Sample v. Penn Mutual Life Insurance ( 2003 )

United States Court of Appeals
FOR THE EIGHTH CIRCUIT
___________
No. 02-3773
___________
Joan Sample, Individually and as *
Successor Trustee of the Wayne *
W. Sample Living Trust, *
*
Appellant, *
* Appeal from the United States
v. * District Court for the Eastern
* District of Arkansas.
Penn Mutual Life Insurance *
Company, * [UNPUBLISHED]
*
Appellee. *
___________
Submitted: April 18, 2003
Filed: June 11, 2003
___________
Before MORRIS SHEPPARD ARNOLD, BEAM, and MELLOY, Circuit Judges.
___________
PER CURIAM.
Joan Sample ("Joan") brought this diversity action against Penn Mutual Life
Insurance Company ("Penn Mutual") for failing to pay a claim after the death of her
husband Wayne W. Sample ("Wayne"). The district court1 granted Penn Mutual's
motion for summary judgment, and Joan appeals. We affirm.
Wayne applied to Penn Mutual for a $750,000 life insurance policy on October
27, 1999. As part of the application, Wayne submitted a check for $329.02 to Penn
Mutual to cover the premium for the twenty-year term life insurance policy.2 Wayne
also signed a sixty-day temporary insurance agreement ("TIA") that same day. The
application that Wayne completed included the following provision:
Subject to the provisions of the temporary insurance agreement attached
to this application, no insurance will be in force until the first premium
is paid in full and the policy is delivered while the health, habits,
occupation and other facts relating to the Proposed Insured(s) . . . are the
same as described in this . . . application.
The TIA provided that the insurance would terminate automatically upon the earliest
of: sixty days from the date of the agreement; the effective date of the insurance
policy; the date a policy, other than the one applied for, is offered to the applicant; or
the date Penn Mutual mails a notice of termination of coverage to the applicant. Penn
Mutual never issued a life insurance policy on Wayne's life.
Wayne was killed in a car accident on December 29, 1999, sixty-three days
after he applied for the life insurance policy and signed the TIA. Joan sought the
proceeds from the life insurance policy, but Penn Mutual denied her claim on
February 7, 2000, and returned the initial premium, plus interest. Joan then brought
this action, claiming that she is entitled to the full amount of the insurance benefits,
1
The Honorable George Howard, Jr., United States District Judge for the
Eastern District of Arkansas.
2
At the direction of Penn Mutual, Wayne also underwent a physical
examination on November 19, 1999, which he passed.
-2-
as well as twelve percent damages and reasonable attorney's fees, pursuant to
Arkansas Code Annotated § 23-79-208. The district court granted Penn Mutual's
motion for summary judgment. We affirm.
"We review a grant of summary judgment de novo, viewing the evidence in the
light most favorable to the non-moving party and upholding summary judgment
where there are no genuine issues of material fact and the moving party is entitled to
judgment as a matter of law." Richie Co., LLP v. Lyndon Ins. Group, Inc., 316 F.3d
758, 760 (8th Cir. 2003). Additionally, "[a]s we exercise our power under diversity
jurisdiction, we must interpret the forum state's law. When interpreting state law, we
are bound by the decisions of the state's highest court." Interstate Cleaning Corp. v.
Commercial Underwriters Ins., Co., 325 F.3d 1024, 1027 (8th Cir. 2003).
Our review of the record indicates that Penn Mutual had not delivered a policy
to Wayne by the time of his death. The insurance application clearly states that "no
insurance will be in force until . . . the policy is delivered." Consequently, a policy
was not yet in existence. Arkansas law does not recognize a cause of action for
failure to deliver an insurance policy within the time the TIA is in effect. Nat'l Union
Fire Ins. Co. v. Sch. Dist. No. 55, 182 S.W. 547, 548 (Ark. 1916) ("The better reason
and the decided weight of authority supports the doctrine that mere delay in passing
upon an application for insurance can not be construed as accepting such application
and consenting to be bound for the insurance sought by it, nor can a cause of action
for negligence be grounded upon such delay."). Additionally, the TIA
unambiguously states that it automatically expires sixty days from the date of issue.
Therefore, Wayne did not have temporary insurance at the time of his death because
the TIA had expired three days before.
-3-
On appeal, Joan claims that the TIA
fails to state unequivocally what will occur at the end of
that sixty (60) days in the event that the underwriters have
not decided ultimately on the general policy. It is
reasonable, from the language in the temporary agreement,
for Mr. Sample to have drawn the conclusion that the
temporary insurance agreement would have continued to
insure the life of Wayne Sample all the way through the
underwriting process itself in the event that he had not
heard back from Penn Mutual at the close of the sixty (60)
days.
Brief of Appellant at 18. We disagree. The language of the TIA is clear and there is
no room for a different interpretation–the TIA had expired when Wayne was killed.
Therefore, we find that there are no genuine issues of material fact to justify denial
of Penn Mutual's motion for summary judgment.
Accordingly, we affirm.
A true copy.
Attest:
CLERK, U.S. COURT OF APPEALS, EIGHTH CIRCUIT.
-4-