Barrett v. United Ins. Co. of Am., Inc.

• Decision Date: 23 September 2019
• Docket Number: CIVIL ACTION NO.: 4:17-cv-215
• Citation: 418 F.Supp.3d 1274
• Parties: Minerva BARRETT, executrix of the estate of Chester Barrett, and on behalf of all others similarly situated, Plaintiff, v. UNITED INSURANCE COMPANY OF AMERICA, INC., Defendant.
• Court: U.S. District Court — Southern District of Georgia

418 F.Supp.3d 1274

Minerva BARRETT, executrix of the estate of Chester Barrett, and on behalf of all others similarly situated, Plaintiff,

v.UNITED INSURANCE COMPANY OF AMERICA, INC., Defendant.

CIVIL ACTION NO.: 4:17-cv-215

United States District Court, S.D. Georgia, Savannah Division.

Signed September 23, 2019

Robert Bartley Turner, William Jarrell Degenhart, Savage & Turner, PC, Savannah, GA, for Plaintiff.

Elizabeth J. Campbell, Locke Lord, LLP, Atlanta, GA, Roger B. Cowie, Pro Hac Vice, Taylor F. Brinkman, Pro Hac Vice, Locke Lord LLP, Dallas, TX, for Defendant.

ORDER

R. STAN BAKER, JUDGE

In this putative class action lawsuit, Plaintiff, the executrix of the estate of Chester Barrett, brings claims arising out of a life insurance policy Mr. Barrett purchased from Defendant United Insurance Company of America, Inc. ("United") on December 18, 1984. The thrust of Plaintiff's claims is that United used racially discriminatory practices in selling life insurance policies to Mr. Barrett and other African-Americans. Specifically, she contends that United charged Mr. Barrett a higher premium for the policy than United charged white customers and sold him an inferior product than those available to white customers. (Doc. 29.) This matter is before the Court on United's Motion to Dismiss Plaintiff's Amended Complaint. (Doc. 34.) In this Motion, Defendant advances numerous arguments in support of its position that Plaintiff's Amended Complaint should be dismissed. United argues that all of Plaintiff's claims are barred by the statute of limitations. Additionally, United attacks Plaintiff's standing to bring certain claims, and it contends that Plaintiff's state law allegations fail to state a claim upon which this Court can grant relief.

For the reasons set forth below, the GRANTS IN PART and DENIES IN PART United's Motion to Dismiss, (doc. 34). The Court GRANTS United's Motion to Dismiss for lack of standing as to Plaintiff's claims that United failed to keep accurate records, allowed policies to lapse, and failed to pay death benefits. However, the Court DENIES United's Motion to Dismiss for lack of standing as to all other claims. The Court also GRANTS United's Motion to Dismiss for untimeliness as to Plaintiff's claims that Mr. Barrett paid premiums exceeding the face value of his policy. However, the Court DENIES WITHOUT PREJUDICE United's Motion to Dismiss for untimeliness as to all other claims. Further, the Court DENIES United's Motion to Dismiss for failure to state a claim as to Plaintiff's claims for money had and received, negligent misrepresentation, fraudulent inducement, and punitive damages. The Court GRANTS AS UNOPPOSED United's Motion to Dismiss for failure to state a claim as to Plaintiff's claims for breach of contract, declaratory relief, and injunctive relief. Additionally, for the reasons stated below, the Court STAYS all proceedings and deadlines in this case until further order of the Court and DIRECTS the parties to each file a status report with the Court within twenty-one days of the date of this Order.

BACKGROUND¹

Chester Barrett, a now-deceased African-American man, was a resident of Liberty County, Georgia. (Doc. 29 at p. 1.) Defendant United is an Illinois insurance entity that conducts business throughout the United States, including in Georgia. (Id. ) Mr. Barrett purchased a life insurance policy from United on December 18, 1984. (Id. at p. 3.) That transaction and policy form the basis of this lawsuit. Mr. Barrett's policy had a face value of $5,000 and was designated as a "WHOLE LIFE" policy "though its characteristics mirrored the Industrial Polices sold by United." (Id. at p. 3; doc. 29-2.)

Plaintiff brings this putative class action as the executrix of Mr. Barrett's estate. Generally, Plaintiff contends that Mr. Barrett, like others situated similarly to him, purchased an inferior product and paid higher premiums on this insurance policy due to United's unlawful scheme of discrimination against African-Americans. (Id. at pp. 3–8.) "As part of its nationwide scheme, United targeted low income, unsophisticated and minority segments of the population, especially in the Southeastern United States, including Chester Barrett, and developed insurance products for sale to these consumers." (Id. at p. 3.) Through this scheme, United designed and marketed "Industrial Life" insurance policies and policies similar to them.² (Id. at p. 3.) These policies have a relatively low face value and their premiums (which are "designed to appear to the policyholder to be relatively modest") are collected, often in person by United agents, on a weekly, bi-weekly, or monthly basis. (Id. at pp. 3–4.) According to Plaintiff, "[f]or many years, United, pursuant to its own practices and procedures, routinely, knowingly, and intentionally charged African-American individuals ... more for the Policies than it charged similarly situated Caucasians." (Id. at p. 4.) United, with discriminatory intent, took the following actions to carry out this scheme:

• issuing rate books with "overly discriminatory rates" for "negro" or "colored" individuals as opposed to "white" customers;

• issuing rate books charging African-Americans "substandard" or "standard" rates while Caucasians received lower "preferred" rates;

• assigning African-Americans to less favorable underwriting classifications resulting in higher premiums that bore "no legitimate relationship to the actual mortality risk of African-American Class Members, including Chester Barrett";

• utilizing rate books with "so-called ‘socio-economic’ underwriting without explicitly asking for the insured's race"; and

• establishing "subjective and prejudicial classifications bearing no legitimate relationship to the actual mortality risk of African-American Class Members."

(Id. )

Plaintiff alleges that by targeting this "disadvantaged segment of the population" with "Industrial Polices and Policies mirroring Industrial Policies" (as opposed to ordinary life insurance products), United took advantage of the consumers' alleged lack of sophistication. (Id. at p. 5.) United prohibited its "agents from selling ordinary life insurance products and policies to African-Americans." (Id. ) Plaintiff essentially maintains that United tricked African-Americans into buying insurance policies even though these policies were a terrible bargain for the insured, particularly as opposed to traditional insurance policies that United sold to Caucasian customers. (Id. at pp. 5–8.) For instance, Plaintiff contends that the policies:

• required premium payments that, "over the normal life expectancy of Class Members," would greatly exceed the face value of the policy;

• "were intentionally designed by United to create the illusion that they would provide valuable yet affordable death benefits" but in actuality provided "minimal and ever-declining value to the insured";

• did not provide returns on premium overpayments;

• did not provide increasing death benefits over the duration of the policies, unlike traditional whole life policies; and

• were designed to require class members "to continue making premium payments after the premiums exceed the face value of the policies or face losing all of their paid premiums without receiving any meaningful or reasonable cash value or death benefits."

(Id. at pp. 5–7.) Even after United ceased these intentionally discriminatory practices, African Americans who had purchased policies with race-based premiums, including Mr. Barrett, continued to pay the higher premiums for the inferior policies established under the prior discriminatory pricing scheme. (Id. at pp. 4–5.)

United peddled these insurance products, including Mr. Barrett's policy, through a targeted marketing scheme. (Id. at pp. 4–5, 7–8.) United agents were assigned to "debit routes" and the agents "were trained to personally visit the homes of Class Members, such as Chester Barrett, residing on their routes to collect the premiums and develop a personal relationship with the Class Members that would facilitate the sale of additional Policies in the future." (Id. at p. 4.) Further, Plaintiff contends that United induced customers to purchase Industrial Life policies and policies similar to them by "approving and dispersing—both by itself and through its agents—false and misleading information and sales material containing numerous misrepresentations and omissions to Chester Barrett and Class Members." (Id. at pp. 7–8.) "As opposed to selling Class Members affordable versions of traditional life insurance products," United performed no underwriting on these policies and instead sold policies with higher premiums and lower cash value than "traditional life insurance products." (Id. at p. 7.)

Plaintiff further contends that "United affirmatively and actively concealed its fraudulent design, marketing and administration of its industrial policies, as well as its racially discriminatory pricing and Policy sales and administration scheme from Chester Barrett and Class Members." (Id. at p. 10.) Specifically, United told Mr. Barrett that his life insurance policy "was a legitimate ‘whole life’ insurance policy with a valuable death benefit." (Id. at p. 19.) Additionally, United "engaged in a systematic effort" to "eliminate and confuse the administrative records of Class Members, including [Mr.] Barrett" in an effort to prevent them from discovering United's racial discrimination. (Id. at p. 10.) Thus, Mr. Barrett "could not discover, was prevented from discovering, and did not have any of the facts which might have led to the discovery of United's chicanery." (Id. ) United's discriminatory practices caused Mr. Barrett to purchase an insurance policy and pay approximately $14,649.05 in premiums for the policy. (Id. at p. 13.) The policy carried a death benefit of $5,000. (Id. )

Mr. Barrett filed this lawsuit on September 20, 2017, in the State Court of Liberty County, (doc. 1-1), and United then removed the case to ...