Ware v. Columbus Life Ins. Co.
| Decision Date | 26 January 2023 |
| Docket Number | 3:21-cv-1281-LCB |
| Parties | PRESTON WARE and ERIC WARE, Plaintiffs, v. COLUMBUS LIFE INSURANCE COMPANY, Defendant. |
| Court | U.S. District Court — Northern District of Alabama |
Plaintiffs Preston and Eric Ware-father and son, respectively-filed this action in state court on August 20, 2021,[1]and Defendant Columbus Life Insurance Company timely filed its notice of removal here.[2] In short, the Wares allege that by terminating Preston's life-insurance coverage, Columbus ran afoul of the parties' agreement.[3]Before the Court is Columbus's Motion for Summary Judgment;[4] for the forthcoming reasons, the Court GRANTS the Motion in full and, accordingly, DISMISSES this action with prejudice.
The Wares base their claim for relief-and Columbus, its Motion-on the following undisputed facts.
Columbus issued life-insurance policy CM2043958U to Preston Ware on June 11, 1986.[5]The cost of coverage was, by the Policy's terms, determined on a monthly basis and was subject to upward variance in relation to Columbus's “expectations as to future mortality.”[6]In other words, the requisite minimum for monthly premiums increased with the passage of time.[7] For this “Flexible Premium Adjustable” lifeinsurance policy, Preston was able to “choose the amount and frequency of [premium] payments.”[8]
The amount and frequency Preston selected for those payments had a direct effect on what the Policy called “cash value.”[9]“Cash value” was formulaically defined[10]within the Policy: On a given monthly “anniversary” date (here, the 11th of each month), the Policy's cash value equaled (1) “the cash value on the preceding monthly anniversary day,”[11]plus (2) “90 percent of all premiums (except the first) received since the preceding monthly anniversary day,” minus (3) the next month's cost of insurance.[12]Stated simply, the preceding anniversary date's cash value, coupled with 90% of all premiums (except the first) subsequently paid, was required to be at least equal to the next month's coverage cost.[13]Insufficient cash value on a monthly anniversary date triggered a 61-day “grace period,” during which the Policy permitted retroactive cash-value rectification.[14]Columbus also sent annual reports indicating, among other things, the Policy's cash value.[15]
The Wares typically paid monthly premiums by way of preauthorized automatic withdrawal (“PAW”) from the checking account on file. An increase in coverage costs unaccompanied by a corresponding PAW adjustment inherently depleted the Policy's cash value.[16]
The Policy set forth two absolute prerequisites for automatic termination without value.[17]The first was the insured's failure to reestablish a sufficient cash value for the duration of a grace period.[18]The second was Columbus's provision of a “grace notice” via mail.[19]Columbus would “not terminate [the] policy until 31 days after” mailing notice to “the last known address” even if a 61-day grace period had already run to completion.[20]
Between 2010 and 2015, Columbus sent six grace notices to Preston.[21]Each time, Preston remitted the minimum payments necessary to rectify the deficient cash value and maintain coverage before automatic termination.[22]In October 2015, Preston directed all further Policy related correspondence to Eric's residential address (“Golfview address”).[23]
On August 10, 2016, Columbus mailed a grace notice to the Golfview address requesting payment of at least $21.46 by September 10th.[24]The July 11 PAW had been insufficient to maintain a cash value equaling or exceeding the cost of August's coverage and thus triggered a 61-day grace period.[25]To that end-due to the increase in coverage costs-the notice stated that the Wares' $245.22 PAW was “not sufficient to keep [the] policy in force,” that the insufficient PAWs had been temporarily halted, and that, moving forward, a PAW of at least $261.46 was necessary to maintain coverage at the current monthly rate.[26]Columbus ultimately received the minimum payment necessary to rectify the July 11 cash value before the September 10 deadline.[27]Thus, the July 11 grace period referenced in the August 10 notice did not lead to termination.
Despite rectifying the deficient July 11 cash value, the $21.46 premium did nothing for the August 11 cash-value calculation, which restarted the 61-day timer.[28]And because the Wares had paid nothing beyond $21.46 since the July PAW,[29]Columbus sent to the Golfview address another grace notice on September 12, 2016.[30]The September notice described the minimum payment necessary to prevent lapse on October 13, 2016.[31]Preston called Columbus to discuss the situation on September 21, and Columbus's employee explained, as did the August and September notices, that the $245.22 PAWs were insufficient to maintain coverage at the current rate.[32]Nine days later, Columbus received the requested premium, which retroactively established a satisfactory cash value for purposes of both the August 11 and September 11 anniversary dates.[33]The following month, Preston sent Columbus a letter directing all future correspondence to Eric at a new address (“Cottonwood address”) and also instructed deduction of all future PAWs from Eric's bank account.[34]
Columbus sent a grace notice to Eric at the Cottonwood address on July 11, 2018. The notice stated that coverage would lapse unless Columbus received $318.72 within 31 days.[35]Eric subsequently phoned Columbus about the notice; he agreed to pay the requested premium and to increase future PAWs to $308.88-the minimum amount necessary to keep the Policy afloat until coverage costs rose again.[36]Eric also updated his address (“Muscle Shoals address”).[37]
After receiving the Wares' $308.88 PAW on June 9, 2020, Columbus mailed its annual report to the Muscle Shoals address on June 11.[38]The report showed that the Policy had entered a grace period on June 11 in light of a deficient $21.71 cash value.[39]And though Columbus subsequently received the Wares' $308.88 PAW on July 9,[40]the monthly cost of coverage had increased such that the PAW fell short of rectifying the June 11 cash value (i.e., of exiting the grace period).[41]Columbus accordingly mailed notice (“the Final Notice”) to the same address on July 13, informing the Wares of the grace period's commencement and of the temporary pause on PAWs, which required increasing in order to keep pace with the updated cost of coverage.[42]
In the Final Notice, Columbus demanded payment, by August 13, of at least $394.27, the minimum necessary to avoid lapse-i.e., to retroactively establish sufficient cash value for purposes of the foregone June and July anniversary dates.[43]But Columbus received no such payment, so, as promised in the Final Notice, coverage automatically terminated on August 13, 2020. The Wares do not dispute Columbus's mailing of the Final Notice but do allege that they never received it.[44]
Summary judgment is “an integral part of the Federal Rules as a whole, which are designed to secure the just, speedy and inexpensive determination of every action.” Celotex Corp. v. Catrett, 477 U.S. 317, 327 (1986). To obtain summary judgment, the movant must demonstrate that all material facts are undisputed and entitle him to a judgment on the merits. Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 256 (1986). That burden requires the movant to point out portions of the record or pleadings that justify summary judgment. FED. R. CIV. P. 56(a).
“[B]ut the plaintiff is not thereby relieved of his own burden of producing in turn evidence that would support a jury verdict.” Liberty Lobby, 477 U.S. at 256. A party's opposition to summary judgment “may not rest upon the mere allegations or denials of his pleading”; it “must set forth specific facts showing that there is a genuine issue for trial.” Id. at 248 (citing FED. R. CIV. P. 56(e)). To that end, evidence that “is merely colorable” or otherwise “is not significantly probative” cannot create a jury question. Id. at 249 (citations omitted).
Applicable substantive law distinguishes the material from the immaterial. Id. And there can be “no genuine issue as to any material fact” where the nonmovant is unable, after adequate discovery, to “make a showing sufficient to establish the existence of an element essential to [its] case” under the applicable substantive law. Brown v. Crawford, 906 F.2d 667, 669 (11th Cir. 1990) (citations omitted). Dispensing with just one legal element of the non-movant's claim “necessarily renders all other facts immaterial,” in which case “the plain language of Rule 56(c) mandates the entry of summary judgment.” Celotex, 477 U.S. at 322.
The trial court's inquiry turns upon “whether the evidence presents a sufficient disagreement to require submission to the jury or whether it is so one-sided that one party must prevail as a matter of law.” Liberty Lobby, 477 U.S. at 251-52. In engaging with that inquiry, the court is “required to view the evidence and all factual inferences therefrom in the light most favorable to [the nonmovant] and to resolve all reasonable doubts about the facts in her favor.” Patterson v. Ga. Pac., LLC, 38 F.4th 1336, 1341 (11th Cir. 2022) (citation omitted). Should “conflicts arise between the facts evidenced by the parties,” the court “must credit the nonmoving party's version.” Evans v. Stephens, 407 F.3d 1272, 1278 (11th Cir. 2005) (en banc) (citation omitted).
General contract law[45]governs insurance disputes. Pate v Rollison Logging Equip., Inc., 628 So.2d 337, 345 (Ala. 1993). And...
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