Jackson Nat'l Life Ins. Co. v. Crum
| Decision Date | 12 December 2022 |
| Docket Number | 20-11280 |
| Citation | 54 F.4th 1312 |
| Parties | JACKSON NATIONAL LIFE INSURANCE COMPANY, Plaintiff-Counter Defendant, Appellee, v. Sterling CRUM, Defendant-Counter Claimant, Appellant. |
| Court | U.S. Court of Appeals — Eleventh Circuit |
Michael Broadbent, Michael J. Miller, Cozen O'Connor, Philadelphia, PA, Robert F. Parsley, Miller & Martin, PLLC, Chattanooga, TN, Eileen Hintz Rumfelt, Miller & Martin, PLLC, Atlanta, GA, for Plaintiff-Counter Defendant, Appellee.
Scott Zweigel, John H. Elliott, Parker Hudson Rainer & Dobbs, LLP, Atlanta, GA, Brady J. Cobb, Cobb Eddy, Ft Lauderdale, FL, for Defendant-Counter Claimant, Appellant.
Before Branch, Grant, and Julie Carnes, Circuit Judges.
In his appeal before this Court, defendant Sterling Crum argued that the district court erroneously held that a life insurance policy issued by plaintiff Jackson National Life Insurance Company ("Jackson") to third-party Kelly Couch, and subsequently sold by Couch to Crum, was void and unenforceable under Georgia law as an illegal human life wagering contract. Couch acquired the policy, which listed "Kelly Couch" as the insured and named Couch's estate as the beneficiary, in 1999. At the time, Couch was HIV-positive and he had a relatively short life expectancy. A few months after he purchased the policy, Couch, with the assistance of a viatical insurance broker, sold the policy to Crum and named Crum as its primary beneficiary.
Couch died in 2005. Several years later, when Crum learned about Couch's death, he made a claim for the death benefit under policy. Jackson declined to pay the benefit and initiated this action seeking a declaration that the policy was void ab initio under Georgia law as an illegal human life wagering contract. The district court conducted a bench trial and determined that Couch purchased the policy with the intent to sell it in the near future to an individual without an insurable interest in his life, but without the involvement or complicity of the ultimate purchaser (Crum) at the time of the purchase. Based on those facts and on its interpretation of Georgia law, the district court concluded that the policy was void and unenforceable under Georgia law, and it entered judgment in favor of Jackson. Crum appealed, arguing that Couch's unilateral intent to sell the policy to a third party without an insurable interest in his life was insufficient to declare the policy void under Georgia law.
Resolution of Crum's argument required a determination of whether a life insurance policy is void under Georgia law as an illegal human life wagering contract if it is procured by an individual on his own life for the sole purpose of selling the policy to a third party without an insurable interest in the insured's life, but without the complicity of the ultimate purchaser at the time of procurement. Because Georgia law did not definitively resolve this issue, we certified the following question to the Georgia Supreme Court: "When an insured has purchased a life insurance policy with the intent to sell the policy to a third party with no insurable interest, must either the subsequent purchaser or an intermediary be complicit in the procurement of the policy before the latter can be deemed to be an illegal wagering contract and thus void ab initio?" See Jackson Nat'l Life Ins. Co. v. Crum, 25 F.4th 854, 863 (11th Cir. 2022).1
The Georgia Supreme Court has now answered this Court's certified question, holding that "under Georgia law, a life-insurance policy taken out by the insured on his own life with the intent to sell the policy to a third party with no insurable interest, but without a third party's involvement when the policy was procured, is not void as an illegal wagering contract." Crum v. Jackson Nat'l Life Ins. Co., ––– Ga. ––––, ––––, 880 S.E.2d 205 (Ga. Oct. 25, 2022). With great appreciation to the Georgia Supreme Court for its assistance, we follow its decision and therefore reject Jackson's argument that the policy issued by Jackson on Couch's life—which policy Crum subsequently purchased and became named as its primary beneficiary—is void and unenforceable under Georgia law as an illegal human life wagering contract. The district court's ruling to the contrary is REVERSED .
After the Georgia Supreme Court issued its opinion, Jackson filed a motion to submit supplemental briefing to this Court. In its proposed supplemental brief, which Jackson attached to its motion, Jackson urged this Court to affirm the judgment entered in its favor below on the alternative ground of laches, given the long delay between Couch's death and Crum's submission of a claim for the death benefit under the policy. We GRANT Jackson's motion to submit supplemental briefing, and we have considered its proposed supplemental brief, as well as Crum's response to the brief.
We nevertheless reject Jackson's request that this Court decide whether Jackson's second ground for affirmance of the district court is meritorious. Given its conclusion that the insurance policy at issue was void as an illegal wagering contract, the district court expressly declined to consider Jackson's laches argument. Because there is no ruling on the laches question from the district court, we decline to affirm the judgment entered in favor of Jackson on this alternative ground, or otherwise to consider the laches issue in this appeal. Instead, we REVERSE and VACATE the judgment entered by the district court in this case and REMAND the case for further proceedings consistent with this opinion, including a determination as to whether Crum's claim to benefits under the policy is barred by laches.
Decided: October 25, 2022 S22Q0649. CRUM v. JACKSON NATIONAL LIFE INSURANCE COMPANY.
This case comes to us from the United States Court of Appeals for the Eleventh Circuit, which has certified questions to us about Georgia life-insurance law. Those questions are set out below in full. The basic question we need to answer is whether a person can legally take out an insurance policy on his own life with the intent to turn around and sell that policy to a third party who has no "insurable interest" in the policyholder's life. The person seeking to recover on the life-insurance policy in this case says that such a policy is legal if a third party was not involved in causing the policy to be procured. The insurance company says that with or without such third-party involvement, such a policy is an illegal wagering contract and therefore void, relying on some of our case law. But as it turns out, that case law was interpreting and applying old statutes. In 1960, our General Assembly repealed those statutes and replaced them with new statutory language that codified some, but not all, of the old decisional law. See OCGA § 33-24-3. And the new language, which remains materially the same today, does not even hint at the unilateral-intent-based limitation that the insurance company advances. So we answer the certified questions as follows: under Georgia law, a life-insurance policy taken out by the insured on his own life with the intent to sell the policy to a third party with no insurable interest, but without a third party's involvement when the policy was procured, is not void as an illegal wagering contract.
In 1999, Kelly Couch applied for a $500,000 life-insurance policy from Jackson National Life Insurance Company. When he applied, Couch told Jackson that he was healthy, but that was not true. In fact, Couch knew that he was HIV-positive, which, in 1999, meant that he had a greatly diminished life expectancy. He bought the policy with the intent to sell it on the secondary "viatical settlement" market.1 Eight months later, Couch did just that: a brokerage agency that specialized in viatical settlements connected Couch with Sterling Crum, who bought Couch's insurance policy knowing that Couch was HIV-positive and likely had only a few years left to live.
Couch died in 2005, and years later, Crum made a claim to Jackson for the death benefit under Couch's policy. Jackson denied the claim and filed a declaratory-judgment action in the U.S. District Court for the Northern District of Georgia, seeking a declaration that the policy was void ab initio under Georgia law as an illegal human-life wagering contract, and that laches barred Crum's claim.2
After a bench trial, the district court agreed with Jackson that the policy was an illegal wagering contract. The court found that Couch bought the policy without Crum's involvement, but with the intent to sell it in the near future to someone without an insurable interest. See Jackson Natl. Life Ins. Co. v. Crum , No. 1:17-cv-03857-WMR, 2020 WL 12968089, at *9 (N.D. Ga. Mar. 2, 2020). The court acknowledged that Georgia's statute addressing insurable interests in the context of life insurance did not appear to prohibit such a policy without the involvement of a third party at the time the policy was issued. Id. at *5, *7 (citing OCGA § 33-24-3 (b), (i) ). But the court concluded that our case law treated such policies as illegal wagering contracts, see id. at *6-*7, and so it declared the policy void ab initio.
Crum appealed to the Eleventh Circuit. He contended that the district court erred in declaring the policy void ab initio based on only Couch's unilateral intent to sell the policy soon after he bought it. In Crum's view, Georgia law requires "the knowing and direct involvement of an identified third-party beneficiary at the time of the initial procurement of the policy" to find a policy void ab initio as an illegal wager on a human life. Jackson Natl. Life Ins. Co. v. Crum , 25 F.4th 854, 856-857 (11th Cir. 2022). The Eleventh Circuit, however, opined that Georgia case law did not definitively answer the question these arguments raised. So the Eleventh Circuit certified the following two questions to this Court:
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