Battle v. Liberty Nat. Life Ins. Co.

• Decision Date: 06 August 1991
• Docket Number: Civ. A. No. 70-H-752-S.
• Citation: 770 F. Supp. 1499
• Parties: Edgar H. BATTLE etc., et al., Plaintiffs, James L. Taylor, et al., Plaintiff-Intervenors, v. LIBERTY NATIONAL LIFE INSURANCE COMPANY, et al., Defendants.
• Court: U.S. District Court — Northern District of Alabama

770 F. Supp. 1499

Edgar H. BATTLE etc., et al., Plaintiffs, James L. Taylor, et al., Plaintiff-Intervenors, v. LIBERTY NATIONAL LIFE INSURANCE COMPANY, et al., Defendants.

Civ. A. No. 70-H-752-S.

United States District Court, N.D. Alabama, S.D.

August 6, 1991.

COPYRIGHT MATERIAL OMITTED

Francis H. Hare, Hare, Wynn, Newell & Newton, George R. Stewart, Edward L. Hardin, Jr., Claude M. Moncus, Hardin, Stuart, Moncus & Noojin, Birmingham, Ala., C. Neal Pope, Phenix City, Ala., Richard H. Gill, Copeland Franco Screws Gill, Montgomery, Ala., for plaintiff.

O.S. Burke, Greensboro, Ala., J. Richard Carr (Retired), Attalla, Ala., J.L. Chestnut, Jr., Chestnut, Sanders & Sanders, Selma, Ala., U.W. Clemon, Adams, Baker & Clemon, Birmingham, Ala., John B. Crawley, Troy, Ala., Jack Drake, Drake & Knowles, University, Ala., David M. Enslen, Nolen & Enslen, Fayette, Ala., J. Pelham Ferrell, Ferrell & Bennett, Phenix City, Ala., Fred D. Gray, Gray, Seay & Langford, Tuskegee, Ala., Thomas K. Jefferson, Huntsville, Ala., Alto V. Lee, III, Lee & McInish, Dothan, Ala., Duncan Manly, Rives, Peterson, Pettus, Conway, Elliott & Small, Birmingham, Ala., Edmon McKinley, Thomasville, Ala., John W. Parker, Tonsmeire, McFadden & Rile, Mobile, Ala., Don B. Long, Jr., William D. Jones, III, Johnston Barton Proctor Swedlaw & Naff, Birmingham, Ala., John A. Russell, III, Hubbard & Waldrop, J.J. Spiro, Tuscaloosa, Ala., George P. Walthall, Jr., Walthall & Cleveland, Prattville, Ala., Augusta E. Wilson, Mobile, Ala., for plaintiff-intervenors.

Ralph B. Tate, Spain, Gillon, Riley, Tate & Etheredge, John S.P. Samford, Ira L. Burleson, Andrew Campbell, Leitman Siegal & Payne Campbell, Birmingham, Ala., for defendants.

Edward Still, Thomas B. Leonard, III, Birmingham, Ala., for objectors-intervenors.

Thomas A. Ansley, Jonathan H. Waller, Charles A. McCallum, III, Haskell Slaughter & Young, Birmingham, Ala., for Rideout's-Brown-Service.

Polly White, pro. se. Jack Lee d/b/a Jack Lee Funeral Home, Jack Lee & Sons Funeral Home, Inc., pro se.

ORDER

MYRON H. THOMPSON, Chief District Judge:^*

This lawsuit, filed in 1970 on behalf of a class of Alabama funeral homes, has clung to life with a tenacity which, if it could be matched by humans, would undoubtedly have obviated the need for the "burial insurance" that has been the subject of contention in the case for over 20 years. Despite a final consent decree entered in 1977, the cause is now again before the court on a motion for relief from judgment, brought pursuant to Federal Rule of Civil Procedure 60(b)(4) by several holders of such burial insurance policies issued by defendant Liberty National Life Insurance Company. Movants specifically assert that several key provisions of the 1977 consent decree are "void" as to them and other similarly situated absent members of a class of policyholders because it was entered without providing adequate prior notice to them, in violation of their rights to procedural due process. Liberty National has objected, claiming that the Rule 60(b) motion is due to be denied as a matter of law.¹ The court has stayed discovery pending a determination of the legal sufficiency of the Rule 60(b) motion.² For the reasons explained below, the court finds that, even accepting movants' allegations as true, they were not denied due process in the adoption of the 1977 consent decree. Accordingly, the court concludes that the Rule 60(b) motion should be denied.

I.

A. The Burial Policies

Liberty National began issuing burial insurance policies to residents of Alabama in 1944.³ Individuals purchasing such insurance were obligated to make small weekly payments for a number of years until their policies were paid in full.⁴ In return, Liberty National contractually agreed to provide certain funeral benefits to the policyholder on the event of her death. The benefits available depended in part on which of the three types of burial policies the deceased had selected. The most common policy, whose "retail value" Liberty National represented to policyholders as being $300, was one that guaranteed the purchaser a wooden casket. The second category of policies, with a retail value of $600, provided instead for a metal casket.⁵ Third and finally, the company also marketed policies under which the insured would receive and be buried in a "vault."⁶ The retail value of almost all of the vault policies was $100.⁷ A substantial proportion of the vault policies specified that the insured would be provided a certain type of metal or concrete vault. These were not the only variations among the types of burial insurance sold by Liberty National; under the two varieties of casket policies, Liberty National also promised to furnish such merchandise and services as a burial suit or dress, embalming and preparation of the deceased's remains, use of the funeral parlor, assistance in conducting the service, use of a funeral coach to carry the deceased's family, and transportation of the remains within certain distances. However, holders of vault policies were not entitled to receive such funeral services in addition to the vault. As a result, many if not most of those persons who had purchased a vault policy had also bought a burial policy of some sort to supplement it.

Despite the use of the phrase "retail value" in the policies, benefits equivalent to those guaranteed by each policy usually could be purchased at retail from a funeral home only at a price greater than the retail value of the policy. In other words, the family of an uninsured deceased would likely have had to pay a funeral home more than $300 to obtain a casket and other funeral benefits identical to the ones guaranteed an insured under Liberty National's $300 wooden casket policy. The difference was greatest in the case of the vault policies; at the time of the 1977 consent decree, it appeared that the "$100" vault described in the vault policies was being sold at retail by funeral directors for approximately $200 to $300.⁸

In order to satisfy its obligations under these policies, Liberty National contracted for its wholly-owned subsidiary, Brown-Service Funeral Homes Company, Inc., to provide such funeral benefits.⁹ Brown-Service, in turn, maintained agreements with various funeral directors throughout Alabama, which obligated the directors to furnish merchandise and services to Liberty National policyholders at stipulated prices to be paid by Brown-Service.¹⁰ Accordingly, policyholders could only obtain benefits under their policies from such "authorized" funeral homes. Thus, if the family of a deceased insured opted to use an unauthorized funeral home, they would receive only a casket under the casket policies, and no benefits whatsoever if the deceased had held only a vault policy. Moreover, were a policyholder to die outside Alabama or more than 35 miles from the nearest authorized funeral director, she would be entitled under the terms of the policy only to the cash equivalent of a percentage of her policy's retail value, 50% in most cases involving casket policies.¹¹

None of the burial policies, however, directly addressed the issue, later to be sharply disputed, of Liberty National's obligations in the event that the family of a deceased policyholder requested from an authorized funeral home merchandise or services beyond those guaranteed under the policy. Such a contingency, known as an "oversale," occurred in more than 80% of the funerals of individuals covered by Liberty National burial policies, usually where the family selected a more expensive casket than that provided for by the burial insurance. The practice in the funeral industry in Alabama prior to this litigation was for a funeral home to provide a credit in the event of an oversale, usually in the amount of the retail value of the burial policy.¹² However, despite this custom, Liberty National and the movants, much like the parties to the original litigation, sharply disagree about what the scope of the company's legal obligations were when an oversale occurred prior to the 1977 consent decree. According to Liberty National, it was at most required to provide a cash payment or credit equal to one-half the retail value of the policy, as it did in cases in which the policyholder died out of state or more than 35 miles from an authorized funeral director.¹³ However, movants have taken the position that, where a family opted for a more expensive funeral than the one provided for under the deceased's burial policy, Liberty National was legally obligated to allow a credit for the retail value of the items oversold — usually the casket — and to furnish all other merchandise or services guaranteed under the policy.¹⁴

Prior to the 1977 consent decree, the parties to the original litigation sharply disagreed as to the exact nature of Liberty National's contractual liability under the vault policies. Although it appeared to be a common practice for funeral directors to transport and install vaults provided under the burial policies for free or for a nominal charge, the parties disputed whether such a service was in any respect covered under the policies. Moreover, because some of the vault policies referred to a specific type of vault and others referred simply to a $100 vault or a vault with a value of $100, there was also apparently some disagreement as to whether the holder was entitled to a vault of the kind valued at $100 at the time he purchased the policy, or, because the price of vaults had since increased, a vault of lesser quality, valued at $100 at the time of his death.

By 1970, two years prior to the time Liberty National ceased selling this form of funeral benefit policy, 50% of the persons who died each year in Alabama were covered by such policies, and the vast majority of Alabama funeral homes maintained contractual relationships with Brown-Service.¹⁵ See Battle v. Liberty National Life Ins. Co., 493 F.2d 39, 45 (5th Cir.1974), cert. denied, ...