Pitts v. JACKSON NAT. LIFE INS. CO., 3571.

• Citation: 352 S.C. 319,574 S.E.2d 502
• Decision Date: 25 November 2002
• Docket Number: No. 3571.,3571.
• Parties: William Wade PITTS, Appellant, v. JACKSON NATIONAL LIFE INSURANCE COMPANY, Respondent.
• Court: Court of Appeals of South Carolina

352 S.C. 319

574 S.E.2d 502

William Wade PITTS, Appellant, v. JACKSON NATIONAL LIFE INSURANCE COMPANY, Respondent.

No. 3571.

Court of Appeals of South Carolina.

Heard September 11, 2002.

Decided November 25, 2002.

Paul J. Doolittle, of Mt. Pleasant; and Ronald R. Parry, of Covington, KY, for appellant.

David L. Freeman and J. Theodore Gentry, of Greenville; and Joel S. Feldman, of Chicago, IL, for respondent.

CONNOR, J.

This appeal arises out of Jackson National Life Insurance Company's sale of preferred and non-preferred whole life insurance polices. Southland Container Corporation originally brought this class action suit against Jackson National, alleging several causes of action including breach of fiduciary duty/constructive fraud; fraudulent concealment and non-disclosure; and unjust enrichment and imposition of a constructive trust. William Wade Pitts was later substituted as named plaintiff. The circuit court granted Jackson National's motion to dismiss the breach of fiduciary duty and constructive fraud causes of action; granted Jackson National's summary judgment motion as to the fraudulent concealment claim; and denied Pitts's motion for summary judgment as to his claim for unjust enrichment. Pitts appeals. We affirm.

FACTS/PROCEDURAL HISTORY

In 1990, Southland Container Corporation (Southland) purchased "key-man" life insurance on David Katt, its president, from Jackson National. Southland purchased an Ultimate II policy on Katt. Katt allegedly would have qualified for a less expensive Preferred Ultimate II policy, but Southland was not aware of this policy and was not informed of it by Jackson National's agent. In a suit filed December 1, 1995, Southland Container alleged Jackson National sold it the Ultimate II policy when it actually qualified for the Preferred Ultimate II policy. The complaint alleged five causes of action: violation of unfair trade practices act; breach of fiduciary duty/constructive fraud; negligence; fraudulent concealment and non-disclosure; and unjust enrichment and imposition of a constructive trust.

Southland moved for class certification, and a class of South Carolina Jackson National policyholders who purchased non-preferred Ultimate policies, but would have been qualified to purchase preferred policies, was conditionally certified. William Wade Pitts was substituted as named plaintiff and class representative in place of Southland Container when it became apparent that Katt could not devote the necessary time to the litigation.

From 1985 to 1995, Jackson National offered two versions of its whole life insurance policy, the Ultimate I and Ultimate II. Jackson National also offered separate, but corresponding preferred policies, the Preferred Ultimate I and Preferred Ultimate II. The preferred policies had stricter underwriting standards, charged lower premiums, and paid the broker a lower commission than the standard policies of equal face amounts. Non-preferred policies were available to all insurance applicants, while preferred polices were available to "a more restrictive pool of insureds who [had] above average health, good life expectancy, no recent history of smoking and qualif[ied] under factors such as age and amount of insurance." Jackson National's underwriting department assessed the insurability of an applicant based on the policy requested. Thus, if the applicant qualified for the policy in the application, Jackson National would issue that policy without further investigation into whether the applicant qualified for a different policy. If the applicant did not qualify for the applied-for policy, Jackson National would advise if the applicant qualified for a different policy.

Pitts purchased his insurance through an independent insurance agent, Bruce Loring, with whom he had no previous relationship. Pitts purchased an Ultimate II policy for his daughter and a Preferred Ultimate II policy for himself. Although Pitts's daughter may have qualified for a preferred policy, Loring testified he chose to seek a non-preferred policy for her because he believed she would not qualify for the preferred policy because of her weight. Jackson National issued both policies as applied for, and the policies were accepted and paid for by Pitts. The amended complaint alleged Pitts's daughter qualified for the Preferred Ultimate II policy but was issued an Ultimate II policy instead, resulting in damages to Pitts.

Jackson National filed a motion to dismiss all five causes of action. The circuit court dismissed the causes of action for unfair trade practices, breach of fiduciary duty, and negligence. Both parties moved for reconsideration, and the circuit court also dismissed the constructive fraud claim.

Following discovery, Jackson National moved for summary judgment on the fraudulent concealment claim. Pitts moved for summary judgment on the equitable claim of unjust enrichment. The circuit court granted Jackson National's motion and denied Pitts's motion.

Pitts appeals, arguing the circuit court erred in dismissing the claims for breach of fiduciary duty and constructive fraud, in granting Jackson National's motion for summary judgment on the fraudulent concealment claim, and in denying his motion for summary judgment on the unjust enrichment claim.

DISCUSSION

Pitts argues the circuit court erred in granting Jackson National's motions to dismiss the claims for breach of fiduciary duty and constructive fraud. Jackson National's motions to dismiss were made pursuant to Rule 12(b)(6), SCRCP. "Under Rule 12(b)(6), SCRCP, a defendant may make a motion to dismiss based on a failure to state facts sufficient to constitute a cause of action." Baird v. Charleston County, 333 S.C. 519, 527, 511 S.E.2d 69, 73 (1999). "Generally, in considering a 12(b)(6) motion, the trial court must base its ruling solely upon allegations set forth on the face of the complaint." Id. "A Rule 12(b)(6) motion to dismiss for failure to state a cause of action must be resolved by the trial judge based solely on the allegations established in the complaint." Berry v. McLeod, 328 S.C. 435, 441, 492 S.E.2d 794, 797 (Ct.App.1997).

In deciding upon Jackson National's motions to dismiss, the circuit court considered matters outside the pleadings. Numerous exhibits were submitted in the memorandum in opposition to the motion to dismiss, including a copy of the life insurance policy and several tables of policy values. "If on a motion under 12(b)(6) matters outside the pleadings are presented and not excluded, the motion shall be treated as one for summary judgment." McDonnell v. Consol. Sch. Dist. of Aiken, 315 S.C. 487, 489 n. 2, 445 S.E.2d 638, 639 n. 2 (1994); see Berry, 328 S.C. at 441,

492 S.E.2d at 798 (finding where trial court decided Rule 12(b)(6) motion based on matters outside the pleadings, the court converted the motion to dismiss into a summary judgment motion pursuant to Rule 56, SCRCP).

"[Rule 12(b)(6) ] specifically provides for conversion, provided the parties, upon compliance with the notice provisions of Rule 56, are afforded a reasonable opportunity to introduce evidentiary matters." Johnson v. Dailey, 318 S.C. 318, 321, 457 S.E.2d 613, 615 (1995). The pertinent portion of Rule 12(b) allowing conversion provides:

If, on a motion asserting the defense numbered (6) to dismiss for failure of the pleading to state facts sufficient to constitute a cause of action, matters outside the pleading are presented to and not excluded by the Court, the motion shall be treated as one for summary judgment and disposed of as provided in Rule 56, and all parties shall be given reasonable opportunity to present all material pertinent to such a motion by Rule 56.

The memorandum containing the outside materials was dated and filed on May 28, 1996. The order was dated November 25, 1996 and filed November 26, 1996. Because the judge issued the order six months after the memorandum was filed, there was ample opportunity for the parties to introduce additional evidentiary matters if they desired. Thus, the circuit court implicitly converted the motions to dismiss into summary judgment motions under the provisions of Rule 12(b), SCRCP. As such, the procedural posture from which we review these claims is that of summary judgment.

Summary judgment is proper when it is clear there is no genuine issue as to any material fact and the moving party is) entitled to judgment as a matter of law. West v. Gladney, 341 S.C. 127, 132, 533 S.E.2d 334, 336 (Ct.App.2000). "Summary judgment can be granted when plain, palpable, and indisputable facts exist on which reasonable minds cannot differ." Byerly v. Connor, 307 S.C. 441, 445, 415 S.E.2d 796, 799 (1992).

"In reviewing the grant of a summary judgment motion, this Court applies the same standard which governs the trial court." Osborne v. Adams, 346 S.C. 4, 7, 550 S.E.2d 319, 321 (2001). "In determining whether any triable issues of fact exist, the evidence and all reasonable inferences therefrom must be viewed in the light most favorable to the non-moving party." Id. "On appeal from an order granting summary judgment, the appellate court will review all ambiguities, conclusions, and inferences arising in and from the evidence in a light most favorable to the non-moving party below." Id.

I. Breach of Fiduciary Duty

Pitts¹ argues the circuit court erred in dismissing the claim for breach of fiduciary duty. Pitts specifically asserts "Jackson National had a fiduciary duty to provide complete and truthful information to Appellant and Class members when selling insurance policies to them, and it breached that duty when it failed to make full disclosure with respect to the type of policies available, the charges, commissions, mortality costs and other expenses associated with those policies...." Pitts, however, conceded at oral argument the relationship in this case cannot be considered a "pure" fiduciary relationship. Instead, he contends the...