Scarberry v. Peoples Sec. Life Ins. Co.
Decision Date | 12 September 1996 |
Docket Number | Civil Action No. 2:95-0872. |
Citation | 938 F. Supp. 356 |
Parties | Penny R. SCARBERRY, Plaintiff, v. PEOPLES SECURITY LIFE INSURANCE CO., Defendant. |
Court | U.S. District Court — Southern District of West Virginia |
John A.W. Lohmann and Brent Wolfingbarger, Wolfingbarger Law Offices, Charleston, WV, for plaintiff.
Bryan R. Cokeley and Miles G. Lawlor, Steptoe & Johnson, Charleston, WV, for defendant.
This is an action in which Penny R. Scarberry, the Plaintiff, seeks recovery as sole beneficiary of death benefits allegedly due her because of the death of her husband Charles, an insured under a life insurance policy allegedly in force at his death. The Defendant, Peoples Security Life Insurance Company (Peoples), has moved for summary judgment on the claims. Scarberry filed a response and supplemental response to the motion. At Scarberry's request, the Court treats the supplemental response as a cross motion for summary judgment.1 The Court GRANTS Peoples' motion and DENIES Scarberry's motion.
In April 1992, Scarberry and her husband Charles met with a Peoples' agent, Earnest Sanders, to discuss life insurance. Following a further meeting among these parties and a second Peoples' representative, the Scarberrys applied for life insurance on themselves and their two children on May 29, 1992. The application provided that Charles, the "Proposed insured #1," would be the policy "owner unless" specified otherwise. Ex. A to Def.'s mot. for summ. jgt. at 1.
Scarberry paid the initial premium with her personal check at the time of the application. She also executed a pre-authorized check agreement permitting Peoples to draw subsequent premiums "on or after the 25th day of each month" directly from her checking account. Ex. B to Def.'s mot. for summ. jgt. at 1. The Withdrawal Agreement provided as follows:
Peoples issued a term life insurance policy to the Scarberrys with a "Policy Date" of August 25, 1992. Ex. C to Def.'s mot. for summ. jgt. The Policy insured the lives of each of the Scarberrys for $50,000.00 and the lives of their children for $10,000.00.
The Policy provides Peoples "will pay the Death Benefit to the Beneficiary if the Insured dies while this policy is in full force." Policy at 1. "In full force" is defined as the Policy's status when each premium has been paid by its "Due Date" or "within the grace period." Id. at 5. The Policy also states that "all premiums are to be paid in advance," and that "premiums are to be paid on the Due Date for each Premium Interval." Id. at 6. It continues that "the Due Date of a premium is the same day of the month as the Policy Date." Id.
Id. The default section provides Id.
The Scarberrys separated in early 1993. Scarberry talked with Charles nearly every day though and checked her mail at their home even more frequently. Scarberry also had near-daily contact with Defendant's agent, Sanders, who frequented her place of employment.
Up to May 1993, Peoples successfully drew from Scarberry's checking account pursuant to the Withdrawal Agreement. The May 25, 1993 premium withdrawal, however, "bounced" and was returned on June 1 for insufficient funds.2 Peoples attempted to draw again on June 7, 1993 but that withdrawal too was returned on June 8 for the same reason.
Scarberry testified insufficient funds were in her account because she "just messed up." Dep. of Penny R. Scarberry at 50. Overdraft notices were apparently sent to her on June 1 and June 8, 1993. She admits receiving at least one of these notices. She knew it related to the premium due Peoples.3
Scarberry claims after receiving the overdraft notice she immediately deposited funds to cover the premium. Bank records are sketchy on this point, but an affidavit from an official at Scarberry's bank states that at no time between May 28 and July 9 did the account ever have sufficient funds to cover the cost of the premium withdrawal. Indeed, between May 21 and July 1, 1993 the account registered six other overdrafts, including two to another insurance company with a similar withdrawal arrangement.
Scarberry testified that on or about June 10, 1993 she attempted to contact Sanders to (1) inform him she was discontinuing use of her checking account; and (2) ascertain how to mail her premiums directly to Peoples.4
On June 27, 1993 Charles Scarberry was killed in an auto accident. Plaintiff advised Sanders of the tragedy the next day. Sanders later informed her Peoples had denied coverage. The denial of coverage apparently was based on the Policy not being in full force on the date of death due to non-payment of premiums.
Peoples, however, mailed Scarberry a premium notice postmarked June 28, 1993. The premium notice lists the due date in two places as May 25, 1993. The amount due is listed as $325.85. Language at the bottom of the notice provides as follows though: "Your policy will be in force only to the extent of any nonforfeiture option or cash value it may contain, unless total payment due is made prior to expiration of the grace period."
Peoples also mailed a "LAPSE NOTICE" postmarked July 8, 1993 to Scarberry. It informed her as follows:
Ex.B, Pl.'s resp. br. (footnote added). Later in the notice appears the phrase "PLEASE DISREGARD IF TIMELY PAYMENT HAS ALREADY BEEN MADE." Id. (emphasis added).
Scarberry complained to the West Virginia Insurance Commissioner about the denial of coverage. The Commissioner closed the investigation without taking any action against Peoples. During the investigation Brad McCoy, an account manager for Peoples, disclosed he had contacted Charles in June 1993 and told him of the overdue payment:
Mr. Scarberry informed me that he was separated from his wife and that he did not know if they intended to keep the insurance. I informed Mr. Scarberry that his policy was in danger of lapsing and if they intended to keep the policy in force, they should forward their premium as soon as possible.
Ex. I, Pl.'s supp. resp.
Scarberry filed the instant complaint on June 26, 1995. She alleges claims for (1) breach of contract; and (2) violations of the West Virginia Unfair Trade Practices Act, West Virginia Code § 33-11-1 et seq.5
Our Court of Appeals has often stated the settled standard governing the disposition of a motion for summary judgment:
Shaw v. Stroud, 13 F.3d 791, 798 (4th Cir.), cert. denied, ___ U.S. ___, 115 S.Ct. 67, 130 L.Ed.2d 24, ___ U.S. ___, 115 S.Ct. 68...
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