Document ID: s3://data.kl3m.ai/documents/govinfo/USCOURTS/USCOURTS-ca8-05-03870/USCOURTS-ca8-05-03870-0/pdf.json

Parties Involved:
Sheryl D. Osborn
Appellant
The Prudential Insurance Company of America
Appellee

Document Text:

1

The Honorable Dean Whipple, Chief Judge, United States District Court for

the Western District of Missouri.

United States Court of Appeals

FOR THE EIGHTH CIRCUIT

___________

No. 05-3870

___________

Sheryl D. Osborn, *

*

Plaintiff-Appellant, *

* Appeal from the United States

v. * District Court for the

* Western District of Missouri.

The Prudential Insurance Company of *

America, * 

*

Defendant-Appellee. *

___________

Submitted: May 15, 2006

Filed: July 17, 2006

___________

Before WOLLMAN, BRIGHT, and RILEY, Circuit Judges.

___________

BRIGHT, Circuit Judge.

Sheryl Osborn, plaintiff-appellant, appeals the district court's1

 grant of summary

judgment of dismissal in favor of The Prudential Insurance Company of America

(Prudential). Osborn argues the district court erred in determining that Prudential did

not waive its right to deny proceeds of Brad Draper's life insurance policy to her, the

beneficiary of the policy. Prudential additionally asserts Osborn violated a protective

order and Fed. R. Civ. P. 26(c) by including in the appellant's appendix information

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that should have been filed under seal. We affirm the district court's grant of summary

judgment and remand to determine whether Osborn violated the protective order. 

The parties do not dispute the essential facts of the case. In 1998, Prudential

issued a term life insurance policy to Brad Draper in the amount of $1,000,000. Three

years later, in 2001, Draper failed to pay his premium by the required due date.

Prudential sent Draper a letter of reinstatment informing him that the policy had

lapsed but could be reinstated subject to various conditions, one of which was

payment of all premiums "before the death of the insured." Thereafter, Draper

established a pattern of paying his premiums after the due date but within the policy's

thirty-one-day grace period. Prudential continued to insure him. On August 1, 2002,

Draper again failed to make a timely premium payment. Draper died on September

10, 2002, without having paid his premium. 

On September 18, 2002, Osborn's husband called Prudential to make a claim

on the policy. Two Prudential employees told Mr. Osborn that the policy was still in

force and that Prudential would send him a claim form. The next day, Mr. Osborn

again spoke with the insurance company. Another employee told him that Draper had

died nine days before the policy lapsed and reiterated that Prudential would honor the

policy. Sheryl Osborn sent Prudential a death benefit claim form accompanied by the

required documents. On October 1, 2002, Prudential sent Osborn a letter stating that

it would pay no benefit on the policy as the policy had lapsed for failure to pay the

premium. 

Osborn filed suit against Prudential. Count I of her complaint asserted that

Prudential waived its right to deny payment of the proceeds of the life insurance

policy on the basis that Draper's failure to pay premiums resulted in a lapse of the

policy. Count II stated that Prudential is estopped from asserting the same defense.

Both Osborn and Prudential filed motions for summary judgment. 

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The district court granted Prudential's motion, determining that the facts did not

establish either waiver or estoppel. Osborn now appeals the district court's decision

to grant summary judgment on the waiver claim. She does not appeal the ruling on

estoppel. 

This court reviews de novo both the district court's grant of summary judgment

and its interpretation of state law. Barry v. Barry, 78 F.3d 375, 376 (8th Cir. 1996).

Summary judgment is appropriate when the evidence, viewed in the light most

favorable to the non-moving party, demonstrates that no genuine issue of material fact

exists and that the moving party is entitled to judgment as a matter of law. Id.

Osborn argues that the district court erred in granting summary judgment on the

issue of waiver. Under Missouri law, to establish waiver of the defense of forfeiture,

Osborn must show that Prudential (1) had knowledge of the facts giving rise to the

defense, and (2) intentionally relinquished the right to assert the defense. Acetylene

Gas Co. v. Oliver, 939 S.W.2d 404, 409 (Mo. Ct. App. 1996). "To rise to the level of

a waiver, the conduct must be so manifestly consistent with and indicative of an

intention to renounce a particular right or benefit that no other reasonable explanation

of the conduct is possible." Id. (internal quotation and citation omitted). Waiver does

not require prejudice to the insured. Brown v. State Farm Mut. Auto. Ins. Co., 776

S.W.2d 384, 388 (Mo. 1989). 

The district court correctly determined that the facts of this case do not establish

waiver. At no time did Prudential unequivocally indicate it knew of the availability

of the defense of forfeiture but intended to relinquish the right to assert that defense.

Although several Prudential employees had stated that the life insurance policy would

be honored, these employees did not say that Prudential would honor the policy

despite its lapse for nonpayment of premiums. Indeed, the last employee with whom

Mr. Osborn spoke stated that Draper "passed away nine days before the policy

actually lapsed." Rather than demonstrating Prudential's intention to honor the policy

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Osborn argues that, under Missouri law, ignorance or mistake is no defense to

waiver. This principle applies to the doctrine of estoppel, not waiver. Brown, 776

S.W.2d at 388.

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despite its having lapsed, this statement shows that the employee did not have all the

facts relating to the status of the policy and expressed only an intention to honor a

policy that had not yet lapsed.2

 Osborn does not show that the record establishes

waiver.

Osborn also asserts that the district court erred in not applying the "equity

abhors forfeitures" principle to this case. In the past, Missouri courts have

acknowledged this doctrine and seized upon slight cause to find a waiver or an

estoppel with respect to forfeiture. Bartleman v. Humphrey, 441 S.W.2d 335 (Mo.

1969). However, more recent cases indicate that, although the doctrine may still apply

with estoppel, it has been abandoned with respect to waiver. Brown, 776 S.W.2d at

388. Missouri courts will not now apply the "law abhors forfeitures" principle to find

waiver in the absence of full knowledge of the facts giving rise to the forfeiture

defense and an unequivocal intention to relinquish the defense. See Depriest v. State

Farm Fire & Cas. Co., 779 S.W.2d 347 (Mo. Ct. App. 1989); Hite v. Am. Family Mut.

Ins. Co., 815 S.W.2d 19 (Mo. Ct. App. 1991).

For the foregoing reasons, the decision of the district court is affirmed. Further,

we remand to the district court to resolve the protective order issue.

______________________________

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