Parkhill v. Minnesota Mut. Life Ins. Co.

• Decision Date: 18 April 2002
• Docket Number: No. 00-3337.,00-3337.
• Citation: 286 F.3d 1051
• Parties: James W. PARKHILL, an individual, on behalf of himself and all others similarly situated, Appellant, v. MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Appellee.
• Court: U.S. Court of Appeals — Eighth Circuit

286 F.3d 1051

James W. PARKHILL, an individual, on behalf of himself and all others similarly situated, Appellant, v. MINNESOTA MUTUAL LIFE INSURANCE COMPANY, Appellee.

No. 00-3337.

United States Court of Appeals, Eighth Circuit.

Submitted: October 17, 2001.

Filed: April 18, 2002.

Barry A. Weprin, New York City, argued (Melvyn I. Weiss, Regina L. LaPolla, New York City, Becky Erickson, Minneapolis, MN, on the brief), for appellant.

James F. Jorden, Washington, DC, argued (Waldemar J. Pfelpsen, Jr., Sheila J. Carpenter and Denise A. Fee, Washington, DC, Gary J. Haugen and Wayne S. Moskowitz, Minneapolis, MN, Garold M. Felland, St. Paul, MN, on the brief), for appellee.

Before BOWMAN, RICHARD S. ARNOLD, and HANSEN, Circuit Judges.

HANSEN, Circuit Judge.

James Parkhill (Parkhill), a Florida resident, brought this putative class action against the Minnesota Mutual Life Insurance Company (Minnesota Mutual), raising various claims related to Minnesota Mutual's alleged fraudulent and deceptive marketing practices and its maintenance of "vanishing premiums" life insurance policies. In a series of three orders, the district court¹ dismissed several of Parkhill's claims, see Parkhill v. Minn. Mut. Life Ins. Co. (Parkhill (I)), 995 F.Supp. 983 (D.Minn.1998); denied Parkhill's motion for class certification, see Parkhill v. Minn. Mut. Life Ins. Co. (Parkhill (II)), 188 F.R.D. 332 (D.Minn.1999); and granted summary judgment in favor of Minnesota Mutual on Parkhill's remaining claims, see Parkhill v. Minn. Mut. Life Ins. Co. (Parkhill (III)), 174 F.Supp.2d 951 (D.Minn.2000). On appeal, Parkhill argues the district court erred in denying class certification and in granting summary judgment in favor of Minnesota Mutual. We affirm.

I.

The following material facts are stated in a light most favorable to Parkhill. Terry Russo, a Minnesota Mutual insurance agent, contacted Parkhill and his wife, Mary Parkhill, in 1985 to inquire about their interest in purchasing life insurance. The Parkhills had purchased whole life insurance policies from Minnesota Mutual in 1949 and in 1970, and although Russo was not the agent who sold the policies, he apparently believed the Parkhills again might be interested in purchasing Minnesota Mutual life insurance. Russo ultimately informed the Parkhills that they could purchase an Adjustable Life insurance policy providing $30,000 coverage in the event of James Parkhill's death at a cost of only one out-of-pocket premium payment of $645.50. Russo represented that further out-of-pocket payments would be unnecessary because the dividends generated on the new policy, along with dividends received from the couple's other Minnesota Mutual life insurance policies, would cover the policy's future annual premium of $1291.08. The Parkhills signed an application for the policy in January 1986, paid the initial $645.50 premium, and Minnesota Mutual issued the policy to the Parkhills.

In September 1986, Minnesota Mutual sent the Parkhills a premium notice requesting a payment of $646.54 on the policy. (Appellant's App. at 246.) The Parkhills then contacted Russo who advised them that the premium payment would be satisfied from the policy's cash value. (Id.) Russo told the Parkhills to note his instructions on the statement and ignore the notice. (Id.) Minnesota Mutual again notified the Parkhills in March and September 1987 that the $646.54 premium was due. The Parkhills paid the premium on both occasions.

In 1988, Parkhill upgraded the policy to a whole life policy and increased his coverage to $40,000.² The change increased the annual premium to $3791, but Russo represented that the Parkhills could attain the additional coverage without incurring any "out-of-pocket" premium payments. (Id. at 246-47.) One would generally understand Russo's representation concerning the absence of out-of-pocket payments to suggest that the Parkhills would not be required to make any cash outlay to attain the increased coverage. That was not how the phrase was used or understood here, according to Parkhill. Russo instead proposed that the Parkhills finance the policy upgrade by surrendering two Paul Revere life insurance policies that the couple owned and applying the $7500 received from those policies to the annual premium due on the upgraded policy. (Appellant's App. at 1053-54, 1062-63, 1333, 1337-39.) Russo told the Parkhills that once the $7500 was invested in the upgraded policy, the total dividends generated from the couple's Minnesota Mutual policies would sustain the policy without any further cash outlay. (Id. at 1052, 1062, 1339). The Parkhills surrendered the Paul Revere policies and in May 1988, used a portion of the proceeds to make the first annual premium payment on the upgraded policy. (Id. at 88, 1092-93, 1532-33.)

In March 1989, Minnesota Mutual sent the Parkhills a premium notice of $3791 on the upgraded policy. The Parkhills timely paid the premium with a check drawn on their personal account. (Id. at 1094-95, 1536.) The Parkhills received another notice in March 1990, requesting a premium payment of $3791. (Id. at 1101.) Shortly after receiving the notice, Mrs. Parkhill arranged for a change in the policy and completed the necessary paperwork to eliminate the couple's annual premium obligation altogether. (Id. at 1101-02.) Minnesota Mutual reissued the policy to the Parkhills in a nonpremium-payment status, meaning that the company agreed to satisfy any premium obligation from the policy's accumulated cash value. (Id. at 88.). When Minnesota Mutual sent the reissued policy to the Parkhills in 1990, it provided the couple with an illustration projecting the policy's future dividends and cash value for the years 1991 through 2000. (Id. at 1561-62.)

The Parkhills continued to receive annual statements reflecting that a portion of the annual premium had been deducted from the policy's cash value to keep the policy active. In February 1994, however, the Parkhills received a letter from their Minnesota Mutual agent, informing them that the policy would "expire with no value" in March 1999, if the Parkhills did not reinitiate premium payments. (Id. at 1569.) The Parkhills thereafter resumed paying premiums but complained to the Florida insurance commissioner. In February 1997, Parkhill filed a 13-count complaint in Minnesota state court. Minnesota Mutual removed the action to federal court and filed a motion to dismiss or, in the alternative, a motion for summary judgment. The district court granted the motion with respect to several of the claims but denied the motion as to Parkhill's claims for breach of contract, breach of fiduciary duty, breach of duty to deal with an insured in good faith, unjust enrichment, reformation, and his statutory claims under the Minnesota Deceptive Trade Practices Act, see Minn.Stat. §§ 325D.43-.48, and the Minnesota Consumer Fraud Act, see Minn.Stat. §§ 325F.68-.70. See Parkhill (I), 995 F.Supp. 983. Parkhill then filed an amended complaint and moved for class certification pursuant to Fed.R.Civ.P. 23. Parkhill's certification motion focused on Minnesota Mutual's advertisement and administration of Ultimate Interest, the company's methodology for crediting interest on the cash values of its Adjustable Life policies and various categories of its other policies.³ The district court denied class certification, reasoning that questions common to the class did not predominate over other questions. Parkhill (II), 188 F.R.D. at 345 (concluding the purported class could not satisfy Fed.R.Civ.P. 23(b)(3)).

The parties engaged in further discovery following the denial of class certification, culminating in cross-motions for summary judgment. In ruling on the motions, the district court noted that Parkhill essentially was pursuing two actions: one based on the amended complaint's central allegation that Minnesota Mutual, through Russo, promised no further out-of-pocket premium payments; and one, albeit not alleged in the amended complaint but advanced in Parkhill's motion papers, based on Minnesota Mutual's purported failure to adhere to its advertised Ultimate Interest methodology. Parkhill (III), 174 F.Supp.2d at 955-56. In addressing Parkhill's pleaded action, the district court ruled that Parkhill's common law claims for breach of contract, breach of fiduciary duty, breach of the implied duty to deal with an insured in good faith, and his statutory claims were barred by Minnesota's six-year limitations period under Minn.Stat. § 541.05, subd. 1 (Supp.2002), and were nonmeritorious in any event. As for Parkhill's claims related to Ultimate Interest, the district court dismissed them because they appeared nowhere in the amended complaint. Parkhill (III), 174 F.Supp.2d at 960-61.

II.

Parkhill argues that the district court erred in granting summary judgment on his breach of contract claims, fiduciary duty claim, and his deceptive trade practice and consumer fraud claims. He contends genuine issues of fact exist which preclude summary judgment on Minnesota Mutual's statute of limitations defense and on the merits of the claims. With respect to his claims based on Ultimate Interest, Parkhill argues the claims were adequately pleaded in his amended complaint. Lastly, Parkhill argues the district court committed reversible error in denying his motion for class certification.⁴ We address each of these arguments in turn.

A. Statute of Limitations

Both parties agree that Parkhill's breach of contract, breach of fiduciary duty, and statutory claims are governed by section 541.05's six-year limitations period. The crux of these claims is Parkhill's allegation that Russo promised that the policy would maintain itself without any further out-of-pocket premium payments. (Am. Compl., Appellant's App. at 397-98; see Appellant's Br. at 6-7.) Thus, as the district court concluded, the latest time that any of the claims could have accrued was the point at which Minnesota Mutual required...