260 F.3d 1240 (10th Cir. 2001), 99-6354, Rice v. The Office of Servicemembers Group Life Ins.

Docket Nº:99-6354
Citation:260 F.3d 1240
Party Name:CINDY RICE, Plaintiff-Appellant, v. THE OFFICE OF SERVICEMEMBERS' GROUP LIFE INSURANCE, a subsidiary of The Prudential Insurance Company of America, a corporation, Defendant-Appellee.
Case Date:August 14, 2001
Court:United States Courts of Appeals, Court of Appeals for the Tenth Circuit

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260 F.3d 1240 (10th Cir. 2001)

CINDY RICE, Plaintiff-Appellant,


THE OFFICE OF SERVICEMEMBERS' GROUP LIFE INSURANCE, a subsidiary of The Prudential Insurance Company of America, a corporation, Defendant-Appellee.

No. 99-6354

United States Court of Appeals, Tenth Circuit

August 14, 2001

Appeal from the United States District Court for the Western District of Oklahoma (D.C. No. 98-CV-1566-M)

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Glen Mullins, Oklahoma City, Oklahoma, for Plaintiff-Appellant.

David L. Kearney (Amy M. Cox with him on the brief), of Gable & Gotwals, Oklahoma City, Oklahoma, for Defendant-Appellee.

Before EBEL andHENRY, Circuit Judges, and ROGERS,[*] District Judge.

EBEL, Circuit Judge.

This case is about the proceeds of a Servicemembers' Group Life Insurance (SGLI) policy covering Ronald Rice ("Decedent"). Cindy Rice ("Plaintiff") was Decedent's wife and had been the beneficiary of this policy, but Decedent changed the beneficiary to his mother twenty-three days before he committed suicide. Plaintiff argues that the change was invalid because Decedent lacked sufficient mental capacity at that time and his mother exerted undue influence over him. The district court granted summary judgment to the insurance company on the issue of undue influence, and a jury found against Plaintiff on the issue of mental capacity. On appeal, Plaintiff argues that (1) the district court incorrectly instructed the jury that there is a rebuttable presumption of mental capacity; (2) there was sufficient evidence to overcome summary judgment on the issue of undue influence; and (3) she was entitled to judgment as a matter of law on the issue of mental capacity. We AFFIRM on all issues.


Decedent committed suicide on May 8, 1998. As a member of the Army Reserves, he carried a $200,000 life insurance policy from the Office of Servicemembers' Group Life Insurance (OSGLI), which is a subsidiary of the Prudential Insurance Company of America. On April 16, 1998, twenty-three days before his death, Decedent changed the beneficiary of this policy from his wife, Plaintiff, to his ailing mother, Wilma Evans. At the same time, he filed a "Record of Emergency Data" in which he instructed the Army to inform

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only his mother if he died. It did not list Plaintiff, their daughter, Erika, or his four sons from a previous marriage. Earlier, on January 25, 1998, Decedent had signed a military benefits form that listed his former wife, Kathy Rice, as his spouse and ended his children's eligibility for benefits. The misinformation on this form may have been due to glitches in the military's computer system.

Decedent had a history of clinical depression, for which he had received some treatment, and had attempted suicide before. Friends and family testified that Decedent was acting somewhat strangely in the weeks leading up to his suicide. The Rices' marriage was under strain, and at times Decedent was considering divorcing Plaintiff and moving back to West Virginia with his mother, Evans.

Evans testified that during the last few months of his life, Decedent was calling her at least daily, as opposed to two to three times a month before then. Phone records show that the two spoke for 33 minutes on April 15, the day before he designated her the beneficiary of his life insurance policy. Evans testified that they did not discuss the life insurance policy until several days after he had changed it.

Plaintiff sought payment from the OSGLI after Decedent's death. The OSGLI provided Plaintiff an opportunity to document Decedent's lack of mental capacity when he changed the beneficiary of his insurance policy. Because Plaintiff provided only lay affidavits rather than a medical opinion, the OSGLI paid Evans.

Plaintiff brought this suit, arguing both that Decedent did not have the mental capacity to change beneficiaries on April 16 and that Evans exercised undue influence on him. The district court granted summary judgment on the undue influence question. After a trial on the issue of mental capacity, the jury found for the OSGLI.


I. Jurisdiction

Both parties concede, and the district court accepted, that federal jurisdiction over this case is conferred by 38 U.S.C. § 1975. Nonetheless, we have an independent duty to examine our jurisdiction. Maier v. EPA, 114 F.3d 1032, 1036 (10th Cir. 1997). We ultimately conclude that we have jurisdiction, but on different grounds than that advanced by the parties.

The jurisdictional provision relied on by the parties provides, "The district courts of the United States shall have original jurisdiction of any civil action or claim against the United States founded upon [the SGLI subchapter]." 38 U.S.C. § 1975. Plaintiff's lawsuit, however, is not against the United States. Rather, it is against the OSGLI, a division of the Prudential Insurance Company and therefore a private entity. This is in accordance with the governing regulations, which state that "[a]ctions at law or in equity to recover on the policy, in which there is not alleged any breach of any obligation undertaken by the United States, should be brought against the insurer." 38 C.F.R. § 9.13.

Several district courts have assumed without analysis that § 1975 or its predecessor, former 38 U.S.C. § 775, confer federal jurisdiction over suits against the OSGLI or Prudential. E.g., Kilburn v. SGLI Co., 587 F.Supp. 54, 54 (S.D. Ohio 1984); cf. Stratton v. SGLI Co., 422 F.Supp. 1119, 1120 (S.D. Iowa 1976) (noting that "no objection has been made to the Court's taking of jurisdiction" under former § 775).1

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None of these cases provide analysis of the jurisdictional question, and thus they do not constitute strong precedent on the issue. Cf. United States v. L.A. Tucker Truck Lines, 344 U.S. 33, 38 (1952) ("[T]his Court is not bound by a prior exercise of jurisdiction in a case where it was not questioned and it was passed sub silentio.").

In any event, we reject this position as inconsistent with the plain language of § 1975. We therefore follow the majority of courts that look to some other statutory basis for federal jurisdiction. See, e.g., Shannon v. United States, 417 F.2d 256, 263 (5th Cir. 1969) (discretionary pendant party jurisdiction); Melton v. White, 848 F.Supp. 1511, 1512 (W.D. Okla. 1994) (federal question); Prudential Ins. Co. of Am. v. Moorhead, 730 F.Supp. 727, 728 (M.D. La. 1989) (diversity and federal question).

We see two other provisions that might support Plaintiff's allegation of federal jurisdiction. The first is 28 U.S.C. § 1332, the diversity jurisdiction statute. "We examine the face of the complaint to determine whether a party has adequately presented facts sufficient to establish diversity jurisdiction. The party asserting jurisdiction must allege facts essential to show jurisdiction." Gaines v. Ski Apache, 8 F.3d 726, 729 (10th Cir. 1993). Thus, the complaint must allege that the plaintiff and defendant are citizens of different states and that the amount in...

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