Myatt v. Sun Life Assurance Company (U.S.) et al
ORDER granting in part and denying in part 40 Motion for Summary Judgment. Signed by District Judge Carlton W. Reeves on 11/2/12. (co)
IN THE UNITED STATES DISTRICT COURT
FOR THE SOUTHERN DISTRICT OF MISSISSIPPI
WILLIAM J. MYATT
CIVIL ACTION NO. 3:10-cv-701-CWR-FKB
SUN LIFE ASSURANCE COMPANY
(U.S.) and JOHN DOE
MEMORANDUM OPINION AND ORDER
Before the Court is Defendant Sun Life Assurance Company of Canada (U.S.) (“Sun
Life”)’s Motion for Summary Judgment Or In The Alternative, For Partial Summary Judgment,
Docket No. 40, its supporting brief, Docket No. 41, and its reply brief, Docket No. 44. Plaintiff
William J. Myatt (“Myatt”), has filed his response, Docket No. 43, and the matter is ready for
review. The motion is GRANTED IN PART and DENIED IN PART.
I. Factual and Procedural History
Myatt, a citizen of Mississippi, purchased a non-qualified Sun Life Annuity Contract on
December 30, 1998, by making an initial payment of $65,000.00 through the Stifel Nicolaus
brokerage company. The contract offered both market value and a death benefit. After holding
the contract for almost a decade, Myatt decided to partially liquidate the annuity and use the
proceeds to purchase another annuity from Pacific Life, a different company.
On November 28, 2007, Myatt’s brokerage agent, Rankin Revel Rawlings (“Rawlings”),
contacted Sun Life to ask about the market and death values of Myatt’s Annuity Contract.
During that conversation Devin Briltz, Sun Life’s representative, advised Rawlings that a partial
withdrawal would partially reduce the death benefit,1 but “if the contract value  drop[ped] to
A transcript of that conversation has been entered into the record. Docket No. 40-7. In relevant part, it provides:
Now when Mr. Myatt takes out withdrawals is it pro rata
Actually, no in this case it is dollar for dollar
zero, the death benefit would be lost.”2 During that same conversation, Briltz told Rawlings that
he would forward the appropriate form so that Myatt could make a partial withdrawal.3 Sun Life
alleges that Rawlings was sent a copy of its “Variable Annuity Withdrawal Request” form that
same day, pursuant to his conversation with its representative. According to Sun Life, Rawlings
made “no inquiry concerning” his desire to complete a partial withdrawal by any other means.
Docket No. 42, at 4.
On December 12, 2007, Myatt executed a form, “Partial Annuity Exchange/Liquidation
and Transfer to Annuity Acknowledgment Letter,” which directed his broker to partially
Id. at 2 (captions added).
Let me make sure I understand that, um, if
If he took out $100,000, his death benefit would drop by
If he takes out $223,000
His death benefit would drop by $223,000
So he could in essence leave $2,000 in there and keep
$106,000 of death benefits
That's correct, yes
What is the minimum amount that he’d have to leave in here
to keep that death benefit in tact
There is no set dollar amount, one thing to keep in mind is
when we do lower the contract values this is a futurity one
contract, so once that gets below $75,000 there going to be a
year fee of $30 on the contract
And again if he’s staying in the variable funds, there would be
market fluctuations if the contract value does drop to zero, the
death benefit would be lost
Docket No. 40-7, at 3 (captions added).
OK, well ah, I appreciate, what does he have to do, you need
to email me a withdrawal form
That’s fine, I can email it to you to let you know it’s also on
our website or we can fax it if those are any easier for you.
So email’s the best, so that’s great
It works great, cuz I can forward that email right on to Mr.
Myatt if he wants to do this.
Sounds good Revel, what’s the email address please
[redacted], I’m going to send that right away and you will
Docket No. 40-7, at 5 (captions added).
liquidate his Sun Life annuity. That same day, Myatt authorized his broker to transfer 99% of the
funds from his Sun Life annuity toward the purchase of a Pacific Life annuity. This partial
transfer would have left a death benefit of approximately $104,414.29 remaining in Myatt’s Sun
On December 18, 2007, Pacific Life mailed appropriate forms to Sun Life, including a
1035 Exchange Form requesting the transfer of 99% of Myatt’s Sun Life Annuity Contract to
Pacific Life. The next day, Sun Life processed the request as a full 1035 Exchange—instead of a
partial one—effectively eliminating the Annuity Contract’s death benefit and creating the present
controversy. Myatt alleges that he did not discover the erroneous transfer until January 2009,
more than a year later. Sun Life alleges that it sent Myatt several notices during the intervening
period, which should have alerted him that his account had been fully liquidated.
In November 2010, Myatt filed suit in Mississippi state court, seeking to hold Sun Life
liable for breach of contract, negligent misrepresentation, and punitive damages.4 Sun Life, a
Massachusetts corporation with its principal place of business in Boston, invoked diversity
jurisdiction and removed the action to this Court.
Sun Life now claims that it is entitled to summary judgment under the affirmative
defenses of ratification and/or waiver. Alternatively, Sun Life argues that it is entitled to partial
summary judgment on Myatt’s claim of negligent misrepresentation, and on his request for extracontractual damages (attorneys fees and interest) and punitive damages. Myatt opposes the
motion. This Court has personal and subject matter jurisdiction and is prepared to rule.
II. Standard of Review
Myatt has also filed a negligence claim against co-defendant John Doe. Myatt alleges that Doe negligently failed to
process his partial 1035 Exchange. Docket No. 1-1, ¶ 12.
Summary judgment is appropriate if “the movant shows that 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 party asserting that a fact cannot be, or is genuinely disputed, must support the assertion
by “citing to particular parts of materials in the record . . . .” Fed. R. Civ. P. 56(c)(1)(A). The
Court will “view the evidence and draw reasonable inferences in the light most favorable to the
non-movant,” Maddox v. Townsend & Sons, Inc., 639 F.3d 214, 216 (5th Cir. 2011) (citations
omitted), but unsubstantiated assertions are not competent summary judgment evidence, Forsyth
v. Barr, 19 F.3d 1527, 1537 (5th Cir. 1994).
III. Law and Analysis
Sun Life’s Affirmative Defenses
Sun Life contends that summary judgment is warranted under the affirmative defense of
ratification, or alternatively, under the affirmative defense of waiver.
Under Mississippi law, “[r]atification may be established through affirmative acts or
inaction.” Barnes, Broom, Dallas & McLeod, PLLC v. Estate of Cappaert, 991 So. 2d 1209,
1212 (Miss. 2008). Thus, Sun Life can establish its affirmative defense if it shows that Myatt
either (a) “manifest[ed] assent” to the error or (b) engaged in “conduct that justifies a reasonable
assumption” that he consented to the error. Northlake Dev. L.L.C. v. BankPlus, 60 So. 3d 792,
797 (Miss. 2011) (citations omitted). Sun Life’s claim falls under the second prong of the
ratification test; it argues that Myatt’s failure “to take any action to notify Sun Life or have the
transaction reversed” justifies an assumption that Myatt consented to the error. The issue in this
case is whether Myatt’s failure to respond does, in fact, justify a “reasonable assumption” that he
consented to Sun Life’s error.
Mississippi law establishes two factual prerequisites to finding that a principal ratified by
inaction. First, the factfinder should have evidence that “the principal has notice that others will
infer from his silence that he intends to manifest his assent.” Id. Second, the factfinder should
have evidence that the principal acted with “full information” or in deliberate disregard of the
information available to him. Green Acres Farms, Inc. v. Brantley, 651 So. 2d 525, 528-29
(Miss. 1995). A principal’s mere carelessness or simple neglect is generally not enough to
support a finding that he deliberately disregarded the information available to him. See id. at 530
(“the principal’s want of such knowledge, even if it arises from his own carelessness in inquiring
or neglect in ascertaining facts, or from other causes, will render such ratification invalid”)
Sun Life bears the burden of proving each of the factual considerations that are relevant
to its ratification defense. See BankPlus, 60 So. 3d at 797 (“Ratification does not arise by
operation of law.”). It proffers several items as evidence that Myatt had notice that his failure to
respond would effectively terminate his account; and that Myatt had full information, or
deliberately disregarded the information available to him, such that he voluntarily assumed the
effects of Sun Life’s error.
First, Sun Life offers a “Confirmation Statement,” indicating that the value of Myatt’s
account was zero as of December 20, 2007. Docket No. 40-12. The Confirmation Statement
contained these instructions: “PLEASE REVIEW THIS STATEMENT CAREFULLY.
DISCREPANCIES REPORTED WITHIN 60 DAYS WILL BE ADJUSTED.” Id. at 2. Second,
Sun Life offers a “Sun Life Year End Statement” dated December 31, 2007; it also indicated that
Myatt’s account balance was zero. Docket No. 40-14, at 1. The document provided instructions
similar to those appearing in the Confirmation Statement, directing Sun Life customers to give
notice of error within 60 days. Id. at 2.
In further support, Sun Life offers communications between Pacific Life, Stifel Nicolaus,
and Myatt. Myatt’s contract with Pacific Life indicates that he purchased his Pacific Life annuity
at a price that matched the amount withdrawn from his Sun Life annuity. Docket No. 40-10, at 3.
A Pacific Life quarterly statement, dated December 31, 2007, indicates that total payments into
Myatt’s Pacific Life account matched the amount withdrawn from the Sun Life annuity. Docket
Finally, Sun Life offers monthly statements from Myatt’s broker summarizing his
investments and annuities. The November 31, 2007, statement lists a Sun Life annuity (Contract
No. 1700012377) valued at $231,750.87, but the December 31, 2007, statement does not list a
Sun Life Annuity associated with that contract number. Docket Nos. 18-19. The December
statement does, however, list a Pacific Life annuity valued at $227,959.65. Docket No. 19.
Sun Life argues that it has satisfied the notice requirement because “[t]he Confirmation
Statement and Year End Statement constituted notice to [Myatt] that his Annuity Contract had
been fully liquidated and closed.” Docket No. 41, at 18. Myatt contends that he did not ratify the
error, and avers that it was his understanding that the transfer, as authorized, would have kept his
account open and also left his death benefit intact. Docket No. 40-4, at 120-21.
Having considered the evidence presented against the legal effects of Myatt’s inaction,
the Court finds that a genuine dispute of material fact exists on the notice prong of Sun Life’s
ratification defense. Sun Life relies on documents which, themselves, give no indication that
Myatt’s failure to act would have the specific effect of closing his annuity account or canceling
the associated death benefit. Based on the documents’ plain language, a trier of fact could
reasonably infer that they alerted Myatt to nothing more than the balance of his account as
recorded by Sun Life on the date specified, and the actions that he would have needed to take if
he disputed that balance. Accordingly, this issue should go to trial.
Sun Life has also failed to show that Myatt acted with full information, or in deliberate
disregard thereof. It argues that Myatt ratified with full knowledge because he “fail[ed] to take
action within the time period allowed [60 days] and [because he] accept[ed] . . . transfer of funds
to Pacific Life.” Docket No. 41, at 15. In support of its argument, Sun Life cites Brantley, 651
So. 2d at 525. In that case, the plaintiffs (chicken farmers) contracted with the defendant to
receive three flocks of chickens. Id. at 525. After the contract was formed, the defendant’s
lawyer sent a letter to the plaintiffs that modified the terms of their agreement. Id. at 526. The
letter specified: “should  (Mr. Brantley) fall below  fifty percent (50%) [delivery] on the first
flock, no new flocks will be provided.” Id. Plaintiffs sued after the defendant failed to deliver the
second and third flocks because their flock fell below the percentage specified in the
modification. The defendants were granted their ratification defense because the plaintiffs took
no action to disavow the letter or, knowing that the defendants had relied on the letter, to reject
its modification of their agreement. Id. at 530.
Myatt’s case is distinguishable from Brantley. The document ratified in Brantley gave the
principal express notice of the terms to be ratified and how those terms would affect the
principal’s legal rights; it expressly stated that the agreement would be subject to a particular
condition, and that failure to satisfy the condition voided a future interest in any additional
benefits under the contract. Unlike Brantley, Myatt’s claim requires assessment of his
understanding of a company policy that was not expressly stated in the documents that he
Accordingly, there is a genuine dispute of material fact regarding whether Myatt knew
that his failure to act would implicate his right to retain his annuity with Sun Life and its
associated death benefit. The trier of fact can resolve whether Myatt’s contract was fully
informative, as Sun Life contends, Docket No. 40-6, at 48-70, or whether Myatt’s contract was
not fully informative because it did not express Sun Life’s policy prohibiting partial 1035
exchanges, as Myatt argues, Docket No. 43, at 7. Therefore, summary judgment on the second
prong of Sun Life’s ratification defense is denied.
“Waiver is the voluntary relinquishment of a known right . . . . [and] typically must be
proved by clear and convincing evidence.” Moorman v. Tower Mgmt. Co., 451 F. Supp. 2d 846,
853 (S.D. Miss. 2006) (citing Wilson v. General Motors Acceptance Corp., 883 So. 2d 56, 68
(Miss. 2004), Swift v. Aberdeen Lumber Co., 159 So. 301, 305 (Miss.1935)). The Court
incorporates the ratification analysis into its analysis of the defendant’s waiver defense, as do the
parties,5 and finds that there are genuine disputes of material fact on the question of whether
Myatt ‘voluntarily’ gave up a right known to him by failing to respond to Sun Life’s errors.
Separately, Sun Life contends that “Myatt’s careless disregard of the statements and
disclosures received from Sun Life, as well as those received from Pacific Life and Stifel
Nicolaus concerning the transaction, constitute a waiver of his right to sue for the alleged
improper liquidation of the Annuity Contract.” Docket No. 41, at 18.
Myatt’s receipt of documents from Sun Life and Pacific Life is relevant to this
determination. See, e.g., King Lumber Indus. v. Cain, 209 So. 2d 844, 848 (Miss 1968) (“A
person having within his knowledge facts which would put him on inquiry as to his personal
See, e.g., O’Hare v. Graham, 455 F. App’x 377, 381 n.1 (5th Cir. 2011) (“[Appellants] group ratification and
waiver together. We will do the same.”).
rights should be charged with notice of such information such facts and the exercise of ordinary
diligence would disclose.”). Also relevant is the evidence suggesting that Myatt’s contract did
not disclose Sun Life’s policy prohibiting partial 1035 exchanges, and that Sun Life’s acceptance
of Myatt’s request for a partial 1035 exchange plainly violated that policy. Based on the
documentary evidence and testimony, a trier of fact could infer that Myatt’s actions were
consistent with those of a customer who was not fully informed of Sun Life’s policies.
Accordingly, summary judgment is denied because a genuine dispute of material fact exists with
respect to the waiver defense.
A plaintiff who claims negligent misrepresentation must prove five elements:
(1) a misrepresentation or omission of a fact; (2) that the
representation or omission is material or significant; (3) that the
person/entity charged with the negligence failed to exercise that
degree of diligence and expertise the public is entitled to expect of
such persons/entities; (4) that the plaintiff reasonably relied upon
the misrepresentation or omission; and (5) that the plaintiff
suffered damages as a direct and proximate result of such
Mladineo v. Schmidt, 52 So. 3d 1154, 1164-65 (Miss. 2010).
Myatt previously advanced a theory of affirmative misrepresentation, but he now appears
to have abandoned that argument. In his complaint, Myatt alleged that the negligent
misrepresentation occurred when “Sun Life’s agents and/or employees represented that Myatt
could liquidate 99% of his Sun Life Annuity Contract.” Docket No. 1-1, ¶ 10. But at summary
judgment, Myatt advances a theory of misrepresentation by omission. He now alleges that “Sun
Life’s contract contains a misrepresentation of fact” because the contract “does not contain any
prohibition against a partial 1035 tax free exchange.” Docket No. 43, at 8. Therefore, having
changed his theory of how the misrepresentation occurred, Myatt has failed to identify a genuine
dispute of material fact with respect to two of the elements of his negligent misrepresentation
Myatt has failed to identify a genuine dispute of material fact regarding the fourth
element of his negligent misrepresentation claim. Consistent with the fact that Myatt now argues
a theory of misrepresentation by omission, rather than an affirmative misrepresentation, he has
failed to put on any evidence that he actually relied on his contract with Sun Life before
requesting a partial 1035 exchange. Instead, he only has put forth evidence that he relied on
statements made to himself, or to his agent, regarding his Sun Life annuity.
Furthermore, Myatt has failed to identify a genuine dispute of material fact regarding the
first element of his negligent misrepresentation claim. “Under Mississippi law, ‘a claim of fraud
by omission arises only where the defendant had a duty to disclose material facts purportedly
omitted.’ Such a duty ‘generally arises only where there is a fiduciary relationship between the
parties.’” Allstate Life Ins. Co. v. Parnell, 292 F. App’x 264, 274-75 (5th Cir. 2008) (quoting
Taylor v. S. Farm Bureau Cas. Co., 954 So. 2d 1045, 1049 (Miss. Ct. App. 2007)). As a matter
of law, “the purchase of insurance is deemed to be an arms length transaction, and accordingly
no fiduciary duty arises.” Taylor, 954 So. 2d at 1049-50; see also Gen. Motors Acceptance Corp.
v. Baymon, 732 So. 2d 262, 270 (Miss. 1999) (holding that insurer “had no duty to disclose its
internal policies relating to enforcement”); accord Grissom v. Liberty Mut. Fire Ins. Co., 678
F.3d 397, 403 (5th Cir. 2012) (“[I]mposing liability on agents for failing to advise . . . would
remove any burden from the insured to take care of his or her own financial needs.”).
There is no set of facts under which Myatt can establish the first element of negligent
misrepresentation. Accordingly, summary judgment will be granted on that claim.
Extra-contractual and Punitive Damages
“[I]n a breach-of-contract case, a plaintiff must prove that the breach was the result of an
intentional wrong or that a defendant acted maliciously or with reckless disregard of the
plaintiff’s rights.” Pursue Energy Corp. v. Abernathy, 77 So. 3d 1094, 1101 (Miss. 2011), reh’g
denied (Feb. 2, 2012) (citations omitted); see also Hurst v. Sw. Miss. Legal Serv. Corp., 708 So.
2d 1347, 1350 (Miss. 1998) (“Although punitive damages are not ordinarily recoverable in cases
involving breach of contract, they are recoverable where the breach results from an intentional
wrong, insult, or abuse as well as from such gross negligence as constitutes an independent
There is no genuine dispute of material fact on Myatt’s claim for extra-contractual and
punitive damages. Myatt has not directed this Court to evidence indicating that Sun Life was
anything other than negligent when it erroneously processed Myatt’s request. Myatt argues that
punitive damages are appropriate based on his misrepresentation claim, but that claim is no
longer at issue and it cannot be considered in support of his claims for punitive damages. Sun
Life is entitled to summary judgment on this claim.
For these reasons, Sun Life’s motion is DENIED as to its affirmative defenses,
GRANTED as to Myatt’s claim of negligent misrepresentation, and GRANTED as to Myatt’s
request for extra-contractual and punitive damages.
SO ORDERED, this the 2nd day of November, 2012.
s/ Carlton W. Reeves
UNITED STATES DISTRICT JUDGE
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