Mayo v. NationsBanc Insurance Company, Inc. et al
Filing
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ORDER denying 3 Motion to Dismiss. Signed by Judge Richard W. Story on 3/21/2013. (vld)
IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF GEORGIA
GAINESVILLE DIVISION
SHELBY K. MAYO,
Plaintiff,
v.
NATIONSBANC INSURANCE
COMPANY, INC. and GENERAL
FIDELITY LIFE INSURANCE
COMPANY,
Defendants.
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CIVIL ACTION NO.
2:12-CV-00164-RWS
ORDER
This case comes before the Court on Defendant General Fidelity Life
Insurance Co.’s (“Defendant” or “General Fidelity”)1 Motion to Dismiss [3].
After reviewing the record, the Court enters the following Order.
1
Defendant represents that NationsBanc Insurance Company, Inc.
(“NationsBanc”) “is not a viable entity and was not a viable entity when Plaintiff filed
her claim as it merged into [General Fidelity] on September 29, 2006.” (Def.’s Mot.
to Dismiss, Dkt. [3] at 1 n.1.) Defendant moves to dismiss on behalf of itself and as
successor in interest to NationsBanc. (Id.)
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Background2
This is a breach of contract action arising out of Plaintiff’s purchase of a
Monthly Premium Decreasing Net Balance Term Life Policy (the “Insurance
Agreement” or “Agreement”) from NationsBanc, predecessor in interest to
Defendant. (See generally Am. Compl., Dkt. [1-3].) Plaintiff and her spouse,
Henry G. Mayo, entered into the Agreement on or around May 15, 2001. (Am.
Compl., Dkt. [1-3] ¶¶ 2, 5; Am. Compl., Ex. A (the Agreement), Dkt. [1-1] at 5
of 6.) Plaintiff alleges that the Agreement provided “term life insurance
coverage in the amount of $150,000.” (Am. Compl., Dkt. [1-3] ¶ 2.) After the
death of Plaintiff’s spouse on December 16, 2007, Plaintiff submitted a timely
claim under the Agreement. (Id. ¶ 3.) Plaintiff alleges that “Defendant
tendered payment to Bank of America, N.A.” but “failed to pay the sum payable
to the Plaintiff in excess of the sum necessary to pay off the loan with [Bank of
America].” (Id. ¶ 5.) Plaintiff thus filed the instant suit for breach of contract,
alleging that Defendant “failed to pay the insurance proceeds to the Plaintiff as
a consequence of the death of [Plaintiff’s spouse].” (Id. ¶ 6.)
2
Because the case is before the Court on a motion to dismiss, the Court accepts
as true the facts alleged in the Amended Complaint. Bryant v. Avado Brands, Inc.,
187 F.3d 1271, 1273 n.1 (11th Cir. 1999).
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Defendant now moves to dismiss the Complaint for failure to state a
claim upon which relief may be granted, pursuant to Federal Rule of Civil
Procedure (“Rule”) 12(b)(6). Defendant argues that Plaintiff’s breach of
contract claim fails because the Agreement was one simply for the insurance of
Plaintiff’s debt to Bank of America; thus, Defendant argues, its only obligation
under the Agreement was to pay off that debt, which obligation Defendant
discharged. (Def.’s Mot. to Dismiss, Dkt. [3] at 3-4.) In response, Plaintiff
argues that the Agreement reasonably may be read as an Agreement for
$150,000 of life insurance, not simply for the insurance of Plaintiff’s debt; thus,
Plaintiff argues, the Agreement is ambiguous, precluding the Court from ruling
as a matter of law that Defendant discharged its contractual obligations by
paying off Plaintiff’s debt. (See generally Pl.’s Resp. to Mot. to Dismiss (“Pl.’s
Resp.”), Dkt. [4].) The Court sets out the legal standard governing a Rule
12(b)(6) motion to dismiss before considering Defendant’s motion on the
merits.
Discussion
I.
Legal Standard
Federal Rule of Civil Procedure 8(a)(2) requires that a pleading contain a
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“short and plain statement of the claim showing that the pleader is entitled to
relief.” While this pleading standard does not require “detailed factual
allegations,” “labels and conclusions” or “a formulaic recitation of the elements
of a cause of action will not do.” Ashcroft v. Iqbal, 556 U.S. 662, 678 (2009)
(quoting Bell Atl. Corp. v. Twombly, 550 U.S. 544, 555 (2007)). In order to
withstand a motion to dismiss, “a complaint must contain sufficient factual
matter, accepted as true, to ‘state a claim to relief that is plausible on its face.’”
Id. (quoting Twombly, 550 U.S. at 570). A complaint is plausible on its face
when the plaintiff pleads factual content necessary for the court to draw the
reasonable inference that the defendant is liable for the conduct alleged. Id.
At the motion to dismiss stage, “all well-pleaded facts are accepted as
true, and the reasonable inferences therefrom are construed in the light most
favorable to the plaintiff.” Bryant v. Avado Brands, Inc., 187 F.3d 1271, 1273
n.1 (11th Cir. 1999). However, the same does not apply to legal conclusions set
forth in the complaint. Sinaltrainal v. Coca-Cola Co., 578 F.3d 1252, 1260
(11th Cir. 2009) (citing Iqbal, 556 U.S. at 678). “Threadbare recitals of the
elements of a cause of action, supported by mere conclusory statements, do not
suffice.” Iqbal, 556 U.S. at 678. Furthermore, the court does not “accept as
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true a legal conclusion couched as a factual allegation.” Twombly, 550 U.S. at
555.
II.
Analysis
As stated in the Background section, supra, Defendant moves to dismiss
Plaintiff’s claim for breach of contract, arguing that under the Agreement,
Defendant’s only obligation was to pay off Plaintiff’s loan with Bank of
America, which obligation Defendant discharged. (Def.’s Mot. to Dismiss, Dkt.
[3] at 3-5.) Defendant argues that contrary to Plaintiff’s allegations, Defendant
was not required to pay any additional amount to Plaintiff once it satisfied this
obligation. (Id.) In support of this argument, Defendant points to the following
provisions of the Agreement:
Immediately upon satisfactory
WHAT WE WILL PAY:
proof of loss acceptable to us, we will pay the amount of the
insured debt to the creditor as beneficiary, but not more than
the amount necessary to completely pay off your debt. . . .
INSURED DEBT: Means the LEAST of:
1.
The outstanding balance of your debt on the date of
your death;
2.
The MAXIMUM AMOUNT OF INSURANCE as
shown in the SCHEDULE.
(Id. at 3-4 (citing Agreement, Dkt. [1-1] at 6 of 6) (emphasis in bold added).)
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Defendant argues that under the plain language of the foregoing provisions,
Defendant fully performed its obligations under the Agreement when it paid off
Plaintiff’s loan with Bank of America.
Plaintiff contends, on the contrary, that the terms of the Agreement are
ambiguous and therefore should be interpreted in accordance with Plaintiff’s
reading thereof. (See generally Pl.’s Resp., Dkt. [4].) Plaintiff argues that the
Agreement was not simply an agreement for insurance of a debt, but one for
term life insurance in the amount of $150,000. (Id.) In support of this
argument, Plaintiff points out the following:
The [A]greement states on the first page that the Amount of Life
Insurance Term is $150,000. To the layperson, this clearly implies
that they have bought $150,000 worth of term life insurance. If, as
Defendant argues, the sole purpose of the [A]greement is to secure
a debt, then why put a number on the document that reflects a
payout of $150,000?
(Id. at 2.) In further support of Plaintiff’s argument, Plaintiff, like Defendant,
points to the “WHAT WE WILL PAY” provision of the Agreement, quoted
partially above:
Immediately upon satisfactory
WHAT WE WILL PAY:
proof of loss acceptable to us, we will pay the amount of the
insured debt to the creditor as beneficiary, but not more than the
amount necessary to completely pay off your debt. . . . If the
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insured debt exceeds the balance of your debt the excess will be
paid by separate draft or check of the Insurer to the Second
Beneficiary as named in the SCHEDULE or, if none, your
estate.
(Id. at 2 (bold emphasis added).)
“Insurance in Georgia is a matter of contract and the parties to the
contract of insurance are bound by its plain and unambiguous terms.” Hurst v.
Grange Mut. Cas. Co., 470 S.E.2d 649, 663 (Ga. 1966) (citation omitted).
“However, if a provision of an insurance contract is susceptible of two or more
constructions, even when the multiple constructions are all logical or
reasonable, it is ambiguous . . . and the statutory rules of contract construction
will be applied.” Id. (citation omitted). When a provision of an insurance
contract is ambiguous, three well known rules of contract construction apply:
any ambiguities in the contract are strictly construed against the
insurer as drafter of the document; any exclusion from coverage
sought to be invoked by the insurer is likewise strictly construed;
and the insurance contract is to be read in accordance with the
reasonable expectations of the insured where possible.
Fireman’s Fund Ins. Co. v. University of Georgia Athletic Ass’n, Inc., 654
S.E.2d 207, 209-10 (Ga. Ct. App. 2007).
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The Court agrees with Plaintiff in this case that the terms of the
Agreement are ambiguous. While the Agreement may be read, as Defendant
urges, as an agreement to insure a debt, it likewise may be read as a term life
insurance policy in the amount of $150,000. The Court reaches this conclusion
in light of the following. First, the Agreement contains a provision stating the
“Amount of Life Insurance Term” to be $150,000. (Agreement, Dkt. [1-1] at 5
of 6.) Second, the “WHAT WE WILL PAY” provision states, “If the insured
debt exceeds the balance of your debt the excess will be paid by separate draft
or check of the Insurer to the Second Beneficiary as named in the SCHEDULE
or, if none, your estate.” (Id. at 6 of 6.) As Plaintiff argues, a reasonable
insured could believe, based on these provisions, that she had purchased a
policy of life insurance in the amount of $150,000—not simply insurance to
cover a particular debt.
The Court has considered Defendant’s arguments that the foregoing
provisions do not give rise to an ambiguity. Defendant argues that the $150,000
“Amount of Life Insurance Term” does not create an ambiguity because the
provision is defined as the “Maximum[ ] for Each Insured Debt.” (Reply in
Supp. of Mot. to Dismiss (“Def.’s Reply”), Dkt. [6] at 4 (citing the Agreement,
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Dkt. [1-1] at 5 of 6).) This, however, does not eliminate the ambiguity. As
Plaintiff argues, if the Agreement was simply to insure a debt of a specific
amount, a reasonable insured would expect the maximum amount of insurance
coverage to be, simply, the amount of the debt. Thus, the Agreement
reasonably may be read as providing for life insurance coverage in the amount
of $150,000.
Defendant also disputes Plaintiff’s contention that the “WHAT WE
WILL PAY” provision creates an ambiguity. Defendant explains that the
language cited by Plaintiff was included in the Agreement “to balance out any
transactions that occur after the insurance trigger date—i.e., the date of
death—and before submission of a proof of loss.” (Def.’s Mot. to Dismiss,
Dkt. [3] at 4.) Defendant explains, “In other words, since the [Agreement]
defines the Insured Debt as the balance of the Plaintiff’s loan on the date of
death, a mechanism is in place to reimburse Plaintiff for any payments made on
her debt after the date of death.” (Id. at 4-5.) Although this is a logical
explanation of the provision, it does not spring clearly and indisputably from
the face of the Agreement itself. On the contrary, the Court finds that a
reasonable insured could read this provision, in combination with the $150,000
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“Amount of Life Insurance Term,” to mean that once the insured debt was paid
off, the difference between the debt and the $150,000 would be paid to the
second beneficiary or insured’s estate.
In sum, the Court agrees with Plaintiff that the Agreement is subject to
more than one reasonable interpretation and therefore is ambiguous.
Accordingly, as stated above, the Court must construe the Agreement strictly
against the insurer and in accordance with the reasonable expectations of the
insured. Defendant’s Motion to Dismiss [3] therefore is DENIED.
Conclusion
In accordance with the foregoing, Defendant’s Motion to Dismiss [3] is
DENIED.
SO ORDERED, this 21st day of March, 2013.
_______________________________
RICHARD W. STORY
UNITED STATES DISTRICT JUDGE
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