Kelly v. Connecticut Mut. Life Ins. Co.

• Decision Date: 03 September 1993
• Citation: 628 So.2d 454,1993 WL 33720
• Parties: John S. KELLY v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY. Mark WILL v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY, et al. Michael P. KILCULLEN v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY and H. Brantley Sanders. 1920618, 1920717 and 1920861.
• Court: Alabama Supreme Court

Page 454

628 So.2d 454

John S. KELLY v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY.

Mark WILL

v.

CONNECTICUT MUTUAL LIFE INSURANCE COMPANY,

et al.

Michael P. KILCULLEN v. CONNECTICUT MUTUAL LIFE INSURANCE COMPANY and H. Brantley Sanders.

1920618, 1920717 and 1920861.

Supreme Court of Alabama.

Sept. 3, 1993.

C.S. Chiepalich and Richard M. Beckish of C.S. Chiepalich, P.C., Mobile, for appellants.

Davis Carr and James W. Lampkin of Pierce, Carr & Alford, P.C., Mobile, for appellees.

SHORES, Justice.

This opinion addresses three separate actions against Connecticut Mutual Life Insurance Company. John S. Kelly and Mark Will appeal from summary judgments in favor of Connecticut Mutual in their separate actions; and Michael P. Kilcullen appeals from a summary judgment in favor of Connecticut Mutual and H. Brantley Sanders. We affirm all three judgments.

"A summary judgment is proper when there exists no genuine issue of material fact and the moving party is entitled to a judgment as a matter of law. In determining whether a summary judgment was properly entered, this Court will view the evidence in a light most favorable to the nonmovant and will resolve all reasonable doubts concerning the existence of a genuine issue of material fact against the moving party. In determining the existence or absence of a genuine issue of material fact, this Court is limited to a consideration of the factors that were before the trial court when it ruled on the summary judgment motion. However, this Court's reasoning is not limited to that applied by the trial court.

"Once the moving party makes a prima facie showing that no genuine issue of material fact exists, then the burden shifts to Chatham v. CSX Transportation, Inc., 613 So.2d 341, 343 (Ala.1993) (quoting West v. Founders Life Assurance Co. of Florida, 547 So.2d 870, 871 (Ala.1989) (citations omitted)).

                the nonmovant to go forward with evidence demonstrating the existence of a genuine issue of material fact.  Because this action was filed after June 11, 1987, the nonmovant must meet this burden by 'substantial evidence.'   Under the substantial evidence test, the nonmovant must present 'evidence of such weight and quality that fair-minded persons in the exercise of impartial judgment can reasonably infer the existence of the fact sought to be proved.' "
                

FACTS

The facts of each of the three cases are similar. The evidence reveals the following: William G. Nixon, an agent of Connecticut Mutual, sold new insurance policies to each of the plaintiffs in 1987. Each plaintiff had an existing policy with Connecticut Mutual at that time, and Nixon told each plaintiff that he could purchase additional life insurance without additional out-of-pocket expense for each new policy because the premium on the new policy would be paid by the annual dividends on the old policy. Each plaintiff signed a form agreeing to apply "dividend additions" from his old policy to pay the premiums due on the new policy. ¹ Thereafter, Connecticut Mutual issued the new policies to the plaintiffs.

Kelly received a notice from Connecticut Mutual in March 1988 informing him that a premium of over $1500 was due on his new policy. Kelly contacted Nixon, who told him that this was just a formality and that he would need to fill out some forms for Connecticut Mutual's district office in Birmingham. Kelly received from the Birmingham office two forms enclosed in a letter dated May 25, 1988. The letter informed him that dividends credited to his old policy had been used to pay the 1988 annual premium on his new policy. The letter also stated, "In the future, forms will be sent to you for your signature, authorizing the use of dividends and/or cash value in [your old policy] to pay the net annual premium on [the new policy]." Kelly, C.R. 222. In April 1989, Kelly received a notice from Connecticut Mutual telling him that another premium was due on his new policy. Kelly contacted Brant Sanders, the branch manager of Connecticut Mutual's Birmingham office, and told Sanders that he had had the impression that the premiums on his new policy were to be paid by the dividends from his old policy. Kelly understood Sanders's reply to mean that his impression was correct. After this telephone conversation with Sanders, Kelly received from Connecticut Mutual a letter dated April 20, 1989, containing two forms. The letter told Kelly that the forms would allow Connecticut Mutual to "use dividends and cash value from [his old policy] to pay the premium due on [his new policy]." Kelly, C.R. 262. Kelly signed and returned the forms, which authorized the surrender of $790 in "dividend additions" from his old policy and a loan of $721.25 against his old policy, the proceeds from which were to be applied to pay the 1989 premium on his new policy. Kelly testified that he understood from his earlier conversations with Sanders and Nixon that the forms were a formality that would allow the premiums on his new policy to be paid solely by the annual dividends from his old policy.

Kelly sued Connecticut Mutual and Nixon on May 9, 1991. He alleged, among other things, fraud arising out of Connecticut Mutual's use of a part of the accumulated value of his old policy in order to fund the premiums on his new policy, when, contrary to Nixon's representations that the new policy would involve no out-of-pocket expenses, the dividends and accumulated value in his old policy were, in fact, insufficient to continue to fund the new policy. Nixon filed for bankruptcy Will had no contact with Nixon after he bought the 1987 policy and executed a dividend surrender form authorizing the use of $720.75 from the dividend additions on his old policy to fund the initial premium on his new 1987 policy. Will did not respond to later notices concerning amounts due of over $700 on the new policy because, he said, "[i]t was supposed to be paid for." Will, C.R. 146. Will received a letter dated July 22, 1988, from Connecticut Mutual stating that his 1987 policy had been terminated on May 15, 1988. ² The letter indicated that "[p]rior to this date, the policy had become an Extended Term Insurance Policy per its provisions because the premium due had not been paid." Will, C.R. 179. Will did not call the toll free telephone number listed on this letter, but he did call a number for a Connecticut Mutual agent in Nashville that was on some of the notices he had received, and he left a message; the call was never returned. Will also called the Birmingham office of Connecticut Mutual, but no one answered the telephone.

and the trial court dismissed with prejudice Kelly's claims against Nixon after his discharge in bankruptcy. Kelly later amended his complaint to include a claim for conversion. Connecticut Mutual moved for a summary judgment. The trial court, after a hearing and after considering the motions and materials submitted by both parties, entered a summary judgment for Connecticut Mutual. Kelly appeals the summary judgment against his fraud and conversion claims.

Will sued Connecticut Mutual and Nixon on May 9, 1991. He alleged, among other things, fraud arising out of Connecticut Mutual's alleged use of a part of the accumulated value of his old policy in order to fund the premiums on his new policy, when, contrary to Nixon's representations that the new policy would involve no out-of-pocket expenses, the dividends and accumulated value in his old policy would be insufficient to continue to fund the new policy. Nixon filed for bankruptcy, and the trial court dismissed with prejudice Will's claims against Nixon after his discharge in bankruptcy. Will later amended his complaint to include a claim for conversion. Connecticut Mutual moved for a summary judgment. After a hearing, and after considering the motions and materials submitted by both parties, the trial court entered a summary judgment for Connecticut Mutual. Will appeals the summary judgment against his fraud and conversion claims.

Kilcullen began to receive premium notices on his 1987 policy from Connecticut Mutual in 1988. He was unable to contact Nixon, who no longer worked for Connecticut Mutual. He received a notice, dated July 19, 1988, indicating there were insufficient funds available to complete the payment on the 1988 premium for his 1987 policy, and that the policy had lapsed but could be reinstated. Then Kilcullen received a letter dated August 20, 1988, informing him that his 1987 policy had lapsed on June 20, 1988, and indicating that "[p]rior to this date, the policy had become an Extended Term Insurance Policy per its provisions because the premium due had not been paid." Kilcullen, C.R. 111. He called the toll-free number on the letter and reached Brant Sanders, Connecticut Mutual's district manager in Birmingham. Kilcullen told Sanders that he did not owe Connecticut Mutual for the premium, that "[i]t was totally misrepresented to me," and that he was assured that he "would not have to make any premiums on the policy." Kilcullen, C.R. 271. Sanders told Kilcullen that Connecticut Mutual knew it had a problem with its agent, Nixon, in Mobile, and that he or Connecticut Mutual would "straighten everything out." Kilcullen, C.R. 271-72. Sometime between August 1988 and August 1989, Kilcullen spoke with Bill Orrell, the Connecticut Mutual agent that had sold him his original life insurance policy in 1971. Kilcullen told Orrell that he had lost over $500 in dividends from the policy Orrell had sold him because another agent had sold him a later policy, and that he felt he had been "flimflammed." Kilcullen, C.R. 309, 315. Shortly thereafter, Kilcullen spoke with Orrell at Orrell's office. Orrell told him that there were not enough dividends in his original and 1987 policies combined to cover the Kilcullen sued Connecticut Mutual and Sanders on January 10, 1992, alleging, among other things, fraud and suppression of material facts arising out of Nixon's representations to him...