Pitts v. Farm Bureau Life Ins. Co.

• Decision Date: 10 August 2012
• Docket Number: No. 11–0117.,11–0117.
• Citation: 818 N.W.2d 91
• Parties: Michele M. PITTS, Appellant, v. FARM BUREAU LIFE INSURANCE COMPANY and Donald Schiffer, Appellees.
• Court: Iowa Supreme Court

818 N.W.2d 91

Michele M. PITTS, Appellant,

v.FARM BUREAU LIFE INSURANCE COMPANY and Donald Schiffer, Appellees.

No. 11–0117.

Supreme Court of Iowa.

July 6, 2012.

Rehearing Denied Aug. 10, 2012.

Christopher C. Fry of O'Connor & Thomas, P.C., Dubuque, for appellant.

Terri L. Combs, Nicole Nicolino Nayima, and Ryan P. Howell of Faegre Baker Daniels, Des Moines, for appellees.

ZAGER, Justice.

This case requires us to determine whether a life insurance agent owes a duty of care to the intended beneficiary of a life insurance policy. Additionally, we must decide whether a life insurance agent can be liable for negligent misrepresentation when he provides information to the insured and the intended beneficiary regarding the beneficiary designation listed on the life insurance policy. If we determine that an intended beneficiary is owed a duty of care and that a life insurance agent providing information regarding the identity of a beneficiary is a proper defendant in a negligent misrepresentation action, then we must determine whether there is a genuine issue of material fact that would preclude summary judgment. For the reasons set forth below, we find that a life insurance agent owes a duty of care to an intended beneficiary of a life insurance policy and that a life insurance agent can be liable for negligent misrepresentation. Since we also determine that genuine issues of material fact exist in this case, summary judgment should not have been granted.

I. Factual Background and Proceedings.

Pursuant to a stipulation and order entered in 1989, Thomas Pitts (Tom) became responsible for child support payments for the benefit of his daughter, Jamie Pitts, born April 28, 1987. As part of his support obligation, Tom was required to maintain $35,000 of life insurance payable to his daughter for as long as his child support obligation continued. Unless the child was still in high school, or pursuing further postsecondary education, this support obligation would end in April of 2005.

In 1993, Tom and the plaintiff, Michele Pitts (Michele), were married. That same year, they met with Donald Schiffer, an agent for Farm Bureau Life Insurance Company (Farm Bureau), to discuss life insurance. Tom and Michele were interested in purchasing a life insurance policy that would satisfy Tom's child support obligation and provide a benefit to Michele if she were to survive Tom. Tom purchased a life insurance policy from Farm Bureau, and on August 30, 1993, Tom signed a beneficiary designation listing Tom's daughter as the primary beneficiary for the first $50,000 in proceeds and listing Michele as the beneficiary of the “balance of [the] proceeds, if any.” On December 28, 1995, Tom completed and filed a new beneficiary designation form. After the change, Tom's daughter was the primary beneficiary of the first $35,000 of life insurance proceeds, and the balance was to be paid to Michele if she survived Tom.¹ A final written change of beneficiaries was made on August 13, 1996, but the terms of that change are illegible. However, Michele does not allege that the August 13 change removed Jamie as the primary beneficiary of the first $35,000 in proceeds. According to Schiffer, this was the last change in beneficiary designation that Tom made, and neither party has produced any other written documentation regarding a subsequent change in beneficiary.

According to Michele, shortly after Tom's support obligation ended in April 2005, Tom asked Schiffer to change the beneficiary designation on the life insurance policy so that his daughter would no longer be the primary beneficiary of the first $35,000 of insurance proceeds. Michele “believe[d] Tom filled out paperwork to complete this change, but [she did] not know what he did with the paperwork.” Michele claims that on separate occasions Schiffer told her and Tom that Tom's daughter was no longer listed as a beneficiary under the policy and that Michele was now the sole beneficiary. These exchanges occurred in person and over the telephone.

After Tom passed away in November 2007, Michele went to Schiffer's office to fill out the paperwork needed to claim the proceeds of the life insurance policy. Schiffer allegedly told Michele, in the presence of her parents, that she would be receiving the full amount of Tom's life insurance proceeds—about $108,000. While she was in the office, Schiffer's telephone rang, and she heard him say, “Are you sure?” and “Tom and I always talked about percentages for the kids.” After he hung up the telephone, Schiffer informed Michele that Tom's daughter was still the primary beneficiary for the first $35,000 in insurance proceeds and as a result, Michele would only receive about $74,000.

On November 25, 2009, Michele filed suit against Schiffer and Farm Bureau. ² Her claim against Schiffer alleged negligence and negligent misrepresentation, and the claim against Farm Bureau alleged liability under the doctrine of respondeat superior.³ Farm Bureau moved for summary judgment. Farm Bureau claimed it was entitled to summary judgment on the negligence claim because the policy required any change in beneficiary to be in writing and signed by the owner. Since Michele had not provided any evidence of such a writing, Farm Bureau was under no duty to change the beneficiary. Farm Bureau also argued that it did not owe a duty to Michele because she was not the policyholder, and therefore any claim of negligence or negligent misrepresentation failed as a matter of law. Farm Bureau also argued Schiffer was not in the business or profession of supplying information for the guidance of another in an advisory capacity and therefore, as a matter of law, could not be liable for negligent misrepresentation. Finally, Farm Bureau claimed that Michele had not come forward with admissible evidence that she was the intended beneficiary of the first $35,000 in insurance proceeds.

The district court found that “[i]t [was] undisputed that Mr. Pitts did not execute a written request to make Plaintiff the primary beneficiary” and therefore Schiffer's failure to remove Tom's daughter as a beneficiary “was not a product of negligence, but rather resulted from his lack of authority to remove [her] as the primary beneficiary without Thomas Pitts' written request.” The district court then granted Farm Bureau's motion for summary judgment in its entirety and dismissed the case.

Pursuant to Iowa Rule of Civil Procedure 1.904(2), Michele filed a motion to enlarge the findings of fact and conclusions of law. Michele claimed that as the intended beneficiary of the policy, Schiffer owed her a duty of care. Michele also claimed there were disputed issues of material fact that precluded entry of summary judgment. Specifically, Michele claimed that Schiffer told her, her husband, and her parents that she was the sole beneficiary on the policy. Based on these statements, Michele claimed a jury could reasonably find in her favor on the negligence and negligent misrepresentation claims. The district court denied the motion, and Michele appealed. We transferred the case to the court of appeals, which affirmed the district court. Michele sought further review, which we granted.

II. Standard of Review.

The district court granted Farm Bureau's motion for summary judgment. “We review a district court's grant of a motion for summary judgment for errors of law.” Seneca Waste Solutions, Inc. v. Sheaffer Mfg. Co., 791 N.W.2d 407, 410–11 (Iowa 2010). A court should grant summary judgment

“if the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.”

Id. at 411 (quoting Iowa R. Civ. P. 1.981(3)). In other words, summary judgment is appropriate “if the record reveals a conflict only concerns the legal consequences of undisputed facts.” City of Cedar Rapids v. James Props., Inc., 701 N.W.2d 673, 675 (Iowa 2005) (citations and internal quotation marks omitted). When reviewing a court's decision to grant summary judgment, “we examine the record in the light most favorable to the nonmoving party and we draw all legitimate inferences the evidence bears in order to establish the existence of questions of fact.” Kragnes v. City of Des Moines, 714 N.W.2d 632, 637 (Iowa 2006). We also note that the court should only consider “such facts as would be admissible in evidence” when considering the affidavits supporting and opposing summary judgment. Iowa R. Civ. P. 1.981(5); see also Kern v. Palmer Coll. of Chiropractic, 757 N.W.2d 651, 656 n. 3 (Iowa 2008); McCarney v. Des Moines Register & Tribune Co., 239 N.W.2d 152, 157 (Iowa 1976).

III. The District Court's Ruling.

The district court held Tom's oral statements were insufficient to impose a duty on Schiffer to change the beneficiary of the policy. Specifically, the district court stated,

It is undisputed that Mr. Pitts did not execute a written request to make Plaintiff the primary beneficiary. Thomas Pitts knew the procedures that he must follow to make Plaintiff the sole beneficiary, as he had previously changed his beneficiary designation under those terms on two separate occasions. Thus Defendant Schiffer's failure to act was not a product of negligence, but rather resulted from his lack of authority to remove [Tom's daughter] as the primary beneficiary without Thomas Pitts' written request.

The district court then granted Farm Bureau's motion for summary judgment and dismissed the entire case.

The district court erred when it granted summary judgment on all of plaintiff's claims. Michele was not claiming that Tom followed the proper procedures and that the beneficiary had actually been changed. She was claiming that, despite the beneficiary designation, Tom intended her to be the sole beneficiary of his policy. According to her petition, Schiffer's negligence and...