McCurtis v. Life Ins. Co. of North America, Civ. A. No. 4:93-CV-29 (L) (N).

• Decision Date: 18 February 1994
• Docket Number: Civ. A. No. 4:93-CV-29 (L) (N).
• Citation: 849 F. Supp. 1141
• Parties: Tyronda Michelle McCullum McCURTIS, a minor By and Through her mother and guardian, Deborah McCullum LOVE; the Estate of Grant D. McCurtis, Sr.; the Estate of Grant D. McCurtis, Jr., Plaintiffs, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.
• Court: U.S. District Court — Southern District of Mississippi

849 F. Supp. 1141

Tyronda Michelle McCullum McCURTIS, a minor By and Through her mother and guardian, Deborah McCullum LOVE; the Estate of Grant D. McCurtis, Sr.; the Estate of Grant D. McCurtis, Jr., Plaintiffs, v. LIFE INSURANCE COMPANY OF NORTH AMERICA, Defendant.

Civ. A. No. 4:93-CV-29 (L) (N).

United States District Court, S.D. Mississippi, E.D.

February 18, 1994.

David M. Ratcliff, Ratcliff & Ratcliff, Laurel, MS, for plaintiffs.

John E. Hughes, III, Wells, Wells, Marble & Hurst, Jackson, MS, for defendant.

MEMORANDUM OPINION AND ORDER

TOM S. LEE, District Judge.

This cause is before the court on the motion of defendant the Life Insurance Company of North America (LINA) for summary judgment pursuant to Rule 56 of the Federal Rules of Civil Procedure. Plaintiffs Tyronda McCurtis and the Estates of Grant McCurtis, Sr. and Grant McCurtis, Jr. have responded and the court, having considered the memoranda submitted by the parties, together with additional pertinent authorities, concludes that defendant's motion should be granted.

In this action, plaintiffs demand $40,000 in insurance benefits, which they insist are payable under policies issued by LINA. They also seek $5,000,000 in punitive damages from defendant for its alleged "bad faith" refusal to pay those benefits. The case, initially filed in the Circuit Court of Jasper County, Mississippi, was timely removed by defendant on the basis that diversity jurisdiction exists and that the case arises under the Employee Retirement Income Security Act (ERISA), 29 U.S.C. § 1001 et seq.

Facts

Mary McCurtis and her son, daughter and husband, Grant McCurtis, Jr., Keyenner Stevens and Grant McCurtis, Sr., respectively, were killed in a three-car collision on October 12, 1991. The family car struck another vehicle, and upon impact, both vehicles burst into flames which engulfed and killed the occupants. At the time of and preceding the accident, Mary McCurtis was an employee of Nazerth/Century Mills, Inc. (Nazerth), which maintained a number of employee benefit plans, including a term life insurance plan and an accident plan that contained coverage for accidental death. Mary was a covered employee under both plans, and McCurtis, Sr. and McCurtis, Jr. were covered dependents under her policies. McCurtis, Sr. was insured for $20,000 under the life insurance policy and $8,000 under the accident policy, and McCurtis, Jr. had coverage under the policies in the amounts of $10,000 and $2,000, respectively. The right to these proceeds is the subject of the parties' dispute in this case.¹

Following the accident, the attorney for Mary McCurtis' estate, Marvin Oates, requested that LINA pay Mary's estate all of the proceeds due under the policies for the deaths of McCurtis, Sr. and McCurtis, Jr. Initially, LINA expressed concern as to the propriety of paying the benefits to Mary's estate. In a January 14, 1992 letter to Oates, LINA took the position that all of the deaths had occurred simultaneously and that consequently, distribution of policy proceeds was governed not by any terms of the policy but rather by state simultaneous death laws. In response to LINA's apparent reluctance to pay the benefits as requested, Oates provided to LINA the affidavits of Bobby Stevens and Oscar Stevens, Jr., who had arrived at the accident scene shortly after the collision. Both affiants stated that Mary McCurtis was the last occupant of the vehicle to die as a result of the collision, and explained that Mary was struggling to extricate herself from the burning vehicle while the remaining family members were motionless and appeared to be dead. On March 16, shortly after receiving these affidavits, LINA advised Oates that under the provisions of the policy, though no specific provisions were identified, the benefits at issue were, in fact, payable to Mary's estate.²

In the meantime, prior to Oates' submission of the Stevens' affidavits to LINA, Tyronda McCullum, now Tyronda McCurtis, through her attorney, Jack Brand, filed a paternity suit seeking to be adjudicated McCurtis, Sr.'s daughter. Upon learning of the paternity action, Oates alerted LINA that Tyronda might claim an interest in the disputed insurance proceeds. Anticipating this eventuality, LINA advised Brand that the dependents' insurance benefits were, according to its interpretation of the policy, payable to Mary's estate, though LINA again failed to identify the relevant policy provisions. On behalf of Tyronda, Brand agreed to this distribution of proceeds, on the condition that he be provided a copy of Mary's beneficiary designations.³ On April 7, LINA furnished this information and thereafter, on April 13, issued the benefit checks, with Mary's estate receiving the proceeds on McCurtis, Sr.'s and Jr.'s lives.⁴

Soon after these payments were made, LINA received a letter from David Ratcliff, Tyronda's new attorney, who claimed that the disputed proceeds were payable, not to Mary's estate, but to the estates of McCurtis, Sr. and McCurtis, Jr. Though LINA responded by informing Ratcliff that the proceeds had already been paid to Mary's estate, Ratcliff, on Tyronda's behalf, objected to this distribution, citing a provision of the policy which stated that "Life Insurance benefits paid on account of a covered dependent will be paid to the employee, if she is living. If not, we will pay the dependent's Estate." Ratcliff insisted that since Mary had died in the accident and hence, was no longer "living," the benefits should have been paid to the dependents. LINA, though, rejected this position, explaining in a July 6, 1992 letter that, although the policy provision cited by Ratcliff was applicable, since Mary had, in fact, outlived McCurtis, Sr. and McCurtis, Jr., and was thus "living" at the time of their deaths, Mary's estate, and not the estates of McCurtis, Sr. and Jr., was entitled to the proceeds.

Tyronda was adjudicated by the chancery court to be McCurtis, Sr.'s daughter on July 28, 1992, and several months later made a final demand for payment from LINA. Her demand was denied, and on March 28, 1993, Tyronda and the estates of McCurtis, Sr. and McCurtis, Jr. filed this action claiming that the proceeds should have been distributed to McCurtis, Sr.'s and McCurtis, Jr.'s estates, which would entitle Tyronda, as the only heir of both estates, to all of the insurance proceeds.

Analysis

The parties agree that the life and accident plans provided by Mary McCurtis' employer are governed by ERISA.⁵ But they have markedly different views of ERISA's preemptive effect in this matter. ERISA preempts "any and all state laws insofar as they may now or hereafter relate to any employee benefit plan." 29 U.S.C. § 1144(a); see Shaw v. Delta Air Lines, Inc., 463 U.S. 85, 91, 103 S.Ct. 2890, 2896-97, 77 L.Ed.2d 490 (1983). This normally includes all state laws which either directly or indirectly affect employee benefit plans. Lee v. E.I. Du Pont de Nemours & Co., 894 F.2d 755 (5th Cir.1990); see also Goodman v. S & A Restaurant Corp., 756 F.Supp. 966 (S.D.Miss.1990). However, specifically excepted from ERISA's preemptive reach are state laws which regulate "insurance, banking, or securities." 29 U.S.C. § 1144(b)(2)(A). In this case, plaintiffs contend that the Mississippi Simultaneous Death Law, Miss.Code Ann. § 91-3-1 et seq., which establishes a distribution scheme for insurance proceeds in the event of simultaneous death, "regulates insurance" and thus falls within the purview of this exception.⁶

The particular provision of Mississippi's Simultaneous Death Law which plaintiffs contend is not preempted by ERISA and which they thus contend governs the proper distribution of the disputed proceeds is Miss. Code Ann. § 91-3-11 (1972), which provides as follows:

Where the insured and the beneficiary in a policy of life or accident insurance have died and there is insufficient evidence that they have died other than simultaneously, the proceeds of the policy shall be distributed as if the insured had survived the beneficiary.

Clearly, if the appropriate distribution of insurance proceeds were required to be determined solely in accordance with this statute and further, if the deaths of McCurtis, Sr. and McCurtis, Jr. were simultaneous within the contemplation of the statute, the benefits would be payable to McCurtis, Sr.'s and McCurtis, Jr.'s estates, and hence to Tyronda as the sole heir of those estates. Indeed, this is precisely the plaintiffs' position. In a nutshell, they argue that this statute "regulates insurance" such that it is not preempted; that the deaths involved here were "simultaneous"; and that consequently, this statute governs and mandates payment of the policy benefits to Mary's dependents' estates and hence to Tyronda.

LINA, while denying that this state law is excepted from ERISA's preemption, contends that a decision on that particular issue is not ultimately determinative of the question presented in this case, i.e., whose estate was entitled to receive payment under the dependents' policies, since whether preempted or not, the result would be the same. LINA reasons that, irrespective of whether Mississippi's Simultaneous Death Law is or is not preempted, LINA's specific factual finding that Mary outlived her family is amply supported by the evidence in the administrative record and that therefore, this court must defer to that finding. And, because the court must accept LINA's finding in this regard, it follows that the Mississippi Simultaneous Death Law, even if not preempted, would be inapplicable because that law only governs where deaths are simultaneous. The court agrees.

By its terms, § 91-3-11, quoted above, applies only where there is insufficient proof that the deaths of an insured and beneficiary are "other than simultaneous." By deciding that Mary McCurtis lived longer than McCurtis, Sr. and McCurtis, Jr., LINA found, in effect, that the deaths were "other than simultaneous." The success of ...