Stephens v. Equitable Life Assurance Society of US

• Decision Date: 20 March 2003
• Docket Number: No. 2002-CA-00498-SCT.,2002-CA-00498-SCT.
• Citation: 850 So.2d 78
• Parties: Milton STEPHENS, Helen S. Stephens and Henry E. Palmer v. The EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES and George C. Bell.
• Court: Mississippi Supreme Court

850 So.2d 78

Milton STEPHENS, Helen S. Stephens and Henry E. Palmer v. The EQUITABLE LIFE ASSURANCE SOCIETY OF THE UNITED STATES and George C. Bell.

No. 2002-CA-00498-SCT.

Supreme Court of Mississippi.

March 20, 2003.

Precious Tyrone Martin, Jackson, attorney for appellants.

Robert L. Gibbs, Anne Clarke Sanders, Amy Manderson Klotz, Claire W. Ketner, Sheldon G. Alston, David A. Barfield, Andrea La'Verne Ford Edney, Lara A. Coleman, Richard D. Gamblin, Jackson, attorneys for appellees.

Before PITTMAN, C.J., EASLEY and GRAVES, JJ.

EASLEY, J., for the Court.

PROCEDURAL HISTORY

¶ 1. This case involves a claim of alleged fraud and oral misrepresentations of certain life insurance policies issued in 1972.¹ The policies had alleged "vanishing premiums." The issue before this Court concerns whether the trial court correctly dismissed the suit pursuant to the statutes of limitation.

¶ 2. On November 26, 2001, the plaintiffs Milton Stephens and Helen S. Stephens (the Stephenses) and Henry E. Palmer (Palmer) filed suit in the Circuit Court of Sunflower County, Mississippi against The Equitable Life Assurance Society of the United States (Equitable) and George C. Bell (Bell)², an insurance agent. A joint life insurance policy was issued to the Stephenses in June 1972. Palmer purchased an adjustable whole life policy in February 1972. The Stephenses and Palmer alleged that the insurance agent orally misrepresented certain aspects of the policies prior to the purchase of the policies. The policies were purchased by the Stephenses and Palmer in 1972. Pursuant to the complaint filed on November 20, 2001, the Stephenses continued to have the $45.10 premium per month paid by a bank draft to Equitable for their policy. As for Palmer, the complaint revealed that he was 64 years old at the time of filing the complaint in 2001 and that he continued to pay the $45.88 premium per month by bank draft to Equitable for his policy.

¶ 3. Equitable filed a motion to dismiss the complaint. The Circuit Court of Sunflower County granted the motion to dismiss with prejudice. The trial court judge held that the claim was time barred by the applicable statute of limitations. The trial judge thereafter dismissed the case with prejudice pursuant to M.R.C.P. 12(b)(6). From this ruling, the plaintiffs filed an appeal to this Court.

FACTS

¶ 4. On June 28, 1972, the Stephenses purchased a joint life insurance policy with a $10,000.00 value from Bell. The Stephenses allege that Bell orally stated that the monthly premiums would be $45.10, the policy would be fully paid in twenty (20) years and the premiums would cease at that time. At the time of filing their brief, the Stephenses had paid over $16,200 in premiums. The written terms of the policy stated that the premiums were payable until such time as one of the spouses died. The Stephenses' 1972 policy provided the following specific schedule of payments:

BENEFITS AND PREMIUM TABLE BENEFITS MONTHLY PREMIUM PREMIUM PERIOD

LIFE INSURANCE $45.10 FOR JOINT LIFE * * * THE FIRST PREMIUM IS $48.50 AND IS DUE ON OR BEFORE DELIVERY OF THE POLICY. SUBSEQUENT PREMIUMS ARE DUE ON JUL[Y] 28, 1972 AND MONTHLY THEREAFTER DURING THE PREMIUM PERIOD IN ACCORDANCE WITH THE ABOVE PREMIUM TABLE.

Further, the policy stated that the policy and the application constituted the total contract and prohibited any oral modification or waiver of the policy terms. The "General Provision" section of the 1972 policy stated the following:

THE CONTRACT. This insurance is granted in consideration of payment of the required premiums. This policy and the applications (copies of which are attached at issue) constitute the entire contract.

All statements made in the applications shall be deemed representations and not warranties. No statement shall avoid this policy or be used in defense of a claim unless contained in the applications.

This policy may not be modified, nor may any of the Equitable's rights or requirements be waived, except in writing signed by the President, a Vice President, the Secretary or the Treasurer of the Equitable.

(emphasis added).

¶ 5. Palmer purchased an adjustable whole life policy from Equitable on February 5, 1972. He alleged that Bell stated that if Palmer paid a monthly premium of $45.88 until he reached age 58, then the premium would be fully paid with dividends. Palmer reached the age of 58 in 1995. At the time of the filing of his brief, Palmer was 64 and continued to pay a monthly premium to Equitable. The written terms of the policy stated that a monthly premium of $45.88 was payable until age 70 and a monthly premium of $37.97 was payable thereafter. Palmer's 1972 policy provided the following specific schedule of payments:

BENEFITS AND PREMIUMS TABLE BENEFITS MONTHLY PREMIUM PREMIUM PERIOD LIFE INSURANCE $45.88 TO AGE 70 $37.97 THEREAFTER THE FIRST PREMIUM IS $45.88 AND IS DUE ON OR BEFORE DELIVERY OF THE POLICY. SUBSEQUENT PREMIUMS ARE DUE ON MAR[CH] 5, 1972 AND MONTHLY THEREAFTER DURING THE PREMIUM PERIOD IN ACCORDANCE WITH THE ABOVE PREMIUM TABLE.

Like the life insurance policy purchased by the Stephenses, Palmer's policy also stated that the policy and the application constituted the total contract and prohibited any oral modification or waiver of the policy terms.³ ¶ 6. On November 26, 2001, the plaintiffs filed suit against Equitable and Bell, its authorized agent, alleging fraudulent concealment. Equitable and Bell filed motions to dismiss the complaint. The Sunflower County Circuit Court granted the motion to dismiss the complaint. From this ruling, the plaintiffs appeal to this Court.

DISCUSSION

Whether the trial court erred by granting the motion to dismiss the plaintiffs' complaint.

¶ 7. The plaintiffs base their appeal of the trial court's ruling to grant the motion to dismiss the complaint on a three-part argument. First, they claim that the allegations set forth in the complaint easily clear the threshold and withstand a Rule 12(b)(6) motion. Second, Equitable and Bell engaged in fraudulent concealment which tolls the statute of limitations. Therefore, the trial court's dismissal based upon a bar by the statute of limitations was in error. Third, the plaintiffs claim that equitable estoppel applies. They argue that issues concerning fraudulent concealment and due diligence in the discovery of the alleged fraud are factual and generally not to be resolved on a Rule 12(b)(6) motion to dismiss.

¶ 8. An analysis based on whether the plaintiffs' claims are barred by the statute of limitations is of paramount importance and must be addressed by this Court prior to any examination of the issues as presented by the plaintiffs. In the event that the alleged claims by the plaintiffs withstand the applicable statute of limitations, then, and only then, is full review of the issues warranted by this Court.

A. The Trial Court Ruling

¶ 9. The trial court ruled the following in pertinent part:

B. LAW IDENTIFICATION:

5. The applicable statute of limitations is found in Miss.Code Anno. § 15-1-49⁴, which imposes a three year limitation on claims of fraud.

6. "A fraud claim accrues upon the completion of the sale induced by false representation, or upon the consummation of the fraud." Dunn v. Dent, 169 Miss. 574, 153 So. 798 (1934).

7. The cause of action for fraudulent concealment accrues when the person, with reasonable diligence, first knew or first should have known of the fraud. Miss.Code Anno. § 15-1-67.

C. LEGAL APPLICATION

8. In accordance with Dunn, the statute of limitations on all Plaintiff's fraud claims ran in 1975 for the Plaintiffs.

9. Additionally, assuming that everything the Plaintiffs say is true, in accordance with Peters v. Metropolitan Life, 164 F.Supp.2d. 830, 837 (S.D.Miss.2001), at the very latest, the Stephens would have had knowledge of the misrepresentation in 1992 when they were required to pay additional premiums after twenty years, and Palmer would have had notice when he turned 58 yeas old and was required to continue to pay premiums. In both instances, more than three years has passed. Based on this reasoning, the trial court dismissed the complaint in favor of Equitable and Bell.

B. Statute of Limitations

¶ 10. "This Court uses a de novo standard of review when passing on questions of law including statute of limitations issues." ABC Mfg. Corp. v. Doyle, 749 So.2d 43, 45 (Miss.1999)(citing Ellis v. Anderson Tully Co., 727 So.2d 716, 718 (Miss.1998)). See also Sarris v. Smith, 782 So.2d 721, 723 (Miss.2001).

1. Statute of limitations, Miss.Code Ann. § 722 (1972) and Miss.Code Ann. § 15-1-49

¶11. In 1972, Miss.Code Ann. § 722, the applicable statute of limitations for actions without a prescribed period, provided:

All actions for which no other period of limitations is prescribed shall be commence within six years next after the cause of such action accrued and not after.

In 1989, Miss.Code Ann. § 15-1-49, derived from Miss.Code Ann. § 722 (1972), reduced the six-year statute of limitations to a three-year period. See 1989 Miss. Laws, ch. 311, § 3. In 1990 further amendments were made to § 15-1-49. See 1990 Miss. Laws, ch. 348, § 1, eff. from and after passage (approved March 12, 1990).

¶ 12. Now, in Mississippi a claim of fraud has a three-year statute of limitations in accordance with Miss.Code Ann. § 15-1-49 concerning actions without a prescribed period of limitation. The statute states the following:

(1) All actions for which no other period of limitation is prescribed shall be commenced within three (3) years next after the cause of such action accrued, and not after.

(2) In actions for which no other period of limitation is prescribed and which involve latent injury or disease, the cause of action does not accrue until the plaintiff has discovered, or by reasonable diligence should have discovered, the injury.

(3) The provisions of subsection (2) of this section shall apply to all pending and subsequently...