Nancy Wactor v. Jackson National Life Insurance Company

UNPUBLISHED
UNITED STATES COURT OF APPEALS
FOR THE FOURTH CIRCUIT
No. 13-2367
NANCY K. WACTOR,
Plaintiff – Appellant,
v.
JACKSON NATIONAL LIFE INSURANCE COMPANY,
Defendant – Appellee.
Appeal from the United States District Court for the District of
South Carolina, at Anderson. Timothy M. Cain, District Judge.
(8:11-cv-03167-TMC)
Argued: December 9, 2014 Decided: March 10, 2015
Before MOTZ and KING, Circuit Judges, and Arenda Wright ALLEN,
United States District Judge for the Eastern District of
Virginia, sitting by designation.
Affirmed by unpublished per curiam opinion.
ARGUED: Gary Walter Poliakoff, POLIAKOFF & ASSOCIATES, P.A.,
Spartanburg, South Carolina, for Appellant. Charles Franklin
Turner, Jr., WILLSON JONES CARTER & BAXLEY, P.A., Greenville,
South Carolina, for Appellee.
Unpublished opinions are not binding precedent in this circuit.
PER CURIAM:
William Wactor (the “Decedent”) maintained a life insurance
policy (the “policy”) with Jackson National Life Insurance
Company (“Jackson National”) from 1991 until 2010. The policy
was cancelled in February 2010 due to a missed premium payment,
and the Decedent passed away on June 12, 2010. Plaintiff Nancy
Wactor (“Wactor”), the Decedent’s wife, is the personal
representative of the Decedent’s estate and was the sole
beneficiary under the policy. In November 2011, Wactor
commenced this diversity action in the District of South
Carolina, asserting five state law claims through which she
sought to enforce the policy and recover benefits. Jackson
National moved for summary judgment on each of Wactor’s claims,
which the district court awarded. See Wactor v. Jackson Nat’l
Life Ins. Co., No. 8:11-cv-03167 (D.S.C. July 10, 2013), ECF No.
49 (the “Opinion”). Thereafter, the court denied Wactor’s
motion for reconsideration of the Opinion. See Wactor v.
Jackson Nat’l Life Ins. Co., No. 8:11-cv-03167 (D.S.C. Oct. 8,
2013), ECF No. 55 (the “Reconsideration Order”). 1 On appeal,
Wactor contests both the Opinion and the Reconsideration Order.
1
The Opinion is found at J.A. 478-88, and the
Reconsideration Order is found at J.A. 520-22. (Citations
herein to “J.A. ___” refer to the contents of the Joint Appendix
filed by the parties in this appeal.)
2
As explained below, we are satisfied to affirm on the reasoning
of the district court.
I.
A.
1.
The Decedent maintained life insurance with Jackson
National from 1991 until 2010. 2 As of 2010, the policy benefit
was $200,000, and premium payments were due quarterly, on
January 25, April 25, July 25, and October 25 of each year. 3 As
term life insurance, the policy covered the Decedent for the
three-month period following his premium payment, meaning that
if he died during that period, Jackson National would pay the
face value of the policy to Wactor, the named beneficiary.
The policy set forth a series of procedures applicable in
the event of a missed premium payment. If a premium was not
timely paid, the policy became “in default,” commencing a
2
The facts spelled out herein are drawn from the record and
presented in the light most favorable to Wactor, as the
nonmoving party in the summary judgment proceedings. See
Greater Balt. Ctr. for Pregnancy Concerns, Inc. v. Mayor of
Balt., 721 F.3d 264, 283 (4th Cir. 2013) (en banc).
3
During the period in which the policy was in effect,
several terms were modified: (1) the schedule of payment
changed from semiannual to quarterly; and (2) the face value was
decreased from $400,00 to $200,000.
3
thirty-one day grace period. See J.A. 87. During the grace
period, the Decedent remained covered and could reinstate the
policy by simply paying the overdue premium. If the premium
remained unpaid after the grace period, the policy would be
cancelled, meaning the Decedent’s coverage would lapse. At that
point, the policy could be reinstated, within five years of the
date the unpaid premium was due, only upon (1) “receipt of
evidence of insurability of [the Decedent] satisfactory to
[Jackson National],” and (2) “payment of all past due premiums
with interest [at a rate of 6 percent, compounded annually] from
the due date of each premium.” Id. The policy did not contain
a notice provision requiring Jackson National to mail or furnish
notice prior to cancelling coverage for an unpaid premium.
Meanwhile, Jackson National abides by a privacy policy. In
pertinent part, Jackson National collects “nonpublic personal
information (financial and health)” about its insureds, and has
implemented security practices to protect the confidentiality of
that data. See J.A. 143. That information may be disclosed,
however, “[t]o the extent permitted by law, . . . to either
affiliated or nonaffiliated third parties.” Id. The policy
specified that, generally, any disclosures to third-parties
would be for the purpose of servicing or administering the
policy — for example, providing an insured’s name and address to
4
a company that would mail newsletters on Jackson National’s
behalf.
2.
The Decedent was covered by the policy for approximately
nineteen years, beginning in March 1991. The Decedent made most
of the payments for policy premiums from his own bank account,
as he and Wactor generally maintained separate finances. Wactor
sometimes paid the policy premiums for the Decedent, however,
including ten premium payments since 2006. During his nineteen
years under the policy, the Decedent failed to timely pay his
premiums on twenty-two occasions. In each instance, Jackson
National mailed a grace-period notice to the Decedent, and the
Decedent thereafter paid the premium within the grace period.
The Decedent last paid the policy premium that was due
October 25, 2009. After the Decedent failed to pay the January
25, 2010 premium, Jackson National’s records indicate that it
sent two notices via regular mail to the Decedent — a grace-
period notice, followed by a lapse notice — although the
Decedent did not actually receive either notice. The grace-
period notice, sent by letter dated February 4, 2010, stated
that Jackson National had not received the January 25, 2010
premium payment; that, as of that date, the policy had entered a
grace period; and that the policy “will lapse and all coverage
5
. . . will end on February 25, 2010,” absent Jackson National’s
receipt of the premium payment by that date. See J.A. 80.
The Decedent did not submit the overdue premium payment
during the grace period, and Jackson National mailed the lapse
notice to the Decedent by letter dated February 25, 2010,
cancelling the policy. Therein, Jackson National explained that
“your policy has now lapsed and . . . all coverage under this
policy has ended.” J.A. 82. The lapse notice advised that, if
the Decedent submitted the January 25, 2010 premium payment by
March 26, 2010, then “the policy will be automatically
reinstated and we will waive additional requirements.” Id. The
notice clarified that “[t]his offer to reinstate automatically
is not a waiver of the terms of the policy in the event of any
future default of payment of premiums.” Id. The notice also
specified that, unless payment was received by March 26, 2010,
the policy could only be reinstated if all unpaid premiums were
paid along with accrued interest, the Decedent completed an
enclosed application for policy reinstatement, and Jackson
National approved that reinstatement application.
By January 2010, the Decedent was experiencing several
health problems, including Parkinson’s disease and mild
dementia. His cognitive state vacillated between confusion and
lucidity, though the Decedent continued to handle his personal
affairs, including his finances. The Decedent was hospitalized
6
in May 2010 for a broken foot, and Wactor subsequently became
aware that the Decedent had neglected to timely pay several of
his bills.
Wactor called Jackson National’s service center on June 11,
2010, inquiring as to the status of the policy. The Jackson
National representative informed Wactor that the policy was no
longer in force, and that the last premium payment had been
received on October 25, 2009. The representative refused to
provide Wactor with information on paying missed premiums or
reinstating the policy. Rather, the representative told Wactor
that the Decedent would need to contact Jackson National for
instructions on reinstatement. Wactor explained that the
Decedent might not be able to call the company because he was
then hospitalized. The Jackson National representative
ascertained that Wactor did not have the Decedent’s financial
power of attorney, and then suggested that the Decedent could
call Jackson National and authorize Wactor to receive
information. The next day — before any further action was taken
with respect to the policy and the unpaid premiums — the
Decedent passed away.
Wactor and her daughter Lisa Gunter worked on sorting out
the Decedent’s affairs. They searched through the Decedent’s
records for paperwork from Jackson National, but found no
correspondence from 2010. A few days after the Decedent’s
7
death, Gunter telephoned Jackson National to make a claim on the
policy on Wactor’s behalf. The Jackson National representative
informed Gunter that the policy had lapsed. Following that
phone call, Gunter wrote Jackson National a letter, dated June
15, 2010, in which Gunter described her father’s health problems
and enclosed three letters from his health care providers, which
gave information about the cognitive problems that the Decedent
was experiencing in 2010.
Before Gunter’s letter was received, Jackson National
formally denied Wactor’s claim, by letter to Wactor dated June
16, 2010. Therein, Jackson National informed Wactor that the
policy had “lapsed with no value on February 25, 2010 and there
are no benefits payable to the beneficiary.” J.A. 288. The
decision to deny Wactor’s claim was premised solely on Jackson
National’s record that the policy had been cancelled prior to
the Decedent’s death. The June 16, 2010 letter was generated by
Jackson National’s computer system and electronically signed by
Jackson National Vice President Charles F. Field. Field was not
actually involved in writing the letter, but his signature was
affixed pursuant to company procedures for systems-generated
claims correspondence.
Once Jackson National received Gunter’s letter — and after
Wactor’s claim for benefits under the policy had been denied —
Jackson National’s customer relations department became
8
involved. Representative Kevin Schweda was assigned to the
case. He was aware of the information provided by Gunter
indicating that the Decedent had cognitive problems during the
last five to six months of his life, but Schweda did not
consider that information in reviewing Jackson National’s denial
of Wactor’s claim. Rather, Schweda reviewed “the computer
system that administers the policy, confirming that it had
lapsed for nonpayment and the date that that occurred, confirmed
that that occurred prior to the date of [the Decedent]’s death,
confirmed that premium notices were mailed appropriately and
that there was no coverage at the time of death.” J.A. 245.
From that review, Schweda determined that Wactor’s claim had
properly been denied.
B.
Wactor initiated this civil action in November 2011,
alleging five causes of action — breach of contract, equitable
estoppel, unjust enrichment, bad faith refusal to pay insurance
benefits, and breach of the implied covenant of good faith and
fair dealing predicated on Jackson National’s handling of the
claim. 4 Under each of those theories of relief, Wactor sought
4
South Carolina law governs our assessment of Wactor’s
claims. First, “[t]he elements for a breach of contract are the
existence of the contract, its breach, and the damages caused by
such breach.” S. Glass & Plastics Co. v. Kemper, 732 S.E.2d
205, 209 (S.C. Ct. App. 2012). Second, a party claiming
(Continued)
9
enforcement of the policy, including payment of the policy
benefits to her as the sole beneficiary. Additionally, on her
bad faith and implied covenant of good faith claims, Wactor
asserted that Jackson National acted with reckless disregard,
entitling her to recover consequential and punitive damages,
along with attorney’s fees and costs.
Following the close of discovery proceedings, Jackson
National moved for summary judgment as to each of Wactor’s
claims, contending that no material fact was in dispute, and
estoppel must demonstrate that she lacked knowledge or the means
of knowledge as to the truth of relevant facts, that she
reasonably relied on the other party’s conduct, and that she
suffered prejudicial detriment. See Provident Life & Accident
Ins. Co. v. Driver, 451 S.E.2d 924, 928 (S.C. Ct. App. 1994).
Third, unjust enrichment is an available remedy where a party
conferred a benefit on the defendant, the defendant realized
that benefit, and it would be unjust for the defendant to retain
that benefit without paying its value. See Pitts v. Jackson
Nat’l Life Ins. Co., 574 S.E.2d 502, 512 (S.C. Ct. App. 2002).
Fourth, to demonstrate that an insurance company denied a claim
in bad faith, an insured must show the existence of a mutually
binding insurance contract; that the insurer refused to pay
benefits due under that contract; that the denial of benefits
resulted from the insurer’s bad faith or unreasonable action,
breaching its implied duty of good faith and fair dealing; and
that the insured suffered damages. See Cock-N-Bull Steak House,
Inc. v. Generali Ins. Co., 466 S.E.2d 727, 730 (S.C. 1996).
Finally, an insured may recover in tort based on an insurer’s
violation of the implied covenant of good faith and fair dealing
with respect to the insurer’s processing of a claim by
“demonstrate[ing] bad faith or unreasonable action by the
insurer in processing a claim under their mutually binding
insurance contract.” Nichols v. State Farm Mut. Auto. Ins. Co.,
306 S.E.2d 616, 619 (S.C. 1983).
10
that it was entitled to judgment as a matter of law. In
opposing that motion, Wactor maintained that four material facts
remained at issue, precluding summary judgment: (1) whether the
grace-period and lapse notices (collectively, the “cancellation
notices”) effectively cancelled the policy; (2) whether Jackson
National acted in bad faith in refusing to pay benefits;
(3) whether Jackson National was estopped from asserting that
the policy was cancelled; and (4) whether Jackson National acted
in good faith in processing the claim under the policy. 5
1.
By it July 10, 2013 Opinion, the district court awarded
summary judgment to Jackson National on all claims. The court
addressed each of Wactor’s contentions in turn.
a.
First, the district court addressed Wactor’s arguments
relating to the cancellation notices. Wactor contended that
Jackson National — through its course of dealing in providing
written grace-period notices to the Decedent on twenty-two
occasions — waived its right to cancel the policy without
5
In their briefings on Jackson National’s summary judgment
motion in the district court, the parties ordered their
arguments in a slightly different manner than Wactor presented
her claims in the Complaint. We, like the district court,
review the parties’ arguments in the manner presented in the
summary judgment proceedings.
11
furnishing notice. Wactor relied on the Supreme Court of South
Carolina’s decision in Edens v. South Carolina Farm Bureau
Mutual Insurance Co., 308 S.E.2d 670, 671 (S.C. 1983), as
establishing that Jackson National could cancel the policy only
if the Decedent actually received the cancellation notices;
simply sending the notices was ineffective. Wactor submitted
evidence from an expert witness, Gerald M. Finkel, opining that
Edens applies. Because genuine disputes exist as to whether the
Decedent actually received the cancellation notices, Wactor
maintained that summary judgment could not be granted.
The district court found no merit to Wactor’s arguments.
The court determined that the expert opinions submitted by
Wactor regarding Edens constituted legal conclusions and should
be disregarded. The court then recognized that neither South
Carolina law nor the terms of the policy require any notice
prior to cancelling the policy. See Opinion 3-6. Given the
policy’s silence, the court reasoned that the policy contains no
ambiguity as to notice, rendering Edens inapplicable. See id.
at 4-5; Edens, 308 S.E.2d at 671 (finding life insurance
policy’s provision stating cancellation could be effected by
“giving written notice” to be ambiguous, and that, as a matter
of law, contract must be interpreted to require “actual receipt
[as] a condition precedent to cancellation”). Further, the
court rejected Wactor’s contention that Jackson National waived
12
its right to cancel the policy based on its prior course of
dealings with the Decedent. Although Jackson National had
accepted late payments from the Decedent on twenty-two occasions
before 2010, each of those payments was made during the grace
period. Jackson National had never accepted payments from the
Decedent after the grace period, and thus “did nothing that
would have created a reasonable expectation of insurance
coverage past the expiration of the grace periods.” See Opinion
6. Accordingly, Jackson National’s prior conduct “cannot in any
way be construed as a waiver or forfeiture [of] cancelling the
policy for non-payment of premiums after a subsequent grace
period has lapsed.” Id. The court concluded that, because the
undisputed evidence was that Jackson National mailed the
cancellation notices, and because Jackson National was not
obliged to provide notice before cancelling the policy, no
genuine issue of material fact existed regarding the
cancellation notices.
b.
Second, the district court assessed Wactor’s contentions
regarding bad faith. Wactor’s bad-faith argument hinged on her
position that the policy was not effectively cancelled because
the Decedent had not received the cancellation notices. From
that premise, Wactor asserted that Jackson National unreasonably
refused to pay benefits due, again relying on the expert
13
opinions of Gerald Finkel. She further maintained that Jackson
National acted in bad faith by denying her claim for benefits
under the policy without investigating the Decedent’s cognitive
abilities or its prior course of dealings with the Decedent,
because Jackson National knew that the Decedent had not received
the cancellation notices.
The district court disagreed. The court noted that to
succeed on a claim of bad faith refusal to pay benefits, Wactor
must establish, inter alia, that Jackson National’s refusal to
pay benefits resulted from its bad faith or unreasonable
actions. See Opinion 7 (citing Crossley v. State Farm Mut.
Auto. Ins. Co., 415 S.E.2d 393, 396-97 (S.C. 1992)). The “bad
faith or unreasonable action” requirement turns on whether
Jackson National had a reasonable ground to contest Wactor’s
claim. Id. (citing Helena Chem. Co. v. Allianz Underwriters
Ins. Co., 594 S.E.2d 455, 462 (S.C. 2004); Hansen ex rel. Hansen
v. United Servs. Auto. Ass’n, 565 S.E.2d 114, 119 (S.C. Ct. App.
2002)). The court disregarded Wactor’s expert evidence because
it amounted to legal conclusions. The parties agreed that the
Decedent had not paid his premiums after 2009, and the court
determined that, “[b]ased upon the non-payment of the premiums
and the lapse of the policy, Jackson National had reasonable
grounds for denying this claim.” Id. at 8. Accordingly, no
genuine dispute of material fact existed as to bad faith.
14
c.
Third, the district court addressed Wactor’s estoppel-based
arguments. Wactor contended that Jackson National should be
estopped from relying on the policy’s cancellation based on
Wactor’s June 11, 2010 phone call to Jackson National. By
making that call, Wactor had sought information so that she
might “cure any breach that may have occurred,” but “Jackson
National refused to communicate with [Wactor], concealing all
meaningful information.” J.A. 190. Had Jackson National
informed Wactor of the outstanding balance on the policy and how
it could be reinstated, she might have secured the policy’s
reinstatement before the Decedent passed away. Wactor thus
maintained that factual disputes remained “regarding the
inequitable and self-serving application of [Jackson National’s]
privacy policy,” precluding summary judgment. Id.
The district court determined that Jackson National was
entitled to judgment as a matter of law on Wactor’s estoppel
claim. The undisputed evidence was that, during the June 11,
2010 phone call, Jackson National notified Wactor of several
ways she could obtain authority to act for the Decedent.
Although Wactor hypothesized that she could have cured the
Decedent’s breach had Jackson National provided her with more
information, the court concluded that “there is simply no
15
evidence of any material misrepresentation by Jackson National
or detrimental reliance by Wactor.” See Opinion 10.
d.
Fourth, the district court examined Wactor’s argument that
disputes of material fact existed as to whether Jackson National
breached the implied duty of good faith and fair dealing.
Specifically, Wactor maintained that factual disputes remained
regarding the cancellation notices, Jackson National’s
investigation of her claim, and the procedures and policies
utilized by Jackson National in its handling of the claim.
The district court rejected Wactor’s arguments, observing
that whether Jackson National breached its duty to act in good
faith depended on whether a reasonable ground supported its
decision. See Opinion 11 (citing Crossley, 415 S.E.2d at 397;
Helena, 594 S.E.2d at 462). The court determined that “nothing
in the record [would] suggest that Jackson National acted in an
unreasonable manner in denying coverage or its handling of this
claim,” given that the premiums had not been paid and coverage
had lapsed. Id. Therefore, “no rational trier of fact could
find that Jackson National acted unreasonably in its handling of
this claim.” Id. (citing Monahan v. Cnty. of Chesterfield, Va.,
95 F.3d 1263, 1265 (4th Cir. 1996)).
16
In light of those conclusions, the district court granted
Jackson National’s motion for summary judgment. On July 10,
2013, judgment was entered in Jackson National’s favor.
2.
On July 19, 2013, Wactor moved, pursuant to Federal Rule of
Civil Procedure 59(e), that the district court reconsider the
Opinion. Wactor asserted that the court had misunderstood or
misconstrued her waiver argument. She clarified her position
that, through its course of dealing with the Decedent, Jackson
National undertook a duty “of not only sending, but actually
furnishing” the cancellation notices. See J.A. 494. According
to Wactor, that course of dealing modified the terms of the
policy. See id. (citing Carolina Aviation, Inc. v. Glens Falls
Ins. Co., 51 S.E.2d 757, 761 (S.C. 1949); Keith v. River
Consulting, Inc., 618 S.E.2d 302, 305 (S.C. Ct. App. 2005)).
And, because the policy thereby contained a notice provision,
the Edens decision applied, meaning that Jackson National could
only cancel the policy if it first verified that the Decedent
had actually received the cancellation notices.
By its Reconsideration Order of October 8, 2013, the
district court denied Wactor’s Rule 59(e) motion. The court
observed that a judgment should only be amended pursuant to Rule
59(e) in extraordinary situations involving an intervening
change in law, previously unavailable evidence, or a need to
17
“correct a clear error of law or prevent manifest injustice.”
See Reconsideration Order 1 (internal quotation marks omitted).
The court determined, however, that Wactor had not demonstrated
that she was entitled to relief based on waiver, which is “‘a
voluntary and intentional abandonment or relinquishment of a
known right.’” Id. at 2 (quoting Janasik v. Fairway Oaks Villas
Horizontal Prop. Regime, 415 S.E.2d 384, 387 (S.C. 1992)).
Additionally, the court recognized that “‘the party claiming
waiver must show that the party against whom waiver is asserted
possessed, at the time, actual or constructive knowledge of
[its] rights or of all the material facts upon which they
depended.’” Id. (quoting Janasik, 415 S.E.2d at 387-88)). The
court observed that the record contained no evidence that
Jackson National took measures to ensure that the Decedent
received any of the twenty-two grace-period notices sent before
2010. Nor did the record show that any of those twenty-two
notices were actually received by the Decedent; Wactor asserted
only that “[the] Decedent ‘apparently’ received” those notices.
Id. The court thus concluded that, although “Jackson National
may have established a course of dealing and waived its right to
cancel during the grace period by mailing the lapse notices, the
intent to waive its right to cancel based upon receipt cannot be
established through Jackson National’s prior conduct.” Id. at
2-3. Accordingly, the court denied Wactor’s Rule 59(e) motion.
18
This appeal ensued, and we possess jurisdiction pursuant to 28
U.S.C. § 1291.
II.
In this appeal, Wactor reiterates several contentions that
she had advanced in the district court in opposition to Jackson
National’s summary judgment motion and in support of her own
motion for reconsideration. 6 We review de novo the district
court’s summary judgment award, crediting Wactor’s evidence and
drawing all justifiable inferences in her favor. See Anderson
v. Liberty Lobby, Inc., 477 U.S. 242, 255 (1986). Summary
judgment may be awarded only if “there is no genuine issue as to
any material fact and . . . the movant is entitled to judgment
as a matter of law.” Fed. R. Civ. P. 56(c). We review the
court’s denial of Wactor’s reconsideration motion for abuse of
discretion. See Bogart v. Chapell, 396 F.3d 548, 555 (4th Cir.
6
On appeal, Wactor asserts that a factual dispute exists
regarding whether Jackson National mailed the cancellation
notices because computer-system records upon which Jackson
National relies are unreliable. Wactor failed to raise that
contention, however, in the summary judgment proceedings in the
district court. See J.A. 171-92. Wactor did raise that
contention in support of her reconsideration motion, but the
district court declined to address it. See Reconsideration
Order 3 n.3. Because Wactor failed to timely assert her
argument about Jackson National’s computer system, she has not
preserved that contention for appeal. See In re Under Seal, 749
F.3d 276, 287 (4th Cir. 2014); Holland v. Big River Minerals
Corp., 181 F.3d 597, 605 (4th Cir. 1999).
19
2005). Relief from a judgment is available under Rule 59(e)
only “(1) to accommodate an intervening change in controlling
law; (2) to account for new evidence not available at trial; or
(3) to correct a clear error of law or prevent manifest
injustice.” Id. (internal quotation marks omitted).
Having carefully examined the record and assessed the
parties’ written submissions, together with the argument of
counsel, we are satisfied that summary judgment was properly
awarded and reconsideration properly denied in the district
court. We are therefore content to affirm the judgment on the
sound reasoning of the district court’s Opinion and subsequent
Reconsideration Order.
AFFIRMED
20