTENSEN: Well, there's another exception for suicide within the first two years.
Q: Sure.
CHRISTENSEN: But that's not relevant in these cases, I think.
Q: The accidental death policy – standard typical accidental death policies that you're familiar with, unlike these other normal life insurance products, only affords coverage in the event of an accidental death, as defined in that policy?
CHRISTENSEN: Yes. And I appreciate you using the word "as defined," because different accidental death policies will provide us – well, all accidental death policies provide a paragraph, or section called exclusions. And there are certain kinds of deaths, which some folks might call accidental, which they will not cover.
Q: Sure.
CHRISTENSEN: But generally speaking, you're correct. Accidental death is a – death that will result in payment from an accidental death policy.
Ultimately, the appellees moved for summary judgment on a variety of grounds, including that McAlpin had failed to prove any duty was owed to him; that any such purported duty had been breached; or that any such purported breach had been the proximate cause of legally cognizable damage. Agreeing, the circuit court granted their motions. This appeal followed.
Any negligence claim has four elements: "(1) a legally-cognizable duty, (2) a breach of that duty, (3) causation linking the breach to an injury, and (4) damages." Patton v. Bickford , 529 S.W.3d 717, 729 (Ky. 2016).
Summary judgment serves to terminate litigation where "the pleadings, depositions, answers to interrogatories, stipulations, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law." Kentucky Rule of Civil Procedure (CR) 56.03. It is well established that a party responding to a properly supported summary judgment motion cannot merely rest on the allegations in his pleadings. Continental Cas. Co. v. Belknap Hardware & Mfg. Co. , 281 S.W.2d 914, 916 (Ky. 1955). "[S]peculation and supposition are insufficient to justify a submission of a case to the jury, and ... the question should be taken from the jury when the evidence is so unsatisfactory as to require a resort to surmise and speculation." O'Bryan v. Cave , 202 S.W.3d 585, 588 (Ky. 2006) (quoting Chesapeake & Ohio Ry. Co. v. Yates , 239 S.W.2d 953, 955 (Ky. 1951) ). " ‘Belief’ is not evidence and does not create an issue of material fact." Humana of Kentucky, Inc. v. Seitz , 796 S.W.2d 1, 3 (Ky. 1990) ; see also Haugh v. City of Louisville , 242 S.W.3d 683, 686 (Ky. App. 2007) ("A party's subjective beliefs about the nature of the evidence is not the sort of affirmative proof required to avoid summary judgment."). Furthermore, the party opposing summary judgment "cannot rely on the hope that the trier of fact will disbelieve the movant's denial of a disputed fact, but must present affirmative evidence in order to defeat a properly supported motion for summary judgment." Steelvest, Inc. v. Scansteel Serv. Ctr., Inc. , 807 S.W.2d 476, 481 (Ky. 1991) (citations and internal quotation marks omitted). On appeal, we must consider the evidence of record in the light most favorable to the non-movant and must further consider whether the circuit court correctly determined that there were no genuine issues of material fact and that the moving party was entitled to judgment as a matter of law. Scifres v. Kraft , 916 S.W.2d 779, 781 (Ky. App. 1996). "Because summary judgment involves only legal questions and the existence of any disputed material issues of fact, an appellate court need not defer to the trial court's decision and will review the issue de novo. " Lewis v. B & R Corp. , 56 S.W.3d 432, 436 (Ky. App. 2001) (footnote omitted).
With that said, McAlpin argues he adduced evidence sufficient to withstand summary judgment regarding each of his claims. We disagree.
To begin, McAlpin makes no effort to distinguish his "negligent misrepresentation" claim from any of the other negligence claims he asserted in this matter. In failing to do so, he misses a critical point: The tort of "negligent misrepresentation" requires a misrepresentation – an omission , or a subjective inference he may have drawn from a truthful representation, is not enough. "[N]egligent misrepresentation requires an affirmative false statement." Giddings & Lewis, Inc. v. Industrial Risk Insurers , 348 S.W.3d 729, 746 (Ky. 2011) (citations omitted). Here, McAlpin has attributed no affirmative false statement to any of the appellees. Accordingly, this claim was properly dismissed.
Apart from that, all of his claims were founded on ordinary principles of negligence, and it is enough to say that if any "duty to advise" was owed to McAlpin by these appellees, nothing of record supports such a duty was ever breached. For example, in both his testimony and verified complaint, McAlpin faults the appellees for failing to offer him a $1 million accidental death policy. But, at all relevant times, the appellees undisputedly did not sell $1 million accidental death policies to anyone.
In his appellate brief, McAlpin suggests he was merely seeking "up to" $1,000,000 in coverage for Jay; and that he would have been content with a $500,000 "minimum amount" of coverage. According to his testimony and verified complaint, however, he made no such representations to Leeson.
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Moreover, McAlpin faults Leeson for not mentioning "the possibility of accidental death coverage." But, as noted, even McAlpin's own expert testified that if an insurance agent has any "duty to advise," the agent's advice is required to present "possible solutions" to "needs" or "problems" that a customer has "brought forward." And regarding what he "brought forward" to Leeson, McAlpin was concerned that "something" or "anything" could happen to himself or Jay. He believed the term life insurance he carried, which provided coverage of over $1 million, adequately addressed the risk of "something" or "anything" happening to himself. And, he needed "the same thing" for Jay. As discussed, accidental death insurance would have assumed fewer risks and provided only half the coverage amount of the life insurance McAlpin carried. Hence, it would not have been "the same thing."
Accordingly, we AFFIRM.
ALL CONCUR.