American General Life and Acc. Ins. Co. v. Ward

• Decision Date: 12 March 2007
• Docket Number: Civil Action No. 1:05-CV-3320-JEC.
• Citation: 509 F.Supp.2d 1324
• Parties: AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE CO., Plaintiff, v. Preston WARD, Derick Ward, and Ann Vines, Defendants.
• Court: U.S. District Court — Northern District of Georgia

509 F.Supp.2d 1324

AMERICAN GENERAL LIFE AND ACCIDENT INSURANCE CO., Plaintiff, v. Preston WARD, Derick Ward, and Ann Vines, Defendants.

Civil Action No. 1:05-CV-3320-JEC.

United States District Court, N.D. Georgia, Atlanta Division.

March 12, 2007.

COPYRIGHT MATERIAL OMITTED

COPYRIGHT MATERIAL OMITTED

Alycen A. Moss, Kenan G. Loomis, Cozen O'Connor, Atlanta, GA, for Plaintiff.

Michael J. Puglise, Puglise Law Firm, Snellville, GA, Defendants.

ORDER & OPINION

JULIE E. CARNES, District Judge.

This case is presently before the Court on plaintiff's Motions to Dismiss Counterclaims [10], [14], and [15], defendants' Motion to Add a Party [28], and defendants' Motions to Amend Counterclaims [29] and [43]. The Court has reviewed the record and the arguments of the parties and, for the reasons set out below, concludes that plaintiffs Motions to Dismiss [10], [14], and [15] should be GRANTED in part and DENIED in part, defendants' Motion to Add a Party [28] should be GRANTED as unopposed, and defendants' Motions to Amend [29] and [43] should be GRANTED.

BACKGROUND

This diversity action involves two life insurance policies owned by and insuring the life of Grongie K. Ward. (Compl. [1] at ¶¶ 40-46.) Plaintiff American General issued the policies. (Id. at ¶¶ 12, 30.) Defendants Preston Ward, Derick Ward, and Ann Vines are intended beneficiaries of the policies. (Id. at ¶¶ 13, 26.)

In September, 1992, Nita Faye Ward applied for a $25,000 insurance policy on the life of her then sixteen-year-old son, Grongie Ward. (Id. at 119.) Plaintiff accepted the application and issued Policy No. 192228209, insuring the life of Grongie Ward in the amount of $25,000. (Id. at ¶ 12.) The policy named Nita Ward as the primary' beneficiary and Grongie Ward as the policy owner. (Compl. [1] at ¶ 11.)

In August, 2001, plaintiff processed a beneficiary change request for Policy No. 192228209. (Id. at ¶ 13.) Pursuant to the request, plaintiff changed the primary beneficiary to Grongie's father, defendant Preston Ward, and added Grongie's brother, defendant Derick Ward, as a secondary beneficiary. (Id.).

In September, 2002, plaintiff received a policy change application to increase the face amount of Policy No. 192228209 to $50,000 and to add an accidental death rider, a premium waiver rider, and a children's term rider. (Id. at ¶ 14.) Grongie purportedly signed the policy change application, although plaintiff now believes that his signature was forged. (Id. at ¶ 16.) In reliance upon Grongie's signature, plaintiff increased the coverage on Policy No. 192228209 to $50,000 and added the requested riders. (Compl. [1] at ¶ 17.)

In October, 2002, Grongie submitted an application to plaintiff for an additional $150,000 twenty-year term policy. (Id. at ¶ 21.) In conjunction with the application, plaintiff required Grongie to undergo a medical exam and a blood and urine analysis. (Id. at ¶ 22.) Plaintiff denied the application when Grongie screened positive for cocaine metabolites. (Id. at 23.)

In May, 2003, plaintiff received another policy change application concerning Policy No. 192228209. (Id. at ¶ 19.) The application requested an increase in the face amount of the policy to $125,000. (Compl. [1] at ¶ 19.) Plaintiff denied the request, based on Grongie's recent positive cocaine screening. (Id. at ¶ 20.)

In September, 2003, plaintiff received an application for a $500,000 ten-year renewable term life insurance policy from "Katia Ward." (Id. at ¶ 25.) Although plaintiff did not realize it at the time, "Katia Ward" is the same person as Grongie Ward. (Id. at ¶ 28.) Plaintiff contends that Grongie intentionally used the name "Katia" to deceive plaintiff, because plaintiff had recently denied Grongie's requests for additional insurance.¹ (Id. at ¶ 29.) Unaware of the true identity of the applicant, plaintiff accepted the application and issued Policy No. 203101093, insuring the life of Katia Ward in the amount of $500,000. (Compl. [1] at ¶ 30.) The policy designated defendant Preston Ward as the primary beneficiary, and defendant Ann Vines, Grongie's sister, as the secondary beneficiary. (Id. at ¶ 26.)

It is believed that Grongie Ward died on February 15, 2004; however, his body has never been found. (Id. at ¶ 26.) Following Grongie's presumed death, defendant Preston Ward submitted a Claimant's Statement to plaintiff requesting a $500,000 benefit related to Policy No. 203101093 and a $50,000 benefit related to Policy No. 192228209.² (Id. at 1137.) Plaintiff subsequently filed this action seeking a declaratory judgment that Policy No. 203101093 and the $25,000 increase in coverage and additional riders in Policy No. 192228209 were void because Grongie's signature on both applications was forged, and the applications contained material misrepresentations. (Id. at ¶¶ 40-46.)

In their Answer, defendants assert numerous counterclaims based on state and federal law. (Defs.' Answer and Counterclaims [5].) Plaintiff has filed motions to dismiss the majority of these claims under Rules 12(c) and 9(b) of the Federal Rules of Civil Procedure. (Pl.'s Motions. to Dismiss [10], [14], [15].) In response, defendants have filed two motions to amend their counterclaims, and a motion to add a party defendant. (Defs.' Motion, to Add a Party [28] and Motions, to Amend [29], [43].) All of these motions are presently before the Court.

DISCUSSION

I. Defendants' Motion to Add a Party

Defendants have filed a motion to add Preston Ward as a party defendant in his capacity as administrator of the estate of Grongie Ward. (Defs.' Motion, to Add a Party [28].) Defendants have attached to the motion a copy of Grongie's death certificate and an Order from the Gwinnett County Probate Court naming Preston Ward as the administrator of Grongie's estate. (Id. at Ex. 3.) Defendants also have attached Preston Ward's affidavit stating that he is the sole survivor of Grongie Ward, and that Grongie was not married and had no children when he died. (Id. at Ex. 2.)

Plaintiff does not dispute the facts in Preston Ward's affidavit, and does not oppose defendants' motion. (See Pl.'s Resp. to Defs.' Motion, to Amend [41] at 5, n. 4.) Accordingly, defendants' motion to add Preston Ward as a party defendant in his representative capacity as the administrator of Grongie Ward's estate is GRANTED as unopposed.

II. Defendants' Motions to Amend

Defendants have filed two motions to amend their counterclaims. (Defs.' Motions, to Amend [29], [43].) Defendants' motions are governed by Rule 15(a), which provides that:

A party may amend the party's pleading once as a matter of course at any time before a responsive pleading is served.... Otherwise a party may amend the party's pleading only by leave of court.

FED. R. CIV. PLAINTIFF. 15(a). As plaintiff has filed an Answer, leave of Court is required to amend defendants' counterclaims. (See Pl.'s Reply to Defs.' Counterclaims [7].)

Rule 15(a) instructs that leave to amend "shall be freely given when justice so requires." Id. Courts therefore generally grant leave to amend unless there is a substantial reason to deny it, such as "undue delay, undue prejudice to defendants, [or] futility." Carruthers v. BSA Adver., Inc., 357 F.3d 1213, 1218 (11th Cir.2004); Thomas v. Town of Davie, 847 F.2d 771, 773 (11th Cir.1988).

Defendants' proposed amendments are minor. The first amendment adds the phrase "upon information and belief" and other introductory remarks intended to explain the lack of specificity in defendants' original counterclaim, which is allegedly due to plaintiffs "illicit and successful concealment" of the relevant facts. (Defs.' Proposed Amended Counterclaims [30].) The second amendment provides exhibits that were inadvertently omitted from the first amendment. (Defs.' Second Proposed Amended Counterclaims [44].)

There is no substantial reason to deny the above proposed amendments. There has been no undue delay, and plaintiff does not argue that it will be prejudiced by the amendments. Although plaintiff suggests that the proposed amendments are futile, there is no harm in considering defendants' slightly more detailed assertions in ruling on plaintiff's motions to dismiss. Accordingly, defendants' motions to amend are GRANTED.

III. Plaintiff's Motions to Dismiss State and Federal Claims

Plaintiff has filed a motion to dismiss defendants' state and federal claims pursuant to Rule 12(c). (Pl.'s Motions, to Dismiss [14], [15].) In ruling on plaintiffs motions, the Court must assume defendants' allegations are true, and construe all facts and inferences in the manner most favorable to defendants. Scott v. Taylor, 405 F.3d 1251, 1253 (11th Cir.2005). Dismissal is only appropriate if defendants "can prove no set of facts in support of [their] claim[s] which would entitle [them] to relief." Horsley v. Feldt, 304 F.3d 1125, 1131 (11th Cir.2002).

A. State Law Claims

Plaintiff contends that the majority of defendants' state law claims are not viable under Georgia law.³ (Pl.'s Motion, to Dismiss [15] at 3.) With the exception of a state RICO claim asserted on behalf of Grongie's estate, the Court agrees.

1. Claims for Criminal Violations

Defendants assert a number of claims based on plaintiffs alleged violation of various Georgia criminal statutes. (Defs.' Counterclaims [5] at ¶¶ 148-156.) Specifically, defendants claim that plaintiff is liable for violating O.C.G.A. §§ 16-8-2, 16-8-3, and 16-8-4, prohibiting theft by taking, deception, and conversion. (Id.)

Under Georgia law, the violation of a criminal statute "does not automatically give rise to a civil cause of action." Oswald v. Am. Nat'l Can Co., 194 Ga.App. 882, 883, 392 S.E.2d 26, 27 (1990). Instead, where a criminal statute evidences no intent to create a private cause of action, civil liability "must be determined under the applicable provisions of [state] tort law," if any. Rolleston v. Hide, 198 Ga.App. 49, 50, 400 S.E.2d 349, 351 (1990). None of the statutes cited by ...