Goldman v. Equitable Life

NOT RECOMMENDED FOR FULL-TEXT PUBLICATION
File Name: 05a0058n.06
Filed: January 25, 2005
Case No. 03-3880
UNITED STATES COURT OF APPEALS
FOR THE SIXTH CIRCUIT
GARY GOLDMAN, )
)
Plaintiff-Appellee, )
) ON APPEAL FROM THE UNITED
v. ) STATES DISTRICT COURT FOR
) THE SOUTHERN DISTRICT OF
THE EQUITABLE LIFE ASSURANCE ) OHIO
SOCIETY OF THE UNITED STATES, )
)
Defendant-Appellant. )
__________________________________________
BEFORE: NELSON, SILER, AND BATCHELDER, CIRCUIT JUDGES.
ALICE M. BATCHELDER, Circuit Judge. The Equitable Life Assurance Society of the
United States (“Equitable Life”) appeals the district court’s grant of summary judgment and
prejudgment interest in favor of the Plaintiff-Appellee Gary Goldman (“Goldman”) on his claim of
breach of insurance contract. Because Mr. Goldman is entitled to only the “initial amount” of
$500,000 under the unambiguous language of the insurance contract, we REVERSE the judgment
of the district court.
I.
The parties do not dispute the essential facts of this case. In 1973, Burton D. Goldman
purchased a life insurance policy from Equitable Life and named his son, Gary Goldman, as the sole
beneficiary. This insurance policy, which is entitled a “Double Protector Policy,” included a cover
page, as required by Ohio law, describing the most important features of the policy. The top of the
cover page states “the face amount is equal to the Initial Amount shown on page three.” Page Three
lists the “initial amount” as $500,000. The cover page next states that on the policy anniversary
nearest to the insured’s 65th birthday “and on each of the succeeding four anniversaries the face
amount will reduce, as shown in the Table of Face Amounts on page three, until it reaches 50% of
the Initial Amount on and after the policy anniversary nearest the Insured’s 69th birthday.” Page
Three contains a table setting out that annual incremental decrease of the face amount. The middle
of the cover page details a “Level Face Amount Option,” which provides that, upon turning age 60,
the insured may pay an increased premium to avoid a reduction in the face amount of the policy.
Page Four-D contains a provision that if the insured becomes totally disabled before his sixtieth
birthday, the Level Face Amount Option is exercised automatically without the insured paying the
additional premiums. At the extreme bottom of the cover page, four phrases and two sentences
appear in fine print:
Insurance Payable in Event of Death. Face Amount Is Reduced After Age 65. Initial
Face Amount Is Double Face Amount After Age 69. Annual Dividends. Premiums
Payable For Life. Level Face Amount Option.
The Level Face Amount Option on Goldman’s policy was automatically exercised when
Burton Goldman became completely disabled before his sixtieth birthday. Burton Goldman’s
disability meant that the face amount of the policy did not decrease when he turned age 65. Shortly
after Burton Goldman’s death in 1999 at age 72, Gary Goldman surrendered the policy to Equitable
Life and claimed $1,000,000 based on the fine print at the bottom of the cover page which states
“Initial Face Amount Is Double Face Amount After Age 69.” When Equitable Life only paid him
$500,000, Gary Goldman filed a diversity action in federal district court alleging, among other
things, that by refusing to pay him $1,000,000, Equitable Life had breached the terms of the
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insurance policy.
Each party moved for summary judgment on Goldman’s claim for death benefits in the
amount of $1,000,000. Relying on the statement at the bottom of the cover page that “Initial Face
Amount is Double Face Amount After Age 69,” the district court granted summary judgment in
favor of Goldman. On May 28, 2003, the district court entered final judgment in favor of Goldman
on his breach of contract claim in the amount of $500,000 plus prejudgment interest of $189,726.16.
Equitable Life’s timely appeal followed.
II.
We review de novo the district court’s order granting or denying a motion for summary
judgment. Stephenson v. Allstate Ins. Co., 328 F.3d 822, 826 (6th Cir. 2003). Summary judgment
is appropriate where there is no genuine issue of material fact and the moving party is entitled to
judgment as a matter of law. FED. R. CIV. P. 56(c). Because our jurisdiction in this case is premised
on diversity of citizenship, we must apply state law “in accordance with the then controlling decision
of the highest state court.” United States v. Anderson County, Tennessee, 761 F.2d 1169, 1173 (6th
Cir. 1985) (quoting Vandenbark v. Owens-Illinois Glass Co., 311 U.S. 538, 543 (1941)). Both
parties agree that Ohio’s law controls here.
In Ohio, “[a]n insurance policy is a contract, and its construction is interpreted as a matter
of law.” Penn Traffic Co. v. AIU Ins. Co., 790 N.E.2d 1199, 1202 (Ohio 2003) (citing Alexander
v. Buckeye Pipe Line Co., 374 N.E.2d 146 (Ohio 1978)). Courts in Ohio look first to the terms of
an insurance policy and construe clear and unambiguous language accordingly. See Burdett Oxygen
Co. of Cleveland v. Employers Surplus Lines Ins. Co., 419 F.2d 247, 248 (6th Cir. 1969). We begin
with the language of the insurance policy in determining whether Goldman is entitled to total death
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benefits in the amount of $1,000,000.
Reading the words “Initial Face Amount Is Double Face Amount After Age 69” in isolation
from the rest of the policy, the district court held that this language caused the “initial amount” of
the policy to double in value after Burton Goldman turned age 69. But “[t]he meaning of a contract
is to be gathered from a consideration of all its parts, and no provision is to be wholly disregarded
as inconsistent with other provisions unless no other reasonable construction is possible.” Karabin
v. State Auto. Mut. Ins. Co., 462 N.E.2d 403, 406-7 (Ohio 1984) (quoting German Fire Ins. Co. v.
Roost, 45 N.E. 1097 (Ohio 1897)). After reviewing the policy in its entirety and considering the
context in which these specific words appear, we conclude that the district court erred.
The words in fine print at the bottom of the cover page merely describe the provisions of the
insurance policy and do not create contractual rights. For example, the words “Face Amount Is
Reduced After Age 65” describe both the term, set out in full in the body of the cover page,
providing for incremental decrease in the initial amount of the policy after the policy anniversary
date nearest the insured’s 65th birthday, and the table appearing on Page Three which details that
annual incremental decrease. The words “Level Face Amount Option,” which appear in the fine
print, provide notice of the Level Face Amount Option set out in the body of the cover page and
further developed on Page Four of the policy.
Like the other fine print phrases, the words “Initial Face Amount Is Double Face Amount
After Age 69” do not create any rights or obligations under this insurance contract. This particular
phrase summarizes the effect of the table on Page Three detailing the annual incremental decrease
in the initial amount of the policy: the initial amount decreases incrementally from $500,000 before
the insured’s 65th birthday to $250,000 by the time the insured reaches age 69. Hence, as the fine
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print language states, the initial face amount – $500,000 – is double the face amount after age 69 –
$250,000. Inasmuch as the body of the policy contains no term or provision that would double the
insured’s coverage after he attains the age of 69, in order to adopt the district court’s conclusion, we
would have to read the words “Initial Face Amount Is Double Face Amount After Age 69” as
creating an entirely independent and complete provision of the policy. But none of the other fine-
print statements with which this one appears can be said to create terms or provisions of the policy,
and we find no reason to conclude that this one does either.
The district court’s observation that Equitable Life added the cover page to the policy to
comply with OHIO REV. CODE § 3915.05(M) supports our conclusion that the cover page’s fine print
merely summarizes or describes the policy’s terms and does not create contractual rights. This
statute provides:
No policy of life insurance shall be issued or delivered in this state or be issued by
a life insurance company organized under the laws of this state unless such policy
contains . . . A title on its face and back, correctly describing such policy.
OHIO REV. CODE § 3915.05(M). This statute’s “obvious purpose is to enable the policyholder to
ascertain the general terms and conditions of the policy from the title without being required to read
and understand the entire policy.” Boyle v. Great-West Life Assur. Co., 499 N.E.2d 895, 898 (Ohio
Ct. App. 1985). Equitable Life’s name and address, the words “double protector policy,” and the fine
print language are the only words to appear on both the front and the back cover pages, indicating
that Equitable Life intended the words “Initial Face Amount Is Double Face Amount After Age 69”
to be descriptive of the substantive provisions of the contract.
In Boyle, the court held that “in case of conflict, the statutorily mandated title controls over
conflicting provisions in the body of the policy, which are not statutorily mandated.” 499 N.E.2d at
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898. And in that case, because the language on the statutorily mandated cover page conflicted with
the language in the actual provision in the policy, the court held that the language on the cover page
governed the issue. Here, there is no contradiction or inconsistency between the words on the cover
page – “Initial Face Amount Is Double Face Amount After Age 69” – and any provision in the body
of the insurance policy. Goldman’s reliance on Boyle is misplaced.
For the foregoing reasons, we REVERSE the district court’s order granting summary
judgment in favor of Mr. Goldman, and we REMAND the case to the district court with instructions
to enter summary judgment in favor of Equitable Life.
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