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[DO NOT PUBLISH]
IN THE UNITED STATES COURT OF APPEALS
FOR THE ELEVENTH CIRCUIT
________________________
No. 17-11165
________________________
D.C. Docket No. 5:15-cv-00144-JSM-PRL
CHARLES W. O’BRIEN, As Successor Trustee
of First Enterprise Trust,
Plaintiff -Appellant
versus
TRANSAMERICA PREMIER LIFE
INSURANCE COMPANY,
Defendant-Appellee.
________________________
Appeal from the United States District Court
for the Middle District of Florida
________________________
(August 22, 2018)
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Before JORDAN and ROSENBAUM, Circuit Judges, and MARTINEZ, * District
Judge.
PER CURIAM:
The plaintiff-appellant, Charles W. O’Brien (“O’Brien”), initiated this
breach of contract action against defendant-appellee, Transamerica Premier Life
Insurance Co. (“Transamerica”), seeking recovery under a “Death Benefit Rider”
(“Rider”) incorporated in an annuity contract issued to the Beth O’Brien Trust.
The district court granted Transamerica’s motion for summary judgment and
denied Mr. O’Brien’s motion. The court concluded that the contract
unambiguously excluded application of the Rider in instances where the annuitant
died after annuitizing the contract, and thus found the Rider inapplicable to this
case as a matter of law. O’Brien filed this appeal from the final summary
judgment. For the reasons stated below, we affirm the judgment of the district
court.
I. FACTS
On February 8, 1999, Peoples Benefit Life Insurance Co., the predecessor to
Transamerica, issued a “Flexible Premium Multi-Funded Variable Annuity
Contract” (“Contract”) to the Beth O’Brien Trust, with Beth O’Brien designated as
*
Honorable Jose E. Martinez, United States District Judge for the Southern District of Florida,
sitting by designation.
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the annuitant. The Contract, issued in Ohio, bore an original annuity date of
December 1, 2008.
Ms. O’Brien designated the Trustee of First Enterprise Trust as the
Contract’s beneficiary. Charles O’Brien, her son, is Successor Trustee of the First
Enterprise Trust. Ms. O’Brien made an initial purchase payment of $1,834,582.59
to acquire the annuity, which was administered through Vanguard Variable
Annuity Plan (“Vanguard”). The Contract included and was simultaneously issued
with a “Return of Premium Death Benefit Rider.” In relevant part, the Rider
stated:
RETURN OF PREMIUM DEATH BENEFIT RIDER
This Rider has been made a permanent part of your contract. This
Rider adds a cost provision and a coverage provision that replaces the
Death Benefit section of your Contract. This Rider is issued in
consideration of the Contract Owner’s agreement to the changes
below.
…..
Death Benefit
This Rider replaces the “Death Benefit” section of your Contract with
the following:
The Death Benefit payable upon the death of the Annuitant
will be the greater of:
1) The Accumulated Value of the Contract as of the date due Proof of
Death of the Annuitant is received by the Company; or
2) The sum of all Premium Payments, less any Adjusted Partial
Withdrawals and Premium Taxes, if any.
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This Rider takes effect and expires concurrently with the Contract to which
it is attached.
Ms. O’Brien elected to annuitize the Contract within a month of its issuance,
and executed a Variable Annuity Election of Income Option to accomplish this
purpose. She elected to begin receiving annuity payments on May 1, 1999,
continuing for life, with a guaranteed pay-out term of ten years. Ms. O’Brien
enjoyed the benefit of this guaranteed ten-year income stream (120 monthly
payments) plus 50 additional monthly annuity payments paid up through the date
of her death on May 5, 2013. After she died, Charles O’Brien made demand on
Vanguard for payment of the “Death Benefit” described in the Rider. Vanguard
denied the claim on the ground that the Contract’s “Death Benefit” is payable only
if the annuitant dies prior to the Contract’s annuity date, a circumstance which did
not materialize here. O’Brien then brought this breach of contract action against
Transamerica seeking recovery of the “Death Benefit” described in the Rider.
Transamerica eventually filed a motion for summary judgment on the issue
of the Rider’s applicability to this case, and O’Brien’s response in opposition to the
motion was interpreted by the district court to include a cross-motion for summary
judgment. The district court granted Transamerica’s motion for summary
judgment, denied O’Brien’s motion, and entered final judgment accordingly.
O’Brien filed this appeal from the final summary judgment.
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II. STANDARD OF REVIEW
Our review of the district court’s grant of summary judgment is de novo, and
we apply the same legal standards as those used by the district court. Altman
Contractors, Inc. v. Crum & Forster Specialty Ins. Co.,
832 F.3d 1318 (11th Cir.
2016); Hoffman v. Allied Corp.,
912 F.2d 1379, 1383 (11th Cir. 1990); Gulf Tampa
Drydock Co. v. Great Atl. Ins. Co.,
757 F.2d 1172 (11th Cir. 1985).
The interpretation of a contract is also a matter of law subject to de novo
review. Equity Lifestyle Props., Inc. v. Fla. Mowing & Landscape Serv., Inc.,
556
F.3d 1232 (11th Cir. 2009); Seguros Del Estado, S.A. v. Sci. Games, Inc.,
262 F.3d
1164 (11th Cir. 2001) (contract interpretation without resort to parol evidence is
question of law reviewed de novo). 1
III. DISCUSSION
The district court found that the Rider, read in context of the Contract as a
whole, has no application to instances where the designated annuitant dies after the
annuity date. The court found this interpretation was compelled by various
provisions of the Contract describing the interplay between the annuity date and
1
The question of which state’s substantive law applies in this diversity action is a legal
question entitled to independent review on appeal. Am. Fam. Life Assurance Co. v. U.S. Fire
Co.,
885 F.2d 826, 830 (11th Cir. 1989). However, because the parties agree that Ohio law
controls here, the Court will not conduct a choice of law analysis.
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when a death benefit was due: First, a section captioned, “Death Benefit Prior to
the Annuity Date,” recites in pertinent part, “the Death Benefit is calculated and is
payable upon receipt of due Proof of Death of the Annuitant,2 as well as proof that
the Annuitant died prior to the Annuity Date.”3 (R. 48-4). Second, a section
captioned, “Annuitant’s Death Prior to Annuity Date,” refers to distribution of the
death benefit “[i]f the Annuitant dies prior to the Annuity Date” (emphasis
supplied), with the allocation depending on the survivorship and number of
contract beneficiaries. Third, a section captioned, “Annuitant’s Death After
Annuity Date” (emphasis supplied) states “[i]f the Annuitant dies on or after the
Annuity Date, any unpaid Payments Certain will be paid to the Beneficiary,” and
makes no reference to a Death Benefit.
Reading the Contract as a whole, the district court concluded that the Rider
had no application here because Ms. O’Brien indisputably died after the “Annuity
Date,” i.e., the date on which she began receiving annuity payments. It further
found that any “alleged ambiguity” created by the Rider’s reference to
2
“Annuitant” is defined in the Glossary of the contract as “[t]he person or persons on
whose life expectancy the duration of any Annuity Payments is determined, and . . . upon whose
death prior to the Annuity Date benefits under this Contract are paid.” (R. 48-4)
3
“Annuity Date” is defined in the Glossary as “[t]he date on which Annuity Payments
begin.” (R. 48-4).
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“replace[ment]” of a non-existent section 4 of the underlying Contract was
immaterial because, under any reasonable reading of the Contract, no “Death
Benefit” is ever due if the annuitant dies after the annuity date.
On appeal, O’Brien argues that the Rider by its plain terms refers to a
“Death Benefit” which is “payable upon the death of the Annuitant,” without
limitation as to whether the annuitant’s death occurs before or after the annuity
date. He argues the district court erred by misconstruing or disregarding the word
“replaces,” as it appears in the Rider, which, under its ordinary and plain meaning,
refers simply to the substitution of one thing for another. Applying this definition
here, he contends the Rider calls for the “replacement” of any provisions in the
Contract which referred to a “Death Benefit,” including those provisions relied
upon by the district court in reaching its ultimate interpretation of the Contract.
Alternatively, O’Brien contends that the Rider’s reference to the
“replacement” of a non-existent section of the Contract created an ambiguity as to
the circumstances under which the Rider was intended to apply, and that the
district court should have interpreted this ambiguity against Transamerica as
drafter of the Contract and Rider. At a minimum, O’Brien contends that the
district court should have conducted an evidentiary hearing to consider extrinsic
evidence of the parties’ intent.
4
While the Rider states it “replaces” the “Death Benefit section” of the Contract, there is
no section of the Contract expressly titled a “Death Benefit” section.
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Recognizing that “[t]he cardinal purpose for judicial examination of any
written instrument is to ascertain and give effect to the intent of the parties,”
Foster Wheeler Enviresponse, Inc. v. Franklin Cty. Convention Facilities Auth.,
678 N.E.2d 519, 526 (Ohio 1997), it is clear in this case that Transamerica
performed exactly as the Contract contemplated with regard to payment of the
“Death Benefit” described in the Rider. In determining the intent of the parties, “a
writing, or writings executed as part of the same transaction, will be read as a
whole, and the intent of each part will be gathered from a consideration of the
whole.” Id. at 526. Courts should therefore “attempt to harmonize all the
provisions [of the contract] rather than produce conflict in them . . . [and] no
provision of the contact should be ignored as inconsistent if there exists a
reasonable interpretation which gives effect to both.” Lincoln Elec. Co. v. St. Paul
Fire and Marine Ins. Co.,
210 F.3d 672, 685 (6th Cir. 2000) (quoting Ottery v.
Bland,
536 N.E.2d 651, 654 (Ohio Ct. App. 1987)).
Contracts that are, by their terms, clear and unambiguous require no real
construction or interpretation, and courts will enforce such contracts as written by
the parties. See Foster Wheeler, 678 N.E.2d at 526; Alexander v. Buckeye Pipe
Line Co.,
374 N.E.2d 146, 150 (Ohio 1978); Royal Ins. Co. of Am. v. Orient
Overseas Container Line Ltd.,
525 F.3d 409 (6th Cir. 2008). Conversely, where
the court cannot decipher the parties’ intent through the plain language of the
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contract, a fact-finder may consider extrinsic evidence to resolve the ambiguity and
ascertain the parties’ intent. See Shifrin v. Forest City Enters., Inc.,
597 N.E.2d
499, 501 (Ohio 1992). Contract language is deemed ambiguous, however, “‘only
where its meaning cannot be determined from the four corners of the agreement or
where the language is susceptible of two or more reasonable interpretations.’”
Savedoff v. Access Grp., Inc.,
524 F.3d 754, 763 (6th Cir. 2008) (quoting
Covington v. Lucia,
784 N.E.2d 186, 190 (Ohio Ct. App. 2003)). In deciding
whether an ambiguity exists, the contract “‘must be construed as a whole’” and the
intent of the parties must be determined from the entire instrument and not from
detached parts.
Id. (quoting Tri-State Grp., Inc. v. Ohio Edison Co.,
782 N.E.2d
1240, 1246 (Ohio Ct. App. 2002)).
If primary rules of contract construction — plain language of the document
and extrinsic evidence, in that order — fail to clarify the meaning of a contract
term, then a secondary rule of contract construction, requiring ambiguous language
in a standardized contract to be construed strictly against its drafter, comes into
play. Cadle v. D’Amico,
66 N.E.3d 1184 (Ohio Ct. App. 2016).
Finally, common words in a contract are presumed to hold their ordinary
meaning unless manifest absurdity results, or some other meaning is clearly
evidenced from the instrument. Waste Mgmt., Inc. v. Rice Danis Ind.,
257 F. Supp.
2d 1076, 1083 (S.D. Ohio 2003) (citing Buckeye Pipe Line Co., 374 N.E.2d at
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150); Crosier v. Ohio Dept. of Rehab. & Corr.,
2018 WL 1168385, ___ N.E.3d
___ (Ohio Ct. App. Mar. 6, 2018) (citing Plaza Dev. Co. v. W. Cooper Enters.,
LLC,
12 N.E.3d 506 (Ohio Ct. App. 2014)); Kenney v. Chesapeake,
31 N.E.3d 136
(Ohio Ct. App. 2015).
In this case, the only reasonable interpretation of the Contract, viewing the
Contract as a whole, is that the Rider replaced the “Death Benefit Prior to the
Annuity Date” section of the Contract. First, the text and structure of the Rider
mirrors the text and structure of the “Death Benefit Prior to the Annuity Date”
section. For example, the Rider and the “Death Benefit Prior to the Annuity Date”
section both have two subsections and use the exact same language, differing
slightly on only a few items. In addition to the similarity between the text and
structure of this section of the Contract and the Rider, it is important to note that
the Rider states that it “replaces the Death Benefit” section of the Contract.
Although Plaintiff is right that the Contract lacks a section titled “Death Benefit,”
the “Death Benefit Prior to the Annuity Date” is the only section of the Contract
that has “Death Benefit” in its title whatsoever. Furthermore, the Rider and the
“Death Benefit Prior to the Annuity Date” are aimed at the same issue: they both
govern the valuation of the Death Benefit, with both providing for the greater of
the Accumulated Value of the Contract, or, in the alternative, the sum of all
premium payments.
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Moreover, the other two sections of the Contract dealing with the annuitant’s
death and what payments, if any, are due limit the reach of the otherwise-
uninhibited Rider. Indeed, the language from the “Annuitant’s Death Prior to
Annuity Date” section, which limits the Death Benefit to a situation where the
annuitant died before annuitizing the Contract, and the language from the
“Annuitant’s Death After Annuity Date” section, which limits after-death, after-
annuitized benefits to any remaining guaranteed annuity payments, clearly limit
what payments are due upon Ms. O’Brien’s death. And since Ms. O’Brien had
already annuitized the Contract and thereafter received all of her guaranteed
annuity payments, no further payments were due upon her death. See Fifth Third
Mortg. Co. v. Rankin,
2011 WL 2206629, *5 (Ohio Ct. App. 2011) (declining to
adopt a reading of a rider which would, “in essence, create a new contract”).
Last, to interpret the Contract otherwise, as urged by O’Brien, would
effectively amount to a double recovery under the Contract. It would allow
recovery of the death benefit upon passing of the annuitant under any sequence and
would lead to the commercially unreasonable result of allowing an annuitant to
reap the benefit of his or her bargain twice — once by collecting the guaranteed
ten-year annuity stream during his or her lifetime and again by conferring a death
benefit on his or her designated beneficiary at the expiration of that lifetime. The
Contract, read as a whole, does not support this result.
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In determining the intent of the parties, the Court has harmonized all the
provisions of the Contract to reach the only reasonable interpretation of the
Contract. And because the meaning of the Rider can be determined from the four
corners of the Contract and because the language of the Rider is susceptible to only
one reasonable interpretation, no ambiguity exists. This correct, global reading and
harmonization of the Contract’s terms leads to the conclusion that the parties
intended to confer a death benefit only in those circumstances where the annuitant
dies before the annuity date.
The district court’s grant of summary judgment in favor of Transamerica is
AFFIRMED.
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