Thomas v. Ameritas Life Insurance ( 2022 )

Case: 21-30254 Document: 00516317266 Page: 1 Date Filed: 05/12/2022
United States Court of Appeals
for the Fifth Circuit
United States Court of Appeals
Fifth Circuit
FILED
No. 21-30254 May 12, 2022
Lyle W. Cayce
Clerk
Russell Thomas,
Plaintiff—Appellee,
versus
Ameritas Life Insurance Corp.,
Defendant—Appellant.
Appeal from the United States District Court
for the Middle District of Louisiana
USDC No. 3:19-CV-00741
Before Smith, Costa, and Wilson, Circuit Judges.
Cory T. Wilson, Circuit Judge:
In Louisiana, the errors and omissions of an insurance agent in filling
out an application for insurance on behalf of an insured are attributable to the
insurer. Johnny Alfred, a producer for Ameritas Life Insurance Corporation,
erroneously completed a life insurance application and bound Ameritas to a
temporary insurance agreement covering the life of Deshon Murphy.
Deshon died, and his father, Russell Thomas, sought to recover as the policy
beneficiary. After a bench trial, the district court concluded Ameritas was
bound by Alfred’s errors and omissions and found for Thomas. We affirm.
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I.
As neither party challenges the factual findings of the district court,
the facts of this case are represented as that court found them. In 2018,
D’Sha Murphy and Russell Thomas sought insurance covering the life of
their adult son, Deshon Murphy. They met with Johnny Alfred in his office
in Baton Rouge to apply for the life insurance. Alfred had been a producer
with Ameritas since earlier that year, and he walked D’Sha and Thomas
through an application for insurance with Ameritas. Based on responses
from D’Sha and Thomas, Alfred actually filled out the application, as well as
a temporary insurance agreement (the TIA) to cover Deshon’s life while the
application was pending. After completing the application and the TIA on
his laptop, Alfred gave Thomas the opportunity to review them. Alfred
subsequently submitted the application and authorized the TIA.
Despite that D’Sha and Thomas answered Alfred’s questions
accurately, the application and TIA contained multiple erroneous
statements, including omissions of Deshon’s history of ADHD, asthma, and
chest pain. Both documents omitted that there was other life insurance
covering Deshon. Deshon’s name was signed to both documents, even
though he was not present, and Thomas’s name was not listed as owner of
the policy.
Before the policy application was processed, Deshon died in a car
accident. After receiving notice of the death, Ameritas sent Thomas a letter
notifying him that the application had not been processed and delineating the
procedure for filing a claim under the TIA. Ameritas subsequently denied
coverage. Its basis for doing so was the misrepresentation and omission of
key parts of Deshon’s medical history. Thomas then filed suit in Louisiana
state court against Alfred and Ameritas.
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Ameritas removed the case to federal district court on the basis of
diversity. Thomas subsequently filed an amended complaint that dropped all
claims against Alfred from the suit. Both parties filed cross-motions for
summary judgment; the district court denied both motions. The parties then
filed motions in limine. Thomas sought to bar Ameritas from arguing that
Alfred was not its agent. He argued that, based on Louisiana law, Alfred had
to be Ameritas’s agent and any argument to the contrary would be specious.
Conversely, Ameritas sought to bar Thomas from introducing any evidence
that would establish Alfred was its agent. Ameritas argued that while
Thomas’s initial complaint referenced Alfred’s agency relationship, the
amended complaint made no reference to agency, so Thomas could not
proceed under that theory at trial. The district court determined that neither
motion was properly a motion in limine and denied them both.
After a bench trial, the district court enumerated its findings of fact
and conclusions of law. It found that D’Sha and Thomas had not made any
of the misrepresentations in the application or the TIA and that Alfred was
responsible for the errors and omissions in those documents. Then, finding
that Alfred was Ameritas’s agent, the district court imputed Alfred’s actions
to Ameritas and estopped Ameritas from denying coverage. Finally, the
district court determined that Ameritas denied coverage without just cause
and assessed statutory interest against Ameritas as a result. Ameritas
appeals.
II.
As this is a diversity case arising from Louisiana, this court applies the
substantive law of that state. Klocke v. Watson, 936 F.3d 240, 244 (5th Cir.
2019) (citing Hanna v. Plumer, 380 U.S. 460, 465 (1965)). Ameritas levies
four arguments on appeal: First, that the district court erred by denying its
motion in limine; next, that the TIA was not formed properly, and even if it
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was, that it violated Louisiana law; then, that Thomas cannot rely on Alfred’s
apparent authority to recover; and finally, that the district court erred in
assessing statutory interest against Ameritas. We address each in turn.
A.
“The grant or denial of a motion in limine is considered discretionary,
and thus will be reversed only for an abuse of discretion and a showing of
prejudice.” Hesling v. CSX Transp., Inc., 396 F.3d 632, 643 (5th Cir. 2005)
(citing Buford v. Howe, 10 F.3d 1184, 1188 (5th Cir. 1994)). “A trial court
abuses its discretion when its ruling is based on an erroneous view of the law
or a clearly erroneous assessment of the evidence.” Knight v. Kirby Inland
Marine, Inc., 482 F.3d 347, 351 (5th Cir. 2007) (internal quotation marks
omitted) (quoting Bocanegra v. Vicmar Servs., Inc., 320 F.3d 581, 584 (5th Cir.
2003)). In assessing a motion in limine, “[t]he trial court must weigh the
evidence’s contribution to the case against any potential prejudice or
confusion.” FDIC v. Wheat, 970 F.2d 124, 131 (5th Cir. 1992).
Ameritas’s motion in limine sought to preclude Thomas
from asserting or contending at . . . trial that a principal-agency
relationship exist[ed] between Johnny Alfred . . . and
Ameritas, that Alfred’s actions or inactions may be imputed to
Ameritas under an agency theory of liability, that Ameritas is
liable for actions or inactions of Alfred and/or that
Ameritas’[s] defenses are somehow limited or not viable based
on Plaintiff’s contention that a principal-agency relationship
exist[ed] between Alfred and Ameritas because Plaintiff has
asserted no such allegations in his Complaint . . . . Because any
such contention(s) is beyond the scope of Plaintiff’s
allegations, any such contention is not properly before the
Court, and Plaintiff should be precluded from raising or
asserting any such theory or contention . . . .
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The district court concluded that “[t]he Defendant’s Motion is not properly
a Motion in Limine. The purported Motion in Limine seeks a legal
determination of whether an agency relationship exists. It does not challenge
the admissibility of any discreet or particular evidence on evidentiary
grounds, and is DENIED.”
Contrary to the district court’s conclusion, Ameritas raised a valid
evidentiary concern, namely, that Thomas sought to offer evidence irrelevant
to the claim he asserted in his complaint. See Fed. R. Evid. 402 advisory
committee’s note to 1972 proposed rules (quotation omitted) (stating that
the relevancy of evidence is the threshold consideration for admissibility).
Ameritas is correct that Thomas’s amended complaint excised all references
to Alfred’s alleged role as Ameritas’s agent. From there, Ameritas reasons
that Thomas should not have been allowed to offer evidence related to
Alfred’s agency relationship.
But we only require that “a pleading allege[] facts upon which relief
can be granted,” and we have acknowledged that a pleading “states a claim
even if it ‘fails to categorize correctly the legal theory giving rise to the
claim.’” Sanchez Oil & Gas Corp. v. Crescent Drilling & Prod., Inc., 7 F.4th
301, 309 (5th Cir. 2021) (internal quotation marks omitted) (quoting Homoki
v. Conversion Servs., Inc., 717 F.3d 388, 402 (5th Cir. 2013)); see also Fed. R.
Civ. P. 8. While Thomas’s two complaints were fairly barebones, and he
deleted what agency allegations about Alfred he had pled in the original
complaint when he filed his amended complaint, he retained two statements
about Alfred in the live pleading: First, he alleged that “Alfred electronically
submitted an application for life insurance . . . to Ameritas[,]” and second,
that “Alfred completed the Policy’s application which indicates that Murphy
and Thomas signed electronically.” These statements articulate facts upon
which relief could be granted on an agency theory. Sanchez Oil & Gas Corp.,
7 F.4th at 309. The allegations are sufficient to outline a claim that Alfred
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filled out the documents and submitted them, logically leaving him to blame
for any errors or inconsistencies in the applications. Thus, Thomas
preserved, if barely, this theory for trial. It follows that because Ameritas’s
motion would have been properly denied even if the district court had
construed it as a motion in limine, Ameritas cannot demonstrate prejudice
from the district court’s denial of its motion, and this issue is without merit.
B.
Ameritas next challenges the district court’s legal conclusion that the
TIA was enforceable between Thomas and Ameritas. We review this
question de novo. Lehmann v. GE Global Ins. Holding Corp., 524 F.3d 621,
624 (5th Cir. 2008) (quoting Teco Barge Line, Inc. v. Exmar Lux (In re Mid-
South Towing Co.), 418 F.3d 526, 531 (5th Cir. 2005)). 1 In Louisiana, the four
elements of a valid contract are “capacity, consent, a lawful cause, and a valid
object.” Granger v. Christus Health Cent. La., 2012-1892 (La. 6/28/13); 144
So. 3d 736, 760. Ameritas contends that the TIA lacked both a lawful cause
and consent. Ameritas first argues that because Deshon never signed the
TIA, the cause of the TIA was unlawful. Next, it argues that because
Ameritas and Deshon were the only parties listed on the TIA, Thomas was
not a party, and, because Deshon never actually signed the TIA, there was
no consent to form the agreement.
1.
“Cause is the reason why a party obligates himself.” La. Civ.
Code art. 1967. “[I]n Louisiana, the common law tradition that requires
‘consideration’ to effect an enforceable contract has not been adopted;
‘cause’ is sufficient for a party to enter into a contract.” Granger, 144 So. 3d
1As noted above, Ameritas does not contest the district court’s factual findings.
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at 760 n.27 (citing Aaron & Turner, L.L.C. v. Perret, 2007-1701 (La. App. 1
Cir. 5/4/09), 22 So. 3d 910). “Consideration is an objective element
required to form a contract, whereas cause is a more subjective element that
goes to the intentions of the parties.” Perret, 22 So. 3d at 915.
“The cause of an obligation is unlawful when the enforcement of the
obligation would produce a result prohibited by law or against public policy.
Examples of obligations with unlawful causes include those that arise from
gaming, gambling, and wagering not authorized by law.” La. Civ. Code
art. 1968. Another example of an unlawful cause is an individual’s agreeing
to “boycott, coerce, or intimidate” another as part of a noncompetition
agreement. Citizens Bank & Trust Co. v. West Bank Agency, Inc., 540 So. 2d
440, 443-44 (La. Ct. App. 1989).
Ameritas’s argument regarding cause is simple. First, Louisiana
requires that “[n]o life . . . insurance contract upon an individual . . . shall be
made or effectuated unless at the time of the making of the contract the
individual insured . . . in writing applies therefor or consents thereto[.]” La.
Stat. Ann. § 22:856. Second, the district court found that Deshon, the
insured under the putative contract, never signed the contract or otherwise
evinced consent in writing. On those two premises, the cause of the
contract—insuring an individual’s life who has not consented to the
insurance—was unlawful because it directly contradicts a Louisiana statute.
“In the state of Louisiana, the principles of the common law are not
recognized . . . . They have a system peculiar to themselves, adopted by their
statutes[.]” Wright v. Paramount-Richards Theatres, 198 F.2d 303, 306 (5th
Cir. 1952) (internal quotation marks omitted) (quoting Parsons v. Bedford,
Breedlove, & Robeson, 28 U.S. (3 Pet.) 433, 450 (1830) (McLean, J.,
dissenting)). “The sources of law are legislation and custom.” La. Civ.
Code art. 1. Louisiana’s system requires that “courts look first and
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foremost to the statutory law.” Chevron USA, Inc. v. Vermilion Parish Sch.
Bd., 377 F.3d 459, 462 (5th Cir. 2004). Mindful of the unique importance of
Louisiana’s positive statutory law, Thomas contends that because the record
is devoid of any argument related either to section 22:856 or, more generally,
to improper cause, Ameritas has forfeited its argument that under section
22:856, the cause of the TIA was improper, such that the contract was never
confected.
“A party forfeits an argument by failing to raise it in the first instance
in the district court—thus raising it for the first time on appeal[.]” Rollins v.
Home Depot USA, 8 F.4th 393, 397 (5th Cir. 2021). This rule exists for a
simple reason: It is “an efficient approach that allows a full consideration of
all the parties’ arguments in the district court . . . . A thorough ruling might
avoid an appeal by making clearer the unlikelihood of appellate success based
on the strengths of the district court decision.” In re Crescent Energy Servs.,
L.L.C., 896 F.3d 350, 354-55 (5th Cir. 2018). “[I]n order to preserve an
argument for appeal, the argument (or issue) not only must have been
presented in the district court, a litigant also ‘must press and not merely
intimate the argument during proceedings before the district court.’”
Templeton v. Jarmillo, 28 F.4th 618, 622 (5th Cir. 2022) (quoting FDIC v.
Mijalis, 15 F.3d 1314, 1327 (5th Cir. 1994)).
Of course, there is a significant difference between raising an issue or
argument for the first time on appeal and supplementing an argument with
new authority. A party can produce new authority on appeal provided that it
“[m]a[de] an issue clear, or as the First Circuit stated the point . . . ,
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present[ed] the issue ‘face up and squarely in the trial court[.]’” Id. (quoting
Alston v. Town of Brookline, 997 F.3d 23, 44 (1st Cir. 2021)). 2
Ameritas’s illegal-cause argument is appealingly straightforward, but
not preserved for appeal. Ameritas contends that its argument is not forfeited
because both section 22:856 and the notion of unlawful cause were
referenced in its argument for judgment on partial findings during the bench
trial. But the portion of the bench trial motion Ameritas references in its
briefing on appeal is related to Ameritas’s own internal requirements and
definitions of an insurable interest, not the relevant provisions of positive
Louisiana law. Scrutinizing the record, we cannot find any argument related
to section 22:856 or unlawful cause. Simply put, Ameritas did not present
any argument that the TIA ran afoul of section 22:856’s written consent
requirement “face up and squarely” in the district court. Id. We therefore
decline further to address this forfeited argument.
2.
Ameritas’s second argument, that Deshon was the only named party
other than Ameritas and that he did not consent to the TIA, while not
waived, is defeated on appeal by the district court’s unchallenged factual
findings. The district court found that Alfred filled out the application and
TIA erroneously, which included erroneously placing Deshon as the
contracting party rather than Thomas and then signing the agreement for the
contracting parties. The district court also found that Alfred was Ameritas’s
2
Because this is a procedural rule, we have at times relaxed its bar and exercised
our discretion to hear forfeited arguments. Generally, though, we only do so when the
argument is “a purely legal matter and failure to consider the issue will result in a
miscarriage of justice.” Rollins, 8 F.4th at 398 (internal quotation marks omitted) (quoting
Essinger v. Liberty Mut. Fire Ins. Co., 534 F.3d 450, 453 (5th Cir. 2008)). As our later
discussion demonstrates, declining to reach Ameritas’s forfeited argument here results in
no miscarriage of justice.
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agent. Ameritas has not challenged these findings on appeal. Thus, under
Louisiana law, Alfred’s errors and omissions in this context are wholly
attributable to Ameritas. Rudd v. Carpenter, (La. App. 2 Cir. 1/13/21); 311
So. 3d 568, 573 (citing Harris v. Guar. Life. Ins. Co., 75 So. 2d 227 (La. 1954);
Miller v. Preferred Life Ins. Co., 107 So. 2d 323 (La. Ct. App. 1958)). As a
result, the district court did not err by estopping Ameritas from arguing that
Thomas was not a party to the TIA, that Deshon had never consented to the
agreement, and, therefore, that the parties never consented to enter the TIA.
C.
Ameritas also attacks Alfred’s apparent authority. It asserts that
because Thomas had the chance to review the insurance documents and
likely saw Alfred’s errors, Thomas cannot rely on Alfred’s apparent
authority to ratify the errors because no one represented that Alfred had the
authority to do so. Ameritas analyzes apparent authority in its briefing but
under Louisiana law, this is not the relevant consideration. As outlined
above, the actions of an insurance agent in completing an application for an
insured are imputed to the insurer, and that insurer is bound by its agent’s
actions “provided the insured has no actual or implied knowledge thereof.”
Rudd, 311 So. 3d at 573 (citing Harris, 75 So. 2d 227; Miller, 107 So. 2d 323).
This was the basis of the district court’s holding, not Alfred’s apparent
authority. Ameritas’s arguments, while couched in terms of apparent
authority, amount to a contention that Thomas had actual or constructive
knowledge that the application was filled out improperly such that the
responsibility for the errors fall not on Ameritas, but on Thomas. Again, the
district court’s factual findings defeat Ameritas’s argument.
The district court found that Thomas “was provided the opportunity
to read the policy application on Alfred’s laptop computer screen.”
Critically, the court also found that “Thomas made no changes because he
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relied on Alfred’s experience and expertise in completing the Ameritas policy
application form[.]” It is well-established in Louisiana law that “an
insurance applicant may rely upon and sign an application as completed by
the agent and may rely upon the agent’s expertise in interpreting the nature
of the information sought by the company he represents.” Toups v. Equitable
Life Assurance, 94-1232 (La. App. 3 Cir. 5/3/95); 657 So. 2d 142, 147 (citing
Economy Auto Salvage, Inc. v. Allstate Ins. Co., 499 So. 2d 963 (La. Ct. App.
1986)).
As Ameritas has not challenged the district court’s factual finding that
Thomas relied on Alfred’s expertise, Thomas’s cursory review of the
insurance application and TIA, via Alfred’s laptop computer screen, does
not without more satisfy the actual or implied knowledge requirement.
Therefore, we cannot conclude that the district court erred in finding that
Ameritas was bound by Alfred’s errors and omissions in the application and
the TIA, such that Ameritas could not deny Thomas coverage under the
TIA on that basis.
D.
Ameritas concludes by arguing that the district court improperly
assessed statutory interest against it. Under Louisiana’s insurance statutes,
“claims . . . shall be settled by the insurer within sixty days after the date of
receipt of due proof of death, and if the insurer fails to do so without just
cause, the amount due shall bear interest at the rate of eight percent . . . .”
La. Stat. Ann. § 22:1811. Ameritas asserts that it had just cause to deny
Thomas’s claim because of the material misrepresentations in the application
and the TIA. But as the district court found, the false information was
attributable to Alfred. Because Alfred’s actions were attributable to
Ameritas, and “[a]n investigation of its own agent’s actions in issuing the
policy would have revealed to [Ameritas] that” it could not maintain its
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defenses, we discern no reversible error in the district court’s determination
that Ameritas acted without just cause. Swain ex rel. Estate of Swain v. Life
Ins. Co. of La., 537 So. 2d 1297, 1304 (La. Ct. App. 1989); see also Ryan v.
Security Indus. Ins. Co., 386 So. 2d 939, 943-45 (La. Ct. App. 1980). The
district court’s imposition of statutory interest pursuant to section 22:1811
was appropriate.
III.
The district court acted within its discretion to deny Ameritas’s
pretrial motion in limine. On substance, Ameritas forfeited its argument
related to the contractual element of “cause,” as provided by Louisiana’s
positive law, by not first presenting it to the district court. As for the
insured’s “consent” to the contracts, Alfred’s actions, errors and omissions
in completing the insurance application and TIA were properly imputed to
Ameritas, such that Ameritas was estopped from raising Deshon’s lack of
consent. Finally, the district court acted within its discretion in assessing
penalty interest against Ameritas.
AFFIRMED.
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