Colasanto v. Life Ins. Co. of North America

Decision Date12 September 1996
Docket NumberNo. 96-1152,96-1152
Parties45 Fed. R. Evid. Serv. 1357 Valentino T. COLASANTO, Trustee of the Robert M. Colasanto Revocable Trust, Plaintiff, Appellant, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant, Appellee, v. Stephen A. FARLEY, Third-Party Defendant, Appellee. . Heard
CourtU.S. Court of Appeals — First Circuit

Katherine A. Merolla, with whom Amedeo C. Merolla and Pucci, Goldin & Merolla, Providence, RI, were on brief, for appellant.

William B. VanLonkhuyzen, with whom Norman S. Zalkind and Zalkind, Rodriguez, Lunt & Duncan, Boston, MA, were on brief, for appellee Stephen A. Farley.

Before SELYA, Circuit Judge, CAMPBELL, Senior Circuit Judge, and BOYLE, * Senior District Judge.

SELYA, Circuit Judge.

This appeal summons our review of a jury verdict that awarded certain life insurance proceeds to the decedent's quondam companion rather than to a family trust. Upon close perscrutation of the record, the parties' briefs, and the applicable law, we discern no error.

I. BACKGROUND

We start with a neutral account of the facts that were before the jury. The decedent, Robert M. Colasanto, made his mark as a successful business executive. In September of 1982, Colasanto met Stephen A. Farley. A relationship developed and the two men began cohabiting in San Diego, California. They lived initially in a rented dwelling and later in a luxurious home that Colasanto purchased. During this time frame Colasanto founded a health-care organization, Community Care Network, Inc. (CCN), which became hugely successful. Colasanto enjoyed the fruits of his good fortune including, inter alia, a beneficial interest under a group life insurance policy owned by CCN and issued by Life Insurance Company of North America (LINA) which afforded him a $140,000 death benefit.

Colasanto's world changed in 1989 when a physician diagnosed him as HIV-positive. By 1992, he had contracted AIDS. Yearning for his native New England, he bought a home in Massachusetts. Colasanto and Farley took up residence there in the spring of 1993.

As Colasanto's health deteriorated, so, too, his relationship with Farley. The two men began discussing a property settlement in mid-1993. Despite the assistance of retained counsel, they were unable to agree on terms. According to Farley, however, the parties reached an informal agreement on or about December 3, 1993. Under that accord, Colasanto was to transfer ownership of five life insurance policies (including the LINA group life policy) to Farley.

On December 10, Colasanto completed and executed a form entitled "Application for Conversion of Group or Employee Life Insurance" (the conversion application) with the intention of converting his coverage under the group policy to an individual policy. Line 10(c) of the conversion application bears the inscription "Pay Death Benefit to," followed by three blank lines. Underneath the first blank line these instructions appear: "Print Full Name of Beneficiary and State Relationship." On the left-hand side of this line Colasanto typed "Stephen A. Farley." He left a blank space in the middle of the line and on the right-hand side he typed "Executor." 1 On the following two lines Colasanto added "Issue policy with Mr. Farley as owner. See enclosed letter." The letter, signed by Colasanto, bore a caption indicating that it was being transmitted "RE: CONVERSION OF GROUP COVERAGE TO INDIVIDUAL COVERAGE--SPECIFICATION OF OWNER OF INDIVIDUAL POLICY WHICH IS ISSUED." The body of the letter made explicit reference to the conversion application and stated in relevant part:

Please note that I am requesting that the individual policy be issued such that the owner is as follows:

Stephen A. Farley

10448 Russel Road

La Mesa, CA 91941 D.O.B. 2-21-49

Mr. Farley is currently the beneficiary of the group coverage. If he needs to fill out another beneficiary form, please send it to him since that will be his right as the policy owner.

The premium statement(s) should be sent to Mr. Farley at the above address.

Colasanto transmitted the conversion application and letter to LINA. He sent forms and letters to four other life insurers on the same date. Each letter instructed the carrier to transfer ownership of the affected policy to Farley. In each of the five instances Colasanto contemporaneously furnished Farley with signed copies of the conversion application or assignment form, the cover letter, and a certified mail return receipt request in Colasanto's handwriting asking that the receipt be forwarded to Farley. 2

Farley returned to California on December 22. On January 19, 1994, Colasanto sent a premium payment to LINA on the policy in question and accompanied it with a letter reiterating "that the individual policy should be issued to Stephen A. Farley as owner." Colasanto added: "If a separate form is required to change owner, then please send the form. Future premium statements should be sent to Mr. Farley as owner." LINA sent the individual policy to Colasanto in early February together with a letter admonishing that if Colasanto wished to designate Farley as owner, he should execute an assignment form and return it to LINA. Despite the fact that LINA enclosed a blank form with this letter, Colasanto never signed it.

Later that month, Farley returned to Massachusetts. A reconciliation ensued. 3 Colasanto returned to California with Farley, only to return to Massachusetts alone following a bitter quarrel that took place on March 7, 1994. The next month Colasanto executed a change-of-beneficiary form in which he purported to designate one of his brothers, Valentino T. Colasanto, in his capacity as Trustee of the Robert M. Colasanto Revocable Trust, as the beneficiary of the LINA policy. Colasanto died on June 17, 1994.

Both Farley and the Trustee laid claim to the policy proceeds. The Trustee won the race to the courthouse steps and filed suit against LINA in a Rhode Island state court. LINA removed the case to federal district court, 28 U.S.C. § 1441, citing the existence of original jurisdiction arising out of both diversity and interpleader, see 28 U.S.C. §§ 1332(a), 1335, impleaded Farley, and deposited the face value of the policy ($140,000) into the registry of the district court. See generally Fed.R.Civ.P. 22 (discussing mechanics of interpleader actions).

LINA's departure from the fray left Farley and the Trustee locked in mortal combat. After considerable skirmishing, the case was tried and the jury returned a verdict in Farley's favor. The district court thereafter denied the Trustee's motions under Fed.R.Civ.P. 50(b) (judgment as a matter of law) and Fed.R.Civ.P. 59(a) (new trial). This appeal followed.

The Trustee presses several points in support of his position. We have considered them all, but address in this opinion only those contentions that have arguable merit and that are necessary to a resolution of this appeal.

II. OWNERSHIP OF THE POLICY

The appellant's flagship claim is that no reasonable juror could conclude that Colasanto transferred ownership of the subject policy to Farley, and the lower court therefore should have granted the motion for judgment as a matter of law. 4 The standard of review referable to a trial court's refusal to order judgment as a matter of law is set in cement. The court of appeals undertakes plenary review, see Gibson v. City of Cranston, 37 F.3d 731, 735 (1st Cir.1994), and "examine[s] the evidence and the inferences reasonably to be drawn therefrom in the light most favorable to the nonmovant," Wagenmann v. Adams, 829 F.2d 196, 200 (1st Cir.1987). In so doing the court "may not consider credibility of witnesses, resolve conflicts in testimony, or evaluate the weight of the evidence." Id. Overriding a jury verdict is warranted only if the evidence "is so one-sided that the movant is plainly entitled to judgment, for reasonable minds could not differ as to the outcome." Gibson, 37 F.3d at 735.

A

The gist of the Trustee's argument is that Colasanto, although taking an initial step to transfer ownership of the policy to Farley, never effectuated that change according to the terms of the policy. Thus, no reasonable jury could find that Colasanto substantially complied with the explicit policy requirements necessary to anoint Farley as the owner.

This argument misses the mark. It is predicated on the common law doctrine of substantial compliance. The parties agree that the substantive law of Massachusetts governs this controversy, and, according to the appellant, the Massachusetts cases suggest that, if a policy specifies the manner in which transfers are to be made, the failure of literal compliance with the policy requirements will be excused only if the insured did everything that he could do to comply with those provisions. See, e.g., Acacia Mut. Life Ins. Co. v. Feinberg, 318 Mass. 246, 250, 61 N.E.2d 122, 124 (1945) (stating that "it is of the essence of substantial compliance that the insured must have done all in his power to effect the change, leaving only some ministerial act on the part of the insurer necessary to consummate it"); Resnek v. Mutual Life Ins. Co., 286 Mass. 305, 309, 190 N.E. 603, 604-05 (1934) (similar).

Building on this base, the appellant points to a provision in the LINA policy that states: "Changes [of ownership or beneficiary] must be requested in writing on a form satisfactory to us and sent to our Administrative Office." Because this condition could have been, but was not, met--after all, the carrier sent Colasanto a blank assignment form, and he easily could have completed it and mailed it back--the appellant insists that there was no substantial compliance, and, hence, that the attempted change of ownership was ineffectual. See id. at 309-10, 190 N.E. 603 (indicating that if the insured is put on notice that he has not done all in his power to comply with the requirements for changing a beneficiary, as by the insurer's...

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