Mohnkern v. Professional Ins. Co.

• Decision Date: 26 March 2007
• Docket Number: No. 3:02 CV 7206.,3:02 CV 7206.
• Citation: 480 F.Supp.2d 1001
• Parties: Janet E. MOHNKERN, Plaintiff, v. The PROFESSIONAL INSURANCE COMPANY, etc., Defendant.
• Court: U.S. District Court — Northern District of Ohio

480 F.Supp.2d 1001

Janet E. MOHNKERN, Plaintiff, v. The PROFESSIONAL INSURANCE COMPANY, etc., Defendant.

No. 3:02 CV 7206.

United States District Court, N.D. Ohio, Western Division.

March 26, 2007.

Edgar H. Boles, II, Moriarty & Jaros, Pepper Pike, OH, for Plaintiff.

Danielle Konrad Pitcock, Timothy R. Cleary, Cleary & Associates, Cleveland, OH, for Defendant.

MEMORANDUM OPINION

KATZ, District Judge.

This matter is before the Court on the Defendant's motion for summary judgment¹ (Doc. No. 39) and Plaintiff's motion for partial summary judgment (Doc. No. 42). As the parties have briefed the issues, the motions stand ready for adjudication by this Court. Jurisdiction is premised upon 28 U.S.C. § 1332.

BACKGROUND

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 industry².

It is undisputed that The Professional Insurance Company f/k/a The Professional Insurance Corporation ("PIC") issued a life insurance policy, Policy No. 2063622M, to Broderick J. Blacknell ("Blackness"), 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 a policy 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 die 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.)

To fully understand the backdrop against which the present dispute arose, the Court refers to the history in Liberte as articulated by the Sixth Circuit Court of Appeals:

In April 1999, after the assignment of the Blacknell Policy to Mohnkern but before Blacknell's death, Liberte and Alpha commenced an action in district court against their escrow agent James A. Capwill and his companies, Viatical Escrow Services, LLC and Capital Fund Leasing [hereinafter Capwill].² The suit alleged that Capwill misappropriated funds it held in escrow for Liberte and Alpha, including Mohnkern's investment. Shortly thereafter, the district court appointed a Receiver [hereinafter Receiver # 1]. See Liberte Capital Group v. Capwill, 229 F.Supp.2d 799, 799 (N.D.Ohio 2002). The order of appointment instructed Receiver # 1 "to satisfy the claim of creditors, including investors and other parties, in the order of legal priority ...."³ See *381 Liberte Capital Group, LLC v. Capwill, 99 Fed.Appx. 627, 628-29 (6th Cir.2004). Accordingly, between February 2000 and November 8, 2000, Receiver # 1 disbursed proceeds of life insurance policies of deceased insured to matched investor-beneficiaries. Id. at 628-32.

² Liberte filed the action on April 9, 1999. Alpha intervened in the suit shortly thereafter.

³ 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.... " Id. at *2.

Liberte, 421 F.3d at 379.

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., forwarded to PIC and received by them on. November 2, 2001. (Id. at. Ex. C.)

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

(Id. at Ex. H.)

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

(Id., Ex. H.)

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 this venue 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, Mohnken'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).

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 attorney fees and interest in accordance with Florida law; and (4) declaratory relief in regards to Plaintiff's entitlement to attorney fees and interest under Florida law.

MOTION FOR SUMMARY JUDGMENT STANDARD

Summary judgment is appropriate where "the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." FED.R.CIV.P. 56(c). The moving party bears the initial responsibility of "informing the district court of the basis for its motion, and identifying those portions of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any,' which it believes demonstrate the absence of a genuine issue of material fact." Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 2553, 91 L.Ed.2d 265 (1...