The Lincoln National Life Insurance Company v. L'Archevesque et al
Filing
155
OPINION AND ORDER denying 138 Motion to Amend/Correct; denying 139 Motion to Vacate ; denying 140 Motion to Vacate ; denying 141 Motion to Amend/Correct; granting 146 Motion for Final Judgment. So Ordered by Judge William E. Smith on 8/9/13. (Jackson, Ryan)
UNITED STATES DISTRICT COURT
FOR THE DISTRICT OF RHODE ISLAND
___________________________________
)
)
)
)
Plaintiff,
)
)
v.
)
)
WILMINGTON TRUST COMPANY,
)
Co-Trustee of The Paul E.
)
L’Archevesque Special Revocable
)
Trust — 2006; JAY L’ARCHEVESQUE,
)
Co-Trustee of The Paul E.
)
L’Archevesque Special Revocable
)
Trust — 2006,
)
)
Defendants.
)
___________________________________)
THE LINCOLN NATIONAL LIFE
INSURANCE COMPANY,
C.A. No. 08-74 S
OPINION AND ORDER
WILLIAM E. SMITH, United States District Judge.
The motions before the Court represent the latest in the
saga of Paul E. L’Archevesque’s (“Paul”) life insurance policy
(the
“Policy”)
with
Lincoln
National
(“Lincoln National” or “Plaintiff”).
Life
Insurance
Company
Approximately two months
after this Court granted partial summary judgment in favor of
Lincoln National and declared the Policy void ab initio, Paul
passed away.
Each Defendant subsequently filed (1) a motion for
leave to amend each Defendant’s Answer to the Complaint (ECF
Nos. 138 & 141); (2) a motion for leave to supplement the record
of the case to reflect a claim for death benefits under the
Policy made by the Trustees of the Paul E. L’Archevesque Special
Revocable Trust – 2006 (the “Trust”) and for the Court to vacate
its summary judgment order of October 4, 2012 (the “Order,” ECF
No. 136) (ECF Nos. 139 & 140); and (3) together with Plaintiff,
a stipulation for voluntary dismissal of the counts not decided
by the Order (ECF No. 145).
Plaintiff filed a motion for an
entry of final judgment in its favor.
I.
(ECF No. 146.)
Motions for Leave to Amend Answer
Defendants
seek
leave
to
amend
their
Answers
to
the
Complaint in order to add a counterclaim of breach of contract
against Plaintiff.
Defendants allege that they made a valid
claim
under
for
benefits
the
Policy
upon
Paul’s
death
and
Plaintiff breached its contract with the Trust, and the implied
covenant of good faith and fair dealing therein, by not paying
the benefit upon Paul’s death.
Defendants’ motions are governed by Rule 15(a)(2) of the
Federal Rules of Civil Procedure, which states that a party may
amend a pleading with the court’s leave and that leave should be
freely
given
15(a)(2). 1
1
when
justice
However,
a
so
court
requires.
should
deny
Fed.
R.
Civ.
P.
leave
to
amend
in
Plaintiff asserts that Defendants must show good cause to
receive leave from the Court to amend their answers, in
accordance with Rule 16(b) of the Federal Rules of Civil
Procedure.
However, this standard relates only to motions to
amend a court’s pre-trial schedule that Rule 16 requires it to
adopt.
In this case, the Court elected to not include a
instances of “undue delay, bad faith or dilatory motive on the
part of the movant, repeated failure to cure deficiencies by
amendments previously allowed, undue prejudice to the opposing
party by virtue of allowance of the amendment, [or] futility of
amendment.”
Foman v. Davis, 371 U.S. 178, 182 (1962); see also
Correa-Martinez v. Arrillaga-Belendez, 903 F.2d 49, 59 (1st Cir.
1990) (“Where an amendment would be futile or would serve no
legitimate
purpose,
the
district
court
should
not
needlessly
prolong matters.”).
In this case, Defendants’ motions must be denied because
leave
to
amend
would
be
futile.
There
are
no
facts
that
Defendants could plead that would cause Plaintiff to be liable
to Defendants for breach of contract or breach of the implied
covenant of good faith and fair dealing.
Both theories are
based on the existence of a contract that was declared void ab
initio prior to Paul’s death and, thus, is unenforceable.
See
Smithfield Estates, LLC v. Heirs of Hathaway, C.A. No. PC 20034157, 2012 R.I. Super. LEXIS 35, at *14 (R.I. Super. Ct. Mar. 9,
2012) (“A document found to be void ab initio is null from its
very beginning.”); see also United States v. Mardirosian, 602
F.3d 1, 7 (1st Cir. 2010) (stating that a contract that was void
ab initio “may not be enforced, and the court will treat the
deadline for amending the pleadings in its schedule, so the Rule
16(b) standard for amending the schedule is inapplicable.
contract as if it had never been made” (internal citation and
quotation marks omitted)).
Defendants argue that the Order did not have the effect of
voiding
the
Policy,
but
it
merely
stated
that
grounds
for
rescinding the policy existed, and then it was incumbent upon
Plaintiff to actually rescind the Policy.
Defendants assert
that Plaintiff never did rescind the Policy because it never
returned the premiums that Defendants paid under the Policy.
Therefore,
according
to
Defendants,
the
Policy
is
still
in
effect and the Trust may submit a claim for benefits.
The Court was clear in the Order that the Policy was void
ab
initio.
Under
misrepresentation
without
a
in
an
concomitant
Rhode
insurance
Island
law,
application
demonstration
of
“a
makes
fraud,
contract that is issued upon the application.”
an
material
voidable,
insurance
Evora v. Henry,
559 A.2d 1038, 1040 (R.I. 1989) (citing Guardian Life Ins. Co.
of Am. v. Tillinghast, 512 A.2d 855 (R.I. 1986); Affleck v.
Potomac Ins. Co., 49 R.I. 112, 140 A. 469 (1928); Leonard v.
State Mut. Life Assurance Co., 24 R.I. 7, 51 A. 1049 (1902)).
A
court may void a policy without further action by the insurer.
See generally Commonwealth Land Title Ins. Co. v. IDC Props.,
Inc., 524 F. Supp. 2d 155 (D.R.I. 2007) aff'd, 547 F.3d 15 (1st
Cir. 2008).
This Court voided the Policy because of omissions
in Paul’s insurance application regarding his medical history.
While
the
Order
references
“grounds
for
rescission”
of
the
Policy, to the extent there is a difference between the meaning
of
that
term
and
“void
ab
initio”,
this
Court
concluded that the Policy was void ab initio.
unequivocally
(See Order, ECF
No. 136 at 28 (“Accordingly, for the reasons stated above, the
Policy
is
void
ab
initio
because
of
the
material
misrepresentations contained on the Application.”).)
It would
be unfair for the Court to hold Lincoln National responsible for
failing to complete rescission of the Policy after the Policy
was declared void ab initio.
Even if Defendants are correct that the effect of the Order
was to hold that the Policy was rescindable, rather than void,
Plaintiff’s failure to return the premiums paid does not mean
that the Policy remains in effect.
Defendants rely on Borden v.
Paul Revere Life Ins. Co. for the proposition that “the general
rule is that when an insurer ventures to rescind a policy on the
basis of a material misrepresentation in the application, it
must first tender to the insured the premiums paid under the
policy.”
continues
935 F.2d 370, 379 (1st Cir. 1991).
by
explaining
that
this
general
However, Borden
rule
has
its
exceptions and the “return of the premium is not a condition
precedent
to
rescission.”
Id.
Plaintiff
had
requested
a
declaratory judgment from the Court regarding whether the return
of the premium paid was required in this instance, which request
was
not
a
subject
Therefore,
paid
whether
under
the
of
the
Plaintiff
Policy
Court’s
was
was
summary
required
an
judgment
to
return
outstanding
Order.
premiums
question,
and
Plaintiff’s failure to do so did not mean that the Policy was
not rescinded.
Defendants further argue that the Policy remains in effect
because Plaintiff placed it in “‘suspense’ . . . pending the
resolution of the litigation,” whereby no premiums on the Policy
would be due.
(See Letter to Counsel, Ex. B, ECF No. 139-3.)
Defendants provide no case law to support this theory, which
contradicts the clear meaning of the letter to which Defendants
refer.
The letter was clearly designed merely to suspend the
collection
of
premiums
Policy was void.
until
the
Court
decided
whether
the
It did not amount to an agreement that the
Policy would remain in force through the appeal of an order by
this Court.
When the Court declared the Policy void ab initio,
the Policy was no longer in “suspense,” but was treated as if it
had never existed.
Because no valid contract existed between Plaintiff and the
Trust at the time of Paul’s death, amending Defendants’ Answers
to
allege
would
be
that
a
Plaintiff
futile
failed
exercise
to
that
perform
would
litigation, and leave to amend is denied.
under
only
a
contract
delay
this
II.
Motions to Reconsider and Vacate the Order
The
Court
can
vacate its Order.
that “[w]hile
conceive
of
no
reason
to
reconsider
and
The First Circuit Court of Appeals has stated
the
Federal
Rules
[of
Civil
Procedure]
do
not
provide for a ‘motion to reconsider,’ a district court has the
inherent power to reconsider its interlocutory orders, and we
encourage it to do so where error is apparent.”
Fernandez-
Vargas v. Pfizer, 522 F.3d 55, 61 n.2 (1st Cir. 2008) (citing
Warren
v.
2007)).
Am.
It
Bankers
is
an
Ins.,
507
F.3d
extraordinary
1239,
remedy
and
1243
(10th
should
Cir.
be
used
sparingly “[u]nless the court has misapprehended some material
fact or point of law.”
30
(1st
Cir.
demonstrate
Palmer v. Champion Mortg., 465 F.3d 24,
2006).
either
“To
that
obtain
newly
relief,
the
discovered
movant
must
evidence
(not
previously available) has come to light or that the rendering
court committed a manifest error of law.”
Id. (citing Marie v.
Allied Home Mortg. Corp., 402 F.3d 1, 7 n.2 (1st Cir. 2005)).
Defendants argue that the facts have changed such that the
legal
conclusions
correct.
subsequent
submitted
articulated
in
the
Order
are
no
longer
According to Defendants, the death of Paul, and the
claim
by
the
for
benefits
Trust,
entitles
under
the
Defendants
before the Policy may be rescinded.
Policy
to
a
allegedly
jury
trial
Defendants would then be
entitled to benefits under the Policy if the jury determines
that
Paul’s
death
was
caused
by
something
other
than
the
conditions that he omitted from his life insurance application.
Defendants point to Rhode Island General Laws § 27-4-10, which
provides
that
no
misstatements
made
in
procuring
a
life
insurance policy “shall be deemed material or render the policy
void
unless
this
matter
represented
shall
have
actually
contributed to the contingency or event on which the policy is
to become due and payable.”
Under this statute a jury must
decide whether the matter misrepresented or omitted from a life
insurance application contributed to the insured’s death.
Gen. Laws § 27-4-10.
R.I.
Defendants contend that, while the Court
may have had jurisdiction during the life of the insured to void
the
Policy,
now
that
Paul
has
died,
a
jury
must
determine
whether grounds to rescind the Policy exist.
Defendants’ arguments fail because, even if Defendants are
correct that only a jury can find grounds to rescind a policy if
a claimant brings a legal action to enforce it, there can be no
action
to
enforce
a
claim
under
this
Policy
declared void ab initio prior to Paul’s death.
because
it
was
No policy exists
under which Defendants can seek to enforce a claim for benefits
resulting from Paul’s death.
Thus, Defendants are not entitled
to a jury trial to determine the materiality of omissions from
Paul’s life insurance application and the Court need not vacate
its prior Order to provide them with one.
III. Motions to Supplement Record
Defendants also seek to supplement the record of this case
to reflect their contention that the Trust submitted a valid
claim for benefits under the Policy.
Plaintiff does not object
to supplementing the record to reflect the fact of Paul’s death,
but it does object to supplementing the record to reflect that a
valid claim for benefits under the Policy was submitted by the
Trust.
Plaintiff asserts that a specific form must be completed
to trigger a valid claim for benefits under the Policy, while
Defendants
argue
that
the
Policy
permits
a
broader
array
of
documents to trigger a valid claim.
Regardless of whether the Policy permits documentation of
the
insured’s
Plaintiff,
the
death
other
than
the
record
cannot
reflect
forms
that
a
identified
valid
claim
by
for
benefits was made under the Policy because no Policy existed at
the time of Paul’s death.
to that time.
It was declared void ab initio prior
A motion for leave to supplement the record falls
within the district court’s discretion.
See United States v.
One Lot of U.S. Currency ($36,634), 103 F.3d 1048, 1050 (1st
Cir. 1997).
Here, the documents that, according to Defendants,
amount to a valid claim for benefits under the Policy would add
nothing to the record of this case.
They do not amount to a
valid claim because no Policy existed at the time they were
submitted
to
Plaintiff.
Therefore,
Defendants’
motions
to
supplement the record are denied.
IV.
Dismissal of Remaining Claims
Each
of
Plaintiff’s
claims
not
subject
to
the
Order
is
dismissed without prejudice in accordance with the Stipulation
of
Partial
Voluntary
(“Stipulation,”
ECF
Dismissal
No.
145.)
executed
Each
party
by
each
party.
stipulated
to
the
dismissal of these claims in order to facilitate the appeal of
the Order.
Appeal requires a “final disposition” that combines
“in one review all stages of the proceeding that effectively may
be reviewed and corrected if and when final judgment results.”
Cohen v. Beneficial Indus. Loan Corp., 337 U.S. 541, 546 (1949);
28 U.S.C. § 1291.
with
a
final
dismisses
Therefore, in order to provide the parties
decision
Plaintiff’s
that
is
ripe
remaining
for
appeal,
claims,
the
subject
Court
to
all
conditions enumerated in the Stipulation.
V.
Entry of Final Judgment
The
dismissal
of
all
claims
ends
all
litigation
on
the
merits and nothing remains for this Court to do in this case but
enter
final
judgment.
See
Midland
States, 489 U.S. 794, 798 (1989).
enter for Plaintiff.
Asphalt
Corp.
v.
United
Therefore, judgment shall
VI.
Conclusion
For
the
reasons
stated
above,
each
Motion
for
Leave
to
Amend the Answer is DENIED and each Motion to Supplement the
Record
and
to
Reconsider
and
Vacate
Entered October 4, 2012 is DENIED.
the
Opinion
and
Order
Additionally, the remaining
claims are DISMISSED and Plaintiff’s Motion for Entry of Final
Judgment is GRANTED.
IT IS SO ORDERED.
/s/ William E. Smith
William E. Smith
United States District Judge
Date: August 9, 2013
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