Metlife Investors USA Insurance Company v. Steven L Lindsey et al

Filing 69

OPINION AND ORDER: For the reasons set forth in the Opinion and Order, Defendants/Counter-Plaintiffs' motion for summary judgment [41[ is DENIED. Plaintiff's motion to deny or defer Defendants' motion for summary judgment 44 is DENIED. Defendants/Counter-Plaintiffs' request for oral argument 58 is DENIED. Signed by Judge Rudy Lozano on 12/4/2017. (jss)

IN THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF INDIANA
HAMMOND DIVISION

METLIFE INVESTORS USA INSURANCE
COMPANY,
Plaintiff,
vs.
ESTATE OF MELINDA LINDSEY,
STEVEN L. LINDSEY and JULIE
KIRBY, in her capacity as
Personal Representative of the
Probate Estate of Melinda
Lindsey,
Defendants,
________________________________
ESTATE OF MELINDA LINDSEY and
JULIE KIRBY, in her capacity as
Personal Representative of the
Probate Estate of Melinda
Lindsey,
Defendants/Counter-Plaintiffs,
vs.
METLIFE INVESTORS USA INSURANCE
COMPANY,
Plaintiff/Counter-Defendant.

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NO. 2:16–CV-00097

OPINION AND ORDER
This

matter

is

before

the

Court

on:

Defendants/Counter-

Plaintiffs Estate of Melinda Lindsey and Julie Kirby in Her
Capacity as Personal Representative of the Probate Estate of

‐1‐ 

Melinda Lindsey’s Motion to Summary Judgment, filed on June 12,
2017 (DE #41); Plaintiff’s Rule 56(d) Motion to Deny or Defer
Defendants’

Motion

for

Summary

Judgment,

filed

by

MetLife

Investors USA Insurance Company on June 16, 2017 (DE #44); and
Defendants/Counter-Plaintiffs Estate of Melinda Lindsey and Julie
Kirby in Her Capacity as Personal Representative of the Probate
Estate of Melinda Lindsey’s Request for Oral Argument on Motion
for Summary Judgment, filed on July 24, 2017 (DE #58).

For the

reasons set forth below, Defendants/Counter-Plaintiffs’ motion for
summary judgment (DE #41) is DENIED.

Plaintiff’s motion to deny

or defer Defendants’ motion for summary judgment (DE #44) is
DENIED.

Defendants/Counter-Plaintiffs’ request for oral argument

(DE #58) is DENIED.
BACKGROUND
Plaintiff MetLife Investors USA Insurance Company (“MetLife”)
seeks rescission of a term life insurance policy (“Policy”) issued
to

decedent

material
Policy

Melinda

Lindsey

misrepresentations
application.

(“Lindsey”)

and/or

based

omissions

she

on

allegedly

made

Defendants/Counter-Plaintiffs

in

Estate

the
of

Lindsay and Julie Kirby in her capacity as personal representative
of the probate estate of Lindsey (together, “Estate”) move for
summary judgment on the grounds that MetLife failed to properly
rescind the Policy by retaining the insurance premiums when it
initiated the suit, and by not depositing the premiums with the

‐2‐ 

Court. MetLife filed a motion to deny or defer the Estate’s motion
for summary judgment based on Federal Rule of Civil Procedure
56(d).

These

adjudication.

motions

are

fully

briefed

and

are

ripe

for

The Estate also filed a request for oral argument

on its motion for summary judgment.
DISCUSSION
Request for Oral Argument
At the outset, the Court will address the Estate’s request
for oral argument on its motion for summary judgment.

(DE #58.)

Pursuant to Local Rule 7-5, the Court may “grant or deny a request
for oral argument or an evidentiary hearing in its discretion.”
N.D. Ind. L.R. 7-5(c)(1).

Here, the parties' memoranda have

sufficiently apprised the Court of the issues at hand, and the
Court does not believe that oral argument is necessary. Therefore,
the Court DENIES the Estate’s request for oral argument (DE #58),
and turns to the merits of the motions.
Undisputed Facts
On

January

2,

2014,

Lindsey

completed

and

signed

an

application for a term life insurance policy with an accidental
death

benefit

rider

by

MetLife

(“Policy”).

As

part

of

her

application, Lindsey responded to a series of questions regarding

‐3‐ 

her medical history and her spouse’s life insurance coverage.
MetLife issued the Policy to Lindsey on March 26, 2014.1
On January 16, 2015, Lindsey was shot and killed.

Her death

occurred during the contestable period of the Policy.

Lindsey’s

spouse, Steven Lindsey, made a claim for the Policy benefits as
the named beneficiary.

Steven Lindsey was eventually convicted of

Lindsey’s death and is currently incarcerated.

The Estate made a

claim for the Policy benefits on the basis that it obtained a
wrongful death judgment against Steven Lindsey for the Lindsey’s
death. As part of its review of the claims for the Policy benefits,
MetLife found what it believes to be material misrepresentations
and omissions in Lindsey’s application.
In a letter dated June 25, 2015, MetLife denied Steven
Lindsey’s claim for death benefits, and notified him that MetLife
was exercising its right to void the Policy, and that all premiums
paid as of that date, with interest, would be forwarded to him
under separate cover. MetLife sent a similar letter to the Estate,
indicating that the premium refund was being sent to Steven
Lindsey.

The Estate responded on June 29, 2015, requesting that

premium refunds be forwarded to the Estate, rather than Steven,
who at that time was awaiting trial for Lindsey’s murder.

On July

1

 The Court notes that while the parties identify disputes of fact
relating to issuance of the Policy, these disputes are not material
for the purpose of the Estate’s motion for summary judgment.

‐4‐ 

6, 2015, MetLife sent a check to Steven Lindsey in the amount of
$907.05, representing a premium refund plus interest.

On July 20,

2015, MetLife sent a check to the Estate for the same amount.

On

January 19, 2016, the Estate returned the premium refund check to
MetLife, and notified MetLife that it intended to contest the
denial of the Policy.

MetLife acknowledged the Estate’s return of

the check in correspondence dated January 25, 2016.

On February

24, 2016, MetLife stopped payment on the checks that it had sent
to Steven Lindsey and the Estate.
On March 16, 2016, MetLife filed the instant lawsuit seeking
rescission

of

the

Policy.

Rescission

(“Complaint”)

The

alleges

First

Amended

Complaint

that

Lindsey

made

for

material

misrepresentations and/or omissions in her application for the
Policy,

that

MetLife

relied

to

its

detriment

on

her

representations, and that MetLife would not have issued the Policy
if

Lindsey

had

accurately

and

fully

disclosed

all

necessary

information and made correct and complete representations in the
application.

(DE

#14.)

The

Complaint

alleges

that

the

misrepresentations were fraudulent and/or material, entitling it
to rescind the Policy.

The Complaint also alleges that “[o]n June

25, 2015, MetLife provided timely written notice to the Defendants
that the Policy is considered void and MetLife refunded all
premiums paid as of that date, with interest.”

‐5‐ 

(Id., ¶24.)

The Estate answered the Complaint and filed counterclaims
against MetLife.

On June 30, 2016, MetLife filed its answer to

the Estate’s counterclaims, asserting as a defense that “MetLife
properly and timely determined the Policy initially issued to the
Decedent was void and/or voidable and should be rescinded based on
misrepresentations and/or omissions in the Decedent’s insurance
application.”

(DE #21, at 13.)

In September 2016, Magistrate

Judge Martin held the Rule 16 preliminary pretrial conference, and
set discovery and mediation deadlines.

In May 2017, Magistrate

Judge Martin granted the parties’ motion to extend discovery
deadlines; the close of fact discovery was set for August 15, 2017,
and the close of all discovery was set for February 15, 2018.

No

deadline was set for the filing of dispositive motions.
On June 12, 2017, the Estate filed the instant motion for
summary judgment.
engaged

in

(DE #41.)

discovery,

and

At that time, the parties were still
the

Estate

had

depositions of certain MetLife employees.

yet

to

take

the

On June 16, 2017,

MetLife filed the instant motion to deny or defer the Estate’s
motion for summary judgment (DE #44), as well as a motion for leave
to deposit funds with the Clerk (DE #43).

On July 27, 2016,

Magistrate Judge Martin granted MetLife’s motion for leave to
deposit funds with the Clerk, noting that “[a]ccepting deposit of
the funds is therefore appropriate but in no way addresses the
timeliness and effectiveness of MetLife’s attempted rescission.”

‐6‐ 

(DE #60 at 2.)

On September 1, 2017, Magistrate Judge Martin

ordered that all discovery-related deadlines in this matter be
stayed pending the Court’s decision on the instant dispositive
motions.

(DE #65.)

Rule 56(d) Motion
In general, a party may file a motion for summary judgment at
any time after the case is initiated until thirty days after the
close of discovery.

Fed. R. Civ. P. 56(b).

Thus, a party can

move for summary judgment before discovery is completed.

Am.

Nurses' Ass'n v. State of Ill., 783 F.2d 716, 729 (7th Cir. 1986).
Here, the Estate filed a motion for summary judgment before the
close of discovery on the issue of whether MetLife failed to
properly rescind the Policy by failing to tender the premiums to
the Court in a timely manner.
MetLife argues that the Court should deny or defer the
Estate’s motion for summary judgment under 56(d) of the Federal
Rules of Civil Procedure. Rule 56(d) states that “[i]f a nonmovant
shows by affidavit or declaration that, for specified reasons, it
cannot present facts essential to justify its opposition [of a
motion for summary judgment], the court may: (1) defer considering
the motion or deny it; (2) allow time to obtain affidavits or
declarations

or

to

appropriate order.”

take

discovery;

or

Fed. R. Civ. P. 56(d).

(3)

issue

any

other

To succeed, the party

seeking the protection of Rule 56(d) must “state the reasons why

‐7‐ 

the party cannot adequately respond to the summary judgment motion
without

further

affidavit.”

discovery

and

must

support

those

reasons

by

Sterk v. Redbox Automated Retail, LLC, 770 F.3d 618,

627-28 (7th Cir. 2014) (quoting Deere & Co. v. Ohio Gear, 462 F.3d
701, 706 (7th Cir. 2006)).

The party’s affidavit must demonstrate

“how postponement of a ruling on the motion will enable [it], by
discovery or other means, to rebut the movant’s showing of the
absence of a genuine issue of fact.”

First Specialty Ins. Corp.

v. Supreme Corp., No. 3:12-CV-186-JTM-MGG, 2017 WL 2591384, at *2
(N.D. Ind. June 14, 2017) (quoting Korf v. Ball State Univ., 726
F.2d 1222, 1230 (7th Cir. 1984)).
56(d)]

to

gain

a

continuance

“A party . . . may not use [Rule
where

he

has

made

only

vague

assertions that further discovery would develop genuine issues of
material fact.”

Id. (quoting Grundstad v. Ritt, 166 F.3d 867, 873

(7th Cir. 1999)).
Here, MetLife submits the affidavit of Tina Bengs (“Bengs
Affidavit”) in support of its Rule 56(d) motion.

(DE #45-1.)

The

Bengs Affidavit details the history of the discovery in this matter
and communications between the parties related thereto, including
the parties’ delays in producing discovery responses.

MetLife

does not argue, and the Bengs Affidavit does not identify, any
need for discovery pertaining to the limited issue addressed in
the Estate’s motion for summary judgment, that is, whether MetLife
waived its rescission claim by not tendering the premiums to the

‐8‐ 

Court in a timely manner.

Rather, the facts regarding MetLife’s

initial tender of the premiums to the Estate, the Estate’s return
of the premiums, MetLife’s initiation of the lawsuit for rescission
and subsequent assertion of affirmative defenses, and MetLife’s
tender of the premiums to the Court, are undisputed.

MetLife does

not explain what “facts essential to justify its opposition” to
the Estate’s motion for summary judgment that it might be able to
extract from outstanding or additional discovery.

Accordingly,

MetLife’s Rule 56(d) motion is denied.
Motion for Summary Judgment
Summary judgment must be granted when “there is no genuine
dispute as to any material fact and the movant is entitled to
judgment as a matter of law.”

Fed. R. Civ. P. 56(a).

A genuine

dispute of material fact exists when “the evidence is such that a
reasonable jury could return a verdict for the nonmoving party.”
Anderson v. Liberty Lobby, Inc., 477 U.S. 242, 248, 106 S. Ct.
2505, 91 L. Ed. 2d 202 (1986).

Not every dispute between the

parties makes summary judgment inappropriate; “[o]nly disputes
over facts that might affect the outcome of the suit under the
governing

law

will

properly

preclude

the

entry

of

summary

judgment.” Id. To determine whether a genuine dispute of material
fact exists, the Court must construe all facts in the light most
favorable to the nonmoving party and draw all reasonable inferences

‐9‐ 

in that party’s favor.

See Ogden v. Atterholt, 606 F.3d 355, 358

(7th Cir. 2010).
A party opposing a properly supported summary judgment motion
may not rely on allegations in her own pleading but rather must
“marshal and present the court with the evidence she contends will
prove her case.”
651,

654

(7th

Goodman v. Nat'l Sec. Agency, Inc., 621 F.3d
Cir.

2010).

“[I]nferences

relying

on

mere

speculation or conjecture will not suffice.” Stephens v. Erickson,
569 F.3d 779, 786 (7th Cir. 2009) (citation omitted).

If the

nonmoving party fails to establish the existence of an essential
element on which he bears the burden of proof at trial, summary
judgment is proper.

See Massey v. Johnson, 457 F.3d 711, 716 (7th

Cir. 2006).
The Estate argues that MetLife waived its rescission claim
because it failed to tender the premiums to the Court in a timely
manner.

Under Indiana law, when an insurer seeks to rescind a

policy based on a material misrepresentation in an application,
generally the insurer “must first make a tender of the full amount
of premiums paid under the policy.

This is to restore the parties

to the position they were in prior to the contract by returning
the

consideration

the

insurance

company

has

received.”

Am.

Standard Ins. Co. v. Durham, 403 N.E.2d 879, 881 (Ind. Ct. App.
1980) (citations omitted).

“[A]n insurer must tender back any

consideration paid to the beneficiary named in the policy,” and

‐10‐ 

if, as here, “the beneficiary refused to accept the consideration,
the money must be brought into court for use of the beneficiary or
the fraud will be waived.”

Gary Nat. Bank v. Crown Life Ins. Co.,

392 N.E.2d 1180, 1181 (Ind. Ct. App. 1979) (citation omitted).
The Indiana Supreme Court reaffirmed this rule in 2013, stating
that “an insurer must first offer to return the premiums it has
collected from the insured within a reasonable time after the
discovery of the alleged breach. . . .
return

of

premiums,

or

if

refused,

Failure to offer such
to

pay

constitutes a waiver of the alleged fraud.”

it

into

court,

Dodd v. Am. Family

Mut. Ins. Co., 983 N.E.2d 568, 570 (Ind. 2013).

When the facts

are undisputed, “[w]hat constitutes a reasonable time period in
which to tender such premiums becomes a question of law.”
Nat. Bank, 392 N.E.2d at 1182 (citation omitted).

Gary

Here, the

parties do not dispute that MetLife’s initial tender of the
premiums to the Estate was timely.

However, the Estate returned

the un-negotiated check to MetLife before MetLife initiated this
lawsuit for rescission of the Policy, and did not tender the
premiums to the Court until after the Estate filed the instant
motion for summary judgment.

Thus, the issue is whether MetLife’s

second tender of the premiums was timely.
Both

parties

rely

on

Gary

National

Bank

v.

Crown

Insurance Company in support of their respective positions.
that

case,

a

beneficiary

sued

‐11‐ 

Crown

Life

Insurance

Life
In

Company

(“Crown”) after Crown denied a claim for death benefits based on
the decedent’s fraud in procuring the policy.

392 N.E.2d at 1181.

Crown had tendered the premiums to the beneficiary when it denied
the claim.

After Crown answered the complaint and asserted the

affirmative defense of misrepresentation, the beneficiary returned
the un-negotiated check for the premiums to Crown. The beneficiary
eventually filed a motion for summary judgment, arguing that Crown
could

not

raise

the

affirmative

defense

of

misrepresentation

because Crown had failed to tender the premiums to the court.
Crown then tendered the premiums to the court, raising the issue
as to whether Crown’s second tender was timely.
denied the beneficiary’s motion.

The lower court

On appeal, the Indiana Court of

Appeals found that Crown’s initial tender of the premiums and
accompanying letter to the beneficiary were adequate to inform the
beneficiary that it elected to void the policy, and that “Crown
was in total compliance with the law for so long as the beneficiary
retained the tender of the premiums.”
the

premiums

into

negotiated

check

beneficiary

had

court”
was

not

returned,

initiated

affirmative defense.

did

Id.

the

Id. Crown’s “duty to tender
arise

until

which

occurred

suit

and

Crown

after

had

the

after
pled

unthe
its

Holding that Crown’s second tender of

the premiums to the court was timely, the court explained:
One purpose of tendering premiums into court is to
facilitate at the trial on the merits, a judicial
determination of which party is entitled to the sums.

‐12‐ 

Because rescission is an equitable remedy, equity
demands that the party obtaining such relief restore the
status quo by returning any consideration paid. See:
Prudential Insurance Co. v. Smith, [108 N.E.2d 61 (Ind.
1952)]. At the time Crown paid the premiums into court,
both parties had disclaimed any rights thereto. While
Crown could have been more diligent in making the second
tender, the funds were placed into court custody prior
to any pretrial or trial on the merits. The evidence
shows that tender was made prerequisite to asserting the
defense of fraud and that Crown was unequivocal in its
election to rescind the insurance policy. Further, it
must be noted that appellant was less than diligent in
refusing acceptance of the initial check and returning
it to Crown.
Id. at 1182.
According to MetLife, Gary National establishes that its
tender of the premiums to the Court was timely.

As in Gary

National, the evidence shows that MetLife elected to rescind the
Policy and tendered the premiums to the Estate.

The Estate kept

the check for the premiums for several months before returning it
to MetLife.

As in Gary National, MetLife tendered the premiums to

the court after the Estate filed a motion for summary judgment on
this issue, but prior to any pretrial or trial on the merits.

At

the time MetLife paid the premiums into court, both parties had
disclaimed any rights thereto.
The Estate maintains that Gary National does not support the
position that MetLife’s tender was timely. The Estate acknowledges
that “there was no delay in selecting [MetLife’s] remedy” of
rescission; rather, the Estate claims that MetLife delayed “in
being unequivocal in properly presenting that request.”

‐13‐ 

(DE #57

at 11.)

It argues that “[t]he law governing rescission required

MetLife to deposit with this Court the returned premiums prior to
and no later than the time it initiated the suit on March 16,
2016.”

(Id. at 8 (citing Smith, 108 N.E.2d at 65).)

But the case

law cited by the Estate does not address the issue of whether a
“second

tender,”

i.e.,

tendering

the

premiums

to

following refusal thereof by a beneficiary, is timely.

the

court

In Smith,

the insurer “never paid the premiums into court prior to trial.
There it was decided that payment into court after entry of
judgment was too late.”
(distinguishing Smith).

Gary Nat. Bank, 392 N.E.2d at 1182
Aside from Gary National, the Estate does

not identify any other Indiana case that addresses whether a second
tender was timely.

See id. (distinguishing Indiana cases because

they did not address the timeliness of a “second tender” to the
court).
Indiana law requires that an insurer first offer to return the
premiums it has collected from the insured within a reasonable
time after the discovery of the alleged breach, and that if
refused, they must pay it into court, or waive the alleged fraud.
See Dodd, 983 N.E.2d at 570.

The parties do not dispute that

MetLife tendered the premiums to the Estate within a reasonable
time after learning of the alleged misrepresentations.

The Estate

returned those premiums after holding them for several months.
MetLife initiated this lawsuit seeking rescission.

‐14‐ 

While MetLife

delayed in making its second tender by submitting the premiums to
the Court, it did so before a pretrial or trial on the merits.
Applying Gary National, the Court finds that MetLife’s second
tender of the premiums to the Court was timely.
CONCLUSION
For

the

Plaintiffs’

reasons

motion

for

set

forth

summary

above,

judgment

Defendants/Counter(DE

#41)

is

DENIED.

Plaintiff’s motion to deny or defer Defendants’ motion for summary
judgment

(DE

#44)

is

DENIED.

Defendants/Counter-Plaintiffs’

request for oral argument (DE #58) is DENIED.

DATED:

December 4, 2017

/s/ RUDY LOZANO, Judge
United States District Court

‐15‐