Casey v. Metropolitan Life Ins. Co.

• Decision Date: 24 February 2010
• Docket Number: Case No. CV F 08-1811 LJO DLB.
• Citation: 688 F. Supp.2d 1086
• Parties: MayeVern CASEY, Plaintiff, v. METROPOLITAN LIFE INS. CO., Defendant.
• Court: U.S. District Court — Eastern District of California

688 F.Supp.2d 1086

MayeVern CASEY, Plaintiff, v. METROPOLITAN LIFE INS. CO., Defendant.

Case No. CV F 08-1811 LJO DLB.

United States District Court, E.D. California.

February 24, 2010.

Kathleen Rivera, William L. Alexander, Alexander & Associates, PLC, Bakersfield, CA, for Plaintiff.

Rebecca A. Hull, Michelle Yumi McIsaac, Sedgwick Detert Moran and Arnold LLP, San Francisco, CA, for Defendant.

ORDER ON CROSS MOTIONS FOR SUMMARY JUDGMENT, OR IN THE ALTERNATIVE, PARTIAL SUMMARY JUDGMENT

LAWRENCE J. O'NEILL, District Judge.

In this action, plaintiff MayeVern Casey ("Casey") seeks to recover life insurance benefits following the death of her ex-spouse, Billy Claborn, under a group life insurance policy issued by defendant Metropolitan Life Insurance Company ("Met Life"). The parties filed cross motions for summary judgment pursuant to Fed.R.Civ.P. 56.

FACTUAL BACKGROUND

A. The Group Universal Life Policy

In November of 1991, Casey was an employee of GTE, Corp. She enrolled in a Group Universal Life insurance plan provided by The Travelers Life Insurance Company ("The Travelers") for employees of GTE. At that same time, Casey elected to obtain coverage in the amount of $100,000.00 on her then-spouse, Billy Claborn, naming Casey as the beneficiary. (At that time, plaintiff's married name was MayeVern Claborn.) The Travelers provided plaintiff with a certificate of insurance which stated that it "applies only to regular Employees of GTE Corporation or one of its subsidiaries . . . It also applies to the spouse of an eligible Employee." (Doc. 33, McIsaac Decl. Exh. A, p. P003.) In November 1994, Casey retired from GTE after 31 years of service.¹

When Casey retired, she discontinued her coverage under the Plan issued by The Travelers, but continued coverage under the Plan on the life of her husband, Billy Claborn. (Doc. 33, McIsaac Decl. Exh. A, Casey depo. p. 16.)

In December 1996, Casey filed for divorce from Billy Claborn, and the divorce became final on July 3, 1997. Casey and Claborn executed a Marital Settlement Agreement on December 9, 1996 which became incorporated into the judgment of divorce and which awarded Casey the policy of life insurance issued by The Travelers on the life of Billy Claborn.

B. Notices by Met Life

In January 1996, Met Life became the insurer of the Plan. (Doc. 29, Peterson Decl. ¶ 5.) In November 1996, the Plan Administrator Marsh (at that time, called Johnson & Higgins/Kirke-Van Orsdel ("J & H/KVI")), "sent all Plan participants, regardless of whether they were current, retired, or terminated GTE employees, a letter notifying them that MetLife was the new insurer of the Plan." (Doc. 29, Peterson Decl. ¶ 6, Exh. 1.) That November 1996 letter further notified Plan participants of changes to the Plan, including that the Plan did not cover divorced spouses:

"Under the new MetLife provisions, an employee cannot keep Group Universal Life coverage on his or her spouse after a divorce; however, the divorced spouse may apply to continue separate coverage under the program. The employee must submit written notification of the date of divorce and the spouse's address to J & H/KVI. J & H/KVI will then mail out a Group Universal Life enrollment kit to the former spouse. If the former spouse applies within 31 days of the date the kit is mailed, he or she will receive a new certificate of insurance, and can have either an equal or lesser amount of coverage in effect at the time of the divorce." Id. (Emphasis added)

Met Life presents evidence that as a Plan participant, MayeVern Casey would have been sent this letter notification. (Doc. 29, Peterson Decl. ¶ 6.) Plaintiff Casey presents evidence that she did not receive this letter.

In August 1997, Casey received a letter from the Plan Administrator notifying her that the carrier for the Plan had changed from The Travelers to Met Life. (Doc. 24, Casey Decl., Exh. D.) The August 1997 letter enclosed a new Certificate of Insurance, number 1145159, and Insurance specifications page which indicated Met Life as the carrier, Casey as the Insured and Claborn as the covered person with a death benefit of $100,000.00. (Doc. 24, Casey Decl. Exh. E ("Covered Person: Billy J. Claborn".)) The August 1997 letter also enclosed the Met Life insurance policy. (Doc. 24, Casey Decl. Exh. E.) The letter stated: "The enclosed important document should be reviewed carefully and filed with your other important papers." (Doc. 24, Casey Decl. Exh. D.) Casey states that the letter did not identify any changes in the insurance coverage between The Travelers policy and the Met Life policy. The Met Life policy, however, which was included with the August 1997 letter, stated on page 8 (Bates MET0008), in part:

8. Termination of Marriage or Death of the Employee

If the spouse is the Covered Person and while the spouse is covered for an amount of Insurance:

(a) the spouse's marriage to the Employee ends; or

(b) the Employee dies;

the spouse may make written request to remain insured under This Plan. The Death Benefit will continue if the spouse pays the Planned Contributions based on the spouse's new classification, directly to the Administrator.

(Doc. 31, Exh. A, Bates MET0008.) Both parties reference the policy, which is an approximate 26-page document. (Doc. 24, Casey Decl. ¶ 7, Exh. E.); (Doc. 31, Copperwheat Decl. Exh. A.)

C. Casey's Claim for Life Insurance Benefits

Met Life argues that after the divorce, neither Casey nor Billy Claborn notified the administrator or Met Life of the divorce. Met Life argues neither made a written request to the administrator or Met Life for Billy Claborn to remain insured under the Met Life policy as an ex-spouse. (Doc. 32, MetLife moving paper p. 9.)

Casey contacted Met Life in April 2005 to notify Met Life that Billy Claborn was now a non-smoker. Met Life recalculated Billy Claborn's premium under the Plan for a non smoker and sent a confirming letter to Casey. (Doc. 29, Peterson Decl. ¶ 7.)

In May 2006, Casey informed the claims administrator, Marsh, that the Billy Claborn had died. Marsh forwarded the documents it had received from Casey to Met Life, which Met Life received in June 2006. Among the documents Casey submitted included plaintiff's May 26, 2006 letter wherein she stated that she had divorced Billy Claborn in 1997. Plaintiff included a copy of the divorce papers, and her enrollment form in the Group Universal Life.

By letter on June 21, 2006, Met Life notified plaintiff that her claim on the life insurance proceeds was being denied. (Doc. 31, Exh. C.) Met Life stated:

"The divorce decree is dated April 22, 1997, and according to the Plan, any divorce enacted after 1996 required that the benefits for the spouse be terminated on the first of the month following the divorce effective date. Therefore, based upon the information we have on file, we are, at this time, denying your claim." (Doc. 31, Exh. C.)

Plaintiff appealed the denial of her claim. On July 19, 2006, plaintiff filed her appeal of Met Life's denial, stating that she had not received any documents that the Plan had been changed regarding benefits for a spouse, and that she had made premium payments for 10 years under her new married name. She asked for reconsideration of the denial. (Doc. 31, Exh. D.)

Met Life reconsidered its prior denial and asked for supplemental information. On August 10, 2006, Met Life requested a copy of plaintiff's entire divorce decree for review on appeal. (Doc. 31, Exh. E.) Casey forwarded the requested information on September 11, 2006. (Doc. 31, Exh. F.)

By letter on September 27, 2006, Met Life upheld its denial of Casey's claim. Met Life informed Casey that, "we have re-examined the entire claim file, including examination of any additional material and information provided with your request for appeal. For the reasons detailed below, we must uphold the denial of this claim." (Doc. 31, Exh. G.) Met Life's letter of denial quoted the specific Plan language for "Termination of Marriage." Met Life's denial letter then explained:

"The certificate is explicit and clear that only the spouse of the employee may elect to continue dependent spouse benefits on themselves. We have researched your policy with the administrator responsible for maintaining records for this certificate, Marsh@Work Solutions, and have found that from the time of your divorce, July 3, 1997, to the passing of the decedent, the administrator was not notified of your divorce." (Doc. 31 Exh. G.)

Met Life stated that because the Plan administrator was not notified of the divorce, "in good faith the administrator continued to accept premiums under the incorrect information that the decedent was still your eligible dependent spouse." Met Life stated that the "policy does not allow the employee to take over coverage should the then ex-spouse neglect or discontinue coverage."²

Plaintiff filed her complaint alleging the following causes of action:

1. Breach of Contract;

2. Breach of the Covenant of Good Faith and Fair Dealing;

3. Breach of Fiduciary Duties; and

4. Declaratory Relief.

D. Summary of the Parties' Positions on their Motions

Met Life moves for summary judgment on the following grounds:

1. Plaintiff could not maintain coverage on her ex-spouse Billy Claborn following the divorce;

2. Plaintiff's bad faith claim is barred by the statute of limitations;

3. Plaintiff's bad faith claim must be dismissed because there is a genuine dispute as to coverage;

4. Plaintiff cannot maintain her cause of action for breach of fiduciary duty against MetLife;

5. Plaintiff's declaratory relief claim fails;

6. There are no facts supporting plaintiff's assertion of punitive damages.

Casey moves for summary judgment on the grounds that:

1. Met Life wrongly denied her claim based upon the unsupported position that Claborn was not a covered person under the policy.

2. Met Life was not prejudiced by any failure to be notified of the divorce of Claborn and Casey

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