Butler v. MFA INS. COMPANIES

• Decision Date: 12 April 1978
• Docket Number: No. 77-5034.,77-5034.
• Parties: Francille W. BUTLER, Plaintiff, v. MFA INSURANCE COMPANIES, Defendant.
• Court: U.S. District Court — Western District of Arkansas

449 F. Supp. 355

Francille W. BUTLER, Plaintiff, v. MFA INSURANCE COMPANIES, Defendant.

No. 77-5034.

United States District Court, W. D. Arkansas, Fayetteville Division.

April 12, 1978.

Charles E. Hanks, Fayetteville, Ark., for plaintiff.

H. Franklin Waters, Crouch, Blair, Cypert & Waters, Fayetteville, Ark., for defendant.

OPINION

JOHN E. MILLER, Senior District Judge.

There is before the court a motion for summary judgment filed by defendant on March 8, 1978 in which it is alleged:

"That the pleadings herein, together with exhibits attached thereto, plaintiff's answers to the request for admissions of fact, and the affidavit of the employer of the defendants responsible for conversion of group-life insurance policies, all show that there is no genuine issue of any material fact and the defendant should be granted a summary judgment herein."

The original complaint of plaintiff was filed July 21, 1977. On September 20, 1977, she filed an amendment which in effect supersedes the original complaint.

On February 7, 1978, plaintiff filed her second amendment to the complaint.

A copy of the policy issued to the plaintiff is attached to the original complaint and provides:

"The amount of Life Insurance in effect at the date of death will be paid to the beneficiary last designated and on file with MFA Life Insurance Company.

"Premiums will be waived in the event of total disability (Total Disability is defined as that disability which wholly prevents the Agent from engaging in his customary occupation or any other occupation for remuneration or profit for which he might reasonably be qualified by his education and training) prior to age 60, beginning from the thirty-second day after the date of termination of the insurance because of such disability and continuing for one year. Due proof of total disability must be submitted not later than one year after termination of service. Year-to-year extension, for further periods of one year each, will be made if further proof of continuance of total disability is furnished three months prior to each such year.

"If the Life Insurance terminates because of termination of service of eligibility and application is made within thirty-one days following the end of the calendar month in which such termination occurred, MFA Life Insurance Company will issue, without evidence of insurability, an individual policy of Life Insurance other than Term Insurance (without Accidental Death and Dismemberment Benefit or Waiver of premium Benefit). Upon termination or amendment of the Master Policy a conversion right is available, in accordance with the Master Policy, to all Agents insured under the Policy for five or more years."

The defendant on October 4, 1977 filed answer to the original complaint and the first amendment thereto prior to the filing of the second and third amendments.

The defendant admits that it had issued the policy involved herein and pleads termination of defendant's insurance as set forth in the general information section of the policy.

On October 17, 1977, the plaintiff propounded 20 interrogatories to the defendant. Many of them are not particularly material to the question involved but in the answers that are material defendant admits that it terminated Melvin Butler as an employee on July 14, 1975 for failing to keep office open; closed for weeks at a time; customer complaints; unable and unwilling to serve customers. The employee was terminated by letter dated July 14, 1975 and the group insurance policy at the termination of his employment lapsed and the insured failed to convert the insurance within the time and manner provided for in the policy.

Interrogatory No. 14: What is plaintiff's employer's procedure to notify a terminated employee of his conversion privilege?

Answer: When group department receives notice of each terminating employee, we send them a memorandum stating that they may convert an individual policy. This must be done within 31 days from the date coverage terminates. We send the agent all the necessary forms at this time.

Interrogatory No. 16: Did plaintiff's employer or its employees or agents hold any of Melvin Butler's mail at his former office for a period of time after the termination of employment:

Answer: No.

The defendant also denied holding any of Mr. Butler's mail.

On October 27, 1977, the defendant filed ten requests for admissions of fact and on November 23, 1977 they were answered by plaintiff in which she answered that she didn't know whether the agents' agreement attached as exhibit one to the requests was a true and correct copy.

Request No. 10: That Melvin Butler didn't exercise his right to convert his group life insurance with the defendants prior to his death.

Answer: No personal knowledge. Denied.

The insured was born July 19, 1917 and died December 20, 1975, five months and six days after the termination of his employment.

On April 4, 1978, plaintiff filed another motion to amend her complaint which was granted April 10, 1978 and on April 11, 1978 plaintiff filed her third amendment to the complaint in which she alleged:

"(1) That the plaintiff is a citizen of the state of Arkansas; that the defendant is a corporation organized and existing under the laws of the State of Missouri and the matter in controversy exceeds, exclusive of interest and costs, the sum of $10,000.

"(2) On March 1, 1968, defendant executed and delivered to its employee, Melvin Butler, its policy of insurance No. F G 50016-79 whereby in consideration of the payment of the premiums specified in the policy, which the said Melvin Butler agreed to pay monthly, the defendant insured the life of said Melvin Butler in the sum of $30,000 and defendant agreed by said contract of insurance to pay the said sum of $30,000 to plaintiff as beneficiary named in said policy immediately upon proof of death of said Melvin Butler, a copy of the certificate of insurance representing said insurance policy is attached as Exhibit `A'.

"(3) Said insurance policy contained a provision whereby: Any agent whose contract or employment terminated because of Total Disability (which occurred while contracted or employed by MFA Insurance Company and while insured under this policy) may elect to continue participation under the policy, as well as such Agent's insured dependents, until the end of the calendar month in which Total Disability ceases.

"(4) Said Melvin Butler was terminated as an employee of defendant on July 14, 1975, as a result of total disability and said disability did not cease prior to his death.

"(5) Upon termination, said Melvin Butler was entitled to continue participation in the group policy as provided in the clause quoted above.

"(6) On or about July 25, 1975, said Melvin Butler made inquiry concerning continuation of his group policy coverage.

"(7) Defendant was under a contractual obligation to permit said Melvin Butler to continue participation in the group policy as provided therein.

"(8) Defendant wrongfully and fraudulently breached the above contractual duty on or about July 28, 1975, by informing said Melvin Butler that such continuation was not possible and that his only recourse was through defendant's conversion policies."

Jurisdiction is based on diversity of citizenship of the parties and amounts involved. 28 U.S.C.A. 1332.

The devious pleadings of the plaintiff and her contentions as made from time to time makes it difficult to logically interpret but one fact is clearly shown, neither the insured nor the plaintiff converted the policy within the 31 days following the end of July, 1975 as required by the policy which provides:

"If the life insurance terminates because of termination of service or eligibility and application is made within 31 days following the end of the calendar month in which such termination occurred, MFA Life Insurance Company will issue without evidence of insurability an individual policy of life insurance."

The court is filing an opinion in lieu of formal findings of fact and conclusions of law as provided by Rule 52 F.R.C.P.

The allegations contained in the motion of defendant for summary judgment has heretofore been set forth.

Rule 56(c), F.R.C.P., provides that a judgment shall be rendered forthwith if the pleadings, depositions, answers to interrogatories, and admissions of fact, together with the affidavits, if any, show 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.

In 6 Moore's Federal Practice, Second Edition, Section 56.15, page 56-391, the learned author states:

"The function of the summary judgment is to avoid a useless trial; and a trial is not only not useless but absolutely necessary where there is a genuine issue as to any material fact.

"In ruling on a motion for summary judgment, the court's function is to determine whether such a genuine

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