Barton v. Liberty Nat'l Life Ins. Co.

• Citation: 209 So.3d 479
• Decision Date: 12 December 2014
• Docket Number: 2130443.
• Court: Alabama Court of Civil Appeals
• Parties: Misty Ann BARTON, as administratrix of the estate of Benjamin H. Miller, Jr., deceased v. LIBERTY NATIONAL LIFE INSURANCE COMPANY.

209 So.3d 479

Misty Ann BARTON, as administratrix of the estate of Benjamin H. Miller, Jr., deceased

v.LIBERTY NATIONAL LIFE INSURANCE COMPANY.

2130443.

Court of Civil Appeals of Alabama.

Dec. 12, 2014.

Rehearing Denied Feb. 27, 2015.

Stan Brobston of Brobston & Brobston, Bessemer; and Michael Lipscomb of Lipscomb & Lipscomb, Bessemer, for appellant.

Elizabeth W. McElroy of Baxley, Dillard, McKnight, James & McElroy, Birmingham, for appellee.

PITTMAN, Judge.

Misty Ann Barton, as administratrix of the estate of Benjamin H. Miller, Jr., deceased, appeals from a judgment of the Bessemer Division of the Jefferson Circuit Court dismissing her negligence claim against Liberty National Life Insurance Company. We reverse and remand.

Barton, as administratrix of the estate of Benjamin H. Miller, Jr., deceased, filed a complaint on July 30, 2013, against Liberty National, Leanne Jean Miller, and a fictitiously named defendant. Barton alleged, among other things, that she had been appointed as the administratrix of the estate of Benjamin H. Miller, Jr. ("Benjamin Jr."); that Benjamin Jr. was the son of Benjamin H. Miller, Sr. ("Benjamin Sr."), who died on January 15, 2011; that Benjamin Sr. had purchased an insurance policy on the life of Benjamin Jr. ("the policy") while both Benjamin Sr. and Benjamin Jr. were still alive and that, at that time, Nona June Miller had been named as the beneficiary of the policy; that, during his lifetime, Benjamin Sr. had changed the beneficiary of the policy to himself; and that Benjamin Sr. had predeceased Benjamin Jr., who had died on July 30, 2011. Barton asserted that, pursuant to the terms of the policy, the proceeds of any benefits paid pursuant to the policy were payable to the estate of Benjamin Jr. Barton further asserted that, when Benjamin Sr. died, his widow, Leanne, had been granted letters of administration of Benjamin Sr.'s estate; that, during the administration of that estate, Leanne had requested that the policy be altered to make her the beneficiary of the proceeds of the policy; and that Liberty National had granted that request and had paid the proceeds of the policy to Leanne. Barton asserted in the complaint that, because Leanne had no insurable interest in Benjamin Jr., her stepson, Leanne's naming herself as beneficiary of the policy was ineffective and void. In the complaint, Barton asserted that Leanne had made a claim for benefits under the policy following the death of Benjamin Jr.; that Liberty National had been negligent in failing to determine, at the time Leanne requested that she be named beneficiary, that Leanne had no insurable interest in Benjamin Jr.; that, as a proximate consequence of the negligence and wrongful conduct of Liberty National, Benjamin Jr.'s estate had been deprived of those benefits; and that Leanne's actions had resulted in her being unjustly enriched in an amount equal to the insurance proceeds that had been paid to her by Liberty National. Barton sought a judgment in the amount of $25,000.

On October 15, 2013, Liberty National filed a motion, pursuant to Rule 12(b)(6), Ala. R. Civ. P., to dismiss Barton's claim against it. Leanne filed an answer to the complaint, asserting a number of affirmative defenses. Barton filed a response to Liberty National's motion to dismiss. On December 15, 2013, the trial court entered an order granting Liberty National's motion to dismiss. Barton filed a motion seeking reconsideration of the trial court's order; that motion was denied by the trial court. Barton filed a notice of appeal to this court. Liberty National filed a motion to dismiss Barton's appeal; that motion was denied. This court reinvested the trial court with jurisdiction to allow it to consider and enter, if appropriate, a Rule 54(b), Ala. R. Civ. P., certification of the December, 2013, order as a final judgment; on April 4, 2014, the trial court entered an order certifying its December 15, 2013, judgment as final, pursuant to Rule 54(b).

Barton argues on appeal that the trial court erred by granting Liberty National's motion to dismiss.

"The applicable standard of review for a Rule 12(b)(6), Ala. R. Civ. P., dismissal is set forth in Nance v. Matthews, 622 So.2d 297, 299 (Ala.1993) :

" ‘On appeal, a dismissal is not entitled to a presumption of correctness. Jones v. Lee County Commission, 394 So.2d 928, 930 (Ala.1981) ; Allen v. Johnny Baker Hauling, Inc., 545 So.2d 771, 772 (Ala.Civ.App.1989). The appropriate standard of review under Rule 12(b)(6) [, Ala. R. Civ. P.,] is whether, when the allegations of the complaint are viewed most strongly in the pleader's favor, it appears that the pleader could prove any set of circumstances that would entitle her to relief. Raley v. Citibanc of Alabama/Andalusia, 474 So.2d 640, 641 (Ala.1985) ; Hill v. Falletta, 589 So.2d 746 (Ala.Civ.App.1991). In making this determination, this Court does not consider whether the plaintiff will ultimately prevail, but only whether she may possibly prevail. Fontenot v. Bramlett, 470 So.2d 669, 671 (Ala.1985) ; Rice v. United Ins. Co. of America, 465 So.2d 1100, 1101 (Ala.1984). We note that a Rule 12(b)(6) dismissal is proper only when it appears beyond doubt that the plaintiff can prove no set of facts in support of the claim that would entitle the plaintiff to relief. Garrett v. Hadden, 495 So.2d 616, 617 (Ala.1986) ; Hill v. Kraft, Inc., 496 So.2d 768, 769 (Ala.1986).’

"(Emphasis added.)"

Smith v. Smith, 865 So.2d 1221, 1223–24 (Ala.Civ.App.2003) (footnote omitted).

Barton argues that Liberty National's allowance of Leanne's change to the beneficiary of the policy created a wager policy, which is void under Alabama law, thereby depriving Benjamin Jr.'s estate of the insurance proceeds to which it was entitled. The Alabama Supreme Court discussed wager policies in Commonwealth Life Insurance Co. v. George, 248 Ala. 649, 653–54, 28 So.2d 910, 913 (1947) :

"In Helmetag's Adm'r v. Miller, 76 Ala. 183, 52 Am. Rep. 316 [ (1884) ], in the opinion, discussing the question of insurable interest, was the observation: ‘There is no limit to the insurable interest which a man may have in his own life; but there are forcible reasons why a mere stranger should not be permitted to speculate upon the life of one whose continued existence would bring to him no expectation of possible benefit or advantage.... The reason of the law which vitiates wager policies, is the pecuniary interest which the holder has in procuring the death of the subject of insurance, thus opening a wide door by which a constant temptation is created to commit for profit the most atrocious of crimes.’ "

In its motion to dismiss, Liberty National argued that, pursuant to Ala.Code 1975, § 27–14–3, a part of the Alabama Insurance Code, Ala.Code 1975, § 27–1–1 et seq. ("the Insurance Code"), there was no requirement that Leanne have an insurable interest in the life of Benjamin Jr. at the time of the beneficiary change. Section 27–14–3 provides, in pertinent part:

"(a) Insurable interest with reference to personal insurance is an interest based upon a reasonable expectation of pecuniary advantage through the continued life, health, or bodily safety of another person and consequent loss by reason of his or her death or disability or a substantial interest engendered by love and affection in the case of individuals closely related by blood or by law.

"....

"(f) An insurable interest shall exist at the time the contract of personal insurance becomes effective, but this requirement need not exist at the time the loss occurs.

"(g) Any personal insurance contract procured, or caused to be procured, upon another individual is void unless the benefits under the contract are payable to the individual insured, or his or her personal representative, or to a person having, at the time when the contract was made, an insurable interest in the individual insured. In the case of a void contract, the insurer shall not be liable on the contract but shall be liable to repay to the person, or persons, who have paid the premiums, all premium payments without interest."

Liberty National asserts that § 27–14–3(f) indicates that the Alabama Legislature "did not intend to require an insurable interest to exist beyond a life insurance policy's initial issuance." Liberty National further asserts that the remainder of the Insurance Code supports that proposition as well. For instance, Liberty National argues that Ala.Code 1975, § 27–14–4(a), also a part of the Insurance Code, which provides that "[n]o contract of insurance of property or of any interest in property, or arising from property, shall be enforceable as to the insurance except for the benefit of persons having an insurable interest in the things insured as at the time of the loss," illustrates that the "Legislature was aware of the distinction between the time a policy is issued and the time of loss when it drafted and enacted these laws and that it intended insurable interest for policies of personal insurance and for property insurance to be assessed at different times." Although we agree that § 27–14–4(a) specifies that, with regard to policies insuring property, an insurable interest must exist at the time of loss, that section is not instructive regarding whether an insurable interest is required at the time of a change of beneficiary in a life-insurance policy.

Liberty National also cites Ala.Code 1975, § 27–14–21(b), a part of the Insurance Code, which provides that

"[a] policy of life insurance, taken out by the insured himself or by a person having an insurable interest in the life of the insured, in good faith may, unless the policy provides otherwise, be assigned to anyone as any other chose in action without regard to whether the assignee has an insurable interest in the life insured or not."

We note, however, that an assignment is distinguishable from a change of beneficiary.

"The matter of change of beneficiary and assignment of policies are two separate and distinct things.

...