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Anderson v. Wilco Life Insurance Co.

United States Court of Appeals, Eleventh Circuit

November 22, 2019

VANESSA ANDERSON, individually and on behalf of a class of similarly situated persons, Plaintiff-Appellee,
v.
WILCO LIFE INSURANCE COMPANY, Defendant-Appellant.

          Appeal from the United States District Court for the Southern District of Georgia D.C. Docket No. 1:19-cv-00008-JRH-BKE

          Before MARCUS, GRANT and HULL, Circuit Judges.

          HULL, CIRCUIT JUDGE

         In this interlocutory appeal, defendant Wilco Life Insurance Company ("Wilco") appeals from the district court's order granting plaintiff Vanessa Anderson's motion to remand this putative class action back to a Georgia state court. In this case, Anderson, on behalf of herself and all those similarly situated, sued her former insurer, Wilco. Anderson alleges that Wilco improperly raised the cost of insurance premiums for her life insurance policy, which caused her policy to lapse. As relief, Anderson seeks both money damages and declaratory and injunctive relief requiring Wilco (1) to reinstate all life insurance policies that were surrendered or lapsed as a result of the improper premium increases and (2) to lower premiums.

         Anderson filed her lawsuit in the Superior Court of Columbia County, Georgia. Wilco timely removed the case to the United States District Court for the Southern District of Georgia under the Class Action Fairness Act ("CAFA"), 28 U.S.C. § 1332(d). The federal district court remanded the case to state court, concluding that Wilco had not met its burden of showing that the amount in controversy exceeded $5 million, as required by CAFA. This Court granted Wilco permission to appeal under 28 U.S.C. § 1453(c).

         Because plaintiff Anderson seeks equitable relief to reinstate a lapsed or surrendered life insurance policy, we conclude that (1) the face value of the policy can be used to satisfy the amount-in-controversy requirement, and (2) the aggregate face value of the life insurance policies here is over $75 million. Wilco thus has met its burden of proving by a preponderance of the evidence that the amount in controversy exceeds the $5 million CAFA threshold. Accordingly, we reverse.

         I. BACKGROUND

         A. Putative Class Action

         In December 2018, Anderson, on behalf of herself and other similarly situated individuals in Georgia, lodged this class action complaint against Wilco in Georgia state court. According to the complaint, in 2001, Anderson owned a life insurance policy ("the policy") issued by Wilco's predecessor. The policy had a $150, 000 death benefit, a planned monthly premium of $35, and was set to mature in 2059, when Anderson reached 100 years old.

         Anderson's policy was a "universal" or "flexible premium adjustable" life insurance policy. Universal life insurance policies are hybrid products that combine elements of life insurance with a long-term investment savings component using market-based yields. The insured's premiums are deposited into a savings account, from which Wilco deducts certain monthly expenses to pay for the life insurance portion of the plan. The monthly deduction is comprised of two elements: a cost of insurance ("COI") charge and a nominal monthly expense charge. The COI charge is calculated based on the policyholder's mortality risk and may be adjusted annually based on the policyholder's sex, attained age, and premium class.

         The money held in the savings account is called the policy's "accumulation value," and earns interest at a guaranteed rate. For policies like Anderson's, defendant Wilco promised to credit interest on the policyholder's accumulation value at a guaranteed rate of 3% annually. The policyholder, like Anderson, has the option of paying her monthly premiums from external funds or from the policy's accumulation value. If a policy's accumulation value is insufficient to cover a monthly premium deduction, the policy enters a grace period during which the policyholder must pay a premium sufficient to cover the deduction. If the policyholder does not, the policy will lapse.

         When Anderson purchased her policy in 2001, her annual premium was approximately $420. Initially, her annual COI charge was less than that premium, which left some amount each year as accumulated value to grow at the guaranteed interest rate. Anderson's annual COI charge, however, increased year after year as follows:

Policy Year

Annual COI Charge

Percent Change from Prior Year

2003-2004

$233.71

2004-2005

$260.00

11.25%

2005-2006

$286.32

10.12%

2006-2007

$312.62

9.19%

2007-2008

$334.82

7.10%

2008-2009

$352.07

5.15%

2009-2010

$373.54

6.10%

2010-2011

$397.70

6.33%

2011-2012

$578.54

45.47%

2012-2013

$571.98

(1.13%)

2013-2014

$563.10

(1.55%)

2014-2015

$695.31

23.48%

2015-2016

$729.35

4.90%

TOTAL

312.07%

         As shown above, the COI charge increased almost every year. However, Anderson alleges that the sudden and dramatic COI rate increases starting in 2012 were not "based on the insured's sex, attained age, and premium class on the date of issue," but rather on Wilco's unlawful effort to avoid its contractual obligations. Wilco allegedly initiated these increases to (1) recoup losses stemming from the guaranteed interest rates provided with the policies, and (2) force policyholders "to surrender their policies when the increases become impossible to pay, so that Wilco can avoid ever having to pay out a death benefit on those policies." Due to the statute of limitations, only COI rates charged after December 6, 2012, are at issue in this action.

         More particularly, Anderson alleged that the COI charge taken from her accumulation value: (1) increased by 45.47% from 2011 to 2012; (2) decreased by 1.13% and 1.55% in 2013 and 2014; (3) increased again by 23.48% from 2014 to 2015; and then (4) increased by another 4.9% the following year. As a result, Anderson's COI charge went from approximately $33.14 monthly ($397.70 annually) to $60.78 monthly ($729.35 annually).

         According to Anderson's complaint, these increases made her policy unaffordable. While Anderson's accumulation value had grown to $764.90 by 2012, once Wilco started deducting these increased COI charges, her accumulation value was completely depleted by July 2017. This caused her policy to lapse. Anderson asserted that the same thing happened to other putative class members.

         Based on these allegations, Anderson claimed that Wilco breached her policy and the implied duty of good faith and fair dealing. She sued on behalf of all Georgia residents who owned or own policies with the same COI language as her policy and whose COI rates were increased after December 6, 2012. As relief, Anderson sought not only money damages, but also declaratory and injunctive relief requiring Wilco to reverse the allegedly illegal COI rate ...


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