Overstreet v. Kentucky Cent. Life Ins.
| Decision Date | 27 September 1990 |
| Docket Number | Civ. A. No. 88-0391-R. |
| Citation | 747 F. Supp. 1195 |
| Parties | Johnny OVERSTREET, Administrator of the Estate of David Wilkey, deceased, Plaintiff, v. KENTUCKY CENTRAL LIFE INSURANCE, Defendant. |
| Court | U.S. District Court — Western District of Virginia |
S.D. Roberts Moore, Todd W. Holliday, Gentry, Locke, Rakes & Moore, Roanoke, Va., for plaintiff.
Leslie E. Hagie, William B. Poff, Roanoke, Va., for defendant.
Plaintiff filed this action on August 31, 1988 seeking compensatory and punitive damages from the defendant for the wrongful death of decedent, David Wilkey. Plaintiff alleges that defendant is liable for Wilkey's death because it negligently issued an insurance policy to an individual who did not have an insurable interest in the decedent's life. In the alternative, plaintiff seeks insurance benefits allegedly due under an accidental death policy issued by the defendant, asserting contract, constructive trust, and unjust enrichment theories.
Defendant has filed a motion for summary judgment, asserting that the negligence and contract claims raised in plaintiff's cause of action are barred by the statute of limitations. In addition, defendant asserts that because the insurance contract was procured through fraud, the theory of fraud in factum bars recovery on the contract.
Jurisdiction in this matter is based upon diversity of citizenship, 28 U.S.C. § 1332(a)(1) (1982). The parties have submitted briefs and the court has heard argument; the matter is ripe for decision by the court.
On September 14, 1983 David Fisher contacted Kenneth Tietsort, a life insurance agent for Kentucky Central Life Insurance Company ("Kentucky Central"), intending to purchase a life insurance policy. The policy was to insure the life of David Wilkey for fifty thousand dollars ($50,000), plus an additional fifty thousand dollars ($50,000) coverage for an accidental death. David Fisher was to be named owner and beneficiary of the policy. The agent permitted Fisher to complete the application, in Tietsort's North Carolina office, despite his knowledge that David Fisher did not have an insurable interest in the life of David Wilkey. Contrary to company policy, Tietsort did not personally meet with David Wilkey prior to completing the insurance policy application. Tietsort is unsure whether he mailed the application to Wilkey for him to sign, or gave it to Fisher to take to Wilkey. However, handwriting analysis conducted during Kentucky Central's investigation concluded that the signature on the form was not Wilkey's.
Tietsort sent the completed application to the home office of the defendant in Lexington, Kentucky where it was disapproved on September 22, 1983 because Fisher did not have an insurable interest in Wilkey's life. Tietsort and Fisher discussed the rejection and decided to amend the policy's beneficiary from Fisher to Wilkey's estate so the policy would be issued. Fisher completed an amendment request by again forging Wilkey's signature, and it was sent to Kentucky Central's home office.
Kentucky Central issued a policy, with Wilkey's estate as the beneficiary, on September 27, 1983. On October 5, 1983 Fisher completed a change-of-beneficiary form requesting that Fisher be made the policy's beneficiary. As with the other forms, Wilkey's signature was forged on the change-of-beneficiary form, despite the fact that his signature was not required on the form. Kentucky Central approved the request on October 24, 1983.
On November 21, 1983, David Wilkey was fatally shot by Robert Mulligan during a hunting trip to which David Fisher was a party. Fisher contacted Tietsort a few days later and informed him of Wilkey's death. He filed a formal written claim for the one hundred-thousand dollars ($100,000) in insurance proceeds on January 9, 1984. Upon receiving this claim, Kentucky Central initiated a routine investigation, during which it reviewed the medical examiner's and sheriff department's reports, and interviewed Tietsort, Fisher, Mulligan, Wilkey's relatives and his friends.
During approximately the same period, Bedford County law enforcement officials were conducting an investigation of the shooting. They initially concluded that the shooting was accidental and charged Mulligan with reckless use of a firearm. However, the investigation was reopened in 1984 after officials became aware of the insurance policy on Wilkey's life. On April 3, 1984 Jim Updike, Commonwealth Attorney for Bedford County, contacted Kentucky Central and made an informal request for any information pertaining to Fisher's policy. Kentucky Central offered to provide him with verbal information, but declined to provide its files because of concerns for their client's privacy. Updike rejected the offer, but inexplicably never made an official request for the information. Updike's criminal investigation soon stalled.
In April 1984, upon realizing that allegedly negligent issuance of the policy to Fisher could subject it to liability to Wilkey's estate as well as require the payment of the insurance proceeds, Kentucky Central decided to consider a possible settlement with Fisher. Kentucky Central authorized John Manning, a North Carolina attorney, to approach Fisher and negotiate a settlement on behalf of Kentucky Central. Thereafter, Manning retained a handwriting expert to examine the signatures of the insurance documents, who concluded that one of Wilkey's signatures contained in the insurance documents was a forgery. Manning informed Kentucky Central that he suspected that Fisher was involved in Wilkey's death. He recommended settling with Wilkey's estate for a small amount and cooperating fully with the ongoing murder investigation. This recommendation was rejected and Manning was authorized to settle with Fisher for a maximum of twenty-five thousand dollars ($25,000).
On May 18, 1984 Manning met with Fisher and during this meeting became convinced that Fisher's story concerning the "accident" was false. At the conclusion of the meeting, Manning offered Fisher $25,000, allegedly telling Fisher that he knew Fisher had killed Wilkey. Fisher accepted the payment as full settlement of the $100,000 insurance policy.
Throughout the period from Wilkey's death until the settlement with Fisher, Wilkey's estate never contacted the insurance company or attempted to institute an investigation into Wilkey's death. In fact, Wilkey's mother, Dianne Wilkey,1 was the only person who was in touch with the insurance company during the period following Wilkey's death. Mrs. Wilkey had become aware of the existence of the policy when she was contacted by one of defendant's investigators shortly after Wilkey's death. Her contact was limited to two letters she sent in January 1984 in order to express hope that Fisher "would not profit from her son's death" and to request information regarding Kentucky Central's ongoing investigation. Kentucky Central never responded to her letters. Wilkey's estate apparently failed to initiate any action or investigation into the matter until over four years after Wilkey's death.
In 1986 an informant for the Federal Bureau of Investigation (FBI) provided the FBI with information which caused the FBI to initiate its own investigation of the case. The FBI submitted a formal request for Kentucky Central's files and the company complied immediately. The FBI subsequently questioned Mulligan, who eventually confessed to the murder and implicated Fisher. Fisher was indicted for the murder of David Wilkey on November 5, 1986, and convicted on July 15, 1987.
Summary judgment is appropriate if the "pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits ... show that there is no genuine issue as to any material fact...." Fed.R.Civ.Proc. 56(c). In reviewing defendant's motion for summary judgment, this court must "resolve any factual issues of controversy in favor of the non-moving party...." Lujan v. National Wildlife Fed'n, ___ U.S. ___, 110 S.Ct. 3177, 3188, 111 L.Ed.2d 695 (1990). If the nonmoving party fails to demonstrate an element essential to its case, the moving party is entitled to judgment as a matter of law. Id., 110 S.Ct. at 3186. With this standard in mind, the court will review the facts in relation to the applicable law.
Plaintiff alleges that Kentucky Central is liable for the wrongful death of Wilkey because it negligently issued a policy to a person who did not have an insurable interest in the decedent's life. A number of courts have recognized that these facts may support a valid cause of action. See, e.g. Life Ins. Co. of Georgia v. Lopez, 443 So.2d 947 (Fla.1983); Ramey v. Carolina Life Ins. Co., 244 S.C. 16, 135 S.E.2d 362 (1964); Liberty Nat'l Life Ins. Co. v. Weldon, 267 Ala. 171, 100 So.2d 696 (1957); Holloman v. Life Ins. Co., 192 S.C. 454, 7 S.E.2d 169 (1939); see also Annotation, Insurer's Tort Liability For Wrongful or Negligent Issuance of Life Policy, 37 A.L.R. 4th 972 (1985). However, the statute of limitations in Virginia2 for a wrongful death claim is two years. Va.Code Ann. § 8.01-244 (1984). Plaintiff's cause of action accrued on November 21, 1983, the day Wilkey was killed, yet plaintiff failed to file a complaint until August 31, 1988, well beyond the statute of limitations. Even assuming that Plaintiff's cause of action did not accrue until 1985, after Mrs. Wilkey learned that the insurance policy existed and after Bedford County reopened its investigation, the claim is still barred by the statute of limitations.
Plaintiff asserts that the doctrine of equitable estoppel precludes defendant from asserting the statute of limitations as a defense. Equitable estoppel will preclude a defendant from asserting the statute of limitations as a defense only if the defendant made false representations...
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Overstreet v. Kentucky Cent. Life Ins. Co.
...it entered into a good faith settlement with Fisher, and that the company was not unjustly enriched. See Overstreet v. Kentucky Cent. Life Ins. Co., 747 F.Supp. 1195 (W.D.Va.1990). Because the record discloses genuine issues of material fact, we vacate the summary judgment on the wrongful d......