Midland National Life Insurance Company v. Burgess

Filing 19

ORDER: Plaintiff Midland National Life Insurance Company's Motion for Default Judgment (Doc. # 18 ) is GRANTED. The policy is rescinded and void ab initio. The Clerk is directed to enter default judgment in favor of Midland and against Defendant Karen L. Burgess. Thereafter, the Clerk is directed to CLOSE THE CASE. Signed by Judge Virginia M. Hernandez Covington on 5/15/2018. (DMD)

UNITED STATES DISTRICT COURT
MIDDLE DISTRICT OF FLORIDA
TAMPA DIVISION
MIDLAND NATIONAL LIFE
INSURANCE COMPANY,
Plaintiff,

v.

Case No. 8:18-cv-562-T-33CPT

KAREN L. BURGESS,
Defendant.
/
ORDER
This matter comes before the Court pursuant to Plaintiff
Midland National Life Insurance Company’s Motion for Default
Judgment (Doc. # 18), which was filed on May 10, 2018. For
the reasons that follow, the Court grants the Motion.
I.

Legal Standard
Federal Rule of Civil Procedure 55(a) sets forth the

following regarding an entry of default:
(a) Entering a Default. When a party against whom
a judgment for affirmative relief is sought has
failed to plead or otherwise defend, and that
failure is shown by affidavit or otherwise, the
clerk must enter the party’s default.
Fed. R. Civ. P. 55(a). A district court may enter a default
judgment against a properly served defendant who fails to
defend or otherwise appear pursuant to Federal Rule of Civil

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Procedure 55(b)(2). DirecTV, Inc. v. Griffin, 290 F. Supp. 2d
1340, 1343 (M.D. Fla. 2003).
The mere entry of a default by the Clerk does not, in
itself, warrant the Court entering a default judgment. See
Tyco Fire & Sec. LLC v. Alcocer, 218 F. App’x 860, 863 (11th
Cir. 2007)(citing Nishimatsu Constr. Co. v. Houston Nat’l
Bank, 515 F.2d 1200, 1206 (5th Cir. 1975)). Rather, a court
must ensure that there is a sufficient basis in the pleadings
for the judgment to be entered. Id. A default judgment has
the effect of establishing as fact the plaintiff’s well-pled
allegations of fact and bars the defendant from contesting
those facts on appeal. Id.
II.

Background
Midland initiated this action against Defendant Karen L.

Burgess on March 8, 2018. (Doc. # 1). Therein, Midland seeks
rescission of a life insurance policy of which Ms. Burgess is
the beneficiary, and a declaration that the policy is void ab
initio and that Midland has no obligation or liability other
than

the

refund

of

premiums

paid

since

the

policy

was

reinstated. As alleged in the Complaint, Midland is a citizen
of Iowa, Ms. Burgess is a citizen of Florida, and the amount
in controversy exceeds $75,000. (Id. at 1). Therefore, this
Court has jurisdiction based on diversity of citizenship.

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Midland served Ms. Burgess on April 12, 2018, making Ms.
Burgess’s response to the Complaint due May 3, 2018. (Doc. #
12). After Ms. Burgess failed to appear or respond to the
Complaint, Midland applied for entry of Clerk’s default.
(Doc. # 15). Clerk’s default was entered on May 8, 2018. (Doc.
# 17). Midland has now moved for entry of default judgment.
(Doc.

#

18).

Complaint’s

Based

well-pled

upon

the

factual

Clerk’s

default

allegations,

and

the

Midland

has

established the following facts.
Ms.

Burgess

was

the

primary

beneficiary

of

a

life

insurance policy, policy **7292, issued to her husband, Mr.
Burgess. (Doc. # 1 at ¶ 5). Due to nonpayment or premiums,
the policy “entered a grace period in or about February of
2017.” (Id. at ¶ 8). The required premium payment was not
made

during

the

grace

period,

so

the

policy

lapsed

and

coverage terminated. (Id. at ¶ 9). But Midland “subsequently
sent

[Mr.

Burgess]

the

paperwork

required

to

seek

reinstatement of the policy.” (Id. at ¶ 10).
Mr. Burgess completed the reinstatement application in
May of 2017. (Id. at ¶ 11). But Mr. Burgess’s application
contained

various

false

statements

or

misrepresentations

about his health. (Id. at ¶¶ 12-20, 26-27). For example, Mr.

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Burgess gave false answers to the following questions, among
others:
13. In the past 10 years, has any person proposed
for insurance been diagnosed by a licensed medical
professional, treated or advised to get medical
treatment from a licensed medical professional,
hospitalized, or presently taking prescription(s)
for any of the following disease(s) or disorder(s):
a.
Angina, chest pain, heart attack, heart
failure,
heart
surgery,
irregular
heartbeat,
abnormal EKG, coronary artery bypass, angioplasty,
stents,
peripheral
vascular
disease,
poor
circulation,
valvular
heart
disease,
cardiomyopathy or heart murmur?
b.
High blood pressure, hypertension or abnormal
cholesterol levels?
14. Other than indicated above, has any person
proposed for insurance:
a.
In the past 5 years, been diagnosed, treated
or advised to get medical treatment from a licensed
medical professional for any mental or physical
disorder or medically or surgically treated
condition not listed above?
15. Is any person proposed for insurance currently
taking
any
prescription
medications,
herbal
remedies or non-prescription medications for any
disease or disorder not listed above? If yes, list
the medications and remedies and the reason for
which they are taken.
(Id. at ¶¶ 15-17). Mr. Burgess “disclosed no significant
medical information in the reinstatement application.” (Id.
at ¶ 20).
The policy was reinstated in June of 2017 and Mr. Burgess
passed away later that month. (Id. at ¶¶ 21, 23). Ms. Burgess

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then submitted a claim on the policy in July of 2017. (Id. at
¶ 24). Because the claim was made within two years of the
policy’s reinstatement, the policy is contestable and Midland
“conducted

a

routine

investigation

into

[Mr.

Burgess’s]

representations in the reinstatement application.” (Id. at ¶¶
22, 25).
During its investigation, Midland discovered the false
statements and misrepresentations, which it had not known
about when it reinstated the policy. (Id. at ¶¶ 26-28).

Had

Midland “known the true facts pertaining to [Mr. Burgess’s]
medical and health history, it would not have issued the
policy on reinstatement, but would have declined coverage.”
(Id. at ¶ 29). So, Midland sent Ms. Burgess a letter on March
6, 2018, notifying her that “it was exercising its right to
rescind the policy.” (Id. at ¶ 32). Midland returned “the
premiums paid related to the policy following the policy’s
reinstatement plus interest” to Ms. Burgess on March 7, 2018.
(Id.).
III. Analysis
“Under

Florida

law,

if

an

insured

has

made

a

misrepresentation in an application for insurance, and the
insurer with full disclosure would not have issued a policy
or would not have issued one under the same terms, then

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‘rescission of the policy by the insurer is proper.’” USAA
Life Ins. Co. v. Magana, No. 5:17-cv-15-JSM-PRL, 2017 WL
1289846, at *2 (M.D. Fla. Apr. 4, 2017)(quoting Alpha Prop.
& Cas. Ins. Co. v. Bouassria, No. 3:14–cv–278-J-32MCR, 2015
WL

2342969,

*3–4

(M.D.

Fla.

May

14,

2015)).

“A

misrepresentation need not be made knowingly in order to void
an insurance policy.” USAA Life Ins. Co., 2017 WL 1289846, at
*2

(citation

and

internal

quotation

marks

omitted).

“Misrepresentations related to an insured’s medical history
or condition obviously affect an insurer’s risk in issuing a
life insurance policy and may be found to be material as a
matter of law.” Mims v. Old Line Life Ins. Co. of Am., 46 F.
Supp. 2d 1251, 1256 (M.D. Fla. 1999). A reinstated insurance
policy may be rescinded if it has been in force during the
lifetime

of

the

insured

for

under

two

years

from

the

reinstatement date. See Fla. Stat. §§ 627.472, 627.455.
Here, Midland has shown that material misrepresentations
were made in the application for reinstatement of the life
insurance policy and that, had Midland known the truth, it
would not have reinstated the policy. Therefore, the Court
grants the Motion for Default Judgment and finds that Midland
is entitled to rescission of the policy and declares the
policy void ab initio. See USAA Life Ins. Co. v. Magana, 2017

6

WL 1289846, at *2 (granting motion for default judgment and
stating “the Complaint states a cause of action for rescission
under

Florida

law

and

its

admitted

factual

allegations

together with the undisputed evidence entitle USAA Life to a
default final judgment deeming the Policy void ab initio”).
Midland has no obligation or liability under the policy other
than

to

refund

premiums

paid

after

reinstatement,

which

Midland has already done.
As Midland seeks only rescission and a declaration that
the policy is void ab initio, no evidentiary hearing is
required. See Lincoln Nat’l Life Ins. Co. v. Variola, No.
8:13-cv-01310-JDW-EAJ, 2013 WL 12157847, at *1 (M.D. Fla.
Aug. 13, 2013)(granting default judgment in life insurance
rescission case and stating “[s]ince Plaintiff seeks only
declaratory relief, an evidentiary hearing is therefore not
required under Federal Rule of Civil Procedure 55(b)”).
Accordingly, it is
ORDERED, ADJUDGED, and DECREED:
(1)

Plaintiff

Midland

National

Life

Insurance

Company’s

Motion for Default Judgment (Doc. # 18) is GRANTED.
(2)

The policy is rescinded and void ab initio.

(3)

The Clerk is directed to enter default judgment in favor

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of

Midland

and

against

Defendant

Karen

L.

Burgess.

Thereafter, the Clerk is directed to CLOSE THE CASE.
DONE and ORDERED in Chambers in Tampa, Florida, this
15th day of May, 2018.

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