Williamson v. Hartford Life & Accident Ins. Co.

• Decision Date: 21 June 2012
• Docket Number: Case No. 09-4114-CV-C-NKL
• Parties: LINDA WILLIAMSON, on behalf of herself and all others similarly situated, Plaintiff, v. HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Defendant.
• Court: United States District Courts. 8th Circuit. Western District of Missouri

LINDA WILLIAMSON, on behalf of herself and all others similarly situated, Plaintiff,
v.
HARTFORD LIFE AND ACCIDENT INSURANCE COMPANY, Defendant.

Case No. 09-4114-CV-C-NKL

UNITED STATES DISTRICT COURT FOR THE WESTERN DISTRICT OF MISSOURI CENTRAL DIVISION

Dated: June 21, 2012

ORDER

Plaintiff Linda Williamson claims that Defendant Hartford Life and Accident Insurance Company failed to pay interest on insurance claims as required under a Tennessee statute. Pending before the Court are Williamson's motion for summary judgment [Doc. # 89] and Hartford's motion for summary judgment [Doc. # 82]. For the following reasons, the Court denies Williamson's motion and grants Hartford's motion.

I. Factual Background

Plaintiff Linda Williamson is a Missouri citizen. Defendant Hartford Life and Accident Insurance Company is a Connecticut corporation authorized to do business in Missouri.

Hartford offers an accidental death and dismemberment insurance policy, which it delivers to the group policyholder, Financial Services Association, in Tennessee. Banks

Page 2

across the country can become members of the Financial Services Association, enabling them to issue $1,000 of free insurance coverage for accidental death and dismemberment to depositors who open or retain an account. The banks pay the premiums for this coverage. Depositors can purchase additional coverage, for which premiums are periodically deducted from the depositors' accounts. For either kind of coverage, depositors need not submit individual evidence of insurability [Doc. # 29-2 at 3], and coverage is discontinued if the certificate holder's bank ceases to be a member of a participating financial organization. [Doc. # 29-2 at 14]. Depositors enrolled in either type of coverage receive a certificate of insurance. When a certificate holder makes a claim on one of these policies, Hartford is not obligated under the policy to pay out any insurance benefit until it has conducted a claim confirmation analysis to determine if the certificate holder meets all the requirements for payment.

Linda Williamson's late husband, Ben Williamson, was a depositor at a participating bank, and purchased $40,000 of accidental death and dismemberment coverage on top of the $1,000 coverage that came free with his account. Ben Williamson died in a car accident in September 2007. It is undisputed that Hartford paid the correct principal amount in a timely manner on Williamson's claim. The only dispute is whether Williamson was entitled to statutory interest on this amount.

Tennessee's statutory interest statute provides, in relevant part:

(b) Liquidated and settled accounts, signed by the debtor, shall bear interest from the time they become due, unless it is expressed that interest is not to accrue until a specific time therein mentioned.

Page 3

(c) In all other cases, the time from which interest is to be computed shall be the day when the debt is payable, unless another day be fixed in the contract itself.

T.C.A. § 47-14-109 (1979). Prior to this 1979 amendment, Tennessee's interest statute was divided into two sections:

47-1607. Bonds, notes, bills of exchange, and liquidated and settled accounts bearing interest--All bonds, notes, bills of exchange, and liquidated and settled accounts, signed by the debtor, shall bear interest from the time they become due, unless it is expressed that interest is not to accrue until a specific time therein mentioned.
47-1608. Time from which interest to be computed.--The time from which interest may be computed shall be the day when the debt is payable, unless another day be fixed in the contract itself.¹

T.C.A. § 47-1607 (1956); T.C.A. § 47-1608 (1956).

Williamson has filed this lawsuit claiming that under the 1979 Amendment her insurance benefit is a "liquidated and settled account" that became "due" when her husband passed away. Williamson thus claims she is entitled to interest on the principal of her insurance benefit during the period between when her husband passed away and when Hartford completed its claim confirmation analysis.

II. Discussion

A moving party is entitled to summary judgment "if the movant shows that there is no genuine dispute as to any material fact and the movant is entitled to judgment as a matter of law." FED. R. CIV. P. 56(a).

Page 4

A. Conflict of law

"In a diversity action, a district court sitting in Missouri follows Missouri's choice-of-law rules to determine applicable state law." Wolfley v. Solectron USA, Inc., 541 F.3d 819, 823 (8th Cir. 2008). Williamson argues that Tennessee law governs this transaction because under the Missouri Supreme Court's holding in Miller v. Home Ins. Co., 605 S.W.2d 778, 780 (Mo. 1980) (en banc), Missouri courts construing group insurance contracts apply the law of the state where the policy was delivered to the group policy holder, rather than the law of the state of the individual who has been given a certificate by the group policy holder. Because Hartford delivered its policy to a Tennessee group policy holder, Financial Services Association, which delivered an individual certificate to Williamson's husband in Missouri, Williamson argues that Miller requires the Court to apply Tennessee law in this case. Hartford argues that Missouri courts overruled Miller by adopting the "most significant relationship" test articulated in the Second Restatement of Conflict of Laws.

Williamson agrees that the "most significant relationship" test now governs conflict-of-law issues for insurance contracts generally, but argues that Miller is still good law with regard to group contracts. Williamson points out that the Missouri Supreme Court decided Miller after Missouri courts adopted the "most significant relationship" test for contract cases. See Nat'l Starch and Chem. Corp. v. Newman, 577 S.W.2d 99, 102 (Mo. Ct. App.) (1979). Williamson also cites Buck v. Am. States Life Ins. Co., 723 F. Supp. 155, 159 n.1 (E.D. Mo. 1989), in which Judge Nangle of the Eastern District of

Page 5

Missouri conducted a survey of Missouri law and appeared to conclude that Miller remained good law, albeit only with regard to group insurance contracts. Finally, Williamson claims that courts applying Missouri law have continued to apply the holding in Miller to group insurance contracts long after Missouri adopted the "most significant relationship" test for contracts, citing Armstrong v. Aetna Life Ins. Co., 128 F.3d 1263, 1266 (8th Cir. 1997) (applying Missouri law), and Hamilton v. Standard Ins. Co., 516 F.3d 1069, 1073 (8th Cir. 2008) (discussing Missouri law).

Hartford has not produced a Missouri case applying the "most significant relationship" test, instead of the rule in Miller, to a group contract case. Rather, Hartford cites Shelton v. Annuity Bd. of S. Baptist Convention, 915 F. Supp. 124, 128 (E.D. Mo. 1996), aff'd, 109 F.3d 466, 468 (8th Cir. 1997) (issue not raise on appeal), in which the court recognized confusion in Missouri courts on which test to apply to insurance contracts, and then appeared to avoid the question by noting that both tests required application of Texas law on the facts of that case. Thus, the court in Shelton did not apply the "most significant relationship" test to a group contract.

The Court is persuaded that Miller remains good...