Mohnkern v. Professional Ins. Co.

• Decision Date: 08 September 2008
• Docket Number: No. 07-3486.,07-3486.
• Citation: 542 F.3d 157
• Parties: Janet E. MOHNKERN, Plaintiff-Appellant, v. The PROFESSIONAL INSURANCE COMPANY, f.k.a. Professional Insurance Corporation, Defendant-Appellee.
• Court: U.S. Court of Appeals — Sixth Circuit

542 F.3d 157

Janet E. MOHNKERN, Plaintiff-Appellant, v. The PROFESSIONAL INSURANCE COMPANY, f.k.a. Professional Insurance Corporation, Defendant-Appellee.

No. 07-3486.

United States Court of Appeals, Sixth Circuit.

Argued: June 10, 2008.

Decided and Filed: September 8, 2008.

ARGUED:

Edgar H. Boles, Moriarty & Jaros, Pepper Pike, Ohio, for Appellant.

Joshua Bachrach, Rawle & Henderson, Philadelphia, Pennsylvania, for Appellee.

ON BRIEF:

Edgar H. Boles, Moriarty & Jaros, Pepper Pike, Ohio, for Appellant. Joshua Bachrach, Rawle & Henderson, Philadelphia, Pennsylvania, for Appellee.

Before: MARTIN and BATCHELDER, Circuit Judges; JORDAN, Senior District Judge.^*

MARTIN, J., delivered the opinion of the court, in which JORDAN, D.J., joined. BATCHELDER, J. (pp. 163-69), delivered a separate dissenting opinion.

OPINION

BOYCE F. MARTIN, JR., Circuit Judge.

Plaintiff Janet Mohnkern brought suit claiming she was owed attorneys' fees under Florida law by defendant The Professional Insurance Company. The district court granted the defendant's motion for summary judgment, and Mohnkern now appeals that decision. We now AFFIRM.

I.

The district court adequately recited the convoluted facts of this case:

This is one of a number of satellite cases spawned by the litigation in Liberte Capital Group et al v. Capwill, Case No. 5:99 CV 818 (N.D.Ohio) and involving the viatical insurance industry.¹

It is undisputed that the Professional Insurance Company . . . ("PIC") issued a life insurance policy, Policy No. 2063622M, to Broderick J. Blacknell ("Blacknell"), a Florida resident, in the amount of $100,000. However, Blacknell's health problems and attendant medical bills led to him selling his policy in return for a sum less than the policy limits.

In November 1998, Janet E. Mohnkern ("Mohnkern") invested $100,000 with Alpha Capital Group ("Alpha"), which solicited investors for placements in viatical settlements. Mohnkern's funds were placed in escrow with Viatical Escrow Services, LLC ("VES") until she was placed [ ] in the Blacknell policy. On March 9, 1999, Mohnkern was assigned the Blacknell policy in exchange for $49,995.00 of her initial $100,000 investment. The remainder of Mohnkern's investment was placed in another policy and is not at issue in this litigation. The assignment of the Blacknell policy to Mohnkern was recorded by PIC in April 1999 noting the "Approval of Absolute Assignment with Janet E. Mohnkern." (Amended Compl., Ex. B.)

In April 1999, Alpha and a company called Liberte Capital Group, another viatical settlement firm, commenced an action in federal district court against their escrow agent, James A. Capwill, alleging that Capwill misappropriated funds it held in escrow for Alpha and Liberte. The district court appointed a Receiver, and instructed the Receiver "to satisfy the claims of creditors, including investors and other parties, in the order of legal priority. . . ." See Liberte Capital Group, LLC v. Capwill, 99 Fed.Appx. 627, 628-29 (6th Cir.2004). The district court expanded the Receiver's duties on November 9, 1999, "to cover all interests in any and all insurance policies funded by investors which Liberte Capital, LLC or Alpha Capital, LLC contacted, which are or were in the name of James A. Capwill, Capwill & Co., CWN Group or any other name, either as nominee owner or as trustee . . . for the purpose of managing and administering insurance policies in which one of the foregoing either is named as owner, beneficiary or Trustee, including, but is not limited to death claims. . . ." It is undisputed that the Blacknell Policy was listed by name, and included, in the district court's order establishing a Receivership.

The district court summarized the remaining facts as follows:

Blacknell passed away on November 14, 2000. Due to difficulties in ascertaining information about the location of Blacknell's death, it was not until October 1, 2001, that Alpha's escrow agent, NorthEast Escrow Services, LLC ("NES"), forwarded the certified death certificate and a copy of the policy assignment to Mohnkern. Approximately ten days later, Mohnkern submitted her claim to PIC on the Blacknell policy. The claim form indicates it was received on October 12, 2001 by Retirement Accounts, Inc., and forwarded to PIC and received by them on November 2, 2001.

In investigating the claim, PIC determined that Mohnkern was not the named beneficiary to the policy which required, in part, that Blacknell's estate sign off on the claim. By letter dated November 12, 2001, PIC advised Mohnkern that it needed certain documentation in order to proceed with the processing of her claim. PIC states, and Mohnkern does not dispute, that PIC received the requested documentation from her on November 26, 2001.

By early January 2002, PIC stood ready to pay the policy proceeds to Mohnkern. On January 3, 2002, PIC emailed Mohnkern that it was waiting to hear from NES on the status of the premium payments and wanted clarification from Mohnkern as to whom premium payment refunds were to be returned. On January 4, 2002, PIC received an email from NES and responded to NES as follows:

Hi Lynn,

Thank you for your e-mail. I authorized payment of the policy proceeds to Janet Mohnkern this morning. If you believe this decision is incorrect please let me know as soon as possible. I have not received confirmation yet as to when the check will go out but I'm assuming a few days. I will let Janet Mohnkern know as soon as I receive confirmation. My decision was based on the collateral assignment. The only remaining information I needed from you was on the premium refund. I believe that premiums were paid for a few months following the date of death. Janet Mohnkern believes that the premium refund should go to her, but I wanted to get your agreement on that issue prior to returning premiums to Janet. Do you agree that any excess premium payments should go to Janet Mohnkern and not to NorthEast Escrow Services? Thank you very much for your help with this matter.

Scott Holman

GE Financial Assurance.

Later that same day, NES advised PIC of the following:

Dear Scott:

Have been directed by the Federal Court-appointed Receiver, Mr. William Wuliger to express our concern over the payment of this death benefit. I understand that this death claim has been in the process for many months, but it is Mr. Wuliger's position that the court must okay the payment of this benefit. Mr. Wuliger is putting a motion before the court today for direction.

Will forward to you, by mail, a letter explaining the situation along with the motion from court appointing Mr. Wuliger the Receiver and NorthEast Escrow Services as the court-appointed escrow agent over Alpha Capital Group. We then ask for your patience. Will forward to you the motion as who is to be paid, as soon as receive it.

Unfortunately, this policy is wrapped up in the receivership (of Alpha Capital Group) and Mrs. Mohnkern does not know the decision by Mr. Wuliger to allow the court to decide

Thank you.

Lynn Day

Operations.

PIC advised Mohnkern of these developments on January 6, 2002. The Receiver filed his motion on the Blacknell death benefit in the Liberte action on January 7, 2002 and it was approved by the Court on January 10, 2002. In accordance with the directive in the Court order, PIC payed the proceeds from the Blacknell policy to NES, the escrow company utilized by the Receiver and at the Court's direction, NES placed the monies in a segregated account.

Mohnkern filed this litigation on March 8, 2002, in the Middle District of Florida and it was subsequently transferred to [the Northern District of Ohio] on April 19, 2002. Following unsuccessful settlement discussions, this Court stayed the case sub judice, until Mohnkern intervened in the Liberte action regarding her contractual rights. Subsequent to a fairness hearing on the method of distribution regarding the Alpha investors, Mohnkern's motion for release and distribution of the Blacknell proceeds was dismissed. On Appeal, the Sixth Circuit reversed and remanded "for a hearing as to the ownership of the Blacknell Policy proceeds, consistent with Mohnkern's due process rights." Liberte Capital Group, LLC v. Capwill, 421 F.3d 377, 385 (6th Cir.2005).

After remand, in December 2005, Mohnkern and the Receiver resolved the contractual dispute and Mohnkern received $105,000 in return for settlement of her contractual claim. Upon notification of that settlement, the Court lifted the stay in the present lawsuit. Mohnkern sets forth four causes of action in her amended complaint as follows: (1) that Defendant's failure or delay in payment was a violation of Florida statute §§ 624.155 and 627.421; (2) that Defendant acted unreasonably and in violation of Plaintiff's statutory rights; (3) that Defendant has an absolute statutory obligation to pay her [attorneys'] fees and interest in accordance with Florida law; and (4) declaratory relief in regards to Plaintiff's entitlement to [attorneys'] fees and interest under Florida law.

The district court went on to hold that the principal inquiry was whether Mohnkern was due attorneys' fees under Florida statute § 627.421. The lower court held that "taking into consideration PIC's action and responses to the Receiver and Court order, to award attorneys' fees . . ., in this instance, would be to penalize an insurer when it was without power to resolve the conflict and would be contrary to the intent of the statute."

II.

This Court reviews de novo a district court's grant of summary judgment. Hardesty v. Hamburg Twp., 461 F.3d 646, 650 (6th Cir.2006). Summary judgment is proper where no genuine issue of material fact exists and the moving party is entitled to judgment as a matter of law. FED.R.CIV.P. 56(c). In considering a motion for summary judgment, the district court must construe all reasonable inferences in favor of the nonmoving party. Matsushita Elec. Indus. Co. v. Zenith Radio Corp.,...