Harris v. Transamerica Advisors Life Ins. Co. , 2017 Ohio 341 ( 2017 )

[Cite as Harris v. Transamerica Advisors Life Ins. Co., 2017-Ohio-341.]
IN THE COURT OF APPEALS OF OHIO
SIXTH APPELLATE DISTRICT
LUCAS COUNTY
Craig Harris, et al. Court of Appeals No. L-15-1252
Appellants Trial Court No. CI0201401624
v.
Transamerica Advisors Life Insurance
Company DECISION AND JUDGMENT
Appellee Decided: January 27, 2017
*****
R. Ethan Davis and Zachary J. Murry, for appellants.
James F. Koehler and Timothy J. Fitzgerald, for appellant.
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JENSEN, P.J.
I. Introduction
{¶ 1} The plaintiffs-appellants are siblings, Craig Harris and Melanie Harris.
They are beneficiaries of a life insurance policy purchased by their mother, Joanne Harris
(hereinafter “decedent”). Appellants allege that the defendant-appellee, Transamerica
Advisors Life Insurance Company, improperly calculated the death benefit following
their mother’s death. They also claim that appellee acted in bad faith.
{¶ 2} Appellee moved for summary judgment, and appellants moved for partial
summary judgment. On August 24, 2015, the Lucas County Court of Common Pleas
granted appellee’s motion and denied appellants’. Appellants appealed.
{¶ 3} For the reasons that follow, we find that appellee is entitled to judgment as a
matter of law, and we affirm the trial court’s judgment.
II. Statement of Facts and Procedural History
{¶ 4} The material facts are not in dispute. In 1987, the decedent purchased a life
insurance policy from Monarch Life Insurance Company, a predecessor company to
appellee. The single premium for the policy was $200,000. Decedent named her three
children as beneficiaries, one of whom predeceased her, leaving Craig and Melanie as
beneficiaries.
{¶ 5} Decedent died on March 24, 2012. According to appellee, it calculated the
death benefit pursuant to the following provision:
We will pay the death benefit proceeds to the beneficiary upon your
death. * * * Death benefit proceeds are determined as follows:
(1) We determine this policy’s death benefit, which is the larger of
the face amount and the Variable Insurance Amount. * * *
The values above will be those as of the date of your death.
2.
{¶ 6} The “face amount” of the policy at the time of decedent’s death was
$449,848. Thus, the death benefit proceed was the “larger” of the $449,848 face amount
and the “variable insurance amount.”
{¶ 7} The variable insurance amount is defined and calculated as follows:
The Variable Insurance Amount on the policy date equals the cash
value as of such date multiplied by the net single premium factor for your
issue age. Thereafter, the Variable Insurance Amount will vary on each
policy processing date based on the investment results and any additional
payments made. The Variable Insurance Amount will be determined as of
each policy processing date and will remain constant for the following
policy processing period. It will be determined as follows:
1. We determine the cash value of the policy as of such date; and
2. We multiply (1) by the net single premium factor for your
attained age as of such date. * * *
The table of net single premium factors is shown in Policy Schedule.
{¶ 8} The policy processing date (“PPD”) occurs “on the same day of the month as
the policy date at the end of the successive 3 month period.” In other words, appellee
recalculates death benefits four times per year, once per quarter.
{¶ 9} Decedent’s policy date was April 3, 1987, and the net single premium factor
in the third quarter for decedent, given her age when she died, was 1.30032.
3.
{¶ 10} Taking all of the above into account, appellee argues that the policy
required it to calculate the death benefit payable under decedent’s policy on the third day
of each January, April, July and October that fell after the April 3, 1987 policy date.
{¶ 11} As appellee explains, it calculated the variable insurance amount as of
January 3, 2012, the most recent PPD prior to decedent’s death. It multiplied the cash
value ($518,450) by the net single premium factor (1.30032) for a variable insurance
amount of $674,151, as of the January 3, 2012. That amount “remained constant” until
the next PPD, on April 3, 2012.
{¶ 12} Indeed, the quarterly statement sent to decedent on January 3, 2012
indicates that the net life insurance value as of that date was $674,151. Because the
variable insurance amount was larger than the face amount, the death benefit was
$674,171.
{¶ 13} Appellee learned of decedent’s March 24, 2012 death on April 4, 2012. It
mailed the respective death benefit checks to Melanie on April 27, 2012 and to Craig on
May 11, 2012. Appellee sent each appellant a death benefit of $337,075.50, plus interest
from decedent’s date of death: $1,366.77 for Melanie and $1,883.93 for Craig.
{¶ 14} Appellants argue that appellee failed to pay the full death benefit “as it
existed--- at the date of her death---.” (Emphasis in original.) Appellants do not claim
to know the precise value of the death benefit as of March 24, 2012. Instead, they claim
that “the amount paid * * * differed by approximately $42,478 from the value of the
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policy on the date of [decedent’s] death, March 24, 2012.” Appellants explain that
$42,478 is the difference between the death benefit amount indicated in the January 3,
2012 quarterly statement and the April 3, 2012 quarterly statement.
{¶ 15} Appellants rely on quarterly statements to support their case. Statements
sent to decedent between 1987 and early 1997 contained the following language: “The
death benefit may increase or decrease each day depending on the investment results.”1
(Emphasis added.) Appellants also point to references in the quarterly statements
encouraging decedent to contact appellee directly “the next time you need an update on
your policy’s values in between quarterly statements.”
{¶ 16} Appellants maintain that the quarterly statements “actually became part of
the contract between the parties.” They argue that the intent of the parties “was that the
policy’s death benefit would be valued as of the date of her death, not as of the last
quarterly statement sent by [appellee].”
{¶ 17} On June 6, 2014, appellants filed an amended complaint, asserting four
claims of relief: breach of contract, breach of fiduciary duty, bad faith and unjust
enrichment. Appellants sought compensatory and punitive damages and attorneys’ fees.
Appellants filed a motion for partial summary judgment, arguing that they were entitled
to judgment as a matter of law as to their first and third claims.
1
In October of 1997, appellee revised that language, such that it read: “The death benefit
may increase or decrease each policy processing date depending on the investment
results.” (Emphasis added.)
5.
{¶ 18} Appellee filed its own motion for summary judgment claiming that it was
entitled to judgment as to each count. The trial court agreed with appellee. On August
24, 2015, the trial court granted appellee’s motion and denied appellants’.
{¶ 19} Appellants appealed. Appellants challenge the trial court’s decision as to
their breach of contract and bad faith claims. They do not, however, challenge the
dismissal of their breach of fiduciary duty or unjust enrichment claims, or their demand
for punitive damages and attorneys’ fees.
III. Appellants’ Assignments of Error
1. The Trial Court erred by entering summary judgment in favor of
the Defendant-Appellee, and denying Plaintiff-Appellants’ Motion for
Summary Judgment, where both the plain language of the insurance
contract and extrinsic evidence require that Defendant-Appellee pay a death
benefit equal to the value of the policy as of the date of decedent’s death.
2. The Trial Court erred by entering summary judgment in favor of
Defendant-Appellee, and denying Plaintiffs-Appellants’ Motion for
Summary Judgment, on Plaintiff-Appellants’ insurance bad faith claim
where said claim was supported by competent expert testimony that
Defendant-Appellee’s failure to properly handle Plaintiff-Appellants’ claim
and failure to pay the full death benefit due and owing under the decedent’s
insurance policy constituted bad faith.
6.
IV. Standard of Review
{¶ 20} Appellate review of a summary judgment is de novo. Grafton v. Ohio
Edison Co., 77 Ohio St. 3d 102, 105, 671 N.E.2d 241 (1996). In other words, we employ
the same standard as the trial court, without deference to its decision. Lorain Natl. Bank
v. Saratoga Apts., 61 Ohio App. 3d 127, 129, 572 N.E.2d 198 (9th Dist.1989). The
motion may be granted only when it is demonstrated:
(1) that there is no genuine issue as to any material fact; (2) that the
moving party is entitled to judgment as a matter of law; and (3) that
reasonable minds can come to but one conclusion, and that conclusion is
adverse to the party against whom the motion for summary judgment is
made, who is entitled to have the evidence construed most strongly in his
favor. Harless v. Willis Day Warehousing Co., 54 Ohio St. 2d 64, 67, 375
N.E.2d 46 (1978), Civ.R. 56(C).
{¶ 21} When seeking summary judgment, a party must specifically delineate the
basis upon which the motion is brought and identify those portions of the record that
demonstrate the absence of a genuine issue of material fact. Dresher v. Burt, 75 Ohio
St.3d 280, 293, 662 N.E.2d 264 (1996). When a properly supported motion for summary
judgment is made, an adverse party may not rest on mere allegations or denials in the
pleadings, but must respond with specific facts showing that there is a genuine issue of
material fact. Civ.R. 56(E); Riley v. Montgomery, 11 Ohio St. 3d 75, 79, 463 N.E.2d 1246
(1984). A “material” fact is one which would affect the outcome of the suit under the
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applicable substantive law. Russell v. Interim Personnel, Inc., 135 Ohio App. 3d 301,
304, 733 N.E.2d 1186 (6th Dist.1999).
V. Breach of Contract Claim
{¶ 22} An insurance policy is a contract. Westfield Ins. Co. v. Galatis, 100 Ohio
St.3d 216, 2003-Ohio-5849, ¶ 9. To recover upon a breach of contract claim, a plaintiff
must prove “the existence of a contract, performance by the plaintiff, breach by the
defendant, and damage or loss to the plaintiff.” Jarupan v. Hanna, 173 Ohio App. 3d
284, 2007-Ohio-5081, 878 N.E.2d 66, ¶ 18 (10th Dist.).
{¶ 23} In order to prove a breach by the defendant, a plaintiff must show that the
defendant “did not perform one or more of the terms of a contract.” (Citations omitted.)
Id. at ¶ 18.
{¶ 24} Included with appellee’s motion for summary judgment was an affidavit
from its claim manager who had personal knowledge of how decedent’s claim was
processed and benefits calculated. According to the claims manager, appellee calculated
the death benefit according to the formula set forth in the policy. That is, appellee
determined the variable insurance amount as of the date of decedent’s death, compared it
to the face amount, and paid the higher of the two values.
{¶ 25} Appellants point to the opinion of their own expert witness who stated in
his affidavit that the language of the policy and the quarterly statements required appellee
to calculate daily the death benefit, rather than just four days per year.
{¶ 26} Appellants’ argument, that the policy required daily calculation, is
contradicted by clear language in the policy. That is, the $674,151 variable insurance
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amount calculated as of the January 3, 2012 policy processing date was “to remain
constant for the following processing period.” That period included decedent’s March
24, 2012 date of death.
When confronted with an issue of contractual interpretation, the role
of a court is to give effect to the intent of the parties to the agreement. We
examine the insurance contract as a whole and presume that the intent of
the parties is reflected in the language used in the policy. We look to the
plain and ordinary meaning of the language used in the policy unless
another meaning is clearly apparent from the contents of the policy. When
the language of a written contract is clear, a court may look no further than
the writing itself to find the intent of the parties. As a matter of law, a
contract is unambiguous if it can be given a definite legal meaning.
(Citations omitted.) Westfield at ¶ 11.
{¶ 27} We find that the insurance agreement, including the formula for calculating
the variable insurance amount, is clear and unambiguous. We find no support for
appellants’ argument that the parties intended to be bound by an alternative method,
including daily calculation.
{¶ 28} Moreover, we reject appellants’ argument that the opinion of their expert
witness created an issue of fact as to their breach of contract claim. The interpretation of
a contract is an issue of law, not of fact, to be determined by the court. Graham v.
Drydock Coal Co., 76 Ohio St. 3d 311, 313, 667 N.E.2d 949 (1996). The parol evidence
9.
that appellants rely upon, the quarterly statements and the affidavit of their expert
witness, in an attempt to establish that appellee modified the policy cannot be considered
as a means to establish that the insurance policy meant anything other than what it
unambiguously said. Shifrin v. Forest City Ent., Inc., 64 Ohio St. 3d 635, 597 N.E.2d 499
(1992), syllabus.
{¶ 29} As a matter of law, we find that appellee was entitled to judgment as to the
breach of contract claim. Appellants’ first assignment of error is not well-taken.
VI. Bad Faith Claim
{¶ 30} In their second assignment of error, appellants argue that appellee acted in
bad faith by “arbitrarily failing to pay the correct death benefit under [decedent’s] policy
and by failing to handle this claim in good faith.” Appellants argue that the lower court
erred in failing to consider the opinion of its expert witness who opined that appellee
acted in bad faith by failing to pay “the full amount” of the death benefit. They suggest
that the expert opinion, alone, is sufficient to create an issue of fact as to the bad faith
claim.
{¶ 31} An insurer has the duty to act in good faith in the handling and payment of
the claims of its insured. Hoskins v. Aetna Life Ins. Co., 6 Ohio St. 3d 272, 452 N.E.2d
1315 (1983), paragraph one of the syllabus. An insurer fails to exercise good faith where
the circumstances do not furnish reasonable justification for its refusal to pay the claim.
Zoppo v. Homestead Ins. Co., 71 Ohio St. 3d 552, 644 N.E.2d 397 (1994), paragraph one
of the syllabus. An insurer that improperly fails to pay a valid claim may be liable in tort
for bad faith. Hoskins at 276; Beever v. Cincinnati Life Ins. Co., 10th Dist. Franklin Nos.
10.
02 AP-543, 02 AP-544, 2003-Ohio-2942, ¶ 20. Even where a claim is ultimately paid,
the insurer’s “foot-dragging” in handling and evaluating the claim may support a bad-
faith cause of action. Drouard v. United Servs. Auto. Assn., 6th Dist. Lucas No. L-06-
1275, 2007-Ohio-1049, ¶ 16.
{¶ 32} The evidence relied upon by appellants supports a case for improperly
calculating the death benefit; it does not support a claim that appellee mishandled the
claim or engaged in foot dragging. Thus, to the extent that their bad faith claim extends
beyond merely paying the wrong amount, appellants’ claim is conclusory and
unsupported with any evidence.
{¶ 33} Therefore, because we find that appellee calculated and paid the death
benefit pursuant to the unambiguous formula of the policy, appellants’ bad faith claim
fails as a matter of law. Appellants’ second assignment of error is not well-taken.
VII. Conclusion
{¶ 34} Because appellee calculated and paid the death benefit according to the life
insurance policy’s unambiguous formula, there is no genuine issue of material fact in
dispute and appellee is entitled to judgment as a matter of law as to the breach of contract
claim. Similarly, because we find no breach of contract and no evidence that appellee
mishandled the claim, appellants’ bad faith claim also fails as a matter of law.
Appellants’ assignments of error are not well-taken. We affirm the judgment of the
Lucas County Court of Common Pleas granting summary judgment to appellee and
denying partial summary judgment to appellants.
11.
{¶ 35} Pursuant to App.R. 24, costs are assessed to appellants.
Judgment affirmed.
A certified copy of this entry shall constitute the mandate pursuant to App.R. 27.
See also 6th Dist.Loc.App.R. 4.
Thomas J. Osowik, J. _______________________________
JUDGE
Stephen A. Yarbrough, J.
_______________________________
James D. Jensen, P.J. JUDGE
CONCUR.
_______________________________
JUDGE
This decision is subject to further editing by the Supreme Court of
Ohio’s Reporter of Decisions. Parties interested in viewing the final reported
version are advised to visit the Ohio Supreme Court’s web site at:
http://www.sconet.state.oh.us/rod/newpdf/?source=6.
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