Clements v. Continental Cas. Ins. Co.

• Decision Date: 22 December 1989
• Docket Number: No. 1:88-CV-2580-RHH.,1:88-CV-2580-RHH.
• Citation: 730 F. Supp. 1120
• Parties: Charles Richard CLEMENTS, Plaintiff, v. CONTINENTAL CASUALTY INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Northern District of Georgia

730 F. Supp. 1120

Charles Richard CLEMENTS, Plaintiff, v. CONTINENTAL CASUALTY INSURANCE COMPANY, Defendant.

No. 1:88-CV-2580-RHH.

United States District Court, N.D. Georgia, Atlanta Division.

October 4, 1989.

On Reconsideration December 22, 1989.

John C. Campbell, Jonesboro, Ga., for plaintiff.

Kent Taylor Stair and Robert Michael Ethridge, Webb Carlock Copeland Semler & Stair, Atlanta, Ga., for defendant.

ORDER

ROBERT H. HALL, District Judge.

This case is before the Court on plaintiff's request for a trial by jury and defendant Continental Casualty Insurance Company (Continental)'s motion for summary judgment. The Court GRANTS plaintiff's request for a trial by jury and DENIES defendant's motion for summary judgment.

FACTS

Plaintiff is an employee of Delta Airlines. Delta offers its employees an optional group accident insurance policy, underwritten by Continental. Employees who choose to participate in the insurance program have their premiums deducted from their payroll check twice a month. Delta then forwards the premiums to Continental.

Plaintiff has participated in the insurance program since 1979. In April of 1984, plaintiff wanted to change the beneficiary of his accident policy from his recently divorced wife to his minor daughter. Plaintiff allegedly asked his foreman how to make such a change. The foreman instructed him to fill out two small forms (cards) entitled "Request for Group Accident Insurance." Following the supervisor's instructions, plaintiff completed the first card to cancel the policy that named his ex-wife as beneficiary. He completed the second card to request a new policy naming his daughter as beneficiary. He signed both cards and dated them April 25, 1984. Plaintiff also alleges that he filled out a third form to cancel his optional life insurance. (Clements Dep. at 20-21).

Plaintiff alleges that he then sent the cards to Delta's insurance department. (Clements Dep. at 37). Although defendant acknowledges that plaintiff followed a proper procedure to change the beneficiary of his policy, it alleges that it never received the information on the second card.

Beginning in May, 1984, Delta stopped deducting accident insurance premiums from plaintiff's salary. Delta continued, however, to deduct premiums for plaintiff's optional life insurance policy, which he had intended to cancel. These facts were reflected in the stubs attached to plaintiff's paychecks. Plaintiff, however, alleges that he never inspected his paycheck stubs so as to realize that the accident policy deductions had ceased. Part I of the Group Accident Policy clearly provides that coverage would immediately terminate on the expiration of the period for which the last premium was paid.

In October of 1984, plaintiff was severely injured in an accident at work. When plaintiff filed a claim under the accident policy, defendant informed him that it had cancelled his policy. On October 19, 1988, plaintiff brought this action for breach of contract in the Superior Court of DeKalb County, Georgia, seeking the $100,000 benefit payment provided under the policy. Plaintiff sought an additional $25,000 plus reasonable attorney's fees under O.C.G.A. § 33-4-6 for defendant's alleged bad faith denial of his claim. Plaintiff's complaint did not include a request for a jury trial.

On November 14, 1988, defendant removed the action to this Court based on diversity of citizenship. On the Civil Cover Sheet filed with its removal petition, defendant indicated that it did not seek a jury trial. Plaintiff did not file a demand for a jury trial at any time after removal. The parties submitted briefs regarding plaintiff's right to a jury trial pursuant to an order of this Court dated July 17, 1989.

DISCUSSION

I. Jury Trial

Defendant argues that plaintiff has waived his right to a jury trial. As defendant correctly notes, Federal Rule of Civil Procedure 81(c) provides that "a party entitled to trial by jury under Rule 38 shall be accorded it, if the party's demand therefore is served ... within 10 days after service on the party of the notice of filing the (removal) petition." Fed.R.Civ.P. 81(c). However, the ten day limitation of Rule 81(c) does not apply "if state law applicable in the court from which the case is removed does not require the parties to make express demands in order to claim trial by jury." Fed.R.Civ.P. 81(c). Because "the Georgia Civil Practice Act does not require an express demand for jury trial" in suits at law, the ten day limitation of Rule 81(c) does not apply and plaintiff's request for a jury trial is timely. Financial Building Consultants, Inc. v. American Druggists Insurance Co., 91 F.R.D. 62, 63 (N.D.Ga.1981) (Ward, J.) (citing O.C. G.A. § 9-11-38).

II. Summary Judgement

A. Standard of Review

This court will grant summary judgment when "there is no genuine issue as to any material fact ... and the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party must demonstrate that the nonmoving party lacks evidence to support an essential element of her or his claim. Celotex Corp. v. Catrett, 477 U.S. 317, 325, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1986). The movant's burden is "discharged by showing — that is, pointing out to the district court — that there is an absence of evidence to support the nonmoving party's case." Once the movant has met this burden, the opposing party must present evidence establishing a material issue of fact. Id. The nonmoving party must go "beyond the pleadings" and present evidence designating "specific facts showing that there is a genuine issue for trial." Id. at 324, 106 S.Ct. at 2553.

While all evidence and factual inferences should be viewed in a light most favorable to the nonmoving party, Rollins v. Tech-South, Inc., 833 F.2d 1525, 1529 (11th Cir. 1987); Everett v. Napper, 833 F.2d 1507, 1510 (11th Cir.1987), "the mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-248, 106 S.Ct. 2505, 2510, 91 L.Ed.2d 202 (1986) (emphasis in the original). An issue is not genuine if unsupported by evidence or created by evidence that is "merely colorable" or "not significantly probative." Id. at 249-250, 106 S.Ct. at 2511. Similarly, an act is not material unless it is identified by the controlling substantive law as an essential element of the nonmoving party's case. Id. at 248, 106 S.Ct. at 2510. Thus, to survive a motion for summary judgment, the nonmoving party must come forward with specific evidence of every element essential to his or her case so as to create a genuine issue for trial. Celotex Corp., 477 U.S. at 323, 106 S.Ct. at 2552; Rollins, 833 F.2d at 1528.

B. Defendant Has Failed to Meet its Burden

Defendant argues that it is entitled to summary judgment on two grounds. First, it argues that plaintiff cancelled his policy by sending only the first card to Delta's insurance department. Second, it argues that plaintiff cancelled his policy by failing to have premiums deducted from his paycheck and sent to defendant. As stated in the above standard of review, the Court views all factual inferences in a light most favorable to the non-moving party when ruling on a motion for summary judgment. Because plaintiff alleges that he properly sent the card requesting an accident insurance policy naming his daughter as beneficiary and has submitted a copy of that card into evidence, defendant is not entitled to summary judgement on its first ground. To rule on that argument, the Court would have to make a factual determination regarding whether plaintiff sent the second card. Therefore, the remainder of the discussion concerns defendant's second argument: that plaintiff's failure to have his premiums deducted from his salary and sent to defendant terminated his coverage as a matter of law.

Defendant correctly states the general proposition that an employee's nonpayment of group insurance premiums automatically terminates coverage where the policy so provides. Metropolitan Life Insurance Co. v. Kohn, 103 Ga.App. 162, 118 S.E.2d 731 (1961); McClain v. Provident Life & Accident Insurance Co., 65 Ga. App. 355, 16 S.E.2d 173 (1941); Lloyd v. Aetna Life Insurance Co., 50 Ga.App. 478, 178 S.E. 479 (1934). This general rule, however, does not necessarily apply when the employee attempts to pay or actually pays her premiums to the employer and the employer then fails to forward the premiums to the insurer. "A direct conflict of authority regarding the question whether an employee is covered by a contributory group policy exists where the employee makes or attempts to make the required contribution, but the employer fails to continue the premium payment to the insurance company." Annot., 22 A.L.R. 4th 321, 326 (1983). The split in authority appears to turn on whether a court views the employer as an agent of the insurance company for purposes of premium collection. Id. at 327. Courts viewing the employer as agent generally hold that tender of payment to the employer prevents termination of coverage. See, e.g., General American Life Insurance Co. v. Gant, 119 S.W.2d 693, 696 (Tex.Civ.App.1938). Courts not viewing the employer as agent generally hold that coverage terminates despite tender of payment to the employer. See, e.g., Couch v. Connecticut General Life Insurance Co., 216 So.2d 72 (Fla.Dist.Ct. App.1968). No case applying Georgia law directly addresses this issue.

However, Georgia courts have held consistently that "the employer who obtains a group insurance policy covering its employees is the agent of the insurance company for every purpose necessary to make effective the group policy, and thus the insurance company has imputed knowledge of facts which the employer knows." Dawes Mining Co. v. Callahan, 246 Ga. 531, 534, 272...