Principal Nat'l Life Ins. Co. v. Rothenberg
| Decision Date | 04 January 2022 |
| Docket Number | 4:19-CV-2360 JCH |
| Court | U.S. District Court — Eastern District of Missouri |
| Parties | PRINCIPAL NATIONAL LIFE INSURANCE COMPANY, Plaintiff/Counterclaim Defendant, v. DONNA T. ROTHENBERG, Defendant/Counterclaimant, ROBERT W. BAGBY, Counterclaim Defendant. |
This action arises out of a dispute over life insurance proceeds. The matter is before the Court on the Motion for Partial Summary Judgment brought by Defendant and Counterclaimant Donna T. Rothenberg (Doc. 58), the Motion for Summary Judgment brought by Plaintiff and Counterclaim Defendant Principal National Life Insurance Company (“Principal”) (Doc. 65), and the Motion for Summary Judgment brought by Counterclaim Defendant Robert W Bagby (“Bagby”) (Doc. 60). Also before the Court are various Daubert motions to exclude the testimony of the parties' experts (Docs. 53, 55, and 63). The motions are fully briefed and the matter is ripe for disposition. For the following reasons, the Court will grant the Motions for Summary Judgment brought by Principal and Bagby, and deny the Motion for Partial Summary Judgment brought by Rothenberg.
Donna Rothenberg (“Donna” or “Rothenberg”) is the widow of Robert Rothenberg (“Rob” or “Decedent”), who died of a heart attack at the age of 72 on the afternoon of April 26 2019. For approximately twenty years preceding 2019, Rob had maintained a $1.5 million term life insurance policy on his life, of which Donna was the primary beneficiary. This policy was issued by Jackson National Life Insurance Company and was procured by Robert Bagby. The Rothenbergs maintained a brokerage account at Bagby's employer, Berthel Fisher & Company Financial Services, Inc.[1]
The Jackson National policy came up for renewal in 2019, at which time the premium increased substantially, from a few thousand dollars annually to $5, 007.50 per month, or approximately $60, 000 annually, prompting Rob to let that policy lapse at the end of its term, which was April 14, 2019. Rob initially decided that he would not replace the life insurance policy with another policy. However, Bagby encouraged him to replace the policy on his life, as he was the primary income-earner in his household.
Rob requested that Bagby shop around for a new term life insurance policy with premiums that would be close to the amount Decedent had been paying for the Jackson National coverage prior to the premium increase. Bagby subsequently found a ten-year term life insurance product with Principal that was available for a premium similar to the one Rob had been paying on the Jackson National policy. On February 16, 2019, Rob completed the application for the Principal life insurance product, requesting term life coverage in the amount of $200, 000.00. Bagby submitted the application to Principal through a brokerage firm with which Bagby did business, The National Benefit Corporation (“TNBC”). In order for Bagby to arrange for Principal's sale of life insurance to Rob, the state of Missouri required that Bagby be appointed as a marketer for Principal in the state. Accordingly, Bagby signed a broker contract, Form DD715, on March 1, 2019, which was signed by Principal on May 20, 2019.
On March 28, 2019, Rob was approved on a Non Tobacco/Super Preferred basis, and on April 1, 2019, Principal issued a $200, 000.00 policy on Rob's life, bearing policy number 6778434. Because Rob was approved on a preferred status, the premium on the policy was lower than expected. Thus, Bagby investigated whether the coverage amount could be increased, and was informed that a policy in the amount of $250, 000.00 could issue for a premium similar to the amount expected by Rob without any additional underwriting. Rob opted to increase the face amount of the coverage provided by the Principal policy to $250, 000.00, and Principal issued a revised policy on Rob's life, also with policy number 6778434, naming Donna as the primary beneficiary.
On the afternoon of April 23, 2019, Bagby received the $250, 000.00 policy on Rob's life. On April 24, 2019, Bagby called Rob and left him a voicemail informing him that he had received the Principal Policy and associated paperwork, and they needed to schedule a meeting so that Rob could sign the necessary documents and provide Bagby with a check for the Policy premium of $2, 580.06. Doc. 77 at 12. Bagby called Rob again on April 25, 2019, and again did not reach him, and left a message with Rob's staff at his dental practice requesting that Rob call him back. Rob called Bagby on the afternoon of April 25, 2019, and arranged to come to Bagby's office on April 26, 2019, to execute the Principal Policy. Rob arrived at Bagby's office at approximately 11:30 on the morning of April 26, 2019.
At that meeting, Bagby provided to Rob the forms that needed to be completed and executed in connection with the Principal Policy. Rather than paying the premium by check, Rob decided to authorize having the premium amount withdrawn from his bank account. When he arrived at Bagby's office, Rob signed all the documents needed for the execution of the Principal Policy, including an Electronic Funds Transfer (“EFT”) Form. The EFT Form permitted Principal to debit the premium payment from a designated bank account. The EFT Form stated that the signatory could either “Complete Your Bank Information Below, or Submit [a] Voided Check.” The EFT Form also noted that Principal would be “unable to draw funds if any of the required fields . . . are left blank [or] incomplete.” After signing the forms, Rob left Bagby's office to go on a bike ride.
Shortly after Rob left Bagby's office, Bagby noticed that Rob had not completed the bank information required on the EFT Form with his ACH Routing Number, nor had he attached a voided check. Accordingly, Bagby called Rob[2] to let him know that he had left without providing a voided check or otherwise completing the EFT Form. Rob told Bagby that he was on a bike ride and would come by on the following Monday. Bagby cautioned Rob that without the premium payment, his coverage was not in force. Later that same day, Rob suffered a fatal heart attack.
Principal subsequently denied Rothenberg's claim for the Policy proceeds, having determined the Policy had never become effective and Decedent was not covered under the Policy at the time of his death. As a basis for the denial of her claim, Principal explained that a policy does not become effective until the first premium payment is made, and the payment for the policy was never made. Rothenberg's attorney responded, threatening litigation for the amount of the Policy benefits as well as damages for vexatious refusal to pay.
Principal filed this declaratory judgment action on August 16, 2019, seeking a declaration that the Policy never became effective because a required condition precedent (i.e., payment) was never met, and that Principal is released from any liability on claims brought under the Policy. On October 21, 2019, Rothenberg filed a Counterclaim against Principal and Bagby, asserting claims for breach of contract, vexatious refusal, and negligence against Principal, and two negligence claims against Bagby, one in his capacity as insurance broker, and the other in his capacity as financial advisor.
Rothenberg filed a motion for partial summary judgment in her favor with respect to Principal's Complaint seeking a declaratory judgment as to its non-liability on the policy. Bagby. Doc. 58. Bagby filed a motion for summary judgment in his favor on both of Rothenberg's counts of negligence filed against him. Doc. 60. Principal filed a motion for summary judgment in its favor on its complaint and on all counterclaims filed against it. Doc. 65.
The standard applicable to summary judgment motions is well settled. Summary judgment is proper “if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law.” Fed.R.Civ.P. 56(a); Hill v. Walker, 737 F.3d 1209, 1216 (8th Cir. 2013). The movant “bears the initial responsibility of informing the district court of the basis for its motion” and must identify “those portions of [the record] . . . which it believes demonstrate the absence of a genuine issue of material fact.” Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986). If the movant does so, the nonmovant must respond by submitting evidentiary materials that set out “specific facts showing that there is a genuine issue for trial.” Id. at 324 (quotation marks omitted). “On a motion for summary judgment, ‘facts must be viewed in the light most favorable to the nonmoving party only if there is a genuine dispute as to those facts.'” Ricci v. DeStefano, 557 U.S. 557, 586 (2009) (quoting Scott v. Harris, 550 U.S. 372, 380 (2007) (internal quotation marks omitted)).
The “mere existence of some alleged factual dispute between the parties will not defeat an otherwise properly supported motion for summary judgment; the requirement is that there be no genuine issue of material fact.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 247-48 (1986). In other words, only Id. at 248.
The standard does not change when the parties file cross-motions for summary judgment. In such cases, “the court ‘must evaluate each party's motion on its own merits taking care in each instance to draw all reasonable inferences against the party whose motion is under consideration.” Lakeside Roofing Co. v. Nixon 4:10CV1761 JCH, 2012 WL...
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