Sec. Life of Denver Ins. Co. v. Shah
| Decision Date | 28 September 2012 |
| Docket Number | Case No. CV411–008. |
| Parties | SECURITY LIFE OF DENVER INSURANCE COMPANY, Interpleader Plaintiff, v. Dharmistha D. SHAH and Southeast Business Network, Inc., Defendants. Dharmistha D. Shah, Cross–Claimant, v. Southeast Business Network, Inc. and Edward J. Howie, Cross Defendants. |
| Court | U.S. District Court — Southern District of Georgia |
OPINION TEXT STARTS HERE
Bradley J. Betlach, Gregory A. Bromen, Nilan, Johnson & Lewis, PA, Minneapolis, MN, Robert Bates Lovett, HunterMaclean, PC, Savannah, GA, for Interpleader Plaintiff.
Amanda L. Chapman, Michael E. Marder, Greenspoon Marder, PA, Orlando, FL, Ellen Laurel Schoolar, Alan S. Lowe & Associates, Savannah, GA, Richard W. Epstein, Greenspoon Marder, PA, Ft. Lauderdale, FL, Usher L. Brown, Brown, Garganese, Weiss & D'Agresta, PA, Orlando, FL, for Cross–Claimant.
Ronald C. Berry, Ronald C. Berry, PC, Savannah, GA.
Before the Court are Cross-claimant Dharmistha Shah's (“Shah”) Motion for Summary Judgment (Doc. 103) and Cross Defendants Southeast Business Network, Inc. (“SEBN”) and Edward J. Howie's Motion for Partial Summary Judgment (Doc. 95) on Shah's cross-claim. For the reasons that follow, Shah's Motion for Summary Judgment is GRANTED IN PART and DENIED IN PART and SEBN's Partial Motion for Summary Judgment is DISMISSED AS MOOT. Shah's first count seeking declaratory relief is DISMISSED. Shah's motion for summary judgment as to count two and count four is DENIED. Shah's motion for summary judgment as to Florida usury law violations in count three is GRANTED. Lastly, because counts six, seven, eight, and nine of Shah's amended cross-claim rely upon Georgia law, these claims are DISMISSED. The current cross-claims brought by Shah will proceed: count two, count four, and count five.
Before the Court proceeds any further in this complex case, the Court feels it prudent to allow each party an opportunity to brief the Court on its position as to how the interpleader action should proceed. Each party is DIRECTED to file, within thirty days from the date of this order, a single brief explaining their respective positions on the remaining cross-claims and explaining how the interpleader action should proceed in light of the rulings contained in this order. Additionally, the parties' supplemental briefs shall include any legal argument and calculations to compute the amount Shah is entitled to recover as to the usury claim.1
The Court, in previous orders, has outlined the complicated factual background of this case (Doc. 160 at 3–12, Doc. 170 at 2–11), which need not be repeated in its entirety here. The relevant facts, however, warrant current mention.
During 2006, the DDS Trust and SEBN engaged in discussions regarding financing of a life insurance policy. Prior to this time, SEBN had business contacts and solicited business in Florida. In August of 2006, SEBN, through its sole principal Edward J. Howie, entered into an agreement letter (“2006 agreement letter”) with the DDS Trust. (Doc. 26–1, Ex. A at 2–3.) From Florida, the DDS Trust signed and returned the policy. The agreement provided that SEBN pay the premiums for the insurance policy for months six through twenty-four. ( Id. at 2) At the end of the two years, the owner of the policy—the DDS Trust—would then repay the premiums plus ten percent interest and five percent of the face value of the policy to SEBN. ( Id.) If the DDS trust was unable to pay after two years, the 2006 agreement letter provided that “the trust will engage [SEBN] to sell the policy in the Life Insurance Settlement Market at which time the owner of the policy will receive 15% of the proceeds of the sale.” ( Id. at 3.) SEBN and Mr. Dipak Shah, Defendant Shah's husband, entered into a similar agreement. Soon thereafter, the DDS Trust prepared and executed an “Assignment of Life Insurance Policy as Collateral” whereby the DDS Trust collaterally assigned certain rights to SEBN.2 Security Life recorded the collateral assignment.
On February 21, 2007, SEBN sent the DDS Trust a modification of the 2006 agreement letter with another agreement letter that was signed and executed in Florida by the DDS Trust (“2007 agreement letter”). (Doc. 26–1, Ex. C at 8.) Pursuant to the 2007 agreement letter, after the second year of the policy, the DDS Trust would either repay SEBN according to the terms of the 2006 agreementletter, or, if the DDS Trust is “unable to pay its obligation to [SEBN], then the trust will transfer ownership of the life insurance policy to [SEBN] to sell the policy in the Life Insurance Settlement Market at which time the owner of the policy will receive 15% of the net proceeds of the sale.” ( Id. at 9.) The transfer of the policy's ownership was the material difference between the 2006 agreement letter and the 2007 agreement letter. Nowhere in the 2006 agreement letter or 2007 agreement letter did SEBN or the DDS Trust indicate what would happen if the insured died after the second year or if the policy was never sold.
After the two-year period expired, SEBN sent several letters to the DDS Trust concerning repayment options, per the 2006 and 2007 agreement letters. (Doc. 47, Ex. D; Id., Ex. E at 1.) A dispute arose over the amount that was to be repaid. (Doc. 47, Ex. E at 2, 3.) SEBN claimed that $503,279.99, including principal and interest, which the DDS Trust disputed. ( Id.) According to Shah, SEBN failed to pay the premiums. In March of 2010, Security Life sent SEBN a lapse notice because no premium payments had been made and “the cash value of [the] policy is not sufficient at this time to cover the premium that is now due.” (Doc. 99–4, Ex. 2 at 55.) A final grace period notice was sent on April 20, 2010 informing SEBN that the policy would terminate unless $101,345.74 was paid to bring the premium current. ( Id., Ex. 2 at 54.) The policy lapsed. Because the DDS Trust or Shah never received notice of the lapses, Security Life agreed to reinstate the policy once Shah paid $90,549.99 towards the premium. (Doc. 99–2, Ex. 1 at 30.) Following receipt of the payment, the policy was reinstated.
This interpleader action later followed. As part of the action, Shah filed a cross-claim against SEBN and Howie, alleging that SEBN materially breached the parties' agreements “by failing to pay the premiums under the policy causing the policy to lapse” and seeking declaratory relief for SEBN's purported violations of Florida law, including premium finance, usury, breach of contract, and deceptive and unfair trade practices laws. (Doc. 47.) Shah's amended cross-claim also seeks, in the alternative, to recover under Georgia law for SEBN and Howie's violations of Georgia's premium finance and loan brokering laws. ( Id.) Both parties have filed competing motions for summary judgment on Shah's amended cross-claims. (Docs. 95, 103.)
According to Federal Rule of Civil Procedure 56(a), “[a] party may move for summary judgment, identifying each claim or defense—or the part or each claim of defense—on which summary judgment is sought.” Such a motion must be granted “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.” Id. The “purpose of summary judgment is to ‘pierce the pleadings and to assess the proof in order to see whether there is a genuine need for trial.’ ” Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 587, 106 S.Ct. 1348, 89 L.Ed.2d 538 (1986) ().
Summary judgment is appropriate when the nonmovant “fails to make a showing sufficient to establish the existence of an element essential to that party's case, and on which that party will bear the burden of proof at trial.” Celotex Corp. v. Catrett, 477 U.S. 317, 322, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). The substantive law governing the action determines whether an element is essential. DeLong Equip. Co. v. Wash. Mills Abrasive Co., 887 F.2d 1499, 1505 (11th Cir.1989).
As the Supreme Court explained:
[A] party seeking summary judgment always bears the initial responsibility of informing the district court of the basis for its motion and identifying those portion of the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, which it believes demonstrate the absence of a genuine issue of material fact.
Celotex, 477 U.S. at 323, 106 S.Ct. 2548. The burden then shifts to the nonmovant to establish, by going beyond the pleadings, that there is a genuine issue as to facts that are material to the nonmovant's case. Clark v. Coats & Clark, Inc., 929 F.2d 604, 608 (11th Cir.1991).
The Court must review the evidence and all reasonable factual inferences arising from it in the light most favorable to the nonmovant. Matsushita, 475 U.S. at 587–88, 106 S.Ct. 1348. However, the nonmoving party “must do more than simply show that there is some metaphysical doubt as to the material facts.” Id. at 586, 106 S.Ct. 1348. A mere “scintilla” of evidence, or simply conclusory allegations, will not suffice. See, e.g., Tidwell v. Carter Prods., 135 F.3d 1422, 1425 (11th Cir.1998). Nevertheless, where a reasonable fact finder may “draw more than one inference from the facts, and that inference creates a genuine issue of material fact, then the Court should refuse to grant summary judgment.” Barfield v. Brierton, 883 F.2d 923, 933 (11th Cir.1989).
Federal jurisdiction is based on diversity of citizenship, and Georgia is the forum state. As a federal court exercising diversity jurisdiction, the Court must examine the laws of Georgia, including choice of law, to determine what law applies. See McMahan v. Toto, 256 F.3d 1120, 1131 (11th Cir.2001) ( citing Klaxon Co. v. Stentor Elec. Mfg. Co., 313 U.S. 487, 496, 61 S.Ct. 1020, 85 L.Ed. 1477 (1941)); Fioretti v. Mass. Gen. Life Ins. Co., 53 F.3d 1228,...
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