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Brannen v. Jackson National Life Insurance Co.

United States District Court, M.D. Georgia, Macon Division

September 16, 2019

JULIANNA “JILL” BRANNEN, as Trustee of the 1996 C. Bishop Brannen III Irrevocable Trust; CLINTON B. BRANNEN, IV; and SARAH-AVERILL BRANNEN, Plaintiffs,
v.
JACKSON NATIONAL LIFE INSURANCE COMPANY, Defendant.

          ORDER GRANTING DEFENDANT'S MOTION FOR SUMMARY JUDGMENT

          TILMAN E. SELF, III, JUDGE

         Bishop Brannen died three years ago. Prior to his death, Bishop took out a 20-year term life insurance policy, but he missed his last payment, causing the policy to lapse. Under operation of Georgia law and the Eleventh Circuit's interpretation of that law, Bishop's children will lose $2.3 million because of that missed payment.

         In hopes to avoid this loss, Plaintiffs, who are his former spouse (Julianna) and his children (Clinton and Sarah-Averill), hired an attorney who sent a demand letter (along with the missed payment) to Defendant Jackson National Life Insurance Company demanding it pay the claim. Contending that the policy had lapsed and could not be reinstated due to Bishop's death, Jackson National denied the claim. After months of back and forth, Plaintiffs instituted this action against Jackson National, asserting claims for breach of contract (Counts I, II), accord and satisfaction (Count III), estoppel (Count IV), other equitable relief (Count V), bad faith damages pursuant to O.C.G.A. § 33-4-6 (Count VI), and attorney's fees. [Doc. 16 at pp. 12-21].

         Early in the case, Jackson National moved the Court to dismiss Plaintiffs' estoppel (Count IV) claim. After conferring with defense counsel and researching relevant Georgia law, Plaintiffs consented to the dismissal and the Court granted the motion. [Docs. 18, 27, 29].[1] Plaintiffs, however, opposed dismissal of their “other equitable relief” claim (Count V), taking the position that the Georgia Court of Appeals incorrectly interpreted O.C.G.A. § 33-24-44(d) in Guideone Life Insurance Co. v. Ward, 619 S.E.2d 723 (Ga.Ct.App. 2005), and its predecessor Goodley v. Fireman's Fund American Life Insurance Co., 326 S.E.2d 7 (Ga.Ct.App. 1985). [Doc. 27 at p. 6]; see also [Doc. 16 at p. 17]. Nevertheless, Plaintiffs astutely recognized that Count V fails under the current interpretation and, after preserving their appellate rights on that claim, consented to its dismissal. [Doc. 27 at p. 6]. Jackson National has now moved for summary judgment adjudication on the four remaining claims-a claim for bad faith damages couched on two breach of contract claims and an accord and satisfaction claim. After a careful review of the record, the parties' briefs, and with the benefit of oral argument, the Court GRANTS Jackson National Insurance Company's Motion for Summary Judgment [Doc. 47].

         I. FACTUAL BACKGROUND

         Julianna, as trustee of the 1996 C. Bishop Brannen III Irrevocable Trust (the “Trust”), and the Trust's beneficiaries, Clinton and Sarah-Averill (collectively “Plaintiffs”), filed this lawsuit seeking to recover proceeds of a life insurance policy insuring the life of the late Clinton Bishop Brannen, III. [Doc. 16 at ¶ 1].

         A. The Policy

         On June 4, 1997, Valley Forge Life Insurance Company[2] issued a life insurance policy (the “Policy”) to Clinton Bishop Brannen, III (the “Insured” or “Bishop”) with a fixed annual premium payment of no more than $2, 547.20 due each subsequent year for 20 years. [Doc. 62-1 at ¶¶ 1, 4-6]. Bishop paid the annual premium for the first 19 years of the policy term, but he failed to pay his final payment, which had come due on June 4, 2016. [Id. at ¶¶ 8, 30].

         In the event that “[a]ny premium, other than the first, . . . [wa]s not paid by its [due date], ” the Policy provided a 31-day Grace Period during which the Policy would stay in force. [Id. at ¶¶ 9-10]; [Doc. 18-1 at p. 17]. At any time during that 31-day period, a missed premium could be paid if “the Insured [was] living” at the time of the payment. [Doc. 62-1 at ¶ 11]; [Doc. 18-1 at p. 17]. If, however, an annual premium remained unpaid at the end of the Grace Period, the Policy could be reinstated up to five years after it lapsed under certain circumstances, provided that Bishop was alive at the time of payment. [Doc. 62-1 at ¶¶ 12-13]; [Doc. 18-1 at p. 17].

         B. The Trust

         The Trust was the sole beneficiary of the Policy, and Bishop's now adult children are the sole and equal beneficiaries of the Trust. [Doc. 16-2 at ¶¶ 15-16]. Julianna was the initial trustee under the terms of the Trust; however, its terms provided that

[i]n the event the [Insured] and [Julianna] become divorced, she shall cease to be a beneficiary and fiduciary under this Agreement (and shall be treated for the purposes of this Agreement as if she had predeceased the [Insured]) . . . and she shall have no right to exercise any power under this Agreement granted to her.

[Id. at ¶¶ 17-18]; [Doc. 55-1 at p. 24]. After she and Bishop divorced in May 2007, her role as trustee ceased in accordance with the Trust's terms, and Clinton and Sarah-Averill's godparent, Brack Maggard, became successor trustee in July 2007. [Doc. 62-1 at ¶¶ 19-21]. The terms of the final order for their divorce required Bishop to maintain a life insurance policy “with no less than $1, 000, 000.00 of death benefit, naming the two minor children of the parties as equal beneficiaries until such time as they reached the age of majority and are no longer eligible for child support.” [Id. at ¶ 23]; [Doc. 49-12 at p. 155]. When Clinton and Sarah-Averill graduated from high school in 2011 and 2016, respectively, Bishop no longer had to pay child support. [Doc. 49-12 at pp. 153-54]. And, because he no longer had to pay child support, he no longer had to continue to pay for the Policy. [Doc. 62-1 at ¶¶ 24-27, 29]; [Doc. 49-12 at pp. 153-54].

         C. Lapse of the Policy in 2016

         Although Bishop didn't pay the June 4, 2016, premium payment, in accordance with the Policy's provisions, the Policy nonetheless remained in force for 31-days (the Grace Period), which ended on July 5, 2016. [Id. at ¶¶ 30, 32]. After the Policy officially lapsed, Jackson National sent a Notice of Lapse dated July 12, 2016, which stated, “Your [P]olicy provided a Grace Period following your premium Due Date of June 04, 2016, during which premiums could be paid without affecting your coverage. Since your premium payment has not been received your [P]olicy has terminated without value effective July 05, 2016 . . . .” [Id. at ¶ 34]; [Doc. 55-1 at p. 30].

         The Notice of Lapse also outlined the criteria for reinstatement of the Policy. Any reinstatement, however, was subject to the requirement that “[t]he Insured [was] living on the date that all past due premiums are received” by Jackson National. [Doc. 62-1 at ¶ 35]; [Doc. 55-1 at p. 30]. Relevant to these reinstatement provisions, the Notice of Lapse also provided that, “[i]f the [p]olicy is not reinstated under the . . . conditions [listed in the Notice of Lapse], the [P]olicy [would] remain lapsed.” [Doc. 62-1 at ¶ 36]; [Doc. 55-1 at p. 30]. Almost a month after Jackson National sent the Notice of Lapse, it sent a subsequent notice informing the Insured that “the time ha[d] ended for reinstating” the Policy under the 20-day reinstatement period following the Grace Period. [Doc. 62-1 at ¶ 37]; [Doc. 55-1 at p. 31]; [Doc. 18-1 at p. 17].

         D. The Insured's Death

         Bishop died on July 24, 2016, and nearly two months later, Maggard became the executor of the Insured's estate. [Doc. 62-1 at ¶¶ 39-40]. In order to resolve disputes over the distribution of the estate, Bishop's adult children and his widow (Tracy Brannen) proceeded to mediation. [Id. at ¶ 41]. Following the mediation, Clinton, Sarah-Averill, and Tracy executed a settlement agreement, and as part of that agreement, released Maggard from his responsibilities as trustee and executor of the estate. [Id. at ¶¶ 42-43]. The Trust provided for two successor appointments. [Id. at ¶ 44]. However, Plaintiffs' prior counsel secured renunciations from the two trustees named to succeed Maggard. On October 10, 2017, the Superior Court of Houston County, Georgia, issued an order appointing Julianna as trustee. [Id. at ¶¶ 45-46].

         E. Jackson National's Denial of Plaintiffs' Claim for Policy Proceeds

         On March 14, 2017-seven months before the trustee appointment from the Houston County Superior Court-Julianna's prior counsel sent a letter to Jackson National in Lansing, Michigan, accompanied by a completed “Life Insurance Claim Form” seeking the proceeds of the Policy. [Id. at ¶¶ 60-61].[3] The two-page letter enclosed several documents: the required claim form, an affidavit from Maggard, a copy of the Trust and modification documents, various correspondence from Jackson National, a death certificate, and a check for $2, 922.80 drawn on Plaintiffs' prior counsel's trust account.[4] [Id. at ¶ 62-63]; see generally [Doc. 55-1].

         Jackson National received this letter and its enclosures on March 15, 2017, at its corporate headquarters in Lansing, Michigan. [Doc. 62-1 at ¶ 64]. Jackson National's mailroom scanned the letter and its contents and sent those scanned documents to be indexed and routed to the proper departments. [Id. at ¶ 65]. This Order focuses on what happened next. Although it is unknown who reviewed the check and the enclosures, we do know that it went to some department for review and was eventually deposited on March 22, 2017. [Id. at ¶ 75]. Five days later, some unknown person, upon realizing that the Policy had lapsed and that the Insured had died, decided that Jackson National would not reinstate the Policy and that Plaintiffs' outstanding premium payment should be refunded.[5] [Id. at ¶ 76]. These circumstances pit an interesting question to the Court: whether the five-day period between Jackson National knowingly depositing the check (after reviewing a completely forthcoming and undeniably candid letter detailing the lapse and the Insured's death) and refunding it constitutes a retention such that Jackson National is on the hook for $2.3 million. The short, but unfortunate, answer (for Plaintiffs) is no.

         II. DISCUSSION

         A. Standard of Review

         A court must grant 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). A factual dispute is not genuine unless, based on the evidence presented, “‘a reasonable jury could return a verdict for the nonmoving party.'” Info. Sys. & Networks Corp. v. City of Atlanta, 281 F.3d 1220, 1224 (11th Cir. 2002) (quoting United States v. Four Parcels of Real Prop., 941 F.2d 1428, 1437 (11th Cir. 1991)); see also Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248 (1986). The movant may support its assertion that a fact is undisputed by “citing to particular parts of materials in the record, including depositions, documents, electronically stored information, affidavits or declarations, stipulations (including those made for purposes of the motion only), admissions, interrogatory answers, or other materials.” Fed.R.Civ.P. 56(c)(1)(A).[6]“When the nonmoving party has the burden of proof at trial, the moving party is not required to ‘support its motion with affidavits or other similar material negating the opponent's claim[]' in order to discharge this ‘initial responsibility.'” Four Parcels of Real Prop., 941 F.2d at 1437-38 (quoting Celotex Corp. v. Catrett, 477 U.S. 317, 323 (1986)). Rather, “the moving party simply may show-that is, point out to the district court- that there is an absence of evidence to support the nonmoving party's case.” Id. (cleaned up). Alternatively, the movant may provide “affirmative evidence demonstrating that the nonmoving party will be unable to prove its case at trial.” Id.

         The burden then shifts to the nonmoving party, who must rebut the movant's showing “by producing . . . relevant and admissible evidence beyond the pleadings.” Josendis v. Wall to Wall Residence Repairs, Inc., 662 F.3d 1292, 1315 (11th Cir. 2011) (citing Celotex Corp., 477 U.S. at 324). The nonmoving party does not satisfy its burden “if the rebuttal evidence ‘is merely colorable, or is not significantly probative' of a disputed fact.” Id. (quoting Anderson, 477 U.S. at 249-50). Further, where a party fails to address another party's assertion of fact as required by Fed.R.Civ.P. 56(c), the Court may consider the fact undisputed for purposes of the motion. Fed.R.Civ.P. 56(e)(2). However, “credibility determinations, the weighing of the evidence, and the drawing of legitimate inferences from the facts are jury functions, not those of a judge. Anderson, 477 U.S. at 255. Stated differently, “the judge's function is not himself to weigh the evidence and determine the truth of the matter but to determine whether there is a genuine issue for trial.” Id. at 249. “The evidence of the [nonmovant] is to be believed, and all justifiable inferences are to be drawn in his favor.” Id. at 255.

         B. Plaintiffs' Breach of Contract Claims ...


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