Cincinnati Life Ins. Co. v. Beyrer

• Decision Date: 08 July 2013
• Docket Number: No. 12–2365.,12–2365.
• Parties: CINCINNATI LIFE INSURANCE COMPANY, Plaintiff, v. Marjorie BEYRER, individually and as Executrix of the Estate of Kevin Beyrer, and Estate of Kevin Beyrer, Defendants–Cross–Plaintiffs–Third Party Plaintiffs–Appellants, v. Stanton W. Grotenhuis and Casey State Bank, Defendants–Cross–Defendants–Appellees, and Mark Savoree, Third Party Defendant–Appellee.
• Court: U.S. Court of Appeals — Seventh Circuit

722 F.3d 939

CINCINNATI LIFE INSURANCE COMPANY, Plaintiff,

v.Marjorie BEYRER, individually and as Executrix of the Estate of Kevin Beyrer, and Estate of Kevin Beyrer, Defendants–Cross–Plaintiffs–Third Party Plaintiffs–Appellants,

v.Stanton W. Grotenhuis and Casey State Bank, Defendants–Cross–Defendants–Appellees,andMark Savoree, Third Party Defendant–Appellee.

No. 12–2365.

United States Court of Appeals, Seventh Circuit.

Argued Feb. 14, 2013.

Decided July 8, 2013.

James H. Austen, Attorney, Starr, Austen & Miller, LLP Logansport, IN, for Plaintiff.

John Scaccia, Jr. (argued), Attorney, Scaccia & Associates, LLC, Dayton, OH, for Defendants–Cross–Plaintiffs–Third Party Plaintiffs–Appellants.

James R. Myers (argued), Attorney, Lefevre Oldfield Myers Apke & Payne Vandalia, IL, for Defendants–Cross–Defendants–Appellees.

Brent D. Holmes, Heath E. Uppencamp (argued), Attorneys, Heller, Holmes & Associates, Mattoon, IL, for Third Party Defendant–Appellee.

Before KANNE and WILLIAMS, Circuit Judges, and ZAGEL, District Judge. ^*

KANNE, Circuit Judge.

In 2006, Kevin Beyrer (“Kevin”) and his wife Marjorie Beyrer (“Marjorie”) moved to Terre Haute, Indiana, to manage several car dealerships owned by Mark Savoree. The next year, Savoree proposed selling the dealerships to the Beyrers through a series of stock purchases to be financed by a $3.5 million loan from Casey State Bank (“CSB”). The Beyrers accepted and began the process of acquiring the dealerships. Soon after negotiating the loan with CSB, Kevin took out a life insurance policy with Cincinnati Life Insurance Co. that named Marjorie as the beneficiary. Two months later, in July 2007, Kevin assigned that life insurance policy to CSB.

The dealership purchase began to fall apart almost immediately, however. Eventually the Beyrers declared bankruptcy, and multiple rounds of litigation between each of the aforementioned parties ensued. During all of this, Kevin was diagnosed with terminal cancer. He passed away in June 2010, which set the stage for an additional fight over the insurance policy proceeds. Cincinnati Life deposited the proceeds, some $3 million, with the Clerk of the Superior Court of Vigo County, Indiana, and sought judicial determination of the rightful owner. This appeal represents a culmination of that quest, including various cross- and third claims that have been filed along the way.

I. Background

Presented with a business opportunity for which he was apparently ill-prepared, Kevin Beyrer decided to take a chance. Having operated car dealerships for others, Kevin accepted Mark Savoree's February 2007 offer to sell several dealerships, primarily Ford, that Savoree owned in the Terre Haute area. Kevin had, in fact, been managing these very dealerships for the better part of the previous year. Kevin and Marjorie did not have the money on-hand to meet the $5 million purchase price for the dealerships and related assets, so they arranged to finance the purchase through a series of loans from Casey State Bank. The loans, totaling over $3.5 million, were made to Ronin Automotive, Inc., a company controlled by the Beyrers. The Beyrers closed on the purchase and the loans in early March 2007.

Soon thereafter—on March 8, 2007—Kevin Beyrer applied for a life insurance policy with Cincinnati Life Insurance Company. Cincinnati Life approved Kevin's application on April 30, and, by May 8, he had purchased the policy and named his wife the primary beneficiary. Later that summer, however, Kevin executed an assignment of the policy to CSB. The assignment stated that it was made “for [v]alue [r]eceived.” (R. 58–1.) Among the rights not assigned was the right “to receive ... any disability income.” ( Id.) Cincinnati Life recorded the assignment in its corporate records on August 4, 2007.

Although each party paints the picture slightly differently, it is apparent that the sale of the dealerships was troubled from the beginning. For instance, because the dealerships were part of the Ford network, Ford had to approve the Beyrers and the franchise transfer. Though sought, this approval was never obtained. Further, despite the loans having been signed in March, it seems that the terms—particularly who would or should guarantee the loans—continued to be disputed throughout 2007.

Eventually, CSB restructured the original loans. These restructured loans, made in January 2008, were in the name of the Beyrers individually and in companies they controlled. Very shortly after the restructure, however, the loans went into default. On March 3, 2008, CSB called in the loans and began seizing money in the Beyrers' personal and corporate accounts. On March 10, 2008, CSB obtained judgments on the restructured loans against the Beyrers and entities they controlled. On March 26, CSB assigned its interest in these judgments and the life insurance policy to Stan Grotenhuis (whom Marjorie characterizes as the “Founder and ... owner” of CSB (Appellant's Br. at 13)). In the midst of what was already a difficult time period, Kevin Beyrer was diagnosed with terminal cancer on May 25, 2008. On September 11, 2008, the Beyrers filed for Chapter 7 bankruptcy. They were discharged on December 24, 2008.

During most of 2008, there were ongoing court proceedings involving these same parties (CSB, Savoree, the dealerships, the Beyrers, and the Beyrers' companies) in Clark County, Illinois, based on the March 10 judgment (Circuit Court of Clark County, Illinois, Case No. 08–L–04). Although the Beyrers were dismissed from the litigation by virtue of their bankruptcy filing in September 2008, the state court continued to sort out the ramifications of the failed dealership sale. This process included liquidating assets of the dealerships and deposing various people in an attempt to parse out blame. There also appears to have been a separate, though related, fraudulent transfer case brought by CSB against Savoree in Illinois state court. (R. 154 at 1–2) (referencing Circuit Court of Clark County, Illinois, Case No.2010–CH–17).

On May 14, 2010, Kevin Beyrer applied for benefits under the Cincinnati Life insurance policy. Although Marjorie described these in an affidavit as “disability benefits,” (R. 72 at 2), they are more aptly described as an advance on the standard proceeds of the policy. The “Accelerated Benefit Rider” allowed an insured to receive “part of the policy's death benefit” if a doctor diagnosed him with a terminal illness that would result in death within the next twenty-four months. ( Id. at 5.) While this money is likely intended to help cover end-of-life healthcare costs, it is not separate from the overall payout of the policy. Cincinnati Life refused to release any part of the proceeds to Kevin because neither CSB nor Grotenhuis, who now owned the assignment, would consent.

Kevin Beyrer died on June 17, 2010, triggering the life insurance policy's death benefit and a dispute between the parties over its true owner. Cincinnati Life filed a Complaint for Interpleader and Declaratory Judgment in the Superior Court of Vigo County, Indiana, to determine the proper owner of the funds. On an order of that court, Cincinnati Life deposited the policy proceeds with the Clerk of Court.

Grotenhuis answered the complaint, but Marjorie removed the case to the U.S. District Court for the Southern District of Indiana. Once there, she filed her “Answer and Cross Claim and Third Party Claim” on August 5, 2010. (R. 6.) This filing attempted to state Marjorie's claim for the policy proceeds, as well as allege various causes of action against CSB, Grotenhuis, and Savoree. For the next year, the defendants repeatedly pointed out the flaws in Marjorie's filing, she repeatedly requested leave of the court to amend it, and the district court granted those requests.

Eventually, in March 2011, Grotenhuis filed a motion for summary judgment with respect to the policy proceeds. (R. 54.) Marjorie filed a cross-motion for summary judgment the next month. (R. 79.) On September 22, 2011, the court granted summary judgment in favor of Grotenhuis on the limited issue of entitlement to the policy proceeds (“Proceeds Order”). (R. 127.) Immediately after the court entered the Proceeds Order, Marjorie moved to modify the order to award her $250,000, which she claimed was due her under the “Accelerated Benefit Rider.” (R. 129.) The next month, Marjorie filed a motion to reconsider the judgment in its entirety based on what she claimed was newly discovered evidence. (R. 149.) The district court rejected both of these motions on February 8, 2012. (R. 254.)

The week after entering the Proceeds Order, the district court granted Marjorie's request to amend her complaint for the third time. (R. 132.) In so doing, it admonished her that “no further amendments will be permitted.” ( Id.) Marjorie's “Third Amended Answer, Cross Claims and Third Party Claims” alleged seven separate claims for relief against CSB, Grotenhuis, and Savoree. (R. 100.) After briefing, the district court dismissed Marjorie's first, second, third, and seventh claims with prejudice on February 16, 2012, for failing to meet pleading standards. (R. 255.) CSB and Grotenhuis moved for summary judgment on the remaining claims; Marjorie did not respond to that motion. The district court entered summary judgment for CSB and Grotenhuis on the remaining claims on May 7, 2012. (R. 271.)

II. Analysis

Marjorie Beyrer ¹ has brought this appeal challenging each of the decisions that the district court decided against her. By way of review, those decisions are: (1) the grant of summary judgment on the proceeds issue; (2) the rejection of the motions to modify and reconsider; (3) the dismissal of claims one, two, three, and seven; and (4) the entry of summary judgment on claims four, five, and six. Because of the rather complicated procedural history of this case and the large number of issues to be addressed, we will structure our review as follows: first, we will...