National Western Life Insurance Company v. The Tromblay Irrevocable Heritage Trust
Filing
24
OPINION AND ORDER GRANTING 23 National Western's Motion for Default Judgment. Default Judgment is entered against the Trust on Count I of the Amended Complaint. This case is terminated. Signed by Chief District Judge Sarah D. Morrison on 10/23/2024. (tb)
UNITED STATES DISTRICT COURT
SOUTHERN DISTRICT OF OHIO
EASTERN DIVISION
NATIONAL WESTERN
LIFE INSURANCE
COMPANY,
Plaintiff,
:
Case No. 2:24-cv-00166
Chief Judge Sarah D. Morrison
Magistrate Judge Chelsey M.
Vascura
v.
THE TROMBLAY
IRREVOCABLE HERITAGE
TRUST dated March 25,
2020,
:
Defendant.
OPINION AND ORDER
This matter is before the Court on the Motion for Default Judgment (Mot.,
ECF No. 23) filed by National Western Life Insurance Company. For the reasons set
forth below, the Motion is GRANTED.
I.
PROCEDURAL HISTORY
National Western initiated this action against The Tromblay Irrevocable
Heritage Trust in January 2024. (ECF No. 1.) The Trust was served with notice of
process via certified mail pursuant to Rule 4 (ECF Nos. 6, 6-1) but failed to respond
to the Complaint. Accordingly, on March 11, 2024, National Western applied to the
Clerk for an entry of default pursuant to Rule 55(a). (ECF No. 7.) Default was
entered the next day. (ECF No. 8.)
On March 26, 2024, National Western filed its first Motion for Default
Judgment (ECF No. 9), to which the Trust did not respond. Upon review of the first
Motion, the Court determined that National Western had not shown the existence
of an actual controversy sufficient to establish the Court’s subject matter
jurisdiction under the Declaratory Judgment Act. (ECF No. 10, PAGEID # 102.) The
Court declined to enter default judgment against the Trust and dismissed the case
without prejudice to refiling. (Id., PAGEID # 104.)
Shortly thereafter, the Court granted National Western’s motion to reopen
the case (ECF Nos. 12, 13), and National Western filed a First Amended
Supplemental Complaint (Am. Compl., ECF No. 14). The Clerk issued a summons
and copy of that Amended Complaint by certified mail to the Trust on June 26,
2024. (ECF No. 16.) Service was returned as executed on July 2, 2024. (ECF Nos.
18, 20.) When the Trust again failed to respond to the Amended Complaint before
the established deadline, National Western again applied for and obtained an entry
of default under Rule 55(a). (ECF Nos. 19, 21.)
Now before the Court is National Western’s second Motion for Default
Judgment (ECF No. 23). The time for responding has passed, and the Trust has
filed no response.
II.
FACTUAL BACKGROUND
“Once default is entered, the defaulting party is deemed to have admitted all
of the well-pleaded allegations in the complaint regarding liability[.]” Zinganything,
LLC v. Import Store, 158 F. Supp. 3d 668, 670 (N.D. Ohio 2016); see also Fed. R.
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Civ. P. 8(b)(6). The following factual allegations from the Amended Complaint (ECF
No. 14) are deemed admitted due to the Trust’s default.
On or about March 25, 2020, Linda Tromblay executed an application for
individual life insurance from National Western with a face amount of $188,205.
(Am. Compl., ¶¶ 7–8; Application, ECF No. 14-1, PAGEID # 192.) Ms. Tromblay was
85 years old when she signed and submitted the Application, along with a $150,000
single premium. (Am. Compl., ¶¶ 7–8.) The Application included a declaration by
Ms. Tromblay 1 that (1) all answers in the Application were true and complete to the
best of her knowledge; and (2) she understood that any material misrepresentations
could void the Policy during the initial two-year incontestability period. (Am.
Compl., ¶ 12; Application, PAGEID # 195.) The Application also stated that any
applicant who knowingly presented false statements could be subject to criminal
penalties. (Am. Compl., ¶ 13; Application, PAGEID # 195.)
Section VIII of the Application contained various inquiries about Ms.
Tromblay’s medical history and stated that “[i]f any question in Section VIII is
answered yes, no coverage can be issued.” (Am. Compl., ¶ 9; Application, PAGEID
# 193.) In response to a question in Section VIII asking if she had ever “[b]een
diagnosed by a member of the medical profession as having more than one
occurrence or any metastasis of any cancer in your lifetime,” Ms. Tromblay
Trustee Jeffrey Tromblay and National Western Agent Todd White also
signed the Application and declaration therein. (Application, PAGEID # 195.)
National Western asserts that neither it nor Mr. White had any knowledge of the
falsity or fraudulent nature of Ms. Tromblay’s answers to the questions. (Am.
Compl., ¶ 35; White Decl., ECF No. 23-2, ¶ 5.)
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answered in the negative. (Am. Compl., ¶¶ 10–11; Application, PAGEID # 193.)
Based on the contents of Ms. Tomblay’s Application, National Western issued her a
life insurance policy on April 27, 2020. (Am. Compl., ¶ 15; Policy, ECF No. 14-2,
PAGEID # 198.)
Ms. Tromblay died on or about March 4, 2022. (Am. Compl., ¶ 18.) At the
time of her death, the Policy’s death benefit was valued at $190,500. (Id.) The Trust,
administered by trustee Jeffrey Tromblay, is the sole beneficiary of the Policy’s
death benefit. (Id., ¶¶ 3, 16.)
Following Ms. Tromblay’s death, which was within the Policy’s two-year
incontestability period, National Western received a Claimant Statement from Mr.
Tromblay that made a claim to the Policy’s death benefit. (Am. Compl., ¶¶ 17–19;
Claim, ECF No. 14-3, PAGEID # 236.) National Western subsequently collected Ms.
Tromblay’s medical records and learned that she had been diagnosed with breast
cancer several decades earlier, with multiple recurrences thereafter. (Am. Compl.,
¶ 20.) This information rendered Ms. Tromblay’s response to the above-quoted
question in Section VIII of the Application untruthful. (Id.) Had Ms. Tromblay
included her accurate medical history in the Application, National Western would
not have issued the Policy. (Id., ¶ 21.)
National Western seeks recission of the Policy under Ohio Rev. Code.
§ 3611.06 and asks the Court to order that the $150,000 premium initially paid by
Ms. Tromblay be remitted to the Clerk (due to the invalidation of the Policy) until
such time as her estate can be opened and administered. (Id., PAGEID # 189–90.)
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III.
DISCUSSION
A.
Subject Matter Jurisdiction
National Western’s first attempt at securing default judgment against the
Trust was unsuccessful because National Western did not establish the existence of
the Court’s subject matter jurisdiction. (ECF No. 10, PAGEID # 102.) As the Court
explained in its prior Order:
The Complaint does not allege that the Trust has made a claim or is
actively seeking to recover under the Policy, as also evidenced by its
failure to participate in the instant action. Rather, the Complaint
simply asserts that Ms. Tromblay included false statements in her
Application responses such that the resulting Policy should be voided
and the premium returned to Ms. Tromblay’s estate. Indeed, it was
National Western’s unilateral collection and review of Ms. Tromblay’s
medical records that led to its discovery of the misrepresentations, not
any claims or actions by Ms. Tromblay or the Trust. National Western
represents that “[a]n actual controversy has arisen and now exists
between the parties concerning their respective rights and duties
under the Policy,” but its Complaint seeks only a determination
regarding speculative liability, contingent upon the Trust, at some
point in the future, seeking to enforce the Policy … The current
litigation is not inevitable where nothing suggests that the Trust
intends to pursue its rights under the Policy either in this forum or in
another federal or state forum.
(ECF No. 10, PAGEID # 103 (citations omitted).)
By virtue of its Amended Complaint, however, National Western has
remedied these issues, such that the Court now has subject matter jurisdiction over
this action. See Warth v. Seldin, 422 U.S. 490, 498 (1975) (courts must determine
subject matter jurisdiction before reaching merits of underlying action). National
Western has demonstrated that Mr. Tromblay filed a claim against the Policy and
“has followed up repeatedly” with National Western “to inquire as to the status.”
(Am. Compl., ¶¶ 19, 22; Claim, PAGEID # 236.) Because Mr. Tromblay is actively
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seeking enforcement of the Policy, there exists an actual controversy between the
parties sufficient to confer jurisdiction. Cf., e.g., N. Am. Co. for Life & Health Ins. v.
Crowell, No. 3:20-cv-2027, 2021 WL 3167411, at *2 (N.D. Ohio July 26, 2021)
(finding no standing or actual controversy in declaratory judgment action where
insured not actively seeking policy enforcement and insurer’s “potential liability
rests on a factual situation that may never occur”).
However, the Court’s inquiry does not end there because the instant matter
arises under the Declaratory Judgment Act. (Am. Compl., ¶ 26.) Although this Act
affords the Court jurisdiction to grant declaratory relief, the Court is “under no
compulsion to exercise that jurisdiction.” Brillhart v. Excess Ins. Co. of Am., 316
U.S. 491, 494 (1942). Thus, prior to granting declaratory relief and entering default
judgment in this case, the Court must determine whether it should exercise its
jurisdiction to do so. See Scottsdale Ins. Co. v. Flowers, 513 F.3d 546, 552 (6th Cir.
2008) (courts may use discretion to determine whether to exercise jurisdiction to
grant declaratory relief).
In the Sixth Circuit, courts consider five factors in deciding whether a case is
appropriate for declaratory judgment:
(1) whether the declaratory action would settle the controversy;
(2) whether the declaratory action would serve a useful purpose in
clarifying the legal relations in issue; (3) whether the declaratory
remedy is being used merely for the purpose of “procedural fencing” or
“to provide an arena for res judicata;” (4) whether the use of a
declaratory action would increase friction between our federal and
state courts and improperly encroach upon state jurisdiction; and
(5) whether there is an alternative remedy which is better or more
effective.
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Grand Trunk W. R.R. Co. v. Consolidated Rail Corp., 746 F.2d 323, 326 (6th Cir.
1984). “The relative weight of the underlying considerations of efficiency, fairness,
and federalism will depend on facts of the case.” Western World Ins. Co. v. Hoey, 773
F.3d 755, 759 (6th Cir. 2014).
National Western does not address these factors in its Motion for Default
Judgment. Nevertheless, the Court finds that each Grand Trunk factor is met and
that jurisdiction is appropriate. As to the first two factors, a declaration that the
Policy is void ab initio and that the Trust is barred from recovering upon the Policy
would define the scope of National Western’s obligations to the Trust, settling the
dispute between the parties and clarifying the legal relations at issue. There are no
allegations or suspicions of “procedural fencing” or a “race for res judicata” here, so
the third factor also weighs in favor of the Court’s exercise of jurisdiction.
Concerning the fourth factor, though there exists a state-court probate action with
respect to the administration of the Trust (see ECF No. 14-4), the parties have not
directed the Court to any other pending state court cases. Matters of insurance are
generally left to state courts, so the Court’s exercise of jurisdiction may create some
potential for increased friction between the federal and state courts, but this does
not weigh heavily under the facts of this case, given that there is no indication that
a state court is considering the issues presented in the instant federal matter.
Finally, there is no argument that a state court declaratory judgment action would
be better or more effective than a federal court declaratory judgment action, such
that the fifth factor does not cut against the exercise of the Court’s jurisdiction.
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Accordingly, because this case poses an actual controversy and satisfies the
Grand Trunk factors for jurisdiction under the Declaratory Judgment Act, the
Court considers the merits of National Western’s default judgment request below.
B.
Default Judgment
Once default has been entered, the Court may rule on default judgment
against the defendant with or without a hearing. Fed. R. Civ. P. 55(b). Although the
well-pled factual allegations of a complaint are accepted as true for the purpose of
determining liability, the Court must still determine whether those facts state a
claim upon which relief may be granted. Zinganything, 158 F. Supp. 3d at 672
(citing J&J Sports Prods., Inc. v. Rodriguez, No. 1:08-cv-1350, 2008 WL 5083149, at
*1 (N.D. Ohio Nov. 25, 2008)). Nonetheless, “those allegations relating to the
amount of damages suffered are ordinarily not [accepted as true], and a judgment
by default may not be entered without a hearing on damages unless the amount
claimed is liquidated or capable of ascertainment from definite figures contained in
the documentary evidence or in detailed affidavits.” Brinager v. JAO Distribs., Inc.,
No. 1:14-cv-252, 2014 WL 3689147, at *1 (S.D. Ohio July 23, 2014) (Black, J.) (citing
Dundee Cement Co. v. Howard Pipe & Concrete Prods., Inc., 722 F.2d 1319, 1323
(7th Cir. 1983)). Courts may grant default judgment in declaratory judgment
actions involving the question of coverage under insurance policies. See Liberty Mut.
Ins. Co. v. Petit, No. 2:09-CV-111, 2009 WL 3241670, at *1 (S.D. Ohio Oct. 1, 2009)
(Holschuh, J.) (citing cases).
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Based on the well-pled allegations in the Amended Complaint and the
exhibits National Western submitted in support of its Motion for Default Judgment,
the Court concludes that there is sufficient basis for determining the Trust’s
liability and damages without the need for a hearing. National Western has stated
a claim for recission of the Policy on account of Ms. Tromblay’s responses on the
Application. (Am. Compl., ¶¶ 25–36.) By its default, the Trust has admitted that
Ms. Tromblay procured the Policy by affirmatively making material
misrepresentations on her Application regarding her medical history. (Id., ¶¶ 11,
30–33; Gunderson Decl., ECF No. 23-1, ¶¶ 6, 18.) National Western was not aware
of the falsity of Ms. Tromblay’s answer and would not have issued the Policy had
Ms. Tromblay responded truthfully. (Am. Compl., ¶¶ 9, 35; Gunderson Decl., ¶¶ 20,
21; Application, PAGEID # 193 (“If any question in Section VIII is answered yes, no
coverage can be issued.”).) Pursuant to the terms of the Policy, her
misrepresentations rendered the Policy void ab initio from its inception. (Am.
Compl., ¶¶ 28, 36; Application, PAGEID # 193); see also Ohio Rev. Code. § 3911.06;
Frohn v. Globe Life & Accident Ins. Co., 667 F. Supp. 3d 715, 727 (S.D. Ohio 2023)
(Cole, J.). National Western is thus entitled to default judgment against the Trust.
C.
Relief
National Western seeks rescission of the Policy and authorization to pay Ms.
Tromblay’s initial premium into the Clerk’s registry for holding until her estate is
opened 2 so as to place the parties in the status quo ante. (Mot., PAGEID # 265, 271.)
In August 2022, Mr. Tromblay applied to the state probate court for
summary release from administration of the Trust under Ohio Rev. Code
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The Policy indicates that the premium amount was $150,000. (Application, PAGEID
# 192; Policy, PAGEID # 200.) Dennis Gunderson, Director of Underwriting and
New Business at National Western, also testified to the premium amount.
(Gunderson Decl., ¶¶ 3, 15); see Profusion Indus., LLC v. Chem-Tek Sys., Inc., No.
5:16-cv-164, 2016 WL 7178731, at *6 (N.D. Ohio Dec. 9, 2016) (courts may rely on
affidavits submitted by a plaintiff in support of damages without the need for a
hearing). Accordingly, the Court finds that National Western is entitled to a
declaratory judgment that (1) the Policy is rescinded, and (2) National Western may
pay the initial premium ($150,000) into the Clerk’s registry where it will be held
until Ms. Tromblay’s probate estate is opened and a representative of the estate can
make a claim to the premium.
National Western initially sought recovery of its attorneys’ fees, costs, and
expenses incurred in litigating this matter (Am. Compl., PAGEID # 189), but it has
since withdrawn that request (Mot., PAGEID # 271), so the Court need not consider
the issue.
§ 2113.031, representing that the value of Ms. Tromblay’s probate assets was the
lesser of $5,000 or the amount of her funeral and burial expenses. (ECF No. 14-4,
PAGEID # 241.) The state probate court granted him summary release. (Id.,
PAGEID # 248.) Because Ms. Tromblay individually paid the $150,000 premium
that must be returned, that premium is considered a probate asset returnable only
to her estate. (Gerken Decl., ECF No. 23-3, ¶ 8.) Including the $150,000 premium in
her assets, however, would render summary release inapplicable, meaning an
estate must be opened. (Id.) As of the date of this Order, there is no indication that
an estate for Ms. Tromblay has been opened.
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IV.
CONCLUSION
For the reasons set forth herein, National Western’s Motion for Default
Judgment (ECF No. 23) is GRANTED. Default judgment is entered against the
Trust on Count I of the Amended Complaint. The Court AWARDS relief for
National Western against the Trust in the form of recission of the Policy and an
Order requiring National Western to pay Ms. Tromblay’s initial premium into the
Clerk’s registry for holding until her estate is opened.
The Clerk is DIRECTED to TERMINATE this case from the docket records
of the United States District Court for the Southern District of Ohio, Eastern
Division.
IT IS SO ORDERED.
/s/ Sarah D. Morrison
SARAH D. MORRISON
CHIEF UNITED STATES DISTRICT JUDGE
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