Farm Bureau Life Ins. Co. v. Bradley
| Decision Date | 18 April 2022 |
| Docket Number | Case No. 1:20-cv-00254-REP |
| Citation | 598 F.Supp.3d 946 |
| Parties | FARM BUREAU LIFE INSURANCE COMPANY, Plaintiff/Counter-Defendant, v. Aaron J. BRADLEY, individually and as co-personal representative of the Estate of John A. Bradley, and Megan C. Burks, as co-personal representative of the Estate of John A. Bradley, Defendants/Counter-Claimants. |
| Court | U.S. District Court — District of Idaho |
Chynna Castoro, James S. Thomson, II, Powers Farley, PC, Boise, ID, for Plaintiff/Counter-Defendant.
Kelly Andersen, Stover, Gadd & Associates, PLLC, Twin Falls, ID, Richard J. Worst, David W. Gadd, Worst, Fitzgerald & Stover, PLLC, Twin Falls, ID, for Defendants/Counter-Claimants.
(Dkt. 40)
Pending is Plaintiff/Counter-Defendant Farm Bureau Life Insurance Company's Motion for Summary Judgment (Dkt. 40). All parties have consented to the exercise of jurisdiction by a United States Magistrate Judge. Dkt. 16. Because the evidence presents a genuine dispute of material fact regarding John A. Bradley's competency to surrender his life insurance policy – the dispositive legal issue in this case – the Court denies Farm Bureau's motion.
This case centers on a dispute over life insurance benefits. On December 26, 1997, Plaintiff/Counter-Defendant Farm Bureau Life Insurance Company issued a variable life insurance policy to John A. Bradley, the father of Defendants/Counter-Claimants Aaron J. Bradley and Megan Burks. See Pl.’s Stmnt of Facts ¶ 1 (Dkt. 40-2).1 The death benefits on this policy originally amounted to $250,000. Id.
Subject to certain restrictions not relevant here, the policy permitted John Bradley to "surrender all or a portion of the net cash value" of the policy at his discretion. Id. ¶ 2; see also Policy Excerpts § 7.12 (Dkt. 40-4). The policy warned, however, that surrendering the entire net cash value would result in termination of the policy. Pl.’s Stmnt of Facts ¶ 2 (Dkt. 40-2); see also Policy Excerpts §§ 2.10(d) and 7.12(i) (Dkt. 40-4). The policy also allowed policy holders to take out cash loans against the policy when there was a net cash value. Policy Excerpts § 8.1 (Dkt. 40-4).
Between 2007 and 2017, John Bradley applied for and received seven loans against his policy and two partial cash surrenders, thereby reducing the value of his policy. Pl.’s Stmnt of Facts ¶¶ 3-9. 11-12 (Dkt. 40-2).
In August 2018, John Bradley suffered a heart attack. Decl. of Robert F. Calhoun, Ph.D. ¶¶ 9-11 (Dkt. 45-2) and Decl. of James Davidson, Ph.D. ¶ 12 (Dkt. 46). Over the next five months, John Bradley was admitted to the hospital on several occasions for various medical issues, including hitting his head after falling, acute and chronic renal failure
, and congestive heart failure. Decl. of Robert F. Calhoun, Ph.D. ¶¶ 12-17 (Dkt. 45-2) and Decl. of James Davidson, Ph.D. ¶ 12 (Dkt. 46).
On January 30, 2019, John Bradley called Farm Bureau and indicated that he had recently had some significant health problems and would like to discuss withdrawing capital against his policy. See Pl.’s Stmnt of Facts ¶ 13 (Dkt. 40-2). At that time, John Bradley was residing in a care facility called Countryside Care and Rehab. Def.’s Stmnt of Facts ¶ 4 (Dkt. 43-1). A phone representative for Farm Bureau informed John Bradley that there was not enough cash value in the policy for a partial surrenderer or a loan. Pl.’s Stmnt of Facts ¶ 13 (Dkt. 40-2). The representative, however, provided Mr. Bradley with the total cash value should he elect to terminate the policy. Id.
John Bradley called Farm Bureau on the phone another four times, once on February 22, 2019 and three times on February 25, 2019, to further discuss obtaining cash from his policy. Id. ¶¶ 14-15; see also Decl. of Denise Moore ¶¶ 17-20 (Dkt. 40-3) and Pl.’s Exhs. O-R (Dkt. 40-6). In these calls, Mr. Bradley was consistently informed that there was not a sufficient net cash value for a loan or partial surrender. Id. He was advised of his ability to cash out the remaining value of the policy with a full surrender. Id.
Armed with this information, John Bradley called Farm Bureau on February 26, 2019. He explained that he wanted to sign a surrender form and asked that Farm Bureau fax him the appropriate form. Pl.’s Exh. S (Dkt. 40-6).
John Bradley received, completed, signed, and returned the surrender form to Farm Bureau that same day. Pl.’s Stmnt of Facts ¶ 16 (Dkt. 40-2). In the portion of the form stating whether he was requesting a full or partial surrender, John Bradley checked that he wanted a full surrender in exchange for the net cash value. See Surrender Form (Dkt. 40-7 at 3). The form explained that this surrender would "terminate" Farm Bureau's liability under the policy and release them from any further obligations, other than payment of the net cash value. Id. After he faxed this form to Farm Bureau, John Bradley called the company to confirm they had received the form and ensure his automatic payments on the policy would be canceled. Pl.’s Stmnt of Facts ¶ 18 (Dkt. 40-2).
Farm Bureau promptly processed the surrender on February 28, 2019, issuing John Bradley a check for $719.59. Id. ¶ 19. This check was mailed to the address on file. Pl.’s Stmnt of Facts ¶ 19 (Dkt. 40-2), Pl.’s Exhs. N-R, T (Dkt. 40-6).2 After the check was issued, John Bradley called Farm Bureau to ask that the check be sent to a different address as he had moved. Pl.’s Stmnt of Facts ¶ 19 (Dkt. 40-2). Farm Bureau informed Mr. Bradley that the check had already been mailed to his old address and Mr. Bradley responded that he would work it out. Id.
While seemingly unlikely, it is unknown whether the check ever made its way to John Bradley.3 What is undisputed is that Mr. Bradley never cashed the surrender payout. Pl.’s Stmnt of Facts ¶¶ 23, 26 (Dkt. 40-2).
In late March 2019, John Bradley's daughter, Megan Burks, and his son-in-law, Jared Burks – unaware that the policy had been canceled – sent Farm Bureau $900 in an attempt to pay the premiums on Mr. Bradley's insurance policy. Id. ¶ 21. Farm Bureau returned the check to Mr. Bradley's old address with a note that the policy had been terminated. Id. ; see also March 25, 2019 Correspondence (Dkt. 40-7 at 7).
This did not stop John Bradley's daughter and son-in-law from submitting more payments on the policy. On June 28, 2019 and September 26, 2019, John Bradley's family sent two additional $900 checks to be applied to Mr. Bradley's life insurance policy. Pl.’s Stmnt of Facts ¶¶ 22, 24 (Dkt. 40-2). Farm Bureau returned both checks. Id.
On September 29, 2019, John Bradley died. Id. ¶ 25. At some point thereafter, Defendants informed Farm Bureau that they believed their father's cancellation of the policy was invalid because he was incompetent, and they demanded that Farm Bureau pay death benefits on the policy. Compl. at 2 (Dkt. 1). Farm Bureau refused and this lawsuit followed. Id.
"The court shall grant summary judgment if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." Fed. R. Civ. P. 56(a). Material facts are those that may affect the outcome of the case, and a dispute about a material fact is genuine if there is sufficient evidence for a reasonable jury to return a verdict for the non-moving party. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248-49, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). "The mere existence of a scintilla of evidence ... will be insufficient; there must be evidence on which the jury could reasonably find for the [nonmoving party]." Id. at 252, 106 S.Ct. 2505.
In deciding whether there is a genuine dispute of material fact, the Court must view the facts in the light most favorable to the nonmoving party. Id. at 255, 106 S.Ct. 2505 ; Devereaux v. Abbey , 263 F.3d 1070, 1074 (9th Cir. 2001) () (citing Lopez v. Smith , 203 F.3d 1122, 1131 (9th Cir. 2000) ). The court is prohibited from weighing the evidence or resolving disputed issues in the moving party's favor. Tolan v. Cotton , 572 U.S. 650, 657, 134 S.Ct. 1861, 188 L.Ed.2d 895 (2014).
In Idaho, three companion statutes govern the enforceability of contracts involving persons lacking mental capacity: Idaho Code §§ 32-106 through 32-108.
The Idaho Supreme Court has held that these three statutes must be construed together. Rogers v. Household Life Ins. Co. , 150 Idaho 735, 737, 250 P.3d 786 (2011). Viewed through this lens, the Idaho Code creates tiered standards of contract enforceability based on the level of a person's understanding and whether or not that person has been adjudicated incompetent prior to contracting. See id. at 738, 250 P.3d 786.
Relevant here, when a person of unsound mind, but not entirely without understanding, enters a contract prior to being adjudicated incompetent, the Idaho legislature has directed that the contract is voidable. Id. ; ...
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