Country Life Ins. Co. v. Marks

• Decision Date: 27 January 2010
• Docket Number: No. 08-2741.,08-2741.
• Citation: 592 F.3d 896
• Parties: COUNTRY LIFE INSURANCE COMPANY, Plaintiff-Appellee, Auto-Owners Life Insurance Company, Plaintiff, v. Johno F. MARKS; Debbie Marks, Defendants-Appellants.
• Court: U.S. Court of Appeals — Eighth Circuit

592 F.3d 896

COUNTRY LIFE INSURANCE COMPANY, Plaintiff-Appellee Auto-Owners Life Insurance Company, Plaintiff, v. Johno F. MARKS; Debbie Marks, Defendants-Appellants.

No. 08-2741.

United States Court of Appeals, Eighth Circuit.

Submitted: September 24, 2009.

Filed: January 27, 2010.

Thomas E. Hankins, argued, Gladstone, MO, for Appellant.

Mark E. McFarland, argued, Gary A. Schafersman, on the brief, Overland Park, KS, for Appellee.

Before BYE, ARNOLD, and SMITH, Circuit Judges.

BYE, Circuit Judge.

This is a dispute over the death benefits on an insurance policy issued by Country Life Insurance Company (Country Life) to Johno and Debbie Marks insuring the life of Connie B. Romig. Country Life filed this declaratory judgment action seeking, in part, a determination the policy was void on the grounds the Markses had no insurable interest in Romig's life. The district court granted Country Life's motion for summary judgment concluding the Markses did not have an insurable interest as a matter of law. We reverse and remand for further proceedings.

I

In this appeal from a grant of summary judgment, we must view the evidence in the light most favorable to the Markses and give them the benefit of all reasonable inferences to be drawn from the evidence. Turner v. Iowa Fire Equip. Co., 229 F.3d 1202, 1204 (8th Cir.2000). Viewed in such a light, the record discloses the following:

Connie Romig was a close friend of Johno Marks's parents and was present at most all of his family gatherings while he was growing up. Johno knew her from the time he was a baby until her death and had always referred to her as "Aunt Connie" in his dealing with her. In fact, Johno did not learn as to Romig not being his biological aunt until early in his adult life.

The Markses have been married for over thirteen years and have three children — Vincent, Angelina and Adrianna. Vincent suffers from a medical condition called Charcot-Marie-Tooth (CMT), a nerve disorder which causes muscle atrophy and weakness. As a consequence, the Markses incurred extra medical and travel expenses because of Vincent's condition resulting from trips to medical specialists. After the birth of their children, the couple's relationship with Romig became even closer than previously, and they would see her with considerable frequency. The Markses saw Romig on an almost daily basis during the last nine years of her life.

Romig helped support the Marks family in a variety of ways. She provided the couple with cash to assist in the expenses they incurred while traveling with their son, Vincent. She did most of the family's grocery shopping, not only donating her time and travel to the effort, but also paying for the groceries. She also frequently paid the family's rent, which was $1,000.00 per month, as well as the family's utility bills. In addition, Romig gave Johno and Debbie extra money on a regular basis, telling them she would always do what she could to help and take care of them. Romig also helped Johno in his automobile business, picking up and dropping off cars for him, giving Johno rides to and from the dealership, helping him if a car broke down, and dropping him off at car auctions. Romig did all this for free, never asking for or receiving any compensation for all she did to assist the family financially.

Romig's husband passed away in 2005 without any life insurance. As a result of that incident, she obtained life insurance naming the Markses as beneficiaries so that when she passed away the Marks's children would be taken care of, especially Vincent because of his medical issues.

In February 2006, Romig and the Markses visited an insurance agent for Auto-Owners Insurance¹ to obtain life insurance. She submitted to a medical examination at the request of Auto-Owners, which took place in the Marks's home. A follow-up visit took place in Romig's home where neither Johno or Debbie were present.

Because of delays in obtaining the Auto-Owners policy, the insurance agent suggested Romig visit an agent for Country Life. She was advised Country Life could provide a policy providing twice the death benefit as the Auto-Owners policy for about the same premium, so she sought a policy from Country Life while waiting for approval on the Auto-Owners policy. Romig submitted to a medical examination at the request of Country Life. On April 25, 2006, Country Life issued the Markses a life insurance policy on Romig's life, naming the couple as both owners and beneficiaries of the policy, and the Markses thereafter paid the premiums as they became due under the terms of the policy.

Romig was healthy, strong, and insurable when the two life insurance policies were issued, but did become ill and was eventually hospitalized in October 2006. She passed away on November 29, 2006. Country Life and Auto-Owners denied the Marks's claims for death benefits on the grounds the couple had no insurable interest in Romig's life and refunded the premiums the couple had paid. Both insurance companies filed this declaratory judgment action. The district court granted summary judgment in favor of the insurers and this appeal followed, with Auto-Owners settling its claim while the appeal was still pending. The claim involving the Country Life insurance policy remains the central focus of this litigation.

II

We review de novo both the district court's grant of summary judgment and its interpretation of state insurance law. Clarendon Nat'l Ins. Co. v. United Fire & Cas. Co., 571 F.3d 749, 752 (8th Cir.2009).

The Markses were the beneficiaries and owners of the life insurance policy issued by Country Life. This dual beneficiary/owner role is distinct from a situation where an insured owns a policy, pays the premiums, and has the right to name whomever the insured desires as a beneficiary. Because the Markses were both beneficiaries and owners of the Country Life policy, they had to prove they had an insurable interest in the life of the insured, otherwise the policy would be unenforceable. See Lakin v. Postal Life & Cas. Ins. Co., 316 S.W.2d 542, 550, 552 (Mo.1958). To establish an insurable interest under Missouri law, a party is required to show a benefit or advantage from the continuance of the life of the insured. Id. at 549. An insurable interest can be based upon three different types of relationships — a pecuniary relationship, a blood relationship, or a relationship based upon affinity (i.e., marriage). Id.

The Markses did not have a blood or marriage relationship with Romig, so the existence of an insurable interest turned instead upon whether there was a pecuniary relationship between them. To establish an insurable interest based upon a pecuniary relationship, "there must be `a reasonable probability that [the beneficiary] will gain by the [insured's] remaining alive or lose by [her] death.'" Hershberger v. Young, 59 S.W.3d 614, 622 (Mo.Ct. App.2001) (quoting Poland v. Fisher's Estate, 329 S.W.2d 768, 772 (Mo.1959)). "Stated another way, `any reasonable expectation of pecuniary benefit or advantage from the continued life of another creates an insurable interest in such life.'" Id. at 622-23 (quoting Alexander v. Griffith Brokerage Co., 228 Mo.App. 773, 73 S.W.2d 418, 423 (1934)). Whether a party has an insurable interest due to a pecuniary interest is a question of fact when the parties dispute (as they do here) the basis for the pecuniary interest. See Vette Co. v. Aetna Cas. & Sur. Co., 612 F.2d 1076, 1078 (8th Cir.1980) (applying Missouri law).

The Markses contend the disputed facts regarding their relationship with Romig, when viewed in the light most favorable to them, show they had a reasonable expectation of a pecuniary benefit or advantage from Romig remaining alive, making summary judgment inappropriate. We agree.

As an initial matter, we disagree with Country Life's contention Missouri law categorically limits a pecuniary interest in another's life to situations involving: 1) a business enterprise's pecuniary interest in the life of its manager; 2) an insured and beneficiary's common interest in a business association; 3) a business partner's pecuniary interest in the life of a partner; 4) a business owner's pecuniary interest in the life of a customer; or 5) a creditor's pecuniary interest in the life of a debtor. Missouri, like other states which follow the common law rule, indulges "great liberality" in determining whether an insurable interest...