Pratt v. Mut. of Omaha Ins. Co.

• Decision Date: 28 March 2016
• Docket Number: NO. 4:15-CV-00009-DMB-JMV,4:15-CV-00009-DMB-JMV
• Parties: TONY PRATT PLAINTIFF v. MUTUAL OF OMAHA INSURANCE COMPANY; and UNITED OF OMAHA LIFE INSURANCE COMPANY, a Mutual of Omaha Company DEFENDANTS
• Court: U.S. District Court — Northern District of Mississippi

TONY PRATT PLAINTIFF v. MUTUAL OF OMAHA INSURANCE COMPANY; and UNITED OFOMAHA LIFE INSURANCE COMPANY, aMutual of Omaha Company DEFENDANTS

NO. 4:15-CV-00009-DMB-JMV

UNITED STATES DISTRICT COURT FOR THE NORTHERN DISTRICT OF MISSISSIPPI GREENVILLE DIVISION

March 28, 2016

MEMORANDUM OPINION AND ORDER

This breach of contract action is before the Court on the motion for summary judgment of Defendants Mutual of Omaha Insurance Company and United of Omaha Life Insurance Company. Doc. #37. For the reasons below, the motion for summary judgment will be granted.

ISummary Judgment Standard

"Summary judgment is appropriate when there are no genuine issues as to any material facts, and the moving party is entitled to judgment as a matter of law." Norwegian Bulk Transp. A/S v. Int'l Marine Terminals P'ship, 520 F.3d 409, 411 (5th Cir. 2008) (citing Celotex Corp. v. Catrett, 477 U.S. 317, 22-23 (1986)). To award summary judgment, "[a] court must be satisfied that no reasonable trier of fact could find for the nonmoving party or, in other words, that the evidence favoring the nonmoving party is insufficient to enable a reasonable jury to return a verdict in her favor." Norwegian Bulk Transp. A/S, 520 F.3d at 411-12 (internal quotation marks and citation omitted). To this end, "[t]he moving party bears the burden of establishing that there are no genuine issues of material fact." Id. at 412.

"If ... the nonmoving party bears the burden of proof at trial, the moving party may demonstrate that it is entitled to summary judgment by submitting affidavits or other similar evidence negating the nonmoving party's claim, or by pointing out to the district court the absence of evidence necessary to support the nonmoving party's case." Morris v. Covan World Wide Moving, Inc., 144 F.3d 377, 380 (5th Cir. 1998) (citation omitted). If the moving party makes the necessary demonstration, "the burden shifts to the nonmoving party to show that summary judgment is inappropriate." Id. In making this showing, "the nonmoving party must go beyond the pleadings and by her own affidavits, or by the depositions, answers to interrogatories, and admissions on file, designate specific facts showing that there is a genuine issue for trial." Cotroneo v. Shaw Env't & Infrastructure, Inc., 639 F.3d 186, 191-92 (5th Cir. 2011) (citation and internal punctuation omitted). When considering a motion for summary judgment, the Court "resolve[s] factual controversies in favor of the nonmoving party." Little v. Liquid Air Corp., 37 F.3d 1069, 1075 (5th Cir. 1994).

IIFactual Background

A. Parties

Defendant United of Omaha Life Insurance Company ("United of Omaha") is a subsidiary of Defendant Mutual of Omaha Insurance Company ("Mutual of Omaha"). See Doc. #25 at ¶ 3;¹ Doc. #30 at ¶ 3; Doc. #31 at ¶ 3. Plaintiff Tony Pratt is a resident citizen of Leland, Mississippi. Doc. #37-1 at 6.

B. Tony's Initial Purchase of Life Insurance Coverage

Sometime around 2000, Tony² started buying health insurance coverage for himself and various members of his family. Doc. #37-1 at 48. Tony explained he made this decisionbecause:

As family members were dying, my mother whom always asked me to pay for the funeral because at the time I guess I was probably the only one that seemed to have had a little bit of success, and I end up paying for funerals that perhaps was 6 and $7000 out of my family. So that's where instead of paying big lump sums of money on funerals I instead - I'd rather have insurance to cover my family so that we would have funds to bury people and help take care of my family when needed.

Id.

Over the ensuing years, Tony purchased eleven life insurance policies for himself and various family members from companies other than United of Omaha ("Non-Omaha Policies"): (1) a policy from American General; (2) a policy from State Farm Life Insurance Company ("State Farm"); (3) three policies from Liberty National; (4) four policies from Chesapeake; (5) one policy from Occidental Insurance Company; and (6) one policy from the Independent Order of Foresters ("IOF").³ Doc. #37-1 at 26-44. Tony purchased the Occidental, Chesapeake, and Liberty policies from George Henry, an insurance agent. Id. at 45-46. He purchased the State Farm policy from agent Noel Williams, and the American General policy from agent Ruth Brown. Id. at 46. The agent for the IOF policy is not apparent from the record.

With the exception of the State Farm policy, each of the Non-Omaha Policies remain in effect. Id. at 41-44. Tony is the owner and beneficiary of the American General, Liberty, Chesapeake, and Occidental policies. Id. at 41-43. The owner and beneficiaries of the IOF policy are not indicated in the record.

C. Purchase of United of Omaha Policies

Sometime around 2010, Tony began purchasing United of Omaha life insurance policies through George Henry. Doc. #37-1 at 53-54; Doc. #26-1-Doc. #26-29;⁴ Doc. #37-4.⁵ Tony explained he made the switch to United of Omaha at Henry's suggestion because "I'm looking for ways I can save money, what the premiums [are]. That's what I look at, what I can afford." Doc. #37-1 at 54. At some point, Tony told "every one that was close to [him], family, friends, [that] if they wanted insurance now is that time to get it, that [he] would pay for it." Id. at 58.

1. United of Omaha Policy Application Form

During the time period relevant to this suit, United of Omaha utilized a standard series of forms for life insurance applications. See Doc. #26-1-Doc. #26-9. Each form series sets forth the terms governing the relevant insurance policy and includes sections for the applicant to provide pertinent information, including the identity of the proposed insured, plan information, the identity of the plan owner, and the identity of the plan beneficiary. See id.

Each policy application contains a merger clause, which provides:

Entire Contract

The entire contract is:

(a) this policy;

(b) the attached signed application;

(c) any supplemental applications made part of the policy;(d) any Riders; and

(e) any endorsements and amendments.

All statements made in the application(s) will, in the absence of fraud, be considered representations and not warranties. We will not use any statement in defense of a claim or to contest this policy unless it is in an application.

Any change made to the policy requires an Executive Officer's written consent. An agent does not have the authority to change the policy or waive any of its terms.

See, e.g., Doc. #26-21 (Form B738LMS07P, at 4) (emphasis in original). An Executive Officer, in turn, is defined as "the chief executive officer or corporate secretary of United of Omaha Life Insurance Company." See, e.g., id. (Form B738LMS07P, at 1).

Furthermore, each application form contains a section labeled "OWNER," which directs that the applicant should "Complete Policyowner information if Proposed Insured is not the Policyowner." See, e.g., id. (Form ICC09L034A, at 3) (emphases in original). According to Karen J. Dukes, a Reinstatement Underwriter with United of Omaha, "[t]he determination of ownership of a life insurance policy is made at the time the application of insurance is completed by the proposed insured." Doc. #37-2 at ¶ 3. If the proposed insured fails to complete the "OWNER" section, then it is presumed that "the applicant has intended for the applicant/proposed insured to be the owner of the policy." Id.

With regard to ownership and beneficiaries, the forms provide:

Owner

The owner is:

(a) the insured; or

(b) the applicant, if other than the insured.

While the insured is alive, only you, the owner, may exercise the rights under the policy, subject to the consent of any irrevocable Beneficiary. You may name a new owner by assigning the policy as described in the Assignment provision.

Assignment

An assignment is a transfer of all or some of the policy's rights and benefits to someone else. If you assign the policy, your rights and the rights of the Beneficiary are subject to the terms of the assignment.

You may change the owner of this policy by making an absolute assignment or you may pledge the policy as collateral by making a collateral assignment. An assignment must be made by Written Request. If the Beneficiary designation in effect is irrevocable, the Beneficiary must also sign the Written Request.

An assignment of the policy or of an interest in the policy will not be binding on us until we have recorded it. We are not responsible for the validity or effect of any assignment.

Beneficiary

While the insured is alive, you may name one or more Beneficiaries to receive the death benefits ....

You may change the Beneficiary by sending us a Written Request. If the Beneficiary designation in effect is irrevocable, the Beneficiary must also sign the Written Request.

Doc. #26-21 (Form B738LMS07P, at 3-4) (emphasis in original). The forms define a "Written Request" as "a request, in writing, signed by [the owner of the policy], dated, and submitted to our home office. The request must be on a form we supply or be of a form and content acceptable to us." Id. (Form B738LMS07P, at 2).

Also of relevance here, the application forms contain the following provisions related to premium payments:

Premium Payments

The first premium is due on the Issue Date. Subsequent premiums are payable in advance on or before the premium due date as shown on the data pages. Premiums may be paid:

(a) annually;

(b) semi-annually; or

(c) at other intervals we offer.

You may pay premiums at our home office or to an authorized agent. ...

Grace Period

There is a grace period of 31 days to pay each premium except the first premium. The policy stays in force during the grace period. If the insured dies on the premium due date or during the grace period, the premium due for the policy month in which the insured dies will be subtracted from the death benefits. If you do not pay any premium by the end of the grace period, the policy will Lapse as of the premium due date. You may put the policy back in force by meeting

...