N.Y. Life Ins. Co. v. Grant
| Decision Date | 28 March 2016 |
| Docket Number | CIVIL ACTION NO. 5:14-CV-101 (MTT) |
| Parties | NEW YORK LIFE INSURANCE COMPANY, Plaintiff/Counter-Defendant, v. DEAN GRANT, Defendant/Counter-Claimant. |
| Court | U.S. District Court — Middle District of Georgia |
New York Life Insurance Company and Dean Grant have both moved for summary judgment. (Docs. 52; 47). For the following reasons, New York Life's motion is GRANTED in part and DENIED in part, and Grant's motion is DENIED.
Grant worked as an Agent for New York Life from October 7, 1988 to December 31, 2013. (Doc. 66-14 at ¶¶ 1, 3). He worked as a District Agent from March 6, 2000 to July 31, 2013. (Doc. 66-14 at ¶¶ 4-5). As an Agent, Grant received commissions based on his own sales of New York Life products, and as a District Agent, he received override commissions based on sales by other agents within his District Agent Unit. (Doc. 65-2 at ¶¶ 5-6, 23-24). Although Grant was ordinarily not entitled to receive a commission until the premium had been paid by an insured, he could, on occasion, request an advance payment of a commission. (Doc. 54 at 197:6-25). Moreover, under certain circumstances, such as if an insurance policy was rescinded, declined or cancelled, Grant was obligated to reimburse New York Life. (Doc. 65-2 at ¶¶ 14, 27). For each of its Agents, New York Life maintains an electronic balance sheet, or Ledger, which "is credited with the Agent's compensation payments and is debited with the Agent's compensation reversals, benefit deductions, taxes, and expenses." (Docs. 65-2 at ¶ 66; 52-14 at ¶ 7).
New York Life claims that Grant's Ledger has a negative balance of $287,819.01. (Doc. 1 at ¶ 3). Most of Grant's negative Ledger balance consists of advanced commissions he was paid based on his work with four policyholders during New York Life's "Term Conversion Campaign." (Doc. 52-43 at 6). Grant filed a second amended counterclaim against New York Life for negligent misrepresentation based on what occurred with these four policyholders, as well as claims for breach of contract, breach of implied covenant of good faith and fair dealing, breach of implied contract, quantum meruit, promissory estoppel, and attorney's fees. (Doc. 43). These claims are based on Grant's work with New York Life Agent Umang Patel and New York Life's modification of Grant's District Agent Agreement. New York Life moves for summary judgment on its claim against Grant for breach of contract and on each of the seven counts of Grant's second amended counterclaim. (Doc. 52-43 at 2).
New York Life also brings a claim for breach of fiduciary duty based upon Grant's actions before and after he terminated his relationship with New York Life. (Docs. 1 at ¶¶ 37-40). Grant moves for summary judgment on this claim and New York Life's claims for punitive damages and attorney's fees. (Doc. 47).
In 2013, New York Life began a Term Conversion Campaign, which offered certain term life insurance policyholders "conversion credits" if they elected to convert their policy to a whole life insurance policy. (Doc. 65-2 at ¶ 74). These conversioncredits would be applied to the first premium due under the new policy. (Doc. 65-2 at ¶ 75). On March 25, 2013, Grant's assistant asked Jamie Bartholf, Service Manager in New York Life's Central Georgia General Office, to "find out how much the conversion credits" would be for six term life insurance policyholders. (Doc. 65-2 at ¶ 76). Bartholf responded that F.H. and M.H., two brothers who were each insured under a $20.5 million term life insurance policy, would be entitled to a conversion credit that was "100% of 1st year premium paid and doubled." (Doc. 65-2 at ¶¶ 77, 85). She also responded that M.H. and T.H., a married couple who were each insured under a term life insurance policy, would be entitled to a conversion credit that was "5% of the premium [they] are converting to ... no double credits." (Doc. 65-2 at ¶¶ 77, 88). The parties agree that this information was correct. (Doc. 65-2 at ¶¶ 85, 88). Bartholf incorrectly responded, however, that F.H. would receive a conversion credit of $41,448 and his brother, M.H., would receive a conversion credit of $34,068. (Doc. 65-2 at ¶ 86).
Although Grant "considered [Bartholf] to be incompetent," he "did nothing to verify the information that she provided to [him]." (Docs. 65-2 at ¶¶ 89-90; 54 at 202:2-6). Grant met with the brothers, told them what the conversion credits would be, and said that the credits would be sufficient to cover the initial premiums for their whole life insurance policies. (Docs. 52-25 at 2; 54 at 200:2-7; 65-2 at ¶ 91). On March 27, 2013, New York Life received applications from the brothers to convert $15.5 million of their term life insurance policies to whole life insurance policies. (Doc. 65-2 at ¶ 92). New York Life issued whole life insurance policies for delivery to the brothers. (Doc. 65-2 at ¶ 94). On March 27, 2013, New York Life also received applications from the marriedcouple to convert their term life insurance policies to whole life insurance policies. (Doc. 65-2 at ¶ 109). New York Life issued a whole life insurance policy for T.H. but ultimately did not issue a whole life insurance policy for her husband, M.H. (Docs. 52-14 at ¶ 30; 65-2 at ¶¶ 110-11).
On March 27, 2013, New York Life received and approved requests from Grant and Lisa Miller, an Agent in Grant's District Agent Unit, to pay commissions on the four whole life insurance policies. (Doc. 65-2 at ¶¶ 113-14, 116). That same day, New York Life issued a $226,660 check to Grant and credited Grant's Ledger with "Term Conversion Commission Advances" totaling $226,660, which consisted of $77,860 for F.H., $84,080 for his brother, M.H., $23,800 for T.H., and $40,920 for her husband, M.H. (Doc. 65-2 at ¶¶ 117, 121). New York Life also credited Grant's Ledger with override commissions totaling $198,738.07—$169,995 of which was attributable to the whole life policies issued to F.H., M.H., T.H., and M.H. (Doc. 65-2 at ¶¶ 122-23). On April 24, 2013, New York Life transferred $198,792.66 to Grant's bank account, which represented the District Agent override commissions.1 (Doc. 65-2 at ¶ 124).
On March 29, 2013, Bartholf realized, after receiving paperwork related to the issuance of the brothers' policies, that she had incorrectly calculated the conversion credits for the brothers. (Docs. 65-2 at ¶ 97). The policy billing statements for the brothers' whole life insurance policies, which are both dated March 29, 2013, list F.H.'s conversion credit as $21,224.96 and M.H.'s conversion credit as $17,133. (Docs. 52-23; 65-2 at ¶¶ 95-96). Bartholf informed Grant's assistant of the error, explaining that"the numbers I gave you were based on current year not first year premiums so the calculations were different." (Docs. 52-20 at 2; 65-2 at ¶¶ 98-99). The brothers refused to accept delivery of the $15.5 million whole life insurance policies. (Doc. 65-2 at ¶ 101).
Because New York Life provided incorrect conversion credits, it prepared accommodation agreements in an attempt "to make the [brothers] whole." (Docs. 51 at 86:22-24; 52-14 at ¶ 20; 65-2 at ¶ 103). According to Chadd French, a New York Life employee, "New York Life offered to make up the difference between the conversion credits incorrectly quoted and the conversion credits to which they were contractually entitled, so that the whole life insurance policies could be issued at no additional cost to F.H. and M.H." (Doc. 52-14 at ¶ 20). Because the first premium for F.H.'s whole life insurance policy would be $24,602.92, and the correct conversion credit was $21,224.96, New York Life offered to issue F.H. a $3,377.96 check to cover the difference. (Docs. 52-14 at ¶ 21; 52-25 at 2; 65-2 at ¶ 104). Because the first premium for M.H.'s whole life insurance policy would be $28,026.56, and the correct conversion credit was $17,133, New York Life offered to issue M.H. a $10,893.56 check to cover the difference. (Docs. 52-14 at ¶ 22; 52-25 at 2; 65-2 at ¶ 104). The checks were to be issued "only after [the brothers] each submit[ted] a check to [New York Life] for the applicable amount to pay the short fall on the first premium." (Doc. 52-25 at 2).
The brothers did not sign the accommodation agreements. (Docs. 52-14 at ¶ 26; 65-2 at ¶ 105). They did not proceed with the conversions of their term life insurance policies, and so their whole life insurance policies were not placed in force. (Docs. 52-14 at ¶ 26; 65-2 at ¶ 106). The whole life insurance policy for T.H. was also not placedin force. (Docs. 52-14 at ¶ 30; 65-2 at ¶ 110). On May 15, 2013, the Term Conversion Commission Advances for the four policies were reversed on Grant's Ledger, which resulted in an ending balance of negative $225,984.95. (Doc. 65-2 at ¶¶ 125-26). Grant admits that "[i]f the conversion of the term life policies to whole life policies did not happen, [he] would not earn a commission." (Docs. 54 at 196:19-22; 65-2 at ¶ 120). He testified that he is not claiming that he "should be entitled to keep the advance commission that was paid to [him]." (Doc. 54 at 208:24-209:4). Rather, Grant testified:
New York Life's District Agent Program "offers well-established Agents the opportunity to mentor a unit of Agents and to receive additional commissions ... while continuing personal production." (Docs. 52-1 at ¶ 10; 65-2 at ¶ 15). Grant and New York Life operated under the terms of a ...
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