Simpson v. Life Investors Ins. Co. of America
| Citation | 367 F.Supp.2d 875 |
| Decision Date | 28 February 2005 |
| Docket Number | No. 1:04 CV 00026.,1:04 CV 00026. |
| Court | U.S. District Court — Middle District of North Carolina |
| Parties | Valjeane SIMPSON, Plaintiff, v. LIFE INVESTORS INSURANCE COMPANY OF AMERICA, Defendant. |
Stewart W. Fisher, Durham, NC, for Plaintiff.
Jeffrey A. Doyle, Raleigh, NC, for Defendant.
Valjeane Simpson ("Plaintiff") filed this action in the General Court of Justice, Superior Court Division of Durham County, North Carolina, on November 13, 2003. Life Investors Insurance Company of America ("Defendant") removed the case pursuant to 28 U.S.C. § 1441, asserting this court's original jurisdiction under 28 U.S.C. § 1332 based on the diversity of citizenship of the parties. Plaintiff asserts a claim of breach of contract arising out Defendant's refusal to pay benefits under a life insurance policy upon the death of her husband, Donnie Simpson. Plaintiff also asserts a claim of negligence against Defendant for the conduct of its agent, Michael Braswell, for failure to properly complete the Simpsons' insurance application. Before the court is Defendant's motion for summary judgment pursuant to Federal Rule of Civil Procedure 56. For the reasons set forth below, Defendant's motion will be granted.
Plaintiff and her husband met with Michael Braswell, an independent agent licensed by Defendant to sell its insurance products, on July 13, 2002, to apply for a life insurance policy on each of their lives. Braswell first met with Plaintiff alone, outside the presence of her husband, to gather her personal identification information and medical history as required to complete the insurance application. Rather than have Plaintiff read the application and complete it in her own writing, Braswell asked Plaintiff the questions written on the application, and recorded her responses himself. In general, Braswell paraphrased the questions instead of reading them precisely as they appeared on the application. The section of the application most relevant here reads as follows:
Have you or any proposed insured, ...
5. Within the past 10 years, been treated for or diagnosed by a health care professional as having (If yes, circle applicable condition):
a. Any disease or disorder of the blood or circulatory system (such as: heart disease, palpitations, heart murmur, or chest pain, high blood pressure, stroke, anemia), respiratory system (such as: emphysema, asthma, shortness of breath, or sleep apnea), brain or nervous system (such as: seizures, epilepsy, multiple sclerosis, mental illness or Alzheimer's disease), urinary tract (such as: kidney or bladder) reproductive system, stomach, intestine, liver (such as: ulcer, colitis, Crohn's disease, or hepatitis), endocrine system (such as: diabetes, thyroid), or muscles or bone (such as: arthritis, back problems, lupus)?
b. Cancer, cyst, or tumor?
c. Currently on any medication or being treated for any condition, not listed above.
d. Used drugs (such as: hallucinogens, barbiturates, excitants or narcotics) except as medication prescribed by physician, or been treated or counseled for drug or alcohol use?
6. Within the past 5 years,
a. Had or been advised to have a check-up, consultation, lab test, EKG, X-ray or other diagnostic test[?]
b. Been or is now fully or partially disabled?
c. Been charged with or convicted of any felony or been on probation?
To the right of each lettered question was a set of check boxes, one column labeled "Yes", the other labeled "No." On the following page the form provided a three-columned table, which provided space to list details related to any response of "Yes" given to the questions above.
In interviewing Plaintiff, Braswell checked "No" for all questions except 5a, as Plaintiff informed Braswell that she suffered from diabetes. Braswell recorded the details of Plaintiff's response in the space provided on the following page of the application, listing the question number to which the details corresponded, the name of the insurance applicant to which the answer pertained, and the specific information provided, namely that Plaintiff was diagnosed in 1999 with diabetes and took five milligrams of Glucotrol per day to treat it. Braswell also recorded the name and contact information of Plaintiff's doctor.
Plaintiff testified that, in addition to providing her identification information and medical history, she also provided to Braswell her husband's identification information and told Braswell that her husband suffered from diabetes, took the same medication as she did, and was treated by the same doctor. Braswell recorded Mr. Simpson's identification information but did not indicate on the application that Mr. Simpson suffered from diabetes. Braswell testified that he could not recall if Plaintiff informed him of Mr. Simpson's diabetes. After completing his questioning of Plaintiff, Braswell instructed her to sign the last page of the document. Plaintiff did so without reading the questions previously asked of her or the answers recorded by Braswell.
Mr. Simpson then joined Plaintiff and Braswell. Plaintiff has given conflicting testimony about the discussion between her husband and Braswell, which she heard in its entirety. Upon examination by Defendant's attorney, Plaintiff stated that Braswell asked her husband Question 5a in full, but failed to ask any other questions, preferring instead to discuss Mr. Simpson's golf career. Plaintiff testified that although Braswell, in asking Question 5a, mentioned diabetes, he and her husband did not discuss Mr. Simpson's diabetes, his treating physicians, or his medications. Plaintiff stated specifically that Braswell never asked her husband about any medications he was taking. Upon questioning by her attorney, however, Plaintiff recalled that Braswell did in fact ask her husband if he had diabetes, and Mr. Simpson not only informed Braswell that he suffered from the disease, he also showed Braswell the bottle that contained the medication he used to treat it. Braswell, for his part, denies that Mr. Simpson informed him of his diabetes, contending that he specifically asked Mr. Simpson the health-related questions on the application and that he would have recorded the information of Mr. Simpson's diabetes if it had been provided to him. He does not, however, dispute that Plaintiff may have informed him of her husband's diabetes before Mr. Simpson joined them.
Less murky is the fact that neither Plaintiff nor Mr. Simpson informed Braswell that Mr. Simpson, within the time period covered by the questions on the insurance application, had been diagnosed and treated for a condition known as gynecomastia, which is an abnormal swelling and/or pain in the male breast tissue. This information was pertinent to Questions 5c and 6a as stated above. At the conclusion of the discussion with Braswell, Mr. Simpson signed the application without reading any of the questions or answers recorded by Braswell.
Braswell submitted the application to Defendant, whose underwriters approved the application and issued a policy covering the lives of both Plaintiff and Mr. Simpson for an initial amount of $90,000. Less than one year after the policy was issued, Mr. Simpson was struck by a car on the interstate and died. Because his death occurred within two years of the issuance of the policy, Defendant, pursuant to North Carolina law, conducted an investigation into the information provided on his insurance application. Defendant discovered that Mr. Simpson suffered from diabetes and gynecomastia, neither of which were revealed in the application, and rejected Plaintiff's claims for benefits under the insurance policy. Plaintiff seeks $90,000, the face amount of the policy, alleging breach of contract by Defendant. Plaintiff also seeks from Defendant an additional $10,000 for damages resulting from Braswell's negligence in completing the insurance application.
Summary judgment must be granted when the pleadings, responses to discovery, and the record show that "there is no genuine issue as to any material fact and that the moving party is entitled to judgment as a matter of law." Fed.R.Civ.P. 56(c). The moving party bears the burden of persuasion on all relevant issues. Celotex Corp. v. Catrett, 477 U.S. 317, 323, 106 S.Ct. 2548, 91 L.Ed.2d 265 (1986). Once the moving party has met its burden, the non-moving party must come forward with specific facts demonstrating a genuine issue for trial. See Fed.R.Civ.P. 56(e); see also Cray Communications, Inc. v. Novatel Computer Sys., Inc., 33 F.3d 390, 393-94 (4th Cir.1994) (). The non-moving party may survive a motion for summary judgment by producing "evidence from which a [fact finder] might return a verdict in his favor." Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 257, 106 S.Ct. 2505, 91 L.Ed.2d 202 (1986). In considering the evidence, all reasonable inferences must be drawn in favor of the non-moving party. Id. at 255, 106 S.Ct. 2505. However, "the mere existence of a scintilla of evidence in support of the plaintiff's position [is] insufficient; there must be evidence on which the [fact finder] could reasonably find for the plaintiff." Id. at 252, 106 S.Ct. 2505.
"A representation in a life insurance application is material if the knowledge or ignorance of it would naturally influence the judgment of the insurer in making the contract and accepting the risk." Ward v. Durham Life Ins. Co., 325 N.C. 202, 210, 381 S.E.2d 698 (1989). "Moreover, in an application for a life insurance policy, written questions and answers relating to health are deemed material as a matter of law." Id. (citing Rhinehardt v. North Carolina Mut. Life Ins. Co., 254 N.C. 671, 673, 119 S.E.2d 614 (1961)). It is undisputed that neither Plaintiff nor Mr. Simpson revealed to Braswell that Mr. Simpson,...
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