Johnson Intern. Co. v. Jackson Nat. Life Ins. Co.

CourtUnited States Courts of Appeals. United States Court of Appeals (8th Circuit)
Citation19 F.3d 431
PartiesJOHNSON INTERNATIONAL COMPANY, a Washington Corporation, Plaintiff-Appellee, v. JACKSON NATIONAL LIFE INSURANCE COMPANY, a Michigan Corporation, Defendant-Appellant. JOHNSON INTERNATIONAL COMPANY, a Washington Corporation, Plaintiff-Appellant, Cassem, Tierney, Adams, Gotch & Douglas, Attorneys for Johnson International Company, Sanctioned Under Fed.R.Civ.P. 36(a) and 37(c) by Court Memorandum and Order Dated
Decision Date27 January 1993

David M. Woodke, Omaha, NE, argued (Susan E. Norris, on the brief), for appellant.

Daniel J. Duffy, Omaha, NE, argued, for appellee.

Before BEAM, Circuit Judge, LAY, Senior Circuit Judge, and BOGUE, * Senior District Judge.

LAY, Senior Circuit Judge.

This is a diversity action brought by Johnson International Company ("Johnson International"), a Washington corporation, against Jackson National Life Insurance Company ("Jackson National"), a Michigan corporation, regarding a $250,000 "keyman" life insurance policy issued by Jackson National to Johnson International to cover one of the latter's key employees, Howard Warford. Warford died while on a business trip to Taiwan. Jackson National refused to pay Johnson International's claim on the keyman policy because the claim arose during the two-year contestability period for the policy, and, according to Jackson National, after Warford's death it discovered material misrepresentations in the policy application concerning Warford's health. Johnson International sued for breach of contract and negligence. 1

The case went to trial before the Honorable Richard G. Kopf, United States District Judge for the District of Nebraska. Two issues were submitted to the jury: (1) whether there was a breach of contract by the insurer, Jackson National, in failing to pay the $250,000 face value of the policy, and (2) whether Jackson National's agent, Bill Yeager, was negligent in failing to advise Johnson International of certain risks arising out of the replacement of an earlier keyman policy issued by another company. 2 The jury returned a special verdict finding in favor of Johnson International on both claims. The district court entered judgment on the verdict for the breach of contract, but it granted Jackson National's motion for judgment as a matter of law on the negligence claim, on the ground that it was time barred. Johnson Int'l Co. v. Jackson Nat'l Life Ins. Co., 812 F.Supp. 966 (D.Neb.1993). In addition, the court awarded plaintiff's counsel attorneys' fees, and it awarded fees and costs against the plaintiff and its counsel as sanctions stemming from certain pre-trial discovery rulings. Id. Jackson National appeals; Johnson International cross-appeals the dismissal of the negligence claim and the sanctions. We affirm in part, vacate in part, and remand.


This case centers around the allegedly fraudulent insurance application of the decedent, Howard Warford. The basic facts concern a change of keyman insurance policies issued to Johnson International through insurance agent William Yeager. Yeager originally sold Johnson International a policy issued by Summit National Insurance Company ("Summit"). Approximately three months later, however, Yeager advised Johnson International that if it replaced Summit's policy with one issued by Jackson National, it could lower its premiums, because Jackson National's rates for smokers like Warford were much lower than Summit's. Johnson International agreed and made the switch.

When Warford completed the application for the Summit National policy, he answered affirmatively the question of whether he had ever been treated for "chest pain, heart murmur, high or low blood pressure, heart attack; or any disease of the heart or blood vessels?" Handwritten on the application beneath the question, it states, "chest pain" in "April, 1978," "Dr. Farex, Beatrice, Nebr." At a paramedical examination conducted as part of the Summit application process, Warford again answered affirmatively when asked if he had ever had any indication of "chest pain, palpitation, high blood pressure, rheumatic fever, heart murmur, heart attack or other disorder of the heart or blood vessels?" The words "chest pain" on the application are circled, and the handwritten detail states, "Chest pain in 1976 hospitalized Luthern [sic] Hosp. five days 1200 S. 9th, Beatrice Neb. C.T. Frerichs, M.D. 114th So. 6th Beatrice, Nebr. EKG-negative--negative findings no problems since." On the application for the Jackson National policy, however, and on the form filled out at the paramedical examination for that policy, the questions regarding chest pains and heart problems are all answered negatively.

It appears that Warford had, in fact, suffered a heart attack in 1978 and had been prescribed nitroglycerin tablets throughout the years since. He was carrying nitroglycerin tablets at the time of his death in Taiwan. The issue at trial, therefore, was whether Warford had materially misrepresented his health during the application process and intentionally deceived Jackson National. Much of the trial testimony focused on the credibility of insurance agent Yeager, who had filled out both the Summit and the Jackson National policy applications, and on what role he may have played in disregarding Warford's heart problems on the Jackson National application form. Yeager testified that he told Warford that his 1978 chest pains did not need to be reported on the Jackson National application, because they had occurred more than five years earlier. Evidence that Warford had been out of town at the time the Jackson National policy application was completed allowed an inference that Warford had not actually met with Yeager to fill out the Jackson National application and that Yeager had acted on his own--perhaps, as Johnson International suggested, with the Summit policy application to guide him. 3 Johnson International's negligence claim alleged that Yeager, as Jackson National's agent, had violated the replacement insurance regulations of the State of Washington by not providing Johnson International with proper written notice that it might lose benefits by changing the existing life insurance coverage it had for Warford.


Jackson National's primary argument on appeal is that the district court erred in denying its motion for summary judgment. Jackson National states that on summary judgment, "the district court should have found as a matter of law that Warford had made material misrepresentations with a presumption of an intent to deceive or that were material to the risk or the hazard assumed by the insurer." Appellant's Br. at 29. Much of Jackson National's appellate brief is devoted to demonstrating that, based on the pretrial submissions of the parties, no genuine disputes as to material fact should have been found.

A ruling by a district court denying summary judgment is interlocutory in nature and not appealable after a full trial on the merits. Bottineau Farmers Elevator v. Woodward-Clyde Consultants, 963 F.2d 1064, 1068 n.5 (8th Cir.1992); see Reich v. ConAgra, Inc., 987 F.2d 1357, 1362 n.6 (8th Cir.1993); 15B Charles A. Wright et al., Federal Practice and Procedure Sec. 3914.28, at 210-11 & n.18 (2d ed. 1992). The final judgment from which an appeal lies is the judgment on the verdict. Bottineau, 963 F.2d at 1068 n.5. The judgment on the verdict, in turn, is based not on the pretrial filings under Federal Rule of Civil Procedure 56(c), but on the evidence adduced at trial. See id.

Summary judgment under Rule 56 is designed to eliminate prolonged litigation where, "after adequate time for discovery and upon motion, ... a party ... fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial." Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 2552, 91 L.Ed.2d 265 (1986). The primary question on summary judgment is whether there exists a genuine issue of material fact as to the elements of a party's claim. Id.; see, e.g., Wilson v. Myers, 823 F.2d 253, 256 (8th Cir.1987). Once the summary judgment motion is denied and the case proceeds to trial, however, the question of whether a party has met its burden must be answered with reference to the evidence and the record as a whole rather than by looking to the pretrial submissions alone. See Locricchio v. Legal Servs. Corp., 833 F.2d 1352, 1359 (9th Cir.1987). 4 The district court's judgment on the verdict after a full trial on the merits thus supersedes the earlier summary judgment proceedings. See id.; Bottineau, 963 F.2d at 1068 n.5. Accordingly, we find the principal issue raised and briefed by Jackson National (and the response by Johnson International) not relevant to the issues properly before us.


Jackson National does argue, in one and one half pages of its fifty-page appellate brief, that the jury verdict on the breach of contract claim was contrary to the evidence and the law. Its claim, however, is essentially that the trial judge should have granted it summary judgment and that the testimony presented at trial on the breach of contract claim did not present anything new. Jackson National again asks this Court to "reverse the district court's order ... rejecting the magistrate's recommendation that summary judgment be granted." Appellant's Br. at 46. We are willing to assume, based on its phrasing of the issue in its Statement of Issues Presented for Review, that Jackson National has adequately preserved a proper challenge to the district court's denial of its motion for judgment as a matter of law or a new trial. We emphasize again, however, that the record at the time of...

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