Scriber v. Conseco Life Insurance Company
ORDER denying 35 Motion for summary judgment. Did Conseco send the Scribers the grace notice, as this policy required? A jury will answer that question. Signed by Judge D. P. Marshall Jr. on 2/8/2018. (jak)
IN THE UNITED STATES DISTRICT COURT
EASTERN DISTRICT OF ARKANSAS
MARCIE P. SCRIBER, Trustee
of the Ladd J. Scriber Life
CONSECO LIFE INSURANCE
Conseco insured Dr. Ladd Scriber's life for $500,000 for his
trust. This was a whole life policy, with cash value available to pay
premiums. The policy was in place for twenty-six years. During the
last few of those years, the Scribers also paid premiums by automatic
bank draft. The cash value had been depleted by the summer of 2014;
and the bank drafts didn't cover the monthly premiums. The policy
lapsed because of nonpayment. In those circumstances, the trust had a
two-month grace period to bring things current. NQ 2 at 14. Conseco
also promised: "We will send a written notice to you at least thirty (30)
days before the day the policy would end." Ibid.
Conseco says, and has offered evidence, that it sent this grace
notice to the Scribers, their former agent, and their former lienholder.
It is undisputed that none of these notices came back undeliverable.
The Scribers say they didn't get the notice.
Their former agent's
widow -who maintains his business post office box - didn't get the
And their former lienholder didn't get the notice, either.
Monthly premium payments, though insufficient to cover the total due,
continued to be drafted from the Scribers' bank account.
After the sixty-day grace period ended, using the same mailing
protocol, Conseco sent letters to the Scribers, their former agent, and
the former lienholder canceling the policy.
All three letters were
received or returned as undeliverable.
The Scribers sought
reinstatement, which Conseco denied based on Dr. Scriber's health.
The trust has sued for damages or reinstatement.
summary judgment, while the trust wants a trial. Is there a genuine
issue of material fact about whether Conseco sent the grace notice?
Bedford v. Doe, 2018 WL 547455 at *2 (8th Cir. 2018).
Conseco argues that the Scribers have shown (at most) lack
of receipt, not lack of sending. Conseco stands on its mailing protocol,
an automated letter-processing system. It generates and prints notices.
NQ 35-1 at 30.* The notices are tagged with a bar code-which is
scanned throughout the process as a safeguard- and moved to the mail
room. NQ 35-1 at 72-75. There, they are placed into an inserter that
packages them, applies postage, and assembles them for pickup.
NQ 35-1at31. A vendor picks the notices up, presorts them, and mails
* All similar citations are to the deposition's pages.
them. In all, Conseco spends about $15 million a year on its mailing
Conseco' s records show that the July grace notice was
generated, printed, and put into the inserter. NQ 35-1 at 55-56. And the
same mailing protocol was used in September, when everyone agrees
that the lapse notice was sent. There is some scuffling about the fourdigit extension on the Scribers' zip code in the mailings.
Conseco says, the Scribers' basic address and zip haven't changed. The
extension is also correct.
The Scribers cast doubt, though, on the July mailing. They
highlight that Conseco can't prove the notice was mailed, just that it
was generated and inserted. After the notice goes through the inserter,
it must be held, and then picked up and mailed by a third party.
NQ 35-1 at 29. These steps involve people who, like all of us, make
mistakes. The Scribers argue that through human error Conseco never
sent the grace notice. They rest this conclusion on this record evidence:
they never got the notice; their former agent's widow, new agent, and
former lienholder never got the notice; all the copies of the September
lapse notice (unlike the July grace notices) were either received or
returned as undeliverable; and, though he would backtrack a step or
two later in the deposition, Conseco's Rule 30(b)(6) witness
acknowledged that the company couldn't prove it had mailed the grace
notice. Here's the initial exchange:
[I]s there any evidence that ... this
July 2nd grace notice was actually
physically delivered to the post office?
NQ 35-1 at 29; see also NQ 35-1at55-56.
Proof that the Scribers didn't get the July letter, standing
alone, doesn't prove that it wasn't sent.
Phillips v. Riverside, Inc.,
796 F. Supp. 403, 408 (E.D. Ark. 1992). As Conseco argues, there must
be more than a metaphysical doubt to create a genuine factual dispute.
Matsushita Electric Indus. Co. v. Zenith Radio Corp., 475 U.S. 574, 586
(1986). Non-receipt by their current and former agents, as well as their
former lienholder, adds some evidentiary weight for the Scribers.
Next, there are the disparate outcomes. In July, no copy of the
notice was received or returned as undeliverable; in September, all of
These circumstances allow competing reasonable
inferences. Success in September could mean that Conseco' s system
also worked in July. Or it could mean that some human error crept in,
leading to an unsent July notice.
Conseco relies on Swinney and Shoffey. They are car insurance
cases, as the Scribers insist, but they are illuminating. In both cases,
witnesses testified under oath that notice had been mailed. Atlanta Cas.
Co. v. Swinney, 315 Ark. 565, 566, 868 S.W.2d 501, 502 (1994); Shoffey v.
Progressive Nw. Ins. Co., 70 Ark. App. 458, 460-61, 20 S.W.3d 424, 425
(2000). No such testimony is offered here. Instead, Conseco's Rule
30(b)(6) witness first testified that he could not say for sure that this
grace notice made it to the post office and into the mail. Ng 35-1 at 29 &
NQ 35-1 at 55-56. Conseco' s sophisticated automated letter-processing
system doesn't close the case as a matter of law because space for
human error remains.
The Court must take the record in the light most favorable to the
Scribers, drawing all reasonable inferences in their favor. Chivers v.
Wal-Mart Stores, Inc., 641 F.3d 927, 932 (8th Cir. 2011). Looking at the
whole mixed bag, a reasonable person could conclude that Conseco
didn't send the July notice. So the motion for summary judgment,
Ng 35, is denied. Did Conseco send the Scribers the grace notice, as this
policy required? A jury will answer that question.
D.P. Marshall Jr.
United States District Judge
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