Smith v. Primerica Life Ins. Co.
| Decision Date | 23 November 2022 |
| Docket Number | 21-3196 |
| Citation | 54 F.4th 550 |
| Parties | The ESTATE OF Charles D. SMITH, BY Patsy G. SMITH, Personal Representative, Plaintiff - Appellee v. PRIMERICA LIFE INSURANCE COMPANY, Defendant Kansas City Chrome Shop, Inc.; The Estate of Dora Mae Wall, Substituted for Dora Clark-Wall, Third Party Defendants - Appellants |
| Court | U.S. Court of Appeals — Eighth Circuit |
Counsel who presented argument on behalf of the appellant and appeared on the brief was Shane Lillich, of Bonner Springs, KS. The following attorney also appeared on the appellant brief; Hale G. Weirick, of Bonner Springs, KS.
Counsel who presented argument on behalf of the appellee and appeared on the brief was Robert H. Schnieders, of Oak Grove, MO.
Before GRUENDER, SHEPHERD, and ERICKSON, Circuit Judges.
This case concerns a $225,000 life insurance policy issued on the life of Charles Smith. When Smith died in 2018, his estate ("Smith's Estate" or the "Estate") made a claim for the policy proceeds. His former employer, Kansas City Chrome Shop ("KCCS"), together with KCCS's president, Dora Clark-Wall, made a competing claim. After the district court1 granted partial summary judgment in favor of Smith's Estate, Clark-Wall brought equitable claims in her personal capacity.2 Following a bench trial, the district court found that Clark-Wall was entitled to an equitable portion of the proceeds totaling $55,253.28 and that Smith's Estate was entitled to the remaining $169,746.72. KCCS and Clark-Wall appeal, and we affirm.
In 1989, Primerica issued a twenty-year $100,000 life insurance policy on Charles Smith's life. KCCS, a Kansas corporation for whom Smith worked, was the owner and named beneficiary of the policy. According to Smith's family, Smith stopped working for KCCS around 1994. In 2010, without Smith's assent, the policy was renewed for another twenty-year term and its benefit was increased to $225,000. All premiums under the policy were paid by Clark-Wall. The policy provided that "[p]roceeds will be paid to [Smith's] estate if there is no living beneficiary or owner" at the time of Smith's death.
Following Smith's death in 2018, his Estate asked Primerica for the policy proceeds. KCCS and Clark-Wall made competing claims. When Primerica declined to pay the proceeds to any claimant, Smith's Estate sued Primerica for breach of contract in Missouri state court.
In April 2019, after removing the Estate's suit on diversity grounds, Primerica brought an interpleader action against the Estate and against KCCS and Clark-Wall. See 28 U.S.C. § 1335 ; Fed. R. Civ. P. 22. KCCS and Clark-Wall then filed a breach-of-contract claim against the Estate, alleging that Smith and Clark-Wall had previously agreed that the policy was to be "an assurance and collateral" held by KCCS for a series of unpaid loans made to Smith and that the Estate breached that agreement when it submitted a claim for the proceeds to Primerica. Later, Primerica deposited the proceeds into an interest-bearing account held by the district court and was dismissed as a party.
Meanwhile, separate proceedings took place in Missouri state court. In July 2019, KCCS and Clark-Wall each filed probate claims against Smith's Estate, alleging that they made personal loans to Smith that remained outstanding when he died. In July 2020, after a bench trial, the court entered judgment in favor of Smith's Estate on both claims. As to KCCS's claim, applying Kansas law, the court found that KCCS was dissolved as a corporation in 1994 and therefore lacked standing to pursue any probate claim against Smith's Estate. As to Clark-Wall's claim, the court found that Clark-Wall "failed to establish by competent evidence she is entitled to receive payment ... for any personal loans." KCCS and Clark-Wall appealed, and the Missouri Court of Appeals later affirmed. Kan. City Chrome Shop, Inc. v. Smith , 649 S.W.3d 19, 20 (Mo. Ct. App. 2022) ; Clark v. Smith , 644 S.W.3d 835, 837 (Mo. Ct. App. 2022).
In August 2020, the federal district court granted partial summary judgment to Smith's Estate. The court found that, in light of the state court's determination that KCCS was dissolved as a corporation in 1994, KCCS was collaterally estopped from asserting that it was a "living beneficiary" under the policy at the time of Smith's death. Having thus dismissed KCCS from the case, the court then allowed Clark-Wall to proceed in her personal capacity with claims for breach of contract, novation, unjust enrichment, and recoupment, as well as affirmative defenses of equitable estoppel and waiver.
Following a bench trial, the district court denied Clark-Wall's breach-of-contract, novation, and recoupment claims but granted her unjust-enrichment claim. It did not address her affirmative defenses. Accordingly, the court ordered that Clark-Wall was entitled to an equitable award of $55,253.28 to be paid from the proceeds, representing the total amount of her premium payments. The remaining proceeds went to Smith's Estate. Clark-Wall moved to alter or amend the judgment under Federal Rule of Civil Procedure 59(e), requesting that the court specify the amount of interest to be added to her equitable award. The court denied that motion and explained that the only interest to which she was entitled was "any interest accrued on this amount from the date Primerica deposited the funds into the Court registry."
On appeal, KCCS and Clark-Wall challenge the district court's application of collateral estoppel, its denial of Clark-Wall's claims for breach of contract and novation, and its failure to address her affirmative defenses. Clark-Wall also challenges the district court's decision not to include prejudgment interest with her equitable award and its denial of her Rule 59(e) motion.
We begin with KCCS and Clark-Wall's argument that the district court erred in finding that KCCS was collaterally estopped from asserting that it was a "living beneficiary" under the policy at the time of Smith's death. "We review a district court's collateral-estoppel determination de novo." Riis v. Shaver , 4 F.4th 701, 703 (8th Cir. 2021).
Collateral estoppel, sometimes called issue preclusion, generally bars the relitigation of factual or legal issues that were decided—correctly or not—in a prior action. Ginters v. Frazier , 614 F.3d 822, 825-26 (8th Cir. 2010) ; Fischer v. Scarborough , 171 F.3d 638, 641 (8th Cir. 1999). Its purpose is to "protect[ ] against the expense and vexation attending multiple lawsuits, conserv[e] judicial resources, and ... minimiz[e] the possibility of inconsistent decisions."
B & B Hardware, Inc. v. Hargis Indus., Inc. , 575 U.S. 138, 147, 135 S.Ct. 1293, 191 L.Ed.2d 222 (2015) (internal quotation marks omitted).
Here, to determine whether collateral estoppel applies, we look to the law of Missouri, the state that issued the potentially preclusive judgment. See Riis , 4 F.4th at 703. Under Missouri law, four conditions must be met for collateral estoppel to apply: (1) the issue for which collateral estoppel is asserted in the present action is identical to one that was determined in the prior action, (2) the prior action resulted in a judgment on the merits, (3) the party against whom collateral estoppel is asserted was a party or in privity with a party to the prior action, and (4) the party against whom collateral estoppel is asserted had a full and fair opportunity in the prior action to litigate the issue for which collateral estoppel is asserted. In re Caranchini , 956 S.W.2d 910, 912-13 (Mo. 1997).
KCCS and Clark-Wall assert that the first condition is not met because the issues involved in the state and federal actions were different. They argue that the state court considered only whether KCCS had standing to pursue a probate claim for reimbursement of personal loans against Smith's Estate, whereas the federal court considered the distinct question of whether KCCS could collect the policy proceeds. They do not dispute that the other collateral-estoppel conditions are satisfied.3
We conclude that the district court properly applied collateral estoppel because the issue presented in the federal action was already determined in the prior state action: whether KCCS was a valid, existing corporation at the time of Smith's death.
In the state action, the court had to resolve, as a threshold matter, whether KCCS had standing to sue. See CACH, LLC v. Askew , 358 S.W.3d 58, 61 (Mo. 2012). Because dissolved corporations generally lack authority to sue, Gunter v. Bono , 914 S.W.2d 437, 440 (Mo. Ct. App. 1996), the standing question led the court to consider KCCS's corporate status. Applying Kansas law, the court found that KCCS forfeited its articles of incorporation in 1991 and had until 1994 to settle its affairs, at which point it dissolved. See 7 Kan. Stat. Ann. § 17-6807.
In the federal action, the district court had to determine whether KCCS was a "living beneficiary" at the time of Smith's death in 2018 such that it was entitled to the Primerica policy proceeds. Whether a corporation is a "living beneficiary" under a life insurance policy depends on that corporation's corporate status—if the corporation is dissolved, it is not "living." See Chicago Title & Tr. Co. v. 4136 Wilcox Bldg. Corp. , 302 U.S. 120, 124-25, 58 S.Ct. 125, 82 L.Ed. 147 (1937) ( ); Manard v. Snyder Bros. Co. , 964 S.W.2d 487, 488 n.3 (Mo. Ct. App. 1998) (). The federal action therefore presented the same issue of KCCS's corporate status that the state court already adjudicated. Accordingly, the district court properly held that the state court's determination that KCCS had dissolved...
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