Hanson v. Cincinnati Life Insurance Co., 970247

• Decision Date: 02 December 1997
• Docket Number: No. 970247,970247
• Citation: 571 N.W.2d 363
• Parties: Donald HANSON, Jr. and Nicole Hanson, Plaintiffs and Appellants, v. CINCINNATI LIFE INSURANCE COMPANY, an Ohio Corporation, Defendant and Appellee. Civil
• Court: North Dakota Supreme Court

Page 363

571 N.W.2d 363

1997 ND 230

Donald HANSON, Jr. and Nicole Hanson, Plaintiffs and Appellants, v. CINCINNATI LIFE INSURANCE COMPANY, an Ohio Corporation Defendant and Appellee.

Civil No. 970247.

Supreme Court of North Dakota.

Dec. 2, 1997.

Randall S. Hanson (argued), of Camrud, Maddock, Olson & Larson, Ltd., Grand Forks, for plaintiffs and appellants.

Thomas L. Zimney (argued), of Vaaler, Warcup, Woutat, Zimney & Foster, Grand Forks, for defendant and appellee.

MESCHKE, Justice.

¶1 Nicole Hanson and Donald Hanson, Jr., the beneficiaries of a term life insurance policy issued by Cincinnati Life Insurance Company to their deceased father, appealed a summary judgment dismissing their lawsuit against Cincinnati for death benefits under the policy. We hold, as a matter of law, that Cincinnati's policy with Donald Hanson, Sr., lapsed and that Cincinnati was not precluded from treating the policy as lapsed. We affirm the summary judgment.

¶2 In 1981, Inter-Ocean Insurance Company, the predecessor to Cincinnati, issued a $200,000 renewable term life insurance policy to Hanson, and he paid quarterly premiums for that coverage. On October 16, 1994, Cincinnati advised Hanson his quarterly premium for the policy would increase to $364 for the payment due December 16, 1994. Hanson did not pay that premium by the due date, or within a 31-day grace period allowed by the policy.

¶3 After the expiration of the grace period, Cincinnati sent Hanson a "lapse notice late payment offer" that advised him the policy had "lapsed," ¹ but extended a late-payment offer. The offer said "payment must be received during the lifetime of the insured and before the offer expires date on this notice." The offer designated February 1, 1995, as its expiration date.

¶4 Hanson wrote a check, dated January 30, 1995, for the $364 premium, but the beneficiaries produced no evidence to show when he mailed that check. By letter dated February 5, 1995, Cincinnati informed Hanson his policy had "lapsed for nonpayment of premium due on 12/16/94; and the valuable coverage it provided has ceased." Cincinnati's letter explained it was "concerned with [Hanson's] current loss of protection. Your policy included a valuable reinstatement provision. To receive your reinstatement information, please complete the section below and return it to us as soon as possible.... When we receive your request, it will have our immediate attention."

¶5 According to Cincinnati, on February 14, 1995, it received Hanson's $364 check with a payment slip from the "lapse notice late payment offer" and subsequently coded the check for placement in a suspense account. Cincinnati cashed Hanson's check and sent him a February 17 letter stating: "Thank you for sending us $364.00. Unfortunately, your policy has already lapsed. In order to consider reinstatement according to policy provisions, we must also have ... [a]n additional premium $364.00 to pay the policy to 6-16-95 ... [and][r]eturn of the enclosed reinstatement form as initial evidence of insurability."

¶6 Cincinnati informed Hanson by letter dated March 3, 1995, it had not yet received the completed reinstatement form and the additional $364 premium. Cincinnati advised Hanson, "[i]f you are still interested in reinstatement, please complete these requirements and return them to our office as soon as possible. If the requirement(s) are not received by 3-17-95, we must close our file and return any money submitted to us. Please remember that your policy is not in force at this time. If you have any questions, or if I may be of some assistance, please let me know."

¶7 According to Cincinnati, it began closing Hanson's file on March 17, 1995, and requisitioned a $364 refund check payable to him. Cincinnati advised Hanson by letter dated March 21, 1995, it had not received the reinstatement requirements and was closing his file and issuing a $364 refund check. Hanson died on March 21, 1995.

¶8 Cincinnati refused to pay death benefits to the beneficiaries. They sued Cincinnati, alleging they were entitled to benefits under several different legal theories including breach of contract, waiver, equitable estoppel, accord and satisfaction, negligence, and bad faith. Cincinnati asserted the policy had lapsed for nonpayment of the premium and claimed it was not precluded from denying coverage. The trial court granted Cincinnati summary judgment, concluding as a matter of law that Cincinnati had not breached its insurance contract with Hanson; it had not waived its right to deny coverage; it was not estopped from denying coverage; it had not accepted an accord and satisfaction; and it was not negligent and had not acted in bad faith.

¶9 The beneficiaries appealed, contending the trial court erred in ruling, as a matter of law, they were not entitled to benefits under several legal theories.

¶10 We review this case under the summary judgment standards of NDRCivP 56. As we explained in Nodak Mut. Ins. Co. v. Heim, 1997 ND 36, p 8, 559 N.W.2d 846, summary judgment is a procedure for deciding an action without a trial if, after viewing the evidence in the light most favorable to the party opposing the motion and giving that party the benefit of all favorable inferences that can reasonably be drawn from the evidence, there is no genuine dispute as to either the material facts or the inferences to be drawn from the undisputed facts, or if only a question of law is involved.

¶11 A party resisting summary judgment may not simply rely upon pleadings or unsupported conclusory allegations, but must present competent admissible evidence by affidavit or other comparable means that raises a dispute of material fact and must, if appropriate, draw the court's attention to relevant evidence in the record by citing the page and line in depositions or other documents containing evidence that disputes a material fact. Kummer v. City of Fargo, 516 N.W.2d 294, 297 (N.D.1994). If a party resisting summary judgment fails to present pertinent evidence on an element essential to a claim, it is presumed no such evidence exists. Id. Disputes of fact become questions of law if reasonable persons could draw only one conclusion from the evidence. Peterson v. Ramsey Cty., 1997 ND 92, p 8, 563 N.W.2d 103. Here, the only conclusion reasonable persons can draw from the evidence is that Hanson's policy lapsed and that Cincinnati was not precluded from treating the policy as lapsed.

¶12 The beneficiaries contend Cincinnati waived its right to deny coverage under the policy by unconditionally accepting and retaining Hanson's January 30, 1995 check with knowledge it was made in response to the late-payment offer. They argue waiver is a question of fact, and the trial court erred in granting Cincinnati summary judgment on waiver. Cincinnati responds it conditionally accepted Hanson's check under circumstances clearly showing it did not intend to waive the lapse.

¶13 Payment of premiums is a condition precedent to the continuation of insurance coverage, and coverage ordinarily lapses if the insured fails to pay premiums. Sjoberg v. State Auto. Ins. Ass'n of Des Moines, Iowa, 78 N.D. 179, 48 N.W.2d 452, 453 (1951). However, an insurer may waive the effect of an insured's failure to pay a premium. Id. Waiver is a voluntary and intentional relinquishment or abandonment of a known advantage, benefit, claim, privilege, or right. Peterson v. Front Page, Inc. 462 N.W.2d 157, 159 (N.D.1990); Sjoberg, 48 N.W.2d at 454. A waiver may be established either by an express agreement, or by inference from acts or conduct. Sjoberg, 48 N.W.2d at 458. The existence or absence of waiver is generally a question of fact. Peterson, 462 N.W.2d at 159; Beauchamp v. Retail Merchants' Ass'n Mut. Fire Ins. Co., 38 N.D. 483, 165 N.W. 545, 549 (1917). As we explained in Beauchamp, 165 N.W. at 549, if the circumstances of a claimed waiver are admitted or clearly established and reasonable persons can draw only one conclusion from those circumstances, the existence or absence of waiver is a question of law.

¶14 Cincinnati's policy with Hanson defined its "term period" as the time when the policy was kept in force by payment of premiums. The policy allowed a 31-day grace period for premium payments. Hanson's policy lapsed when the 31-day grace period expired on January 16, 1995, because, by then, Hanson had failed to pay the premium due on December 16, 1994. Cincinnati notified Hanson his policy had "lapsed" when it sent him the "lapse notice late payment offer." Although Cincinnati was under no obligation, it also extended Hanson a late-payment offer that required the late payment to "be received during the lifetime of the insured and before the offer expires date on this notice." The late-payment offer designated February 1, 1995, as its expiration date, and said if payment was not received within that time, it was deemed not to have been made.

¶15 The beneficiaries claim there is a factual dispute about whether the late-payment offer expired by its own terms on February 1, or by Cincinnati's internal operating procedure on February 4. We need not decide that dispute, however, because assuming Cincinnati's offer expired on February 4, it required the late payment to be "received" by that date, and the beneficiaries have presented no evidence to raise an inference that Cincinnati "received" the late payment by February 4.

¶16 The beneficiaries rely solely on the January 30, 1995 date of Hanson's check to assert he complied with the terms of the late-payment offer. The beneficiaries produced no evidence to show when Hanson mailed that check, and they have cited no evidence other than the date of the check to show Cincinnati "received" the premium by February 4. Cincinnati's February 5 letter to Hanson indicates it had not received the premium by that date. Cincinnati presented evidence it received Hanson's check on February 14. The beneficiaries did not respond with any...