William Hancock, Sr. v. Americo ( 2020 )

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 19-1374
WILLIAM T. HANCOCK, SR., individually and in a representative capacity on
behalf of a class of all persons similarly situated,
Plaintiff - Appellant,
v.
AMERICO FINANCIAL LIFE AND ANNUITY INSURANCE COMPANY;
INVESTORS LIFE INSURANCE COMPANY OF NORTH AMERICA;
AMERICO LIFE, INC.,
Defendants - Appellees.
Appeal from the United States District Court for the Eastern District of North Carolina, at
Wilmington. Louise W. Flanagan, District Judge. (7:16-cv-00350-FL)
Submitted: December 30, 2019 Decided: February 5, 2020
Before MOTZ, DIAZ, and THACKER, Circuit Judges.
Affirmed by unpublished per curiam opinion.
H. Forest Horne, Jr., John Alan Jones, MARTIN & JONES, PLLC, Raleigh, North
Carolina; Mark R. Sigmon, SIGMON LAW, PLLC, Raleigh, North Carolina, for
Appellant. Debbie W. Harden, Matthew F. Tilley, WOMBLE BOND DICKINSON (US)
LLP, Charlotte, North Carolina; Roger B. Cowie, Carl C. Scherz, Taylor F. Brinkman,
LOCKE LORD LLP, Dallas, Texas, for Appellees.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
In 1985, William T. Hancock, Sr., purchased a flexible premium adjustable life
insurance policy from Americo Financial Life and Annuity Insurance Company, Investors
Life Insurance Company of North America, and Americo Life, Inc. (collectively,
“Defendants”). The policy provided for a $50,000 death benefit if Hancock died before
the date of maturity, which was his 95th birthday. If Hancock was alive on the date of
maturity, he would receive the cash value of the policy. The policy also provided for an
initial minimum premium of $41.27 per month and a “planned periodic premium” in that
same amount. Hancock alleges that, although he paid $41.27 per month for more than 25
years, Defendants later increased the amount of his monthly premiums and depleted the
cash value of the policy to cover the difference between the initial minimal premium and
the increased monthly premium, depriving Hancock both of the cash value and the
promised death benefit unless he began to pay higher monthly premiums. Hancock appeals
the district court’s order dismissing for failure to state a claim his amended putative class
action complaint in which he asserts claims under North Carolina law for breach of
contract, breach of the duty of good faith and fair dealing, declaratory and injunctive relief,
equitable rescission, and violation of the Unfair and Deceptive Trade Practices Act
(“UDTPA”), N.C. Gen Stat. Ann. § 75-1.1 (2017). We affirm.
“We review de novo the district court’s dismissal of a complaint under Federal Rule
of Civil Procedure 12(b)(6),” and must “accept as true all of the factual allegations
contained in the complaint and draw all reasonable inferences in favor of the plaintiff.”
Hall v. DIRECTV, LLC, 846 F.3d 757, 765 (4th Cir. 2017). “To survive a motion to
2
dismiss, [Hancock’s] factual allegations, taken as true, must state a claim to relief that is
plausible on its face. The plausibility standard is not a probability requirement, but asks
for more than a sheer possibility that a defendant has acted unlawfully.” Id. (citations and
internal quotation marks omitted).
Under North Carolina law, insurance policies are contracts that courts must interpret
as they are written. Digh v. Nationwide Mut. Fire Ins. Co., 654 S.E.2d 37, 39 (N.C. Ct.
App. 2007). In the absence of ambiguity, courts should construe insurance policies “by
the plain, ordinary, and accepted meaning of the language used. An ambiguity exists
where, in the opinion of the court, the language of the policy is fairly and reasonably
susceptible to either of the constructions asserted by the parties.” Id. (citations and internal
quotation marks omitted). Courts must construe any ambiguities against the insurance
company as the drafting party. Id.
Hancock asserts that the policy could be reasonably interpreted to provide that the
amount of the monthly premium could only be changed by the policyholder, and, as a
result, coverage under the policy would be guaranteed if the policyholder paid $41.27 per
month. Accordingly, he argues, Defendants breached the policy by increasing the
premiums and depleting the cash value of the policy to make up the difference. We have
reviewed the policy and conclude that the district court correctly determined that, reading
the policy as a whole, Defendants were permitted under the policy’s terms to require
Hancock to pay increased premiums if the cost of insurance became greater than the cash
3
value of the policy. The district court therefore correctly dismissed Hancock’s claim for
breach of contract. ∗
Hancock next contends that the district court should not have dismissed his claim
for breach of the duty of good faith and fair dealing. In every contract there is an implied
covenant of good faith and fair dealing that neither party will do anything that injures the
right of the other to receive the benefits of the agreement. Bicycle Transit Auth., Inc. v.
Bell, 333 S.E.2d 299, 305 (N.C. 1985); see Maglione v. Aegis Family Health Ctrs., 607
S.E.2d 286, 291 (N. C. Ct. App. 2005) (“[A] party who enters into an enforceable contract
is required to act in good faith and to make reasonable efforts to perform his obligations
under the agreement.”).
We agree with the district court that Hancock’s allegations regarding breach of the
duty of good faith and fair dealing are materially similar to those supporting his claim for
breach of contract. Because the district court properly dismissed the breach of contract
claim and Hancock did not adequately plead an independent claim for breach of the duty
of good faith and fair dealing, the district court properly dismissed this claim.
Finally, Hancock argues that he pled an adequate claim for relief under the UDTPA.
The UDTPA is meant to prevent unfair or deceptive acts or practices in or
affecting commerce. In order to state a claim under the UDTPA, a plaintiff
must show (1) defendant committed an unfair or deceptive act or practice;
(2) the action in question was in or affecting commerce; and (3) the act
proximately caused injury to the plaintiff. Whether conduct is unfair or
deceptive is a legal issue for the court to decide.
∗
As the district court correctly dismissed this claim, it also correctly dismissed the
derivative claims for declaratory and injunctive relief and rescission.
4
Ellis v. La.-Pac. Corp., 699 F.3d 778, 787 (4th Cir. 2012) (citations and internal quotation
marks omitted). “North Carolina courts have repeatedly held that a mere breach of
contract, even if intentional, is not sufficiently unfair or deceptive to sustain an action under
[the UDTPA.]” PCS Phosphate Co. v. Norfolk S. Corp., 559 F.3d 212, 224 (4th Cir. 2009)
(internal quotation marks omitted); see Wells Fargo Bank, N.A. v. Corneal, 767 S.E.2d
374, 377 (N.C. Ct. App. 2014) (“A UDTPA action is distinct from a breach of contract
action; a plaintiff must allege and prove egregious or aggravating circumstances to prevail
on a UDTPA claim.”). Section 58-63-15 of the North Carolina Code defines unfair
methods of competition and unfair or deceptive acts or practices relating to the business of
insurance, and the North Carolina courts have held that violations of § 58-63-15 also
constitute violations of the UDTPA. Elliott v. Am. States Ins. Co., 883 F.3d 384, 396 (4th
Cir. 2018). Having reviewed the pleadings, we agree with the district court that Hancock
failed to state a UDTPA claim.
We therefore affirm the district court’s judgment. We dispense with oral argument
because the facts and legal contentions are adequately presented in the materials before this
court and argument would not aid the decisional process.
AFFIRMED
5