Wells Fargo Bank, N.A. v. Lincoln Benefit Life Company
Filing
121
FINDINGS OF FACT AND CONCLUSIONS OF LAW. The Court finds that Lincoln Benefit is liable to the Plaintiff for breach of contract in the principal amount of $1,084,807.27 plus prejudgment interest from 3/30/2011 through the date of this Order. Signed by Judge Thomas W. Thrash, Jr. on 2/28/2017. (jkl)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
ATLANTA DIVISION
WELLS FARGO BANK, N.A.,
Plaintiff,
v.
CIVIL ACTION FILE
NO. 1:13-CV-2890-TWT
LINCOLN BENEFIT LIFE
COMPANY,
Defendant.
FINDINGS OF FACT AND CONCLUSIONS OF LAW
This is an insurance claims dispute. Pursuant to the mandate of the Court of
Appeals, the Court conducted a bench trial on February 13, 2017. Based upon the
evidence presented, the Court hereby enters the following findings of fact and
conclusions of law:
FINDINGS OF FACT
1.
On December 31, 1999, Defendant Lincoln Benefit Life Company issued a
“Flexible Premium Adjustable Life Insurance Policy,” Policy No. 01N1029191 (the
“Policy”) to Najah Almalat. (Ex. J-4) The Plaintiff Wells Fargo Bank, N.A. is
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pursuing this civil action in its capacity as the Sub-Custodian and Securities
Intermediary of current beneficiary of the Policy.
2.
As there is no dispute regarding standing, for the sake of convenience, the Court
shall hereinafter refer to Wells Fargo Bank, N.A., the parties for whom it acts and
their respective predecessors in interest collectively as the “Plaintiff.” The Plaintiff is
the beneficiary of the Policy and has been at all times relevant to this case.
3.
On the initial application for the Policy, Ms. Almalat stated that she was born
in 1939. (Ex. J-3) Lincoln Benefit nevertheless issued the Policy with a birth date in
1936. Specifically, the Policy states that Ms. Almalat was 63 years of age on the date
the Policy was issued on December 31, 1999. (Ex. J-4) An amendment to the Policy,
dated February 2, 2000, lists Ms. Almalat’s date of birth as August 30, 1936. (Ex. J-5)
4.
In 2007, Lincoln Benefit was presented with a copy of Ms. Almalat’s Senior
Citizen Identification Card issued by the State of California. That document listed Ms.
Almalat’s date of birth as June 11, 1936. (Ex. J-6) Lincoln Benefit accepted the
California ID Card as acceptable proof of age and amended the Policy to reflect Ms.
Almalat’s date of birth as June 11, 1936. (Ex. J-7) The 2007 amendment did not affect
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the premiums or benefits under the Policy because Ms. Almalat would still have been
63 years of age on the date the Policy was originally issued – December 31, 1999.
5.
Ms. Almalat died in Syria on February 17, 2010.
6.
On July 23, 2010, and August 25, 2010, Lincoln Benefit sent letters to the
Plaintiff regarding the Policy. Those letters included the certain pre-printed Lincoln
Benefit forms that Lincoln Benefit required the Plaintiff to complete and submit in
order to receive the proceeds of the Policy. (Ex. J-8, J-11)
7.
By letter dated September 17, 2010, the Plaintiff submitted completed Claim
Forms to Lincoln Benefit in support of its request for the Policy’s death benefits. The
Claim Submission included, among other things, a Claimant’s Statement of Life
Insurance Proceeds, a Foreign Death Questionnaire, a certified Death Statement issued
by the Syrian Arab Republic, Ministry of Interior, Civil Affairs, with an English
translation. The English translation of the Syrian Death Statement lists Ms. Almalat’s
date of birth as “01.12.1931.” (Ex. J-9)
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8.
Both the Claimant’s Statement and the Questionnaire included pre-printed
sections requesting identifying information for the insured, including the insured’s
date of birth. The Plaintiff’s representative inserted the “01.12.1931” date of birth
recited on the Syrian Death Statement when filling out these documents. (Ex. J-9)
9.
Lincoln Benefit received the Claim Submission on September 20, 2010. (Ex.
J-9) Lincoln Benefit immediately realized that the “01.12.1931” date of birth reflected
on the Syrian Death Statement, the Claimant’s Statement and the Questionnaire did
not match the 1936 date of birth on the Policy. Specifically, a September 21, 2010
notation in the Lincoln Benefit claims file notes this discrepancy. (Ex. J-12)
10.
Lincoln Benefit did not bring the date of birth discrepancy to the attention of
the Plaintiff. Instead, Lincoln Benefit informed the Plaintiff that, because Ms.
Almalat died in a foreign country, Lincoln Benefit would undertake a routine
investigation to confirm Ms. Almalat’s death. (Ex. J-11) Lincoln Benefit hired an
investigative firm, ICS-Merrill, to conduct an investigation regarding Ms. Almalat.
(Ex. J-14) The final report that ICS-Merrill issued to Lincoln Benefit listed Ms.
Almalat’s date of birth as August 30, 1936. (Ex. J-26)
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11.
In the course of its investigation, Lincoln Benefit obtained a purported Syrian
Birth Certificate from AXA Equitable, another insurance company that issued a life
insurance policy to Ms. Almalat. The Syrian Birth Certificate reflected a 1931 birth
date, but the email forwarding the Syrian Birth Certificate stated: “This record reflects
a date of birth as 1/1[2]/1931 while the electronic record at the Civil Registry the year
of birth is 1936.” Moreover, the Syrian Birth Certificate was not created until 1959.
(Ex. P-1)
12.
On March 30, 2011, Lincoln Benefit sent the Plaintiff a letter regarding the
Policy. That letter acknowledged that the face amount owed under the Policy was
$2,953,735.00. Nevertheless, Lincoln Benefit informed the Plaintiff that it was
excluding $1,084,807.27 in benefits under the Policy (the “Excluded Proceeds”). To
justify its withholding of the Excluded Proceeds, Lincoln Benefit relied on a
Misstatement of Age provision in the Policy and took the position that Ms. Almalat
was born in 1931. (Ex. J-30) Thus, according to Lincoln Benefit, Ms. Almalat was 68
years old when the Policy was issued – not 63 years old as stated on the Policy. As
proof of the alleged misstatement of age, Lincoln Benefit relied on the Syrian Death
Statement and the Syrian Birth Certificate. (Ex. J-30)
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13.
The Plaintiff obtained certified records of the California Department of Motor
Vehicles that list Ms. Almalat’s date of birth as June 11, 1936. (Ex. P-3) The certified
records of the United States Social Security Administration also reflect that Ms.
Almalat was born in 1936; although on a different day and month – September 26,
1936 based upon presentation of a Syrian passport. (Ex. J-36)
14.
On July 19, 2013, the Plaintiff filed its Complaint in the Superior Court of
Fulton County, Georgia, asserting claims for breach of contract and bad faith arising
from Lincoln Benefit’s refusal to pay the Excluded Proceeds. On August 29, 2013,
Lincoln Benefit removed the case to this Court in the Northern District of Georgia.
This Court subsequently dismissed the Plaintiff’s bad faith claim.
CONCLUSIONS OF LAW
Based on a choice of law provision in the Policy, the Plaintiff’s sole count of
breach of contract is governed by California law. Under California law, a beneficiary
of a life insurance policy “seeking to recover on an insurance policy must aver the loss
and show that it occurred by reason of a peril insured against.” Searle v. Allstate Life
Ins. Co., 696 P.2d 1308, 1316 (Cal. 1985); see also Honnevk v. Farmers New World
Life Ins. Co., 2013 WL 3733610, at *4 (E.D. Cal. July 15, 2013) (life insurance policy
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placed the burden on the beneficiary to show evidence of insured’s death). In this
case, there is no dispute that Ms. Almalat died and that, but for the issue regarding her
date of birth, the Plaintiff would be entitled to the Excluded Proceeds. Thus, the
primary issue presented is whether Ms. Almalat’s date of birth was misstated on the
Policy; more specifically, whether Ms. Almalat was actually 63 years old when the
Policy was issued on December 31, 1999, or whether she was 68.
In general, the burden of proving an exclusion to the Policy “which negates full
liability is on the insurer and not on the beneficiary.” Searle, 696 P.2d at 1316 (insurer
had the burden of proving suicide to avoid liability on a life insurance policy); see also
Trull v. Independent Order of Puritans, 181 P. 89, 90 (Cal. Ct. App. 1919) (insurer
failed to satisfy its burden to prove the insured misrepresented his health in the
application). Although no California court appears to have addressed the burden of
proof specifically in the context of misstatement of age, the courts that have addressed
the issue require an insurer prove a misstatement of age by the insured as a defense
to paying the full death benefit. See, e.g., Plan Investments, Inc. v. Brumfield, 319 So.
2d 859, 862–63 (La. Ct. App. 1975) (insurer had burden of proof to show insured was
more than sixty-five years of age when life insurance policy was issued); Koch v.
Prudential Ins. Co. of Am., 447 P.2d 825, 828 (Kan. 1968) (“We must conclude that
the contention that one is not in an assured group because of age presents an
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affirmative defense and the burden of proof is upon the insurer.”); American Nat. Ins.
Co. v. Branch, 191 S.E. 668, 672 (Va. 1937) (“The statement of the assured as to his
age, in the application for a [life] insurance policy, is presumed to be correct, and the
burden of overcoming this presumption is on the insurer.”); Bernard v. Metropolitan
Life Ins. Co., 45 N.E. 2d 518, 519 (Ill. App. Ct. 1942) (insurer had burden to prove
affirmative defense that insured misstated his age and that insurer could reduce death
benefit based on similar provision as the Misstatement of Age Provision); Aronson
v. Hercules Life Ins. Co., 131 S.W. 2d 852, 854, 857 (Mo. App. 1939) (same); Hardy
v. State Mut. Benefit Soc’y, 170 A. 704, 705 (Pa. Super. Ct. 1934) (same); 6 Couch
on Ins. § 86:7 (2013) (“The burden of proving a misstatement of age by the insured
rests upon the insurer, and in the absence of proof to the contrary, a presumption
exists that the applicant has truly stated his or her age.”).
The Court has weighed the evidence regarding Ms. Almalat’s date of birth and
concludes that she was born in 1936. This conclusion is based on a number of facts.
First, Lincoln Benefit was aware that there was a question regarding Ms. Almalat’s
date of birth when it originally issued the Policy. Specifically, on the Policy
application, Ms. Almalat listed her date of birth as August 30, 1939. Notwithstanding
this, Lincoln Benefit underwrote and issued the Policy based on Ms. Almalat being
63 years of age on December 31, 1999 – thus, making her year of birth 1936.
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Presumably, this was based upon satisfactory evidence that this was her true age. This
underwriting conclusion is further evidenced in the February 2000 Amendment to the
Policy which lists Ms. Almalat’s date of birth as August 30, 1936. Second, in 2007,
Lincoln Benefit was presented with a copy of Ms. Almalat’s California ID Card,
which listed her date of birth as June 11, 1936. Lincoln Benefit accepted the
California ID Card as acceptable proof of Ms. Almalat’s date of birth and amended
the Policy accordingly. Third, the California DMV Records confirm the date of birth
on the California ID Card. 20 C.F.R. § 422.107(c) (explaining driver’s license
constitutes “convincing evidence of your identity” because it contains “sufficient
information to identify you, including your name and: (i) [y]our age, date of birth, or
parents’ names; or (ii) [y]our photograph or physical description.”); Collier v. Apfel,
91 F. Supp. 2d 904, 905 (W.D. Va. 2000) (considering driver’s license evidence to
determine date of birth).
Finally, the Social Security records also reflect a date of birth in 1936. When
applying for Social Security benefits, an applicant is required to submit “convincing”
evidence of her date of birth. 20 C.F.R. § 404.715; 20 C.F.R. § 404.708; see also 20
C.F.R. § 422.107(a) (“To obtain an original Social Security number card, you must
submit convincing evidence of your age, U.S. citizenship or alien status, and true
identity. . . We will not assign a Social Security number or issue an original or
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replacement card unless we determine that you meet all of the evidence
requirements.”); Jennings-El v. Social Sec. Admin., 2007 WL 1114237, at *2 (S.D.
Ohio Apr. 12, 2007) (“The requirement that plaintiff obtain proper verification of his
identity before a Social Security card may be issued . . . reflects legitimate
governmental policies of reducing identity theft and ensuring fiscal responsibility.”).
Thus, the Social Security records are reliable proof of age.
The Court concludes that the Syrian Death Statement is not persuasive evidence
of Ms. Almalat’s date of birth because it was provided to document her death, not to
confirm her date of birth. See Interstate Life & Accident Ins. Co. v. Smith, 260 So. 2d
453, 456 (Miss. 1972) (death certificate could not be used to establish the date of birth
of the deceased insured because “to put the date of one’s birth on a death certificate
is obviously hearsay evidence”); In re Fink’s Estate, 21 A.2d 883, 888 (Pa. 1941)
(death certificate is admissible to prove the fact of death but not to prove the birth
date). The Syrian Birth Certificate was not recorded until 1959 – more than 27 years
after Ms. Almalat was allegedly born. See Kappler v. Shalala, 840 F. Supp. 582, 586
(N.D. Ill. 1994) (“Because the delayed birth certificate was recorded either 11 or 12
years (depending on what birth date is chosen) after that Regulation-specified
watershed, it clearly cannot be accorded the status of ‘preferred evidence.’”).
Moreover, the party that provided the Syrian Birth Certificate to Lincoln Benefit
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questioned its accuracy. Specifically, Lincoln Benefit obtained the Syrian Birth
Certificate from AXA Equitable, another insurance company that issued another life
insurance policy to Ms. Almalat. The email forwarding the Syrian Birth Certificate to
AXA Equitable, which was subsequently forwarded to Lincoln Benefit, stated: “This
record reflects a date of birth as 1/1[2]/1931 while the electronic record at the Civil
Registry the year of birth is 1936.” The foregoing evidence casts doubt on the
reliability of both the Syrian Death Statement and the Syrian Birth Certificate. In light
of the foregoing, regardless of which party bears the burden of proof on the issue of
Ms. Almalat’s age, the Court finds that she was born in 1936. Accordingly, the Court
finds that Lincoln Benefit breached the Policy by refusing to pay the Excluded
Proceeds.
Lincoln Benefit argues the Plaintiff is estopped from denying the 1931 date of
birth because it attested to that date of birth on the Claimant’s Statement and the
Questionnaire. Under California law, equitable estoppel requires that: (1) the party
to be estopped must be apprised of the facts; (2) that party must intend that his or her
conduct be acted upon, or must so act that the party asserting estoppel had a right to
believe it was so intended; (3) the party asserting estoppel must be ignorant of the true
state of the facts; and (4) the party asserting estoppel must reasonably rely on the
conduct to his or her injury. Lukovsky v. City and County of San Francisco, 535 F.3d
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1044, 1051-52 (9th Cir. 2008). The burden is on the party asserting estoppel to
establish each of the foregoing elements. Wolitarsky v. Blue Cross of California, 61
Cal. Rptr. 2d 629, 632 (Cal. Ct. App. 1997).
The Court finds that Lincoln Benefit’s estoppel defense fails for three
independent reasons. First, the Court concludes that the evidence fails to support a
finding that Lincoln Benefit reasonably relied on the date of birth information recited
in the Claimant’s Statement or the Questionnaire. “The sine qua non of estoppel is
that the party claiming it relied to its detriment on the conduct of the party to be
estopped.” Gorlach v. Sports Club Co., 148 Cal. Rptr. 3d 71, 78 (Cal. Ct. App. 2012)
(emphasis in original). In Warner Bros. Int’l Television Distr. v. Golden Channels &
Co., 522 F.3d 1060, 1069 (9th Cir. 2008), the court reversed a ruling of equitable
estoppel because there was no evidence that the party claiming estoppel had
reasonably relied.
After receiving the Plaintiff’s claim, Lincoln Benefit conducted its own
independent investigation regarding Ms. Almalat’s death. The results of that
investigation uncovered contradictory evidence regarding whether Ms. Almalat was
born in 1931 or 1936. The evidence, therefore, shows that Lincoln Benefit did not
reasonably rely on the date of birth information listed in the Claim Submission.
Moreover, in the letter informing the Plaintiff that it was withholding the Excluded
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Proceeds, Lincoln Benefit did not profess to have relied on the Claimant’s Statement
or the Questionnaire. And, Lincoln Benefit did not present any testimony at the trial
that it had relied – reasonably or otherwise – upon the date of birth listed in the Claim
Submission. Lincoln Benefits’ sole trial witness had no personal knowledge about the
processing of the claim.
Second, the Court finds that Lincoln Benefit cannot prove it was ignorant of the
true facts regarding Ms. Almalat’s date of birth. See Smith v. Governing Bd. of Elk
Grove Unified Sch. Dist., 16 Cal. Rptr. 3d 1, 5 (Cal. Ct. App. 2004) (holding that “a
party invoking estoppel must have been misled by the other party.”). Upon receiving
the Plaintiff’s Claim Submission, Lincoln Benefit immediately realized that there was
a discrepancy between the 1931 date of birth on the Syrian Death Statement and the
1936 date of birth on the Policy.
Third, the Court concludes that Lincoln Benefit has failed to present evidence
that the Plaintiff intended for Lincoln Benefit to rely on the date of birth information
contained in the Claimant’s Statement and the Questionnaire. See Hendren v. Yonash,
52 Cal. Rptr. 738, 744 (Cal. Ct. App. 1966) (“The party [against whom estoppel is
asserted] must intend that his conduct shall be acted upon.”). The Plaintiff’s witnesses
testified that they believed that information was provided solely for identification
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purposes; not as a confirmation that the date of birth in the Policy as issued was
accurate.
The Court concludes that, under California law, the Plaintiff is entitled to
prejudgment interest at the rate of 10% per annum from the date of the breach. See
Cal. Civ. Code § 3289. The Court finds that prejudgment interest began to accrue on
March 30, 2011, when Lincoln Benefit first refused to pay the Excluded Proceeds.
The Plaintiff is not entitled to an award of attorney’s fees under O.C.G.A. § 13-6-11
because there was a genuine dispute of material fact as to Ms. Almalat’s date of birth.
Failure to disclose the AXA email during pre-litigation negotiations is not bad faith
nor stubborn litigiousness.
CONCLUSION
Thus, the Court finds that Lincoln Benefit is liable to the Plaintiff for breach of
contract in the principal amount of $1,084,807.27 plus prejudgment interest from
March 30, 2011 through the date of this Order.
SO ORDERED, this 28 day of February, 2017.
/s/Thomas W. Thrash
THOMAS W. THRASH, JR.
United States District Judge
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