Paine v. Jefferson Nat. Life Ins. Co.

• Decision Date: 10 February 2010
• Docket Number: No. 08-3743.,08-3743.
• Citation: 594 F.3d 989
• Parties: W.T. PAINE, Appellant, v. JEFFERSON NATIONAL LIFE INSURANCE COMPANY, formerly known as Conseco Variable Life Insurance Company; Protective Life Insurance Company, Appellees.
• Court: U.S. Court of Appeals — Eighth Circuit

594 F.3d 989

W.T. PAINE, Appellant, v. JEFFERSON NATIONAL LIFE INSURANCE COMPANY, formerly known as Conseco Variable Life Insurance Company; Protective Life Insurance Company, Appellees.

No. 08-3743.

United States Court of Appeals, Eighth Circuit.

Submitted: January 11, 2010.

Filed: February 10, 2010.

Ed Daniel IV, Little Rock, AR, for appellant.

John A. Smyth III, Birmingham, AL, for appellee Protective Life Insurance Company.

Gary L. Howard, Jason A. Walters, Paul P. Bolus, and John C. Neiman, Jr., Birmingham, AL, for appellee Jefferson National.

Before GRUENDER and SHEPHERD, Circuit Judges, and JARVEY,¹ District Judge.

SHEPHERD, Circuit Judge.

W.T. Paine appeals the district court's² dismissal on summary judgment of his lawsuit against Jefferson National Life Insurance Company ("Jefferson")³ and Protective Life Insurance Company ("Protective")⁴ on the ground that Paine's claims are barred by limitations. Paine also appeals the district court's denial of his motion to file a second amended complaint. We affirm.

I.

"Since this appeal is from a motion for summary judgment, we state the facts in the light most favorable to the nonmoving party." Nelson v. Corr. Med. Servs., 583 F.3d 522, 525 (8th Cir.2009) (en banc). In 1988, W.T. Paine purchased 15 single-premium life insurance policies ("the policies") from Jefferson. Each policy contained identical terms and conditions, and each required a single $100,000 premium payment, for a total of $1,500,000.00. Prior to Paine's purchase of the policies, Anthony W. Fakouri, an employee of Jefferson, informed Paine that he could borrow money against the policies' interest earnings, income-tax free, as long as his loan balances did not exceed the guaranteed interest earned. Fakouri also represented that, by borrowing on the guaranteed interest earnings, Paine would not affect the guaranteed cash value or death benefits of the policies. Each policy, however, stated that "all existing loans on this policy plus earned interest" would be subtracted from the policy's cash value or death benefit prior to payment at maturity, surrender, or death.

In 1989, Paine began borrowing against the policies evidenced by loan checks mailed from Jefferson to Paine. In 1994, Jefferson began deducting cost-of-insurance charges from the cash values of the policies. The deductions reduced the interest payable on the policies and, eventually, Paine's loans began to draw on the policies' principal. Nevertheless, Paine continued to receive loans on the policies which caused the amount payable upon death, maturity, or surrender to drop below $100,000. Jefferson sent Paine various letters and annual reports reflecting the cash value, loan balance, death benefit, surrender value, and charges on each of Paine's policies. In December 2000, Paine surrendered two of his 15 policies. He received cash surrender checks for $81,661.62 and $82,510.44. When Paine began receiving his loan checks from Protective in 2002, the checks, for the first time, contained a restrictive endorsement stating that the policies were security for Paine's loans and interest on those loans.

On August 17, 2007, Paine brought this action against Jefferson and Protective in Arkansas state court and eventually amended his complaint alleging: (1) breach of oral and written contracts, (2) deceptive acts under section 23-66-202(b) of the Arkansas Code, and (3) intentional infliction of emotional distress/outrage. Jefferson removed the case to federal court. After removal, Paine moved to file a second amended complaint which included a request for a declaratory judgment, and added claims for bad faith and fraudulent misrepresentation.

The district court (1) granted Jefferson's and Protective's motion for summary judgment on Paine's breach of contract and tort claims because the various statutes of limitation had run and the court found that the limitations periods were not tolled, and (2) denied Paine's motion to amend the complaint finding that all of the proposed amendments to the complaint were futile. Paine now appeals.

II.

A. Statute of Limitations

"This court reviews a district court's grant of summary judgment de novo, viewing the evidence most favorably to the non-moving party." Davenport v. Univ. of Ark. Bd. of Trustees, 553 F.3d 1110, 1112-13 (8th Cir.2009). "To defeat a motion for summary judgment, a party may not rest upon allegations, but must produce probative evidence sufficient to demonstrate a genuine issue [of material fact] for trial." Id. at 1113. A genuine issue of fact exists "if the evidence is such that it could cause a reasonable jury to return a verdict for either party; a fact is material if its resolution affects the outcome of the case." Rakes v. Life Investors Ins. Co. of Am., 582 F.3d 886, 893 (8th Cir.2009).

Paine does not allege that his tort claims were filed within the applicable statute of limitations period, therefore, Paine has waived the issue on appeal. See United States v. Alvarez-Manzo, 570 F.3d 1070, 1077 (8th Cir.2009). However, Paine does argue that the limitations period for his breach of contract claims were tolled based on fraudulent concealment.

As this action is in federal court based on diversity of citizenship, state law governs substantive law issues. Oriental Trading Co.v. Firetti, 236 F.3d 938, 944 (8th Cir.2001). Under Arkansas law, once it is clear from the face of the complaint that an action is barred by the statute of limitations, the burden shifts to the plaintiff to prove by a preponderance of the evidence that the running of the statute was in fact tolled. Meadors v. Still, 344 Ark. 307, 40 S.W.3d 294, 298 (2001). Although the question of fraudulent concealment is usually one of fact and, thus, unsuited for summary judgment, a trial court may resolve the question as a matter of law when there is no evidentiary basis for reasonable differences of opinion. Delanno, Inc. v. Peace, 366 Ark. 542, 237 S.W.3d 81, 84 (2006).

In order for the running of a statute of limitations to be tolled on the basis of fraudulent concealment, there must be: "(1) a positive act of fraud (2) that is actively concealed, and (3) is not discoverable by reasonable diligence." Bomar v. Moser, 369 Ark. 123, 251 S.W.3d 234, 242 (2007). Paine has failed to demonstrate that either...