Secondary Life Three LLC v. Transamerica Life Ins. Co., 21-cv-20-MAR

CourtUnited States District Courts. 8th Circuit. Northern District of Iowa
PartiesSECONDARY LIFE THREE LLC, Plaintiff, v. TRANSAMERICA LIFE INSURANCE COMPANY, Defendant.
Decision Date08 December 2021
Docket Number21-cv-20-MAR

SECONDARY LIFE THREE LLC, Plaintiff,
v.

TRANSAMERICA LIFE INSURANCE COMPANY, Defendant.

No. 21-cv-20-MAR

United States District Court, N.D. Iowa, Cedar Rapids Division

December 8, 2021


ORDER

TABLE OF CONTENTS

I. INTRODUCTION ........................................................................... 3

II. SUMMARY JUDGMENT STANDARD ................................................ 3

III. RELEVANT BACKGROUND ............................................................ 5

IV. THE PARTIES' POSITIONS ........................................................... 10

V. DISCUSSION ............................................................................... 10

A. Choice of Law ...................................................................... 10

B. The Parties' Substantive Arguments ........................................... 13

1. Whether the Statute of Limitations Bars SL3's Claims ............ 14

2. Texas Rules of Contract Interpretation ............................... 17

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3. Lebbin v. Transamerica Life Ins. Co., No. 20-11756, 2021 WL 3278166 (11th Cir. Aug. 2, 2021) (per curiam) and Other Non-binding Precedent ......................................................... 20

a. The Parties' Arguments .......................................... 21

b. Whether the Court can Consider Lebbin when Deciding this Case .................................................................. 22

i. Citation to Unpublished Cases and Cases from Other Jurisdictions ............................................... 22

ii. Whether Texas and Florida Have Different Rules of Contract Interpretation .................................. 25

4. Whether SL3 Seeks Reformation of the Policy ...................... 30

5. Whether the Policy is Ambiguous ...................................... 30

a. Maturity Date ...................................................... 31

b. Joint Equal Age and Joint Equal Age 100 ................... 38

i. Adjusted .................................................... 39

ii. Equal ........................................................ 43

iii. Conclusion ................................................. 44

c. “Never-heard-of” and “Unusual” Terms .................... 44

d. Cash Value and Accumulation Value ......................... 45

C. Effect of the Court's Findings on SL3's Partial Motion for Summary Judgment ............................................................................ 46

VI. CONCLUSION ............................................................................. 47

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I. INTRODUCTION

Before me is a Motion for Summary Judgment filed by Defendant/Counterclaimant Transamerica Life Insurance Company (“Transamerica”). (Doc. 56.)

Plaintiff/Counterclaim Defendant Secondary Life Three L.L.C. (“SL3”) filed a timely Resistance to Transamerica's Motion for Summary Judgment. (Doc. 65.) Transamerica filed a timely Reply to SL3's Resistance to Motion for Summary Judgment. (Doc. 66.)

Also before me is a Motion for Partial Summary Judgment filed by Plaintiff/Counterclaim Defendant SL3. (Doc. 57.) Transamerica filed a timely Resistance to SL3's Motion for Partial Summary Judgment. (Doc. 59.) SL3 filed a timely Reply in Support of its Motion for Partial Summary Judgment. (Doc. 67.) I heard arguments on both motions on September 29, 2021. (Doc. 71.)

Pursuant to the parties' consent to a Magistrate Judge (Doc. 38) and the Scheduling Order (Doc. 42), the parties consented to disposition by a United States Magistrate Judge and the case was subsequently assigned to me. See 28 U.S.C. § 636(c)(3).

II. SUMMARY JUDGMENT STANDARD

Any party may move for summary judgment regarding all or any part of the claims asserted in a case. Fed.R.Civ.P. 56(a). Summary judgment is appropriate when “the pleadings, depositions, answers to interrogatories, and admissions on file, together with the affidavits, if any, show that there is no genuine issue as to any material fact and that the moving party is entitled to a judgment as a matter of law.” Celotex Corp. v. Catrett, 477 U.S. 317, 322 (1986) (quoting Fed.R.Civ.P. 56(c)).

A material fact is one “that might affect the outcome of the suit under the governing law.” Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). Thus, “the substantive law will identify which facts are material.” Id. Facts that are “critical” under the substantive law are material, while facts that are “irrelevant or unnecessary” are not. Id. “An issue of material fact is genuine if it has a real basis in the record, ”

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Hartnagel v. Norman, 953 F.2d 394, 395 (8th Cir. 1992) (citing Matsushita Elec. Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586-87 (1986)), or “when ‘a reasonable jury could return a verdict for the nonmoving party' on the question, ” Woods v. Daimler Chrysler Corp., 409 F.3d 984, 990 (8th Cir. 2005) (quoting Anderson, 477 U.S. at 248)). Evidence that only provides “some metaphysical doubt as to the material facts, ” Matsushita, 475 U.S. at 586, or evidence that is “merely colorable or is not significantly probative, ” Anderson, 477 U.S. at 249-50 (internal citation omitted), does not make an issue of material fact genuine. Put another way, “‘[e]vidence, not contentions, avoids summary judgment.'” Reasonover v. St. Louis Cnty., 447 F.3d 569, 578 (8th Cir. 2006) (quoting Mayer v. Next el W. Corp., 318 F.3d 803, 809 (8th Cir. 2003)). The parties “may not merely point to unsupported self-serving allegations.” Anda v. Wickes Furniture Co., 517 F.3d 526, 531 (8th Cir. 2008) (citation omitted).

As such, a genuine issue of material fact requires “sufficient evidence supporting the claimed factual dispute” so as to “require a jury or judge to resolve the parties' differing versions of the truth at trial.” Anderson, 477 U.S. at 249 (quotations omitted). The party moving for entry of summary judgment bears “the initial responsibility of informing the district court of the basis for its motion and identifying those portions of the record which show a lack of a genuine issue.” Hartnagel, 953 F.2d at 395 (citations omitted). Once the moving party has met this burden, the nonmoving party must go beyond the pleadings and by depositions, affidavits, or otherwise designate specific facts showing that there is a genuine issue for trial. Mosley v. City of Northwoods, 415 F.3d 908, 910 (8th Cir. 2005). The nonmovant must show an alleged issue of fact is genuine and material as it relates to the substantive law. Id. at 910-11. If a party fails to make a sufficient showing of an essential element of a claim or defense with respect to which that party has the burden of proof, then the opposing party is entitled to judgment as a matter of law. Celotex, 477 U.S. at 322-23.

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In determining if a genuine issue of material fact is present, the court must view the evidence in the light most favorable to the nonmoving party. Matsushita, 475 U.S. at 587-88. Further, the court must give the nonmoving party the benefit of all reasonable inferences that can be drawn from the facts. Id. However, because the court views “the facts in the light most favorable to the non-moving party, [the court does] not weigh the evidence or attempt to determine the credibility of the witnesses.” Kammueller v. Loomis, Fargo & Co., 383 F.3d 779, 784 (8th Cir. 2004) (citation omitted). Instead, “the court's function is to determine whether a dispute about a material fact is genuine.” Quick v. Donaldson Co., 90 F.3d 1372, 1377 (8th Cir. 1996).

III.RELEVANT BACKGROUND

This case involves the interpretation of a $1, 000, 000 Joint and Last Survivor Adjustable Life Insurance Policy (“the policy”) issued on the lives of Ben J. and Betty L. Barnett (alternately, “the insureds, ” “the Barnetts, ” “Ben, ” and “Betty”). (Doc. 56-3 at 1.)[1] Robert Arnold Barnett, trustee of the Ben J. Barnett and Betty L. Barnett Life Insurance Trust was listed as the owner of the policy. (Id. at 3.) The policy became effective on January 27, 1994. Although both Ben and Betty were 70-years-old on January 27, 1994, the policy was “issued at a speci[a]l class joint equal age 74.”[2] (Id. at

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3, 22, 25-26) (capitalization omitted).) On February 3, 1994, Ben, Betty, and Robert Barnett all signed an addendum acknowledging this fact. (Id. at 22.) The declarations page is the first page of a three-page “Policy Data” section of the policy and lists the policy maturity date in all capital letters as follows: “POLICY ANNIVERSARY DATE NEAREST THE INSUREDS' JOINT EQUAL AGE OF 100.” (Id. at 3.)

The Definitions section of the policy provides the following relevant definitions:

Joint Equal Age means the adjusted age of a male and a female insured which reflects a risk that would be equivalent to two people of the same age, class of risk and smoking status.
. . . Cash Value means the accumulation value as described in the Accumulation Values section, less any surrender penalty
. . . The Maturity Date is the policy anniversary nearest the Insureds' Joint Equal Age 100.
. . . We will use the Policy Date shown in the policy data to determine the monthly dates, policy anniversaries and policy years.

(Id. at 8.) The “Policy Date” is listed as January 27, 1994. (Id.) The Policy Data section also provides a “Table of Annualized Guaranteed Monthly Deduction Rates per $1, 000.” (Id. at 5 (all capitalization omitted).) The table begins with “Policy year beginning Jan. 27, 1994” and ends with “Policy year beginning Jan. 27, 2019.” (Id.)

This is a “second-to-die policy, ” which means the policy paid “the death benefit to the Beneficiary if both Joint Insureds die before the Maturity Date.” (Id. at 2.) However, if “both or either Joint Insured [was] living at the Maturity Date, ” the policy only paid the net cash value, if any. (Id.) The policy terminated “at the earliest of” four

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occurrences, only of which is relevant to this...

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