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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 20-13706
Non-Argument Calendar
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D.C. Docket No. 1:19-cv-21996-MGC
SLAM DUNK I, LLC,
on behalf of itself and all others similarly situated,
Plaintiff - Appellant,
versus
CONNECTICUT GENERAL LIFE INSURANCE COMPANY,
Defendant - Appellee.
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Appeal from the United States District Court
for the Southern District of Florida
________________________
(April 22, 2021)
Before JILL PRYOR, LUCK, and LAGOA, Circuit Judges.
LAGOA, Circuit Judge:
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Slam Dunk I, LLC, appeals the district court’s order granting Connecticut
General Life Insurance Company’s motion to dismiss with prejudice. We are
presented with a straightforward issue on appeal. Slam Dunk asserts that it stated a
claim for breach of contract by alleging Connecticut General improperly increased
cost-of-insurance rates, thereby increasing fees collected from its insureds. We
disagree and affirm for the reasons that follow.
I. FACTUAL AND PROCEDURAL HISTORY
This case involves group universal life insurance (“GUL”) policies. Several
decades ago, Connecticut General issued GUL policies to employees of several
companies, including Hyatt Corporation, Magellan Health Services, and Continental
Airlines. In 2010, Slam Dunk, a life settlement company that purchases life
insurance policies through the secondary market acquired twenty-two GUL polices
issued to individuals by Connecticut General.
According to Slam Dunk, GUL policies are obtained voluntarily and paid for
by an employee. GUL policies are also less expensive than what is typically
available to an individual, permanent (in that they can be maintained even after an
employee leaves his or her job), and feature a savings component. The savings
component is the policy’s “cash value,” which consists of money held in trust by the
insurer plus any money the policyholder contributes. When making such a
contribution, the policyholder is guaranteed a minimum fixed interest rate.
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The policyholder pays for a policy through deductions that Connecticut
General makes each month from the policy’s cash value. This deduction is
calculated by using a set of cost-of-insurance (“COI”) rates. Connecticut General
selects the COI rate that best corresponds to the insured and then deducts the COI
monthly charge from the GUL policy’s cash value.
The GUL policies contain the following language about how Connecticut
General calculates and may adjust the COI:
The Monthly Cost of Insurance Rates are based on the Insured’s
Attained Age, the type of benefit, the Class of Insured and whether
premiums for that Insured are paid directly to [Connecticut General] or
through payroll deductions. The Monthly Cost of Insurance Rates are
determined by [Connecticut General] based on its expectations as to
future mortality experience. Adjustment in the Monthly Cost of
Insurance Rates may be made by [Connecticut General] from time to
time, but not more than once a year, and will apply to Insureds of the
same class. Under no circumstance will the Monthly Cost of Insurance
Rates for Life Insurance ever be greater than those shown in the Table
of Guaranteed Maximum Life Insurance Rates. Such guaranteed
maximum rates are based on the Commissioners 1980 Extended Term
Table (age last birthday) and 4% effective annual interest.
The GUL policies therefore establish a variable COI rate that may increase or
decrease based on several things, including: the policyholder’s age, the type of
benefit, the class of policyholder, whether premiums for the policyholder are paid
directly to Connecticut General or through payroll deductions, and Connecticut
General’s expectations of the policyholder’s “future mortality experience.”
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Regarding the last factor, as the policyholder’s mortality experience improves or
declines, Connecticut General may adjust the COI rate accordingly.
Slam Dunk brought this putative class action against Connecticut General,
seeking to represent similarly situated policyholders whose monthly COI rates have
been increased at least once since May 16, 2014. Because, as a general matter,
advancements in medicine and science have improved life expectancy over time,
Slam Dunk alleges that Connecticut General should have either reduced or at least
not increased the COI rate. In its initial complaint, Slam Dunk asserted that this
improving life expectancy trend triggered a contractual obligation for Connecticut
to reduce the COI rate. Connecticut General moved to dismiss the initial complaint,
and the district court granted that motion without prejudice, allowing Slam Dunk
leave to file an amended complaint. Slam Dunk then amended its complaint, this
time shifting its theory from faulting Connecticut General for not changing the COI
rate to faulting Connecticut General for changing the rate, i.e., Slam Dunk alleges
that, despite life expectancy improving, Connecticut General improperly increased
the COI rate. According to Slam Dunk, because the COI rate is to be “based on”
expectations of “future mortality experience,” Connecticut General violated the
GUL policies by increasing the COI rate.
Connecticut General again moved to dismiss Slam Dunk’s action, arguing that
Slam Dunk failed to state a plausible claim for breach of contract. On September
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29, 2020, the district court dismissed Slam Dunk’s amended complaint with
prejudice, finding that the policies’ plain language did not support Slam Dunk’s
allegations in its amended complaint. This appeal ensued.
II. STANDARD OF REVIEW
We review de novo an order dismissing a complaint for failure to state a claim
with prejudice, Hunt v. Aimco Props., L.P.,
814 F.3d 1213, 1221 (11th Cir. 2016),
“accepting the complaint’s factual allegations as true and construing them in the light
most favorable to the plaintiff.” United States v. Henco Holding Corp.,
985 F.3d
1290, 1296 (11th Cir. 2021). In our review, we apply Florida law. 1
III. ANALYSIS
On appeal, Slam Dunk argues that Connecticut General breached its
contractual obligations that it would base COI rate adjustments on mortality
expectations. Because mortality experiences across the board are improving, Slam
1
Because this is a diversity case brought in a Florida district court, we apply Florida’s
choice-of-law rules. Boardman Petroleum, Inc. v. Federated Mut. Ins. Co.,
135 F.3d 750, 752
(11th Cir. 1998) (“Federal courts sitting in diversity apply the forum state's choice-of-law rules.”).
Florida follows the rule of lex loci contractus in determining which law applies to a breach-of-
contract claim. Jemco, Inc. v. United Parcel Serv., Inc.,
400 So. 2d 499, 501 (Fla. Dist. Ct. App.
1981). Under this theory, “in the absence of a contractual provision specifying the governing law,
a contract . . . is governed by the law of the state in which the contract is made.” Fioretti v. Mass.
Gen. Life Ins. Co.,
53 F.3d 1228, 1235 (11th Cir. 1995) (footnote omitted). The GUL policies do
not contain a choice of law provision. Slam Dunk’s amended complaint is devoid of allegations
identifying where the GUL policies were signed or executed, but does make passing reference to
Connecticut General’s breach of “one or more contracts in Florida by failing to perform acts
required by its insurance contracts to be performed within Florida.” Although this jurisdictional
allegation does not provide us with information about where the contracts were made, neither party
disputes that Florida law controls, and we therefore apply it to this matter.
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Dunk argues that the language of the GUL policies prohibited Connecticut General
from increasing the COI rate. 2
Insurance policies are contracts. See Lumbermens Mut. Cas. Co. v. August,
530 So. 2d 293, 295 (Fla. 1988). A claim for breach of contract under Florida law
requires three elements: “(1) the existence of a contract; (2) a material breach of that
contract; and (3) damages resulting from the breach.” Vega v. T-Mobile USA, Inc.,
564 F.3d 1256, 1272 (11th Cir. 2009). As with any contract, courts “must interpret
the policy in accordance with the plain meaning of the language used so as to give
effect to the policy as it was written.” State Farm Mut. Auto. Ins. Co. v. Menendez,
70 So. 3d 566, 569–70 (Fla. 2011) (quoting Travelers Indem. Co. v. PCR Inc.,
889
So. 2d 779, 785 (Fla. 2004)). “Furthermore, ‘[i]n construing a contract, the legal
effect of its provisions should be determined from the words of the entire contract,’
and that construction must give ‘effect to all of the provisions of the contract.’”
Summitbridge Credit Invs. III, LLC v. Carlyle Beach, LLC,
218 So. 3d 486, 489 (Fla.
4th DCA 2017) (alteration in original) (emphasis added) (quoting Sugar Cane
Growers Co-op. of Fla., Inc. v. Pinnock,
735 So.2d 530, 535 (Fla. Dist. Ct. App.
1999)).
2
We agree with Connecticut General that Slam Dunk abandoned the theory put forward in
its initial complaint: that Connecticut General should have reduced the COI rate. Further, we also
agree that Slam Dunk has abandoned its count for breach of the duty of good faith and fair dealing,
as Slam Dunk fails to address the district court’s dismissal of this count and makes no mention of
it anywhere in its initial brief. Therefore, we affirm on this count without further comment. See
LaCourse v. PAE Worldwide Inc.,
980 F.3d 1350, 1360 (11th Cir. 2020).
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Accepting Slam Dunk’s factual allegations as true and viewing them in the
light most favorable to Slam Dunk, in order to state a cause of action for breach of
contract, Connecticut General’s duty to adjust the COI rate would have to be based
exclusively on expectations of future mortality experience, and Connecticut General
could not consider any other factors without breaching the GUL policies. This
reading of the contract fails for two reasons.
First, Slam Dunk’s interpretation ignores the other sentences of the GUL
policies. The COI provision contained in each of the GUL policies consists of five
sentences, but Slam Dunk’s theory focuses only on the sentence that mentions future
mortality experience as a basis for establishing the COI rate. The immediately
preceding sentence, however, establishes that the COI rates are also based on “the
Insured’s Attained Age, the type of benefit, the Class of the Insured and whether
premiums for that Insured are paid directly to [Connecticut General] or through
payroll deductions.”
We cannot accept a reading of the GUL policies that focuses only one
sentence to the exclusion of all others. See Auto-Owners Ins. Co. v. Anderson,
756
So. 2d 29, 34 (Fla. 2000) (“[I]n construing insurance policies, courts should read
each policy as a whole, endeavoring to give every provision its full meaning and
operative effect.”). The GUL policies’ language establishes factors that Connecticut
General must consider in a decision to adjust the COI rate: the policyholder’s age,
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the type of benefit, the class of policyholder, whether premiums for the policyholder
are paid directly to Connecticut General or through payroll deductions, and the
expectations of the policyholder’s “future mortality experience.” We must read the
contract as a whole and cannot sever the single sentence highlighted by Slam Dunk
from the remainder of the COI provision.
Second, Slam Dunk advances a reading of the COI provision that is contrary
to its plain language by incorrectly reading exclusivity into the phrase “based on.”
For example, even if we were to disregard the preceding sentence and consider only
the sentence of the COI provision that Slam Dunk highlights, Slam Dunk asks this
Court to read the sentence as follows: “The Monthly Cost of Insurance Rates are
determined by [Connecticut General] based only on its expectations as to future
mortality experience”; or “based on its expectations as to future mortality experience
and nothing else.” This runs afoul of basic principles of contract interpretation that
courts do not add words to a contract. Indeed, ‘[t]he law [in Florida] is quite clear
that courts may not rewrite, alter, or add to the terms of a written agreement between
the parties and may not substitute their judgment for that of the parties in order to
relieve one from an alleged hardship of an improvident bargain..” See Int’l
Expositions, Inc. v. City of Miami Beach,
274 So. 2d 29, 30-31 (Fla. Dist. Ct. App.
1973). “Rather, it is a court’s duty to enforce the contract as plainly written.” See
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Okeechobee Resprts, L.L.C. v. E Z Cash Pawn, Inc.,
145 So. 3d 989, 993 (Fla. Dist.
Ct. App. 2014).
Our sister circuit in Norem v. Lincoln Benefit Life Co.,
737 F.3d 1145 (7th Cir.
2013), addressed the phrase “based on” in a case involving COI rates. In Norem, the
policy at issue contained the following provision: “The cost of insurance rate is based
on the insured’s sex, issue age, policy year, and payment class. The rates will be
determined by us, but they will never be more than the guaranteed rates shown on
Page 5.” Id. at 1147. The plaintiff brought a breach-of-contract class action, alleging
that the insurer breached “the express terms” of the COI provision “because it
considers factors beyond the insured’s sex, issue age, policy year, and payment class
when it calculates the COI rates.” Id. at 1147–48. Because the insurer conceded it
did, in fact, consider other factors, the plaintiff moved for summary judgment,
arguing there was no genuine dispute that the insurer breached the policies. Id. at
1148. The Seventh Circuit looked to the plain and ordinary meaning of the phrase
“based on” and concluded that none of the definitions supported Norem’s proposed
interpretation that “base” or “based on” implied exclusivity. Id. at 1149 (relying on
the definition of “base” in the Merriam–Webster’s Collegiate Dictionary and the
Shorter Oxford English Dictionary). By way of example, the court explained that
“no one would suppose that a cake recipe ‘based on’ flour, sugar, and eggs must be
limited only to those ingredients.” Id. at 1150. The court, therefore, concluded that
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because the phrase “based on” was not exclusive the insurer was not “prohibited
from considering factors beyond sex, issue age, policy year, and payment class when
calculating its COI rates.” Id.
We agree with Norem. Nothing about the plain and ordinary meaning of the
phrase “based on” connotes exclusivity, and nothing about it implies the list that
follows is exhaustive. And while we recognize there is some disagreement among
state and district courts, see Norem, 737 F.3d at 1149 (“Several state and district
courts have considered similar clauses in life insurance policies and reached
divergent results.”), we conclude that this interpretation is most consistent with
Florida contract law. Indeed, here, the COI provision at issue in the GUL policies
contains two separate sentences that both use the phrase “based on.” Having been
used twice to refer to different factors, the phrase “based on” cannot connote
exclusivity without leading to an absurd or internally inconsistent result. We
therefore decline to adopt Slam Dunk’s proposed interpretation because to do so
would rewrite the GUL policies.
We have considered the other arguments raised by Slam Dunk and find them
unavailing. The district court read the COI provisions of the GUL policies according
to their plain and ordinary meaning and properly dismissed the case.
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IV. CONCLUSION
For the foregoing reasons, we affirm the district court’s dismissal of Slam
Dunk’s claims.
AFFIRMED.
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