Harper v. Liberty Nat. Life Ins. Co.

• Decision Date: 16 October 1986
• Docket Number: Civ. A. No. 84-77-VAL (WDO).
• Citation: 645 F. Supp. 260
• Parties: Sammie S. HARPER, Plaintiff, v. LIBERTY NATIONAL LIFE INSURANCE COMPANY, Defendant.
• Court: U.S. District Court — Middle District of Georgia

645 F. Supp. 260

Sammie S. HARPER, Plaintiff, v. LIBERTY NATIONAL LIFE INSURANCE COMPANY, Defendant.

Civ. A. No. 84-77-VAL (WDO).

United States District Court, M.D. Georgia, Valdosta Division.

October 16, 1986.

Kathy D. Hackel, Homerville, Ga., for plaintiff.

F. Thomas Young, Valdosta, Ga., for defendant.

ORDER

OWENS, Chief Judge.

The present case stems from the refusal of defendant Liberty National Life Insurance Company (Liberty) to pay plaintiff Sammie S. Harper life insurance benefits as a result of her son's death. Presently before the court are the parties' cross-motions for summary judgment. Jurisdiction is based upon diversity of citizenship. 28 U.S.C. § 1332.

On a motion for summary judgment the party seeking summary judgment bears the exacting burden of demonstrating that there is no actual dispute as to any material fact in the case. In determining whether the moving party has met this burden, this court should review the evidence and all factual inferences in the light most favorable to the party opposing the motion. East Park, Inc. v. Federal Insurance Company, 794 F.2d 616, 618 (11th Cir. 1986).

Facts

Ms. Harper's husband initially applied for and received a life insurance policy with Liberty which covered both Ms. Harper and her husband. Subsequently, the original policy of insurance was amended to include a juvenile term rider. This amendment provided life insurance for Ms. Harper's five children.

On February 10, 1983, Bertie W. Harper, III, one of Ms. Harper's five children, died in an accident. Bertie W. Harper, III was born on February 17, 1960 and at the time of his death he was twenty-two (22) years old. The issue presented in these motions is whether the policy of insurance issued by Liberty to Ms. Harper covered Bertie W. Harper, III's death.

The Policy of Insurance

The juvenile term rider included in Ms. Harper's policy read in relevant part:

TERM LIFE INSURANCE BENEFITS

Upon receipt at its Home Office of due proof of the death of each Eligible Child as defined herein while this Supplementary Agreement is in force and before the Expiry Date, the Company will pay to the Owner of the Policy the Amount of Benefit shown in the schedule above. However, if the Eligible Child is less than two months of age at death, the Amount of Benefit under this Supplementary Agreement shall be $250.00 for each $1,000 of Amount of Benefit shown in the schedule above. Such insurance is term insurance and expires as to each such Eligible Child on the policy anniversary nearest said Eligible Child's twenty-third birthday or on the Expiry Date in the schedule above, whichever is earlier.

ADDITIONAL BENEFIT FOR ACCIDENTAL DEATH

Upon receipt at its Home Office of due proof that the death of any Eligible Child as defined herein resulted, directly and independently of all other causes, from bodily injury effected solely through external, violent and accidental means ... while this Supplementary Agreement is in force and before the Expiry Date, and that death occurred within ninety days from the date of such injury, the Company will pay to the Owner, in addition to the Term Life Insurance Benefit, an additional amount equal to the amount payable under the Term Life Insurance Benefit provision. This additional Benefit for Accidental Death coverage is also term coverage and expires as to each such Eligible Child on the policy anniversary nearest said Eligible Child's twenty-third birthday or on the Expiry Date in the schedule above, whichever is earlier.

(emphasis added). The "Expiry Date" provided for in the policy is uncontroverted as being October 20, 1987. The "Effective Date" of the policy is also uncontroverted as being October 20, 1966. The only other relevant provision for purposes of deciding the parties' motions is the clause in the policy that states:

the insurance provided by this Policy begins on the Effective Date provided the first premium has been paid. The first premium is due on such Effective Date of the Policy and is payable in advance. Thereafter premiums are payable periodically for the period shown above. The due dates of subsequent premiums shall be computed from the Effective Date, and the amounts and frequency of payment of such premiums shall be as shown in the schedule above. The policy years and policy anniversaries shall be computed from the Effective Date.

(emphasis added).

Defendant's Motion for Summary Judgment

Liberty argues that the coverage on Bertie W. Harper, III's life lapsed prior to his death. It claims that the provision, "such insurance is term insurance and expires as to each such Eligible Child on the policy anniversary nearest said Eligible Child's twenty-third birthday or on the Expiry Date in the schedule above, whichever is earlier" requires this court to find that the policy of insurance lapsed on October 20, 1982, the policy anniversary which preceded his death. Ms. Harper, on the other hand, contends that this provision is ambiguous as to when the policy would lapse, and, therefore, it should be construed against the insurance company. Ms. Harper asks this court to interpret the policy of insurance as providing coverage on Bertie W. Harper, III's life up until his twenty-third birthday. In order to decide this issue, the court must look to the applicable state law on this subject.

Under Georgia law, the construction of a contract is a matter of law for the court as is the determination vel non of ambiguity in a contract. See Jones v. Barnes, 170 Ga.App. 762, 765, 318 S.E.2d 164, 167 (1984). Where the language of a contract is plain and unambiguous, however, no construction by the court is required or even permissible. Id. at 765, 318 S.E.2d at 167. In determining whether there is an ambiguity, words employed in the policy are to be taken and understood in their plain, ordinary, usual and popular sense. Continental Casualty Co. v. Robertson, 245 F.2d 604 (5th Cir.1957). With this law in mind, the court must determine whether the phrase, "such insurance is term insurance and expires as to each such Eligible Child on the policy anniversary nearest said Eligible Child's twenty-third birthday or on the Expiry Date in the schedule above, whichever is earlier" is ambiguous as to when the policy lapsed.

It is clear from the policy that "or on the Expiry Date in the schedule above" refers to October 20, 1987. The policy under no circumstances, therefore, would last longer than this date. Determination of the earlier expiration date requires defining the term "policy anniversary." "Anniversary" has been defined as being "the annual recurrence of a date marking an event or occurrence of notable importance." See Webster's Third New International Dictionary 87 (16th ed. 1971). Accordingly, an anniversary occurs once every year at the same time. The policy sets this date by the provision which states, "the policy years and policy anniversaries shall be computed from the effective date." Since the effective date was October 20, 1966, the policy anniversary would occur annually on October 20th.¹ Having determined when the policy anniversaries occur, the final element required to be decided is whether "the policy anniversary nearest said Eligible Child's twenty-third birthday" can be read as including only the policy anniversary occurring after the Eligible Child's twenty-third birthday.

The term "nearest" has been defined as "being the closer of two." Webster's Third New International Dictionary 1510 (16th ed. 1971). This term, therefore, necessarily requires that there be two potential anniversaries to choose from. Accordingly, the policy anniversary prior to Bertie W. Harper, III's twenty-third birthday and the policy anniversary following this birthday must be used in order to ascertain which of these two dates is nearest to his twenty-third birthday. To adopt Ms. Harper's construction of this provision would be contrary to the plain meaning of the terms used. This court finds, therefore, that this provision is subject to only one interpretation, and, accordingly, is not ambiguous as a matter of law. Under the express terms of the policy, the coverage provided Bertie W. Harper, III expired on October 20, 1982, this being the policy anniversary nearest to the insured's twenty-third birthday.

Plaintiff contends that even if this provision was unambiguous, the policy of insurance had been modified or amended by Liberty's agent prior to the expiration of the coverage. Liberty's agent allegedly represented to Ms. Harper that her policy covered her son's life until he was twenty-three. Because of this representation, plaintiff asserts that the policy was modified to extend coverage until Bertie W. Harper, III's twenty-third birthday. Liberty concedes, for purposes of its summary judgment motion, that such representations were made to Ms. Harper. Liberty takes the position, however, that these statements by themselves are inadequate as a matter of law to work a modification of the policy.

It is well established in Georgia that the conduct or action of an insurer, or its agent, cannot be used to create an implied waiver or estoppel argument where such a waiver or estoppel would bring within the coverage of a policy risks not covered by its terms or risks expressly excluded therefrom. See Sargent v. Allstate Insurance Co., 165 Ga.App. 863, 865, 303 S.E.2d 43, 45-46 (1983). Extension of the applicable period during which the insurance was in force would certainly increase the risks covered by the terms of the policy.² Since Georgia law does not allow waiver or estoppel to increase the risks insured under an express policy of insurance, this court must conclude that Ms. Harper is foreclosed from arguing that the agent's representations estop Liberty from asserting that the policy expired on October 20, 1982, as provided for in the policy of insurance.

Ms. Harper cites to another line of cases in Georgia that purportedly would hold Liberty responsible for its...